Misunderstanding Success

Most people learn to be mediocre because they get caught on wrong side of compounding.

Let me unbundle this statement for you in 3 parts.

What is compounding?

Compounding is a non linear relation between input and output. It means that for large inputs small outcomes would be noticed while for little inputs, giant outcomes can be achieved.

With a Compounding Effect then, small increments, sustained over an extended period of time, cumulate to create an exponential result ( as in graph).

What is learned mediocrity?

The mental model of effort and reward that most people carry in their head is linear which says more you work, larger reward you get. Actually that model of effort-return does not match reality which is based on a compounding relation. Rewards are not related to amount of effort but length of effort. So it is not about work that you do today but about cumulative work that you will do over next 15 years.

Now the initial outcomes with any exponential relationship are very small. So when people work without understanding the real guiding structure (Compounding effect) when small results come initially ( 10K, 20K, 80K of income or any other) they are lulled into a wrong belief that with their linear graph model, their effort is worth that much only. They adapt to these small results, expect them to happen every time, give up trying harder and enter into a state of learned mediocrity.

Which is wrong side?

All celebrities and achievers are on the right side of compounding.
They somehow were motivated to sustain their efforts over long term, irrespective of initial small returns. As a consequence their outcome became exponentially large after a tipping point. This happened because:
1) By luck they got some initial large outcome thus were motivated to sustain.
2) Were passionate enough to not let small rewards affect them initially.

So success results from perseverance and letting the compounding effect decide your returns.

However as Warren Buffet, patron saint of all compounders would say “Big returns are simple but never easy”.

Leave a comment