The dangers of compound error

The effect of compounding is great. For the effect of stacking value over time can have great consequences. People often talk about the positive effect. But if you fail to harness it correctly, it can also have a downside.

What is the compound effect?

The compound effect is a phenomenon in which repeated small changes or actions over time lead to great results. The effect is caused by the cumulative impact, or sum of these small changes. 

This compound effect principle is based on the power of repetition being crucial to success. By maintaining positive habits and making small improvements, the compound effect can lead to significant long-term growth and progress. 

In fact, the opposite is also true. Negative habits and choices can lead to regression and negative long-term consequences. And so that is the flip side of the compound effect.    

See here an image from the bestseller Atomic Habits By James Clear. 

If you haven't read the book yet, definitely recommended! Is also on my favorites list.

Improve and grow 1% every day

Improving 1% every day results in a ±38x improvement. The same is then true if each day 1% is worse. And dwelling on that is just as important. Because we all always assume that we improve and change things in order to grow again. But what if it turns out for the worse? 

It effectively zeroes you in - it takes you out of the game field....

And this is where I immediately make the link with top sports and entrepreneurship. Because as a big sports fanatic, I get a lot of inspiration and lessons from this. In top sport, many analyses and measurements are made on how the athlete can improve. But also with losses or mistakes that occur in technique, training schedule, nutrition and mental health/psychology.

For example:

After a bad event on the field of play (a hit, missed penalty, wrong move in skating), what did the athlete do next? Did the athlete let the bad event get out of hand or did he/she control the situation?

Looking at all the data over the years of training and competition gives insight into compound error avoidance. A key measure of success.

Avoiding piling up negative points is one way to win

And that's where we immediately come to an understanding and confirmation that making mistakes, learning from them and knowing how to improve that therefore contribute to your success. 

After a failure or mistake, the lesson and the next decision is more important. So that you will learn from your mistakes and know how to turn them into new successes and growth. This is where you can stop the negative accumulation and take a step in the right direction.

Making many mistakes makes you successful

So compound error is actually a wonderful metaphor is for life and entrepreneurship. We don't always have control over the initial bad event, but we do have control over how we react to that event. How we allow ourselves to be distracted and misled.

We have control over our reaction. And that's leadership, because you if you can avoid the compound error, then you find a new way to win.

Framework: Composite error avoidance in 3 steps

I have my own framework - in three steps - to avoid the compound error in my life.

Step 1: Create space

This quote that captures this perfectly:

"Between stimulus and response, there is a space. In that space lies our power to choose our response."

Viktor Frankl 

So your power lies in the space between stimulus and response. The space between the negative event, the mistake and the moment how you respond to it. And creating your space there is the key. 

If you have made a mistake, force a break and take a walk. In any case, get out of the situation and literally distance yourself.

Most compound errors are the result of an ill-considered strategy, a rushed process of allowing the situation to force itself on you. Slow it down and create space for yourself....

Step 2: Evaluate the new situation

Because of your mistake, there is new data and a new situation has arisen. Take the time to understand the new situation and its impact:

Analysis: Analyze and gather information about the situation. It is essential to gather as much information as possible to gain a complete understanding of the situation.

Assess: Assess how the information gathered relates to the current situation to help understand the context of the situation. Hert helps you identify patterns or trends.

Decide: Your decision-making process must consider the potential risks, consequences and outcomes. Make a choice about which change/adjustment is most appropriate for you.

Implement: Go do it. Act on your choice made. So adjust your strategy and actions and stick to your chosen new course. It is crucial at this stage to remain flexible, keep up with new developments and know how to adapt in time. Because new challenges always arise that require reassessment of the situation and possible adjustment of your strategy and action plan.

Step 3: Execute

No growth without movement and new actions. You get nowhere without taking the first step.

So after you have created your needed space and evaluated the new situation, it is time to act. The right actions at the right time to achieve your goals.

Implement the chosen action and monitor to assess the result. It is a continuous process of learning from your mistakes and taking the lessons from them and implementing them in your new strategy and action. 

The power of making good choices

No matter what position you are in today. Know that you are only one choice away from a better place tomorrow. 

The decisions you still have to make to get where you want to be, there are many. After all, each day 1% better and each day a new step to move forward again. Focus on the next decision. The next choice you're going to make that puts you in leadership position in the playing field. And you with a strategy and clear action plan know what steps you are going to take at the right time to achieve your goals.

Without peaks no lows, only to peak again. 

Failures, mistakes and slips are inevitable in your life and in your business. But how you deal with them is up to you. Do you get distracted or do you stay the leader and learn from your mistakes. And strengthen your leadership and be the leader who goes for the win and new growth.

Because if you know how to avoid compound error better and better, to prevent your negatives from piling up, you will always find a new strategy to win.

Use the effect of compounding positively and start living up to your profitable growth and progress for the long term.

You are one good decision away from taking a new step and growing profitably on a personal and business level.

What choice will you make? 

 One Life. Lead it. Live it.

Have a great week,

Gerdi

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Book tips:

Darren Hardy: The Compound Effect

How to win-every time! The No. 1 strategy to achieve any goal and triumph over any competitor, even if they're smarter, more talented or more experienced. 

English-language audiobook, highly recommended. Red ears from all the golden nuggets 😉.

James Clear: Atomic Habits