The Compound Effect

Posted by Todd Smith

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compound-effect-In today’s lesson you will learn one of the principle reasons why little things really do matter, and you will comprehend the incredible impact little efforts can have on your life.

Over the past month I have read and listened to Darren Hardy’s new book The Compound Effect. It is one of the best books I have ever read on what it really takes to become successful at anything.

Darren makes the argument that the only path to success is through the continuum of mundane, unsexy, unexciting, and sometimes difficult daily disciplines compounded over time.

If you want to lose weight, let’s assume you cut out just one of your 150 calorie snacks or beverages each day for a year.  This simple discipline would result in a weight difference of 15 pounds after one year. (150 x 365 = 54,750 calories saved, divided by 3500 calories per pound = 15.64 pounds difference.)  For me, I cut out my daily Coke.

Reaching your goals is achieved by the DAILY effort you put into what you do, not by some magic success formula, new miracle product, or undiscovered Internet business. Every big success is made up of little successes, each building on the previous and compounding over time.

Formula for Life

Darren created a life formula: “Your life comes down to this formula.  You à Choices (decisions) + Behavior (action) + Habit (repeated action) + Compound Effect (Time) = Goals.”  Let’s examine each of these components separately.

  • Choices

Darren said, “The difference between becoming fabulously rich, happy and healthy—or broke, depressed and unhealthy is the choices you make throughout your life.”  Our lives are a mirror image of the decisions we make each day. For example, the decision to make a healthy food choice, versus something we know is not healthy.  One of my all-time favorite quotes by Jim Rohn is “Success comes from making a series of good decisions over time while failure comes from making a series of poor decisions over time.”

If you want to improve your life, you must improve your decisions.  I believe the most important element in making good decisions is making conscious decisions.  This is when you actually consider the pros and cons of your decisions before making them.  I am convinced most people float through life making decisions on the fly, with little if any thought, only to find themselves wondering why they aren’t happy, healthy, or successful.

  • Behavior

What stands between you and your goal is your behavior. Darren said, “If you say you are a dedicated professional, but yet you show up late and unprepared, your behavior rats you out every time.” Do you need to stop doing things so the compound effect doesn’t take you in a downward spiral? Similarly, what do you need to start doing to change your trajectory so you are headed in the right direction?  As you consider your goals, what behaviors may be sabotaging your success?

  • Habits

We must establish the right habits—those that repeated over time take us in the right direction.  We must look at everything we do consistently and determine if it is a habit that moves us towards or against what we want to achieve. We must create routines or systems of action that become beneficial habits over time.

Darren said, “A routine is something you do every day without fail, so that eventually, like brushing your teeth or putting on your seatbelt, you do it without conscious thought. Just as investments compound over time, so do our daily actions.  If they are good they take us down one path.  If they are bad or destructive, they take us down a completely different path.”

  • The Compound Effect

Darren defines the Compound Effect this way: “It’s the principle of reaping huge rewards from a series of small, smart choices. Success is earned in the moment to moment decisions that in themselves make no visible difference whatsoever, but the accumulated compounding effect is profound.”

If you want to save money so you can enjoy your retirement, consider the compounding effect of spending $4 a day on coffee. If you choose to invest $4 a day at 8% interest rather than spending it on a cup of coffee it would result in $51,833.79 in 20 years.  The same result could also be reached by making your own lunches rather than eating out.  Do both and you will have saved an extra $100,000.

Patience is the Answer

In order for the compound effect to work, you need to be patient. Most of these daily changes won’t provide immediate results.  If you reduce your calories by 150 today, you won’t see a difference today or even this week.  The same is true with working out. You can go bust your butt at the gym and you won’t see results today or this week.  These daily disciplines must be given time to produce results.

Darren said, “What’s most interesting about the process to me is that even though the results are massive, the steps, in the moment, don’t feel significant. Whether you are using this strategy for improving your health, relationships, finances or anything else, the changes are so subtle, they’re almost imperceptible.”

The Path Upward

If achieving your goals and living the life you have always dreamed of is important to you, I have three challenges for you.

1.  Make a list of all the choices you make throughout each day and ask these questions. When these choices are compounded over time will they move me closer to the accomplishment of my goals or will they take me further away?  Will the time I spend reading the morning newspaper help me achieve my goals?  Will the time I spend watching TV help me achieve my goals?  Will this lunch choice help me achieve my goals?

2.  Review your goals and make a list of the habits you must create each day to achieve them.  After making this list, commit to reading this list and applying each of the points listed for the next 21 days.  Once you have done them consistently, every day for 21 days, they will start to become habits and will be much easier to sustain over the long term.

3.  Buy, study and dissect Darren’s new book, available at (Darren Hardy is the visionary force behind SUCCESS magazine as the Publisher and Editorial Director. More from Darren on his blogFacebook or Twitter.)

To achieve something you have never achieved before, you must be willing to do what you have never done before.

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About the Author:

Todd Smith is a successful entrepreneur of 34 years and founder of Little Things Matter. To receive Todd’s lessons, subscribe here. All Todd’s lessons are also available on iTunes as downloadable podcasts.

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