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Capture Small Improvements (or The 1% Phenomenon)

One of the things I’m constantly harping on as a manager is Capturing Small Improvements. It’s a handy slogan for making compound math work for you over time.

The magic of compound interest is real. If you’ve ever been to a 401k presentation, you’ve likely heard how small growth can lead to outsized returns over time.

As a numerical example, the difference between capturing a 1% improvement a day and remaining static is significant. Mathematically speaking, 1.01365 is about 37.7.

If a 40x rate of improvement isn’t sufficient, then contrast a small improvement with a small regression. The difference is stunning: 0.99365 is 0.0188. That’s a tremendously impactful three orders of magnitude.

A daily 1% improvement over the course of a year ends up two thousand times higher than a daily 1% regression.

If you are talking about spending and saving, you can measure this directly via your bank account. In terms of improving people or knowledge or process efficiency in some way, you want to make sure you build feedback loops and improvement capture mechanisms in those loops in order to achieve atypically large, positive outcomes. (Improving feeback loop cycle time by reducing friction is also critically important!)

When you are talking about certain processes, like hiring & recruiting, daily 1% isn’t practical or achievable. Yet if you could improve just 2% a week you find that you are hiring three times more efficiently. (1.0252 = 2.8)

Another example is Capturing Small Improvements in developer (or whoever) productivity via automation. Saving 10 mins a day for your developers adds up to a roughly a work week over the span of a year. If you have 50 or so developers, that 10 minutes is potentially entire year of productivity. Then imagine that there is four two six other low-hanging-fruit-type opportunities to invest in a tool, automate away or cancel a meeting or streamline some processs. Maybe there are a handful or so not-so-low-hanging or not-so-obvious opportunities as well.

This is how you drive towards and eventually achieve exponential increases in velocity. The broad lesson here is applicable for yourself as an indiviual, your team, or your company.

So yeah, the 1% phenomenon is real. Capture Small Improvements.


This post is adapted from one of my twitter threads. You should follow me there to hear stuff about Engineering, Engineering Managagement and Hiring & Recruiting Engineers.

I do want to properly credit to Paul Buchheit, who’s mathematical allegory (1.01365 vs 0.99365) I’ve reused here. I don’t know if he came up with it, but I originally heard it third-hand from him.



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