“Small, Smart Choices + Consistency + Time = RADICAL DIFFERENCE” – Darren Hardy, The Compound Effect: Jumpstart Your Income, Your Life, Your Success
Whether they know it or not, business leaders of successful businesses run on a simple concept known as ‘the compound effect’. This is “the principle of reaping huge rewards from a series of small, smart choices”, a definition I love as given by Darren Hardy, in his book, The Compound Effect: Jumpstart Your Income, Your Life, Your Success.
Surrounding this principle are several thought processes that slowly, surely and firmly ground every thriving business you see on brick & mortar or online, listed or unlisted in any stock exchange.
In this article, we explore the power of small, smart choices and thought processes, which if you apply with wisdom in your business, you will be on your way to establishing a successful business.
1. Know your business
This is a lesson that many have learned the hard way, if only it were part of the internship and attachment requirements. Business moguls around the world have one thing in common, which you can pick from their talk – they know their business – not just the numbers. They seem to know which part of their business is bleeding, which one is a cost-center and which is a profit center, they know which supplier is most reliable, which customer is their bread and butter, which market segment is their strength, which is their weakness, etc. You will give them a Profit & Loss statement or a Balance Sheet and they will tell you perfectly what is going on in the business.
These business leaders know that the more hierarchies they have in their business the less informed they will be and the more detached they will be from the actual business.
If you are a growing business, one of the best pieces of advice you can receive is that you should not sit in your office or cubicle looking at your screen while your team is out grinding the tarmac closing deals or seeking suppliers. Get involved and know your business. Keep remembering that growing a business is like being in a construction site as a contractor to ensure that the building holds firm and comes through right, from foundation to fittings to roof and beyond.
2. There is always a better way
It is Robin Sharma author of “The Monk who Sold His Ferrari” and other titles who said, “The fears you do not face become your walls. Most people in business, and in their personal lives, design everything so they can avoid doing what makes them feel uncomfortable. Yet any good business person knows we are not only paid to work but also we are paid to be scared”. It is scary to try something different other than what we are used to.
Our brains are not programmed to be good handlers of the unfamiliar or of pain and discomfort. Good business leaders see this fear and still make the smart choice to downplay its power on them and they choose to believe there is a better way. In fact, some have developed the art of taking calculated risks while riding on the backs of their strong-willed employees.
I remember a case in point where a Retail manager of an auto parts centre made a suggestion to the CEO of a global brand that they should open an outlet in a part of the city that had ill repute on car parts stolen from cars parked by their owners in the city centre. Brandwise, the outlet was going to dilute everything the organisation stood for but revenue-wise, the strategy was going to raise the business revenues by more than 100%. The CEO just asked one question, “ Are you sure?” and went on to defend the idea until it got the backing of the board. 6 months later, the outlet was doing significantly more than the main retail outlet of the business.
Do not be afraid to explore the alternatives – there is always a better way to do business and achieve more. Even if it looks odd and unconventional.
3. There is pattern and rhythm
As has been evidenced by many corporate entities around us, all businesses have cycles, a pattern and a rhythm that characterizes their operations and existence. Seasons where the business is a success, and seasons when it is low; What they do when the season is low determines how high they rise in the next business cycle.
Business solutions such as pivoting, iteration, re-engineering and enhancement of various elements help deal with the pattern and rhythm to ensure consistency in service/ product delivery. You should never have a situation where a customer is told, “this is our low season so we can’t be as efficient as we normally are” Understanding these business cycles equips you to develop contingency plans, develop strategies and apply them as hinges and propellers towards new success.
As you seek to understand your patterns and establish your rhythm, remember that there are levels of success which you rise to, as a business, due to growth in the business and how well you steer the enterprise in the growth, will determine how firm a foundation you have for the next level of success.
4. Obligation, discipline & motivation are three sides of the same coin
A coin has 2 faces and 1 ringside. Standing on the ringside, the coin balances well on a flat surface and can even be spun around an endless number of times allowing for the handler to explore the faces.
In business, motivation is the ringside, obligation and discipline are the two sides. For everyone who has the business at heart, these three elements need to be always balanced because neglect of one totally affects the others. Business leaders have their motivation safe locked into their hearts and minds and that is part of the reason they are paid well, have time off perks better than floor workers and unplug moments. The fastest way to deflate a good business leader is to pay them poorly, take away their ‘recharge moments’ and perks. It doesn’t matter how many times you tell such a person that they are doing a good job because they are disconnected from their custom-designed source of motivation.
Where motivation is missing, obligation checks in and mediocrity is not far behind. Where motivation fuels obligation, discipline will almost always be a non-issue because people know what they are supposed to do and they don’t need a rod of correction constantly in the vicinity to remind them of the repercussions of not doing what they are supposed to do.
5. Make Sound Decisions
One of the most critical skills to have for and in a thriving business is the skill of decision making. With a gun stuck to your head, your one decision can save or end your life. In business, the gun is work and personal pressures, which are inescapable.
The secret to making good decisions is in:
- learning how to make them privately
- understanding your own decision-making process, and
- refining it over time so that when you are in public, you are not struggling.
Lanny Bassham an American sports shooter talks about mental management and is quoted as saying “Mental Management is the process of maximizing the probability of having a consistent mental performance, under pressure, on-demand”. Leaders and owners of thriving businesses display this element in both business and personal lives repeatedly; not because it is a special gift they were born with. They have practiced and learned through mistakes and successes, how to make sound decisions for their businesses and their personal lives.
If your business is going to soar higher than it is at the moment, you and the team surrounding you must devote yourselves to growing the skill of decision-making without fail.
It will help when investing, expanding, hiring, product development and other crucial issues are before you in the boardroom.
Thriving businesses do not run themselves. There is no day in the near or far future that your business will be independent of you completely. Thriving enterprises have purposeful action, driving them towards their success, whether it is visible or not. The actions are not sporadic and unplanned, even though they may at times appear to be. They are planned, broken down like pieces of a puzzle, they play out over time and are supported by the discipline and dedication of the owners and leadership of the business.