Marginal Gains

We are intrigued by the ongoing Team Sky/British Cycling controversy and the process of “marginal gains” as an explanation of substantial out performance. The concept of process improvement and marginal gain is, however, not unique to cycling or sport – think biological evolution – albeit, marginal gains over a very, very long-term measure and not simply a quick fix solution.

In many disdreamstime_s_69969957ciplines the theory of marginal gains examines incremental improvements and the aggregation of these improvements over time. It certainly works in business and MMPI is a classic example. The power of marginal gains helps businesses grow by incremental increases in sales; tight control on expenditure and slight boosts in productivity. Financial accountants have the concept down to a fine art with little tweaks to financial budgets producing favourable results year after year. MMPI has coined the phrase “nudge budge” to define the activity of its own financial controller in making minor (yet frequent) adjustments to budgets!

By another name the analysis of strengths, weaknesses, opportunities and threats (SWOT) is also concerned with marginal gains. Successful businesses are those that explore the SWOT in detail promising to tackle each item for improvements. It is this laborious examination of business activities over time that results in what outsiders see as marked progression; but what business insiders view as steady-as-she-goes.

Lots of resources are thrown at research and development (R&D) and, yet, it might take years to bring a product to market. R&D is a study in methodologies – step-by-step processing often leading to dead ends. It is the process of striving for marginal gains that leads to business innovation and new inventions. Admittedly, sometimes there are “light-bulb” moments but most of the time innovation comes about through incremental steps that do not appear material when examined individually. Headline writers always gravitate towards attention-grabbing stories and, therefore, promote the success of new inventions. Whereas, time after time, most sustained business success comes from long-standing companies looking for ways to improve existing products and services!

Quite rightly the innovators and inventors who take risks with new ideas and unconventional thinking are to be encouraged; but solely relying on them to provide business successes is not a good strategy. The much-maligned discipline of marketing can teach us more about the importance of incremental steps. In marketing, great attention is paid to consistency of approach – repeated messaging that resonates with consumers. Whether it is colouring, text size, tone of delivery, logo design or whatever – consistency is all important. Once the branding is established the absolute priority is to retain its consistency. Changes are considered (reluctantly) and, if approved, are implemented in tiny incremental steps.

When MMPI established its Escalator Series of investment products in 2010 the Escalator brand was unknown. Through the years MMPI slowly and carefully modified the model and, today, it is the most recognised product of its kind in the Irish market. Marginal gains, by their very nature, take time. Those who seek to speed up the process may come to regret it.

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