February 18

The Power Of Compounding: Why You Should Aim To Get 1% Better

It is not often you see the words janitor and philanthropist used to describe the same person. Okay, maybe if a rich person squandered away all their money and had to work as a janitor to make ends meet. Thankfully, the story of Ronald Read is quite the contrary. It’s a feel-good, inspirational account of one man’s frugality and doggedness. But most of all, it is a compelling story about the phenomenal power of compounding.

When Ronald Read died at the age of 92 in Vermont, the size of the estate he left behind, almost $8 million, shocked those who knew him.

Read, an army veteran, who worked as a gas station attendant for twenty-five years and later as a janitor for seventeen years before retiring, had judiciously saved and invested his modest income in blue-chip stocks. Read lived so frugally that his friends and family were concerned for his financial well-being, let alone associate him with any kind of wealth.

Lifechanging magic.

Therefore, it was a huge surprise to the community and all those who knew him when, upon his death, Read left $1.2 million to his local library and $4.8 million to the Brattleboro Memorial Hospital where he spent his last years—the largest bequests either of these institutions had ever received.

According to a story published in the Brattleboro Reformer,  the library’s director Jerry Carbone said of the donation:

I feel like Mr. Read was a self-made man. He did not have a formal education, but he was very smart, and he realized the impact that an institution like a library has on an individual.

There are many standout lessons from Read’s story—hard work, frugality, perseverance, etc., but the one we’ll focus on today is the lesson in the power of compounding.

Read used his modest salary to invest in stocks of businesses he understood. Then, he stepped back and let the power of compounding do its thing. Over time, his tiny nest egg grew into epic proportions, thanks to his limited interference.

The power of compounding

Let’s take a quick trip back to middle school math for a minute (did I hear a groan?). Remember the lesson on compound interest? It’s the magic that happens when the interest on your original investment earns its own interest.

Lauded by many as the greatest force in the universe, even the brightest brains of our times were fascinated by the concept of compound interest. Einstein purportedly said,

Compound interest is the 8th wonder of the world. He who understands it, earns it. He who doesn’t, pays it.

Such hyperbole is well-deserved. It’s the power of compounding that grew Ronald Read’s unassuming earnings into life-transforming donations.

The sage from Omaha, Warren Buffet, owes his hundred+ billion-dollar financial fortune not just to savvy stock-picking but to the power of compounding. Rumor is that he started his investing journey in the womb (/s.)

Most importantly, like all good life principles, the power of compounding is universal and has countless, ever-evolving, cross-disciplinary applications. Just as compound interest is the golden ticket to financial success, compounding is the magical path to personal growth—thanks to a concept called the “aggregation of marginal gains.”

Aggregation of marginal gains

If you think the phrase Aggregation of marginal gains sounds like a buzzword out of business school, you’re not too far off the mark. Sir David Brailsford, a British cycling coach, who had an MBA to his name, popularized the phrase. (Plus, he’s British. There’s that. His words are bound to sound fancy.)

British Cycling was in the doldrums, having won just one Olympic Gold medal since 1908. That’s when David Brailsford took over as the team’s coach. With the help of other experts, he soon engineered a remarkable turnaround in the team’s fortunes. Britain won two cycling gold medals in the 2004 Olympic games and led the cycling medal tally at the games in 2008 and 2012.

Coach Brailsford attributed the stunning success to, what he called, aggregation of marginal gains. The concept was simple: Review every step that directly or indirectly influences the cycling team’s performance and then find a way to get 1% better at each stage.

In Brailsford’s words,

The whole principle (aggregation of marginal gains) came from the idea that if you broke down everything you could think of that goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together.

1% better. At everything.

Brailsford wasn’t kidding when he said, “everything you could think of that goes into riding a bike.” The team changed how they washed their hands, the seats on the team bus were modified to aid recovery, and team members even carried the same pillows everywhere to sleep well when traveling.

A bit much, you think? Not according to Brailsford. And he had the results to show for it.

Not surprisingly, it didn’t take long for the buzz to travel to other disciplines. The 1% better philosophy is now accepted somewhat as the norm for performance improvement in any field. The crux of the matter is this:

Thanks to the power of compounding gains, when you make tiny improvements to the parts, you’ll end up with a whole that is more than the sum of the parts.

The aggregation of marginal gains isn’t a new concept. It is borrowed from the Japanese concept of Kaizen.


The Japanese are rightfully revered for many great inventions, including, of course, stuff that millennials and Gen Z’ers credit to make life worth living—sushi, emojis, selfie stick, and anime. Japan also has the distinction of introducing the world to the concept of Kaizen, aka the philosophy of continuous improvement.

Kaizen (roughly translated as “improvement” or “change for the better”) is the business philosophy of process improvement. Kaizen is achieved by making minor, continuous improvements to all aspects of a business process, impacting employees at all levels within an organization, from line workers to the CEO.  

The idea behind Kaizen is that little advances across the organization can add up to a momentous improvement of the organization as a whole.

Toyota, whose brand positioning statement is “Always a better way,” has consistently ranked among the top three car makers of the world by honing Kaizen into an art form.

So, what?

One of my favorite things to say is, “So, what?” : Andy Warhol

Why should you and I care about the successes of Ronald Read, the British Cycling Team, and Toyota?

Because, this: The underlying principle of what makes investments soar, a cycling team medal at the Olympic podium, and a car maker sell cars, is the same thing that can get us from being bumbling buffoons to becoming subject matter experts in any field. And why do we need to get better? To avoid being mediocre.

The secret sauce is the power of compounding.

Why compounding makes personal growth easier

There are three key reasons your chances of success are much better when your focus is to get 1% better at everything you do.

1. One bite at a time

As a vegetarian and an elephant-lover, I cringe to use this expression, but I will. To get the point across. It is easier to eat the elephant one bite at a time.

Why? Because you are oblivious to how big the elephant is when you’re served bite-sized portions.

Cutting a task down into really tiny, manageable chunks makes it less daunting and consequently more doable.

2. Lowers resistance

I don’t intend to trigger PTSD but pretend for a minute that you are a student and have just done poorly on a test. Now, imagine that you’re asked to retake the test. Your probability of actually retaking the test and the likelihood of success in the test are both very high if you are expected to perform just 1% better on the retake.

The odds of success increase dramatically when the skill and effort required are reduced.

3. The power of compounding

When you get just a little bit better on many aspects of one process, they all add up to make you markedly better in the end. 2+2, in this case, equals five because you stop torpedoing your own progress.

Making progress in one part of the process while losing momentum in another means you’ll likely end up where you started. Two steps forward, two back. The 1% better rule of making progress in multiple areas guarantees forward movement.

Physics 101: If opposing forces balance, an object remains stationary.

How to use the power of compounding to get better?

Finally, here’s the how-to to get 1% better at everything you do.

a) Break it down

Look before you leap. If you’re trying to fill a bucket, you need to examine the bucket first to ensure there are no holes, so the water doesn’t leak.

Before you start “improving,” you need to be very clear about what you’re trying to improve. This requires breaking a task down to its brass tacks so you can identify all the elements that potentially influence the task.

If you’re trying to complete an assignment at work, make sure you have your research ready, your phone turned off, your calendar cleared, and set up your workspace free of distractions. In other words, list anything and everything that could impact what you’re trying to do.

b) Avoid making it 1% worse

Growing up, I heard my overworked mother say this a lot. “It’s okay if you can’t help. But don’t hinder.” I understand the sentiment fully well now. Especially when my family members try to help cook a meal but leave midway, with the kitchen resembling the remnants of an angry tornado.

On the face of it, making something just 1% worse doesn’t seem like a big deal. But if you’re trying to implement an exercise regimen to lose weight, then having just “one soda” is a step in the wrong direction. It would take twice as much effort to undo the harm to get back to square one.

Before you learn to improve, learn not to impair.

c) Leave well enough alone

If you find something working, leave it be. Don’t try to reinvent the wheel. Constantly tinkering with a working process will simply distract you from fixing other things that are truly broken.

If you are trying to complete your assignment, then adding scented candles, changing the lighting in your workspace, fiddling with the brightness and display settings on your monitor ad nauseam are, in reality, time-wasters.

Ask yourself this question when you are obsessively messing around with objects peripheral to your key task: What are you avoiding doing? In this example, I bet the problem is finding the words to write. Focus on improving that.

d) Micro improvements

All popular habit-building literature points to the power of tiny habit changes.

If you can’t bear the thought of flossing, just commit to flossing one tooth.

If you prefer to clean cat litter instead of exercise, then simply put on your workout clothes and then clean cat litter.

Growth will inevitably happen. Soon you’ll realize it’s too much effort to pick up the floss for one tooth or change into workout clothes to go nowhere. Boredom is the key to creativity and action.

e) Give it time

The NY Times published a delectable chocolate-chip cookie recipe by French pastry chef and chocolatier Jacques Torres. Though not mentioned explicitly, the recipe called for one main ingredient: Patience. The instructions say, “After assembling the dough, you must chill it for at least 24 hours before baking it, and preferably up to 36.”

Don’t expect instant results. Step away to allow compounding to do its thing.

Making progress, however small, will take time. Trying to rush through the process can backfire spectacularly and set you back. Patience is a virtue. A hard but necessary one.

The very essence of the power of compounding is time. Exponential growth comes through sustained effort.


Begin. Commence. Get Started.

You’ve been Ready and set forever. It’s Go time now.

And if you’re wondering why you need to get better, as the great philosopher Aristotle may or may not have said, “Why not?”

You don’t have to get a whole lot better at what you do. You only have to do things that will make you 1% better. Compounding will take care of the rest.



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