Not every success is the result of some major, overnight, radical change. In fact, nearly every habit - good or bad - is the result of many small decisions made over time. It's "the power of one" or acute focus to make massive shifts through aggregate steps.
While we tend to follow that mentality in our personal lives, it's common to overlook the impact of tiny steps when shifting gears in business. When compounded over time, however, they can result in major improvements in a business's bottom line.
Going through the process of identifying what one percent changes will yield major shifts, also enables business leaders to identify what's important versus what's urgent to avoid getting mired down by the endless small fires that accrue on any given day.
In what areas can the power of one (percent) make marked improvements in the vitality of a business?
Pull the right levers one degree to increase profitability
When it comes to your business's bottom line, at first blush, one percent may not seem significant enough to move the needle. But let's break it down with some simple math.
Let's say you sell 1,000 units each month at $100 per unit for a total of $100,000. Factoring in the cost of those sales -$60 per unit - we're left with a gross profit of $40,000. What if each of these variables improved one percent?
If units sold per month and price each went up one percent the total becomes $102,010, and if cost per sale decreased one percent the result is a gross profit of $42,016. Compound this over the course of a year, and those one percent improvements equate to a $24,192 boost in gross profits.
What if the power of one was applied to other variables in the profitability equation, such as fixed labor, materials or marketing? How much could you improve the net profitability of your business? Often it's those ever-so-slight tweaks that yield the greatest returns.
Tightening processes and reducing waste
There are likely numerous processes in your business that could stand to be tightened up. Some may be more obvious than others, like reducing the number or duration of meetings, switching to an internal communication platform versus emailing, going paperless, and the list goes on.
Take UPS for example. By simply eliminating one thing, the shipping company made massive improvements in reducing waste, saving cost on fuel and even increasing their efficiency in delivering packages. What was that one thing?
Left turns (and right turns for countries that drive on the left). They designed their vehicle routing software to get rid of as many left-hand turns as possible.
As a result, they've reduced the amount of fuel used by 10 million gallons, emit 22,000 tons less carbon dioxide, and deliver 350,000 more packages every year. They've also been able to eliminate 1,100 trucks from the road and reduce total distance traveled by 28.5 million miles - all from eliminating one thing.
Similarly, when Nike developed its Flyknit technology, the company figured out it could prune ounces from the upper shoe, as the technology enabled designers to micro engineer every element. The result of Flyknit was a 60 percent reduction in waste, which equated to 3.5 million pounds less waste in four years.
What if you improved the quality of your product just one percent or switched to a supplier with a higher track record of quality? Could you cut down on returns, customer service calls, or even quality control checks?
Another common area of waste in a company is lead times. This is the amount of time it takes to complete a process or series of tasks.
In fact, lead times are one of the biggest areas of waste in organizations, but they can most certainly be controlled through micro improvements. This could mean reducing, by one percent, the amount of time it takes to deliver product, collect on an invoice, or launch a marketing campaign.
Tackle turnover and downtime
The one percent rule can also be applied to your team. How would it impact turnover and overall morale if you increased salaries one percent, dedicated one percent of your office hours to one-on-one time with employees, or boosted your philanthropic efforts by pledging one percent of your company's equity, time or product?
Many organizations have seen big improvements in productivity and reduced employee downtime by simplifying the number of tools they use internally. Rather than having multiple tools for file sharing and storage, or for communication, or for project and task management, what would it look like to streamline to one?
There's something psychological that occurs in the brain when we're confronted with too many choices. While making the decision on where to create and share that document may not yield the amount of procrastination as say choosing from 100 possible logo designs, it does take longer to choose. How much time could be saved over time if the endless choices were eliminated?
How you decide what your one percent focus should be depends on your business goals, objectives and core values. Just keep in mind, success doesn't always have to be big, momentous wins. Often it's the sum of marginal gains made along the way that deliver the biggest impact.
Just be careful you don't move in the opposite direction. One percent declines over time can crush even the most successful businesses. The compound effect of never getting back on track is what makes the major difference.