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The 2 Types of Growth: Which One of These Growth Curves Are You Following?

The 2 Types of Growth: Which One of These Growth Curves Are You Following?

We often assume that life works in a linear fashion.

People will say, “You get out of life what you put into it.” The basic idea is that for each unit of effort you put into a given task, you get some unit of return. For example, if you make $25 per hour and you work for two hours, then you’ll make $50. If you work for 4 hours, you’ll make $100. Put more in. Get more out.

There is just one problem: most of life doesn’t actually follow this linear pattern. Don’t get me wrong, hard work is essential. However, if you expect your life to follow a linear trajectory, then you may find yourself feeling frustrated and confused.

Instead, most areas of life follow two different types of growth. This is something I learned from my friend Scott Young. Let’s talk about these two patterns now.

Which one of these growth curves are you following?

Type 1: Logarithmic Growth

The first type of growth is logarithmic.

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Logarithmic growth increases quickly in the beginning, but the gains decrease and become more difficult as time goes on. Generally speaking, logarithmic growth looks something like this:

logarithmic-growth-curve

    There are many examples of logarithmic growth in daily life.

    • Fitness and Strength Training: The “beginner gains” come quickly at first, but then it becomes more difficult to get stronger each week.
    • Literacy: Children and young students make massive leaps as they learn how to read. Meanwhile, college students and well-educated adults have to put in a focused effort to expand their vocabulary beyond commonly used words.
    • Language proficiency: Learning how to speak even a rudimentary level of a new language opens up a whole new world. However, there are only meager gains left for fluent speakers to discover.
    • Weight Loss: It may be relatively easy to shed five pounds within a week or two, but then the progress slows. Each successive pound of fat loss is more stubborn than the last.
    • Musical skill: Improvements come quickly for a novice guitar player. Improvements come very slowly for a concert pianist.

    There are thousands of other examples. In fact, most skills (writing, programming skills, juggling, running, etc.) fall into the logarithmic growth category.

    Type 2: Exponential Growth

    The second type of growth is exponential.

    Exponential growth increases slowly in the beginning, but the gains increase rapidly and become easier as time goes on. Generally speaking, exponential growth looks something like this:

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    exponential-growth-curve

      You will also find exponential growth opportunities in daily life (although I think they are less prevalent).

      • Investments and wealth: Thanks to the power of compound interest, your retirement savings start out as a small treasure in the early years, but balloon in size during the final decade or two of savings.
      • Email subscribers and website traffic: New websites receive just a trickle of traffic here and there, but as the weeks and months roll on those trickles can build into a raging river of visitors and subscribers.
      • Entrepreneurship and business growth: The assets that you build for your business stack on top of one another and revenue compounds throughout the life of a successful business.
      • Social media followers: When you only have 100 followers, getting another 100 followers may take six months. Once you have 1,000 followers, however, getting the next 100 may only take one month. Once you have 100,000 followers, getting another 100 probably takes one day. Your growth rate snowballs.

      The Challenges of Each Growth Curve

      Neither type of growth is good nor bad. These growth patterns are simply the way certain things work. However, it is important to understand the growth pattern of your task so that you can set your expectations appropriately.

      Don’t expect exponential returns when you’re playing a logarithmic game. Similarly, don’t expect quick wins when you’re building something that has an exponential curve.

      When dealing with logarithmic growth, the challenge is to avoid feeling discouraged as your improvements decrease. Improvement will come easily in the beginning and you will become accustomed to enjoying small wins each day. Soon, however, those small wins will become smaller.

      Logarithmic growth requires you to have the mental toughness to play a game that will, by definition, become more challenging to win as time goes on. You will feel like you have plateaued. You will question yourself and your abilities. If you want to succeed with logarithmic growth, you have to learn how to fall in love with the boredom of doing the work if you want to maintain consistency as your improvements dwindle.

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      When dealing with exponential growth, the challenge is to continue working through the early period when you have little or nothing to show for your effort. Exponential growth requires you to be remarkably patient and diligent (often for years or decades) before enjoying a significant payoff. There may be 10 years of silence before you hear the sound of success.

      Equally important, you need to give your best effort even when you’re getting average results. Exponential gains only result from sustained effort in the early years.

      How to Accelerate Your Progress

      Once you understand the type of growth curve you are dealing with, there are two ways that you can accelerate your progress on a given curve.

      Option 1:

      The first option is to break the task down into smaller tasks that can be mastered more quickly. In other words, by getting very specific with the task you are working on, you can increase the rate of growth (i.e. smaller tasks have steeper growth curves because they are easier to master). This strategy works especially well for accelerating your progress on tasks that experience logarithmic growth.

      smaller-growth-curves

        Dave Brailsford’s aggregation of marginal gains is a great example of this. By improving every small task related to cycling by just 1 percent, Brailsford was able to guide his British cyclists to massive success. Mastering these small tasks led to incredibly fast growth.

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        Option 2:

        The second option is to play a different version of the game. More specifically, play the version of the game that has the highest growth curve. This strategy works especially well for tasks that experience exponential growth.

        Take entrepreneurship, for example. You could build a candle shop. All of the statements about exponential growth hold true for a candle shop. Given enough time and a good product, you could eventually produce candles at scale, develop new product lines, and otherwise build assets that lead to exponential growth years later.

        However, if you played a different version of the entrepreneurship game and started a software company, then you may reach the exponential growth threshold much faster. There are a variety of reasons for this: reduced overhead and manufacturing costs, faster industry growth overall, higher margins, and so on. The end result is that both companies have exponential growth curves, but one has a much steeper slope.

        highest-growth-curve

          The Bottom Line

          Most things in life have some type of growth curve and very rarely is that curve a straight line.

          Understand the type of curve you are dealing with so that you can set your expectations appropriately. And if you aren’t happy with the type of growth curve you’re on, then start playing a game with a different curve. (1)

          This article was originally published on JamesClear.com.

          FOOTNOTES
          1. This article contains many of my own insights, but I want to make sure that all the credit for the two types of growth concept goes to my friend Scott Young. I am simply building upon his work.

          Featured photo credit: Stefan via flickr.com

          More by this author

          James Clear

          James Clear is the author of Atomic Habits. He shares self-improvement tips based on proven scientific research.

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          Last Updated on January 6, 2021

          14 Ideas on How to Measure Productivity to Make Progress

          14 Ideas on How to Measure Productivity to Make Progress

          Everyone has heard the term productivity, and people talk about it in terms of how high it is and how to improve it. But fewer know how to measure productivity, or even what exactly we are talking about when using the term “productivity.”

          In its simplest form, the productivity formula looks like this: Output ÷ Input = Productivity.

          For example, you have two salespeople each making 10 calls to customers per week. The first one averages 2 sales per week and the second one averages 3 sales per week. By plugging in the numbers we get the following productivity levels for each sales person.

          For salesperson one, the output is 2 sales and the input is 10 sales: 2 ÷ 10 = .2 or 20% productivity. For salesperson two, the output is 3 sales and the input is 10 sales: 3 ÷ 10 = .3 or 30% productivity.

          Knowing how to measure and interpret productivity is an invaluable asset for any manager or business owner in today’s world. As an example, in the above scenario, salesperson #1 is clearly not doing as well as salesperson #2.

          Knowing this information we can now better determine what course of action to take with salesperson #1.

          Some possible outcomes might be to require more in-house training for that salesperson, or to have them accompany the more productive salesperson to learn a better technique. It might be that salesperson #1 just isn’t suited for sales and would do a better job in a different position.

          How to Measure Productivity With Management Techniques

          Knowing how to measure productivity allows you to fine tune your business by minimizing costs and maximizing profits:

          1. Identify Long and Short-Term Goals

          Having a good understanding of what you (or your company’s) goals are is key to measuring productivity.

          For example, if your company’s goal is to maximize market share, you’ll want to measure your team’s productivity by their ability to acquire new customers, not necessarily on actual sales made.

          2. Break Down Goals Into Smaller Weekly Objectives

          Your long-term goal might be to get 1,000 new customers in a year. That’s going to be 20 new customers per week. If you have 5 people on your team, then each one needs to bring in 4 new customers per week.

          Now that you’ve broken it down, you can track each person’s productivity week-by-week just by plugging in the numbers:

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          Productivity = number of new customers ÷ number of sales calls made

          3. Create a System

          Have you ever noticed that whenever you walk into a McDonald’s, the French fry machine is always to your left? 

          This is because McDonald’s created a system. They have determined that the most efficient way to set up a kitchen is to always have the French fry machine on the left when you walk in.

          You can do the same thing and just adapt it to your business.

          Let’s say that you know that your most productive salespeople are making the most sales between the hours of 3 and 7 pm. If the other salespeople are working from 9 am to 4 pm, you can potentially increase productivity through something as simple as adjusting the workday.

          Knowing how to measure productivity allows you to set up, monitor, and fine tune systems to maximize output.

          4. Evaluate, Evaluate, Evaluate!

          We’ve already touched on using these productivity numbers to evaluate and monitor your employees, but don’t forget to evaluate yourself using these same measurements.

          If you have set up a system to track and measure employees’ performance, but you’re still not meeting goals, it may be time to look at your management style. After all, your management is a big part of the input side of our equation.

          Are you more of a carrot or a stick type of manager? Maybe you can try being more of the opposite type to see if that changes productivity. Are you managing your employees as a group? Perhaps taking a more one-on-one approach would be a better way to utilize each individual’s strengths and weaknesses.

          Just remember that you and your management style contribute directly to your employees’ productivity.

          5. Use a Ratings Scale

          Having clear and concise objectives for individual employees is a crucial part of any attempt to increase workplace productivity. Once you have set the goals or objectives, it’s important that your employees are given regular feedback regarding their progress.

          Using a ratings scale is a good way to provide a standardized visual representation of progress. Using a scale of 1-5 or 1-10 is a good way to give clear and concise feedback on an individual basis.

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          It’s also a good way to track long-term progress and growth in areas that need improvement.

          6. Hire “Mystery Shoppers”

          This is especially helpful in retail operations where customer service is critical. A mystery shopper can give feedback based on what a typical customer is likely to experience.

          You can hire your own shopper, or there are firms that will provide them for you. No matter which route you choose, it’s important that the mystery shoppers have a standardized checklist for their evaluation.

          You can request evaluations for your employees friendliness, how long it took to greet the shopper, employees’ knowledge of the products or services, and just about anything else that’s important to a retail operation.

          7. Offer Feedback Forms

          Using a feedback form is a great way to get direct input from existing customers. There are just a couple of things to keep in mind when using feedback forms.

          First, keep the form short, 2-3 questions max with a space for any additional comments. Asking people to fill out a long form with lots of questions will significantly reduce the amount of information you receive.

          Secondly, be aware that customers are much more likely to submit feedback forms when they are unhappy or have a complaint than when they are satisfied.

          You can offset this tendency by asking everyone to take the survey at the end of their interaction. This will increase compliance and give you a broader range of customer experiences, which will help as you’re learning how to measure productivity.

          8. Track Cost Effectiveness

          This is a great metric to have, especially if your employees have some discretion over their budgets. You can track how much each person spends and how they spend it against their productivity.

          Again, this one is easy to plug into the equation: Productivity = amount of money brought in ÷ amount of money spent.

          Having this information is very useful in forecasting expenses and estimating budgets.

          9. Use Self-Evaluations

          Asking your staff to do self evaluations can be a win-win for everyone. Studies have shown that when employees feel that they are involved and their input is taken seriously, morale improves. And as we all know, high employee morale translates into higher productivity.

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          Using self-evaluations is also a good way to make sure that the employees and employers goals are in alignment.

          10. Monitor Time Management

          This is the number one killer of productivity in the workplace. Time spent browsing the internet, playing games, checking email, and making personal calls all contribute to lower productivity[1].

          Time Management Tips to Improve Productivity

            The trick is to limit these activities without becoming overbearing and affecting morale. Studies have shown that most people will adhere to rules that they feel are fair and applied to everyone equally.

            While ideally, we may think that none of these activities should be done on company time, employees will almost certainly have a different opinion. From a productivity standpoint, it is best to have policies and rules that are seen as fair to both sides as you’re learning how to measure productivity.

            11. Analyze New Customer Acquisition

            We’ve all heard the phrase that “It’s more expensive to get a new customer than it is to keep an existing one.” And while that is very true, in order for your business to keep growing, you will need to continually add new customers.

            Knowing how to measure productivity via new customer acquisition will make sure that your marketing dollars are being spent in the most efficient way possible. This is another metric that’s easy to plug into the formula: Productivity = number of new customers ÷ amount of money spent to acquire those customers.

            For example, if you run any kind of advertising campaign, you can compare results and base your future spending accordingly.

            Let’s say that your total advertising budget is $3,000. You put $2,000 into television ads, $700 into radio ads, and $300 into print ads. When you track the results, you find that your television ad produced 50 new customers, your radio ad produced 15 new customers, and your print ad produced 9 new customers.

            Let’s plug those numbers into our equation. Television produced 50 new customers at a cost of $2,000 (50 ÷ 2000 = .025, or a productivity rate of 2.5%). The radio ads produced 15 new customers and cost $700 (15 ÷ 700 = .022, or a 2.2% productivity rate). Print ads brought in 9 new customers and cost $300 (9 ÷ 300 = .03, or a 3% return on productivity).

            From this analysis, it is clear that you would be getting the biggest bang for your advertising dollar using print ads.

            12. Utilize Peer Feedback

            This is especially useful when people who work in teams or groups. While self-assessments can be very useful, the average person is notoriously bad at assessing their own abilities.

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            Just ask a room full of people how many consider themselves to be an above average driver and you’ll see 70% of the hands go up[2]! Now we clearly know that in reality about 25% of drivers are below average, 25% are above average, and 50% are average.

            Are all these people lying? No, they just don’t have an accurate assessment of their own abilities.

            It’s the same in the workplace. Using peer feedback will often provide a more accurate assessment of a person’s ability than a self-assessment would.

            13. Encourage Innovation and Don’t Penalize Failure

            When it comes to productivity, encouraging employee input and adopting their ideas can be a great way to boost productivity. Just make sure that any changes you adopt translate into higher productivity.

            Let’s say that someone comes to you requesting an entertainment budget so that they can take potential customers golfing or out to dinner. By utilizing simple productivity metrics, you can easily produce a cost benefit analysis and either expand the program to the rest of the sales team, or terminate it completely.

            Either way, you have gained valuable knowledge and boosted morale by including employees in the decision-making process.

            14. Use an External Evaluator

            Using an external evaluator is the pinnacle of objective evaluations. Firms that provide professional evaluations use highly trained personnel that even specialize in specific industries.

            They will design a complete analysis of your business’ productivity level. In their final report, they will offer suggestions and recommendations on how to improve productivity.

            While the benefits of a professional evaluation are many, their costs make them prohibitive for most businesses.

            Final Thoughts

            These are just a few of the things you can do when learning how to measure productivity. Some may work for your particular situation, and some may not.

            The most important thing to remember when deciding how to track productivity is to choose a method consistent with your goals. Once you’ve decided on that, it’s just a matter of continuously monitoring your progress, making minor adjustments, and analyzing the results of those adjustments.

            The business world is changing fast, and having the right tools to track and monitor your productivity can give you the edge over your competition.

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            Featured photo credit: William Iven via unsplash.com

            Reference

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