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The Aggregation of Marginal Gains & The Lollapalooza Effect

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Marginal Gains & The Lollapalooza Effect

 

When you think about a pro athlete, what comes to mind? What does it take to compete at an elite level? Physical attributes? Passion? Sure. However, what separates the good from the elite is the constant pursuit of gains- a hunger to get better, even if the increase is marginal. They understand that in time, those gains will yield significant results. But how can consistent marginal improvements yield exponential gains? What can my business learn from the aggregation of marginal gains? How can you create a Lallapalooza effect for your business?

 

Small Steps Make Up Big Journeys

 

“The whole principle 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.”

— DAVE BRAILSFORD

 

In 2010 Dave Brailsford became General Manager & Director of Performance for Team Sky- a British Professional Cycling Team. His team mission was simple- perform at an elite level, something British cycling had never achieved before. However, he didn’t want the team just to be elite; he wanted to dominate the Tour de France. To reach this goal, Dave used the concept called the aggregation of marginal gains. This philosophy searches for tiny margins of improvement in everything you do. This attention to detail led to the most successful stretch in British cycling- setting nine Olympic records and seven world records in the 2012 London Olympics & dominating the Tour de France from 2015 to 2017. Team Sky first looked for improvements in expected ways- redesigning bike seats, lightweight fabrics used in uniforms & treating the tires for better traction. However, Dave’s team didn’t stop there; they continued to look in areas that you might not expect to make a 1% margin gain. For example, testing for the best pillow and mattress combination that led to the most optimum night’s sleep for each rider, painting the inside of the team truck white, which helped find dust that would degrade the performance of the finely tuned bikes. Each of the small changes had a limited effect on the individual result, yet the gains over time allowed Team Sky to deliver exponential outcomes, even creating a Lallapalooza effect.

 

What is the Lallapalooza Effect?

 

Charlie Monger, the Vice Chairman of Berkshire Hathaway one of the most distinguished and successful companies in the world, coined the Lallapalooza Effect as an extreme outcome when multiple forces or factors move in the same direction.

 

“I’m trying to get lollapalooza effects by combining. It is perfectly obvious. This is the way you win big in the world—by getting two or three forces working together in the same direction.”

— CHARLIE MONGER

 

While the Lallapalooza effect tends to be viewed in a more phycological lens, the element of exponential outcomes can be compared with the margin gains compounded over time. The end result is exponentially greater than the initial gain, similar to the principle of compounding interest. Compounding interest impacts growth outcomes such that even Albert Einstein considered compounding interest a superpower, claiming it to be the 8th wonder of the world because he “understands it, earns it, pays for it.” Why is this principle so powerful? Let’s break down the impact of a margin gain compounded below:

 

Even a 1% gain or efficiency made each day can compound to yield exponential results- an overall growth of 35% over a year. Let’s put that into a print & document management perspective; if a coworker reduced their daily paper consumption in the office by 2 pages a day, with 1% reduction each day, that reduction would eliminate 75 sheets of paper by the end of the year. If your department has a team of 5, that’s over 375 sheets! While this may not seem like a lot from a quantity point of view, keep in mind that this is just highlighting one area of your business. What other small things can you change to optimize your business performance? What will they all add up to so your business can achieve the impossible?

Start with your Print & Document Solutions

 

Your business is an athlete. Whether it’s performing at a good level or an elite one—exponential gains to your business do not happen overnight. However, looking at your print & document solutions is the perfect area to improve the business workflow incrementally over an extended timeline. Unfortunately, the financial & operational impact of a document is often overlooked in most companies. Understanding the real cost of a document can give you ways to make those small changes consistently to yield significant results. We love to provide a free one-on-one consultation if you’re looking for ways to improve your business’s performance, even at a consistent marginal level.

 

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