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Magical Compound Effect of Habit - Being 1% Better Everyday

We are not in control of the impact of external events on our lives, but the internal changes that we do for personal development, need not always be drastic. Here is a unique aspect of how making small changes impacts us in a big way.
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We all live in a world where sudden, drastic changes are becoming the new normal of life. While we are not in control of the impact of external events on our lives, did you know that the internal changes that we do for personal development, need not always be drastic? Today we present a unique aspect of how making small changes impacts us in a big way. 

Many companies across the world are implementing a strategy called ‘Kaizen’. According to this strategy, small but continuous changes are brought to processes in order to bring efficiency and productivity to the table. The concept is beautifully explained by the Japanese consultant Masaaki Imai, who famously said:

“The message of the Kaizen strategy is that not a day should go by without some kind of improvement being made somewhere in the company.” 

The above quote can also be applied to personal lives when we all are also in pursuit of making changes, big and small. The question arises – Are drastic changes always bad? 

No one can in any way debunk the need and importance of sudden, crucial, and drastic changes. If you have a problem that is well-defined, serious, and dependent on a direct implementable solution, you may need to make drastic changes. For e.g. if you are sick and the doctor advises an immediate diet change, you will have to make it.

However, when we are talking about behavioral changes, or goal-setting, or habit building, drastic changes will yield very little outcome. The best way forward is to follow the concept of incremental changes and be better in small ways – day-by-day. 

Researchers have stated that it depends upon a person as to how quickly he can build a new habit. For e.g. in a study conducted by Phillippa Lally, a person may take anywhere between 18 days to 254 days to develop a particular habit and inculcate into their behavior. This proves that changing certain aspects of our life can take a long period of time, depending upon our circumstances. The important thing to remember is: 

No matter how many days it takes you to develop a habit, make those days work for you! 

What will help you do this?

The Compound effect of habits.

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It does not matter how slowly you go so long as you make better small changes everyday | Illustration by Kanivalan

Magical Compound Effect of Habits 

Understanding the concept

Darren Hardy famously said, “The accomplishment of any goal is the progressive accumulation or compound effect, of small steps taken consistently over time.” This quote forms the basis of our discussion. We are what we are because of what we do every day. While simply doing something every day won’t make us better, but doing things better every day will help us achieve what we have yearned for. How does this work? 

The compound effect is defined as the “principle of reaping huge rewards from a series of small, smart choices.” The basic premise for the compound effect is to reject the idea of changing your life quickly. That isn’t going to happen as ‘quick fixes’ never lead to long-term self-development. When we make small changes every day, this adds up over time to a bigger outcome. The changes may seem insignificant, but together they end up making you big. 

Darren Hardy, who built this concept of Compound effect, based it on the Butterfly Effect. According to this concept, a butterfly flapping its wings on one side of the world can cause a mighty tornado in another part of the world. While this may seem impossible, small actions with a small beginning, done continuously over time can lead to vastly mighty outcomes. 

James Clear, in his article, “Continuous Improvement: How It Works and How to Master It” made it abundantly clear that if an individual decides and implements the strategy to get 1% better every day for one year, he will end up 37% better by the end of it. No one may notice the 1%, but no one will miss the 37% improvement in you! 

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The effects of a small habits compound over time | Image source

We recommend that you read Darren Hardy’s book, The Compound Effect

Formula for Compound Effect: 

Darren Hardy mentioned that the compound effect of habits is the combination of multiple attributes. These attributes help us understand our role better. The magic formula is: 

Compound Effect = Choices + Behavior + Habits + Time 

The strategy for reaping huge rewards from small changes requires patience, responsibility, and accountability. To make the compound effect work, we need to make the right choices, show the right behavior, cultivate the best habits, and allow time to take its course. How does each of these four attributes work? 

Choices: Everything that we achieve or reap in life is a result of our choices. Some people also call these decisions, and researchers say that the average human makes around 35,000 decisions every day! No one can thus negate the impact of choices on our life. In fact, the whole premise of applying the compound effect is making a conscious choice to apply it!

Behavior: While making the right choice is important, implementing it and showing it in our life defines our behavior. The road from words to action can be a slippery one and negative behavior will completely invalidate even the right kind of choices. A study conducted by some researchers at Duke University stated that 45% of our daily behaviors are automatic. We need to change our negative behavior before it becomes a part of our daily habits.

Habits: Habits are the most powerful indicator of our choices and behavior. In fact, it is the bedrock of our daily lives. A particular set of behavior shown incrementally every day becomes a part of our memory system, and in turn, becomes a habit. Our daily habits dictate our life course and thus play an important part in the compound effect.

Time: The most important aspect of habit building and personality development is time. Sam Levenson famously said, “Don’t watch the clock, do what it does. Keep Going”. The import of compound effect is not just to let time go for making change easier, but to make the best use of the time to make change better.

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Compound Effect = Choices + Behavior + Habits + Time \ Image source

As we saw, all the above four attributes of our life can help us achieve the compound effect of habits. Now let’s understand how to practically apply it in our lives.

 Recommended: A Strategic Approach to Building and Breaking Habits

Making a Practical Application: 

There are three basic steps that will help us apply the compound effect in any aspect of our life, may it be business, health, finance, or personal development. These are: 

#1 Keep long term goals and break it into shorter goals 

Why are keeping goals the core of applying compound effect? A study conducted by the Harvard Business Study revealed that 83% of the population does not keep goals, 14% keep unwritten goals, and the remaining 3% keep written goals. The result? 

The 14% with unwritten goals are 10 times more successful in life than the 83% with no goals, and the 3% with written goals, are 3 times better than the 14% with unwritten goals.  This means that the more you are specific with your goals, the more successful you are. Since success in life is the core ideology of the Compound Effect, goal-setting is a priority to achieve it. 

One thing that keeps people from making efforts is the mightiness of the goals that they keep. The greatest impediment that keeps people from achieving their goals is either focusing too much on the outcome or focusing too much on the obstacles in our path. The premise of the compound effect is the small changes, and it is imperative that we break all our goals into reasonable and achievable micro-goals. 

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Break down goals into smaller tasks to always achieve them

The following steps will help you in this regard:

  1. Identify and set some goals related to your business, health, self-learning, finances, etc.
  2. Break the goals into smaller tasks that you can complete every day.
  3. Cultivate habits that are necessary to achieve these goals. E.g. Hard work, Discipline, Persistence, Commitment, etc.
  4. Make smaller, but consistent improvements every day.

Recommended: Why Goal Setting Is So Hard and 7 Meaningful Goals in Life

#2: Prepare a ‘System of Execution’ 

The important step after keeping a goal is to ‘put your boots on and get out of the house’. Many people fail to achieve their goals because of poor execution or unforeseen occurrences. Regarding this, Mike Tyson said,

“Everyone has a plan until they get punched in the face.”

Once you have committed yourself to a goal, and broken it into tasks, the important step is to eliminate all distractions that keep you away from your goals. Friends, restaurants, movies, games, etc. can be postponed or rescheduled as it cannot come in way of your tasks. Once you have eliminated these distractions, utilize the free-time by blocking it for your micro goals. 

Remember to create, regulate, and adapt your execution plan to your circumstances. 

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Our best intentions fail because we don't have a System of execution \ Image source 

Now that you have a systematic plan in place, take the final step to monitor what you have achieved. 

#3 Monitor what you have achieved                           

Monitoring what you have achieved gives you a sense of achievement. It is important to keep monitoring your progress twice or thrice a week to make improvements and celebrate success. Set regular time aside and compare your performance with your original goals and ask the following questions to yourself: 

Have I achieved what I was expecting to achieve by this time?

Are there ways to still do things differently, or, smartly?

Are there still redundancies that I can clear from my life?

Are my goals still realistic or shall I revise it?

Asking the above questions will help you make a clear path ahead, and establish a routine that will build you up as you move ahead. These three hacks will help you take one step at a time towards your goal of personal success. 

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Tracking your progress to make improvements and celebrate success

If you are in search of a tool to track and monitor your progress, Habitify will help you. On the Habitify app, you can plan your activities, set timelines, and track your daily habits - all at your fingertips. 

Recommended: Habit Tracking Methods - Which One if For You?


Darren Hardy said in his book, “You will never change your life until you change something you do daily. The secret of your success is found in your routine.” 

Isn’t it true that what we do daily defines us as a person? The magical compound effect of habits is based on the awareness of our choices and the power of our habits. Each choice that we make in life started a particular behavior, which over time became a part of our life as a habit. This is the time to harness the power of small changes and reap big rewards. 

Let’s rise above our challenges and bring that small change in our life - day by day, every day!