As a listener to the Entrepreneur on Fire podcast, John Lee Dumas asks every guest for the Best Business Book they have read. The Compound Effect by Darren Hardy has come up many times. And John Lee Dumas talks about it many times. Darren Hardy is the publisher of Success Magazine. Darren describes the Compound Effect as the principle of reaping huge rewards from series of small, smart choices. Similar to compound interest from the financial industry.
The Magic Penny
Darren describes a question to us about compounding. If we were given a choice between $3Million dollars in cash right now, or a penny that doubles in value every day for 31 days, which would you choose? The interesting thing he points out here as that it isn’t until day twenty-nine that the second choice pulls ahead. In the end the second choice ends up being more than three times as much.
In the second chapter Darren describes how our lives are made of the choices we have made up to this point in our life. If we make a series of bad choices we then have to make hard choices to get back to where we started. The big challenge with a lot of our choices are the fact that we don’t think about our choices. We automatically do certain things. Perhaps you might eat candy off a co-workers desk as everyone else does. We need to think about our choices before they become habits.
We are truly creatures of habit, some of those habits are good and some of them are not. If you exercise every morning that is definitely a positive habit. Darren explains how we can’t allow our habits to run our lives. He reminds us to beware of the many instant gratification traps in our world. He uses a flight from Los Angeles to New York as an example, if we are off by 1 degree we could end up in Albany, New York over 150 miles off course. We need look at any of our poor habits and understand they are taking us off course.
It is pretty well laid out here in this book how our choices have a big impact on our lives. We must understand how our seemingly small decisions change the trajectory of our lives. By replacing our bad habits with good ones we will see small changes that over time will change our life.