Good Decisions Build on Each Other

The concept is pretty basic and runs parallel to the effect that compound interest has on the growth of your money. If you put money away for retirement early in your career, time works on that money and it grows way beyond the amount you put in. Not only because of simple interest, but because of compound interest—you gain interest on your interest on your interest, over and over again. This quietly and slowly adds up to create a significant multiple of the money you started with.

The main thing I want to write about are the decisions we make and how they build on each other. I like the expression, “We make our decisions and then our decisions make us.” I’ll get to this in a moment. First, I want to write about how other things compound. The first is the impact your financial decisions make and the second is on the the impact of your effort.

First—If you make financial sacrifices for your company that will help in the future, but hurt in the present, those sacrifices tend to compound over time for the long-term financial health of  your company. A company that makes wise financial decisions for the future, even though it might be painful in the present, will experience a compounding effect that makes them very strong down the road. Some of you work for companies that have done this very thing.

Second—Your consistent effort yields results. If you get through each day and almost keep up with it all but leave 1 percent of your work undone, you can survive that shortfall in the short term. If however, your pattern is to get it all done AND do a little extra, say an extra 1 percent, that won’t be noticed tomorrow or even the next day. But over time this little extra pays off as it will start to compound on itself. One percent per day is is 365 percent per year—either to the positive or to the negative. Over time those two paths produce a gap of 730 percent. Because of the compounding effect, over ten years this difference ends up being huge.

The person who does that little bit extra most days will have produced a ton more output, she will have many more trusting relationships, and she’ll have much more knowledge and wisdom—all because of a little bit extra work, relationship building, and learning each day.

Okay, now the main reason I’m writing this—the compounding of decisions. Many best solutions for short-term benefit are the opposite of what you would do for long-term benefit. Here’s a classic example of this:

Give a man a fish to help him with his hunger (a short-term and low-cost solution to his hunger problem) OR teach him to fish (a lot more time and energy required, but a much better long term solution).

Here’s what this can look like in the leadership world:

The leader—who is also an amazing doer—jumps in to take over a failing project that she tried to delegate OR she spends the time needed to coach her associate to learn what he needs to learn to succeed in the project. Again, over the long term this decision will build her team and that difference will compound on itself.

Here is one more example about the compounding effect of the decisions we make as leaders:

You really enjoy the job you have now because you finally got your arms around it and can enjoy the fruits of your past labor. Now could be a good time to seek that next job or project that will push you, or you might pursue that additional education that will pay off in the future. If you keep striving for more, your efforts will have a compounding difference on your future, not unlike how your financial investments grow.

So here’s my bottom line—if you want to be among the very best, make your decisions with your money, your time and your business based on what will be best in the long term if these decisions don’t create too much risk and pain in the short term. True, it will require you to work harder and experience more pain now. But over time you will have built an unfair advantage over those who chose to do just enough for today.

Now that I’ve written on the topic, I can’t help but wonder if this compounding effect shows up in our physical health, and mental and spiritual health, and also the health of our family relationships. I bet it does.

Meredith, Jeff, and I would love to read any thoughts this prompts in you! Please feel free to make a comment—either written well because you had the time to do it well, or writed bad cause you din’t have the time to make it read good. Smile!

Hope your week is a great one!

Rodg

Image by Mr Moss. Used under permission of CC by 2.0 license.