The Incredible Power of Marginal Gains
If I told you there was a simple concept with the transformative power to change the trajectory of your entire life, would you believe me?
Well, it’s true.
A Quick Economics Lesson
You’ve probably heard of compound interest. Put simply, it’s a term in economics that describes how an incremental but consistent addition adds up exponentially over time.
Think about it like this: Imagine you have $1,000 and every year you earn an additional $100.
After one year, you’d have $1,100 (1,000 + 100). After three years, you’d have $1,300.
Now imagine that instead of earning $100 each year — which was 10% of your original total — you earned 10% each year.
After one year, you have $1,100 (1,000 * 1.1). After three years, you have $1,331.
In the first example, you earned $300 in three years. In the second, you earned $331. That’s a 10.33% difference.
Now imagine a third world where instead of earning 10% each year you earned 10% but the calculation occurred four times a year (so 2.5% each time).
After three months, you’d have $1,025 (1,000 * 1.025). Keep at the pattern and after three years, you’d have $1,344.89.
That’s 4.2% more than the second example — all we changed was how often we compounded the total.
The principle is simple: by changing how we calculated the yearly change (from static to percentile) and how often we compounded (from once a year to four times a year), we were able to dramatically improve our financial position.
And that was starting with the small sum of $1,000 and a timeframe of only three years.
If you did the same exercise with $1 million (gaining $100,000 or 10% each year) over a 20 year window, you’d end up with $3 million in the first world, $6,727,499.95 in the second world, and $7,209,567.82 in the third world.
Are you starting to understand the power of compound interest?
Why You Should Care
Well, I have good news.
The economics talk is over. And more importantly, the exact same mechanics that exist in compound interest apply to your personal development.
That’s why you need to be focusing on making continuous, marginal gains.
If you are able to improve everything about how you operate by 1% every year, those changes will add up far beyond what you can imagine.
And if you are constantly focused on your improvement, building upon what you learned previously — that’s the same as compounding savings continuously.
I promise you this works. But you don’t have to believe me.
This is a concept James Clear explored in Atomic Habits — if you’re interested in seeing a real-life example, I highly recommend you check out this anecdote.
Once I really started focusing on where I could make small, incremental improvements, and what those improvements could be, my whole life changed.
What You Can Do About It
Here’s what I did:
- I started with awareness. If you don’t have total self-awareness, you won’t be able to find the right areas of improvement. When I’m cycling, I understand how my power, heart rate, and speed need to come together to finish a ride within a target time. I understand what muscle groups will take a beating. I understand what mindset I’ll need to push through the suffering. You need to think about yourself in the same deliberate, conscious way.
- Next, I focused on my micro-level behaviors. To improve incrementally at everything I do, I have to have a deep understanding of what those things actually are. I need a detailed understanding of how I actually operate — the underlying behaviors and personality traits that make me unique.
- I finished by diving deeply into the things that made me healthier. Most people don’t consider their heart rate variability, the amount of energy they expend, the hours of sleep they get — but the best athletes do. And they train relentlessly to get a tiny bit more out of all of those areas. I need to treat my body the same way so I’m as sharp as possible when I’m in front of a team of C-level executives pitching an 8-figure transformation using my company’s SaaS platform.
By breaking things down into these domains, I was able to identify all of the areas I could try to incrementally improve upon.
The end result was a healthier and happier human, and as the Japanese call Ikigai, which translates roughly to “reason for being.”
And as I’ve continued to focus on my self-improvement, those learnings have compounded over time.
If you’re interested in trying this for yourself, get my personal toolkit. Reflect on your Ikigai every morning. Then, use the suggestions as inspiration for figuring out what improvements you can make each and every day in your own life. The beauty is making it a personal journey you can call your own.
Why It’s Worth It
Anybody can perform at the top of their game once. The goal is to ensure it’s not a fluke and you can repeat the results year after year without burning out.
That’s where the incredible power of continuous marginal gains comes to life.
Hyper-focus at a detailed level about where and how you can marginally improve.
Do it well, and you’ll be miles ahead of where you were last year…and your competition (if you care about that kind of thing).
Give some of the tools in the guide a try and let me know how it goes! I’d love to hear your thoughts (and if you think I have a future as an Economics Professor).
When you’re ready, here are 3 ways I can help you:
- Get the exact system I’ve used to go from earning $200K to over $1M a year in SaaS sales without burning out here. (1,700+ students)
- Join a community of Purpose-Curious™ sellers in the Make More Hustle Less Club where we develop a personal operating system together here. (300+ members)
- Book a 1:1 coaching session to up-level your performance here. (Limited spots available)