When it comes to investing your money, one of the first principles to understand is compound growth.
We often hear things like:
"The biggest money mistake I ever made was not starting to invest earlier."
"Start investing even a tiny amount early, and you can be a millionaire by the time you retire."
"If you save just $2000 this year and invest it, in 40 years it will be worth $60,000!"
These statements all reference the same thing: compound growth - the non-linear, geometric progression that accelerates real returns over time by reinvesting the interest earned from an original investment.
Basically - it's what happens when your earnings start earning, and those earnings start earning, and so on and so forth. It's a massive snowball effect.
While compound growth is generally talked about in financial terms, it's most important application has nothing to due with money. It has to do with you.
What do you want to get better at?
Piano? Tennis? Management? Reading? Kindness? Patience? Gardening? Focus?
Just like with money, anyone can harness the power of compound growth to see massive returns over time on any skill.
All it takes is a long view and a plan coupled with steady, methodical effort.
Let's say you want to get better at public speaking.
Do you think you can improve by 1% this week? I think you can.
Let's say your skill level is currently 100. Do you think that with a solid practice session or two you can get to 101 over the next week?
Of course you can.
Now keep it up.
If you improve by 1% again in week 2, you will go from 101 to 102.01.
In week 1, you improved by +1 and in week 2 you improved by +1.01. Essentially imperceptible.
But keep it up and from week 25 to 26 you will improve by +1.2, and from Week 51 to 52 you will improve by +1.6.
Improving by +1.6 might have felt like a herculean effort in Week 1, but in Week 51 it feels totally doable, because it is still just 1% - but you're working from a higher baseline.
Here is what 1% weekly improvement looks like over 5 years - the X axis is the Week # and the Y axis is the skill level - starting at a baseline of 100.
Year 1 looks relatively linear. You slowly and steadily increase your skill level. By the end of the year, you have gone from 100 to 166.
Year 2 you begin to feel your efforts really beginning to pay off. Back in week 1, your absolute improvement was only +0.01 but by week 104, your absolute improvement is +2.8, or 208 times as much!
If you make it to year 3, you are truly setting yourself apart. You are on your way to becoming world class in whatever you have chosen to pursue.
If you keep it up in year 4, the power of compound growth really begins to kick in strong.
And the amount of growth that happens in year 5 is almost as much in absolute terms as all of the years combined.
Throughout this - your rate of improvement is constant - just 1% a week.
At the end year 2 you are 1.66X better than you were at the end of year 1.
And by the end of year 5, you are also just 1.66X better than you were at the end of year 4.
But look at the difference in absolute terms:
Year 1: You go from 100 to 166 in year 1 (+66)
Year 5: You go from 792 to 1316 in Year 5 (+524)
So yes - you are improving the same percentage every single year, but because you are compounding yourself, your absolute returns in Year 5 are nearly 8 times higher than they were in Year 1.
By the way - all these same principles apply to money - but definitely do not give your money to anyone promising you 1% a week!
Slow and steady isn't flashy, but it is effective.
Remember, from Part 2 of Productivity Week: CAPACITY = ABILITY x FOCUS.
With a long term, steady effort (which granted is not easy), you can exponentially increase both your ability and focus, and when you multiply them together, your capacity will skyrocket.
So when it comes to being productive, and adding real value to the world, don't fall for productivity gimmicks. Instead, play the long game and compound your skills, compound your focus, and compound your creativity.