The Compound Effect. Book summary
Jumpstart Your Income, Your Life, Your Success
Darren Hardy
Hachette Go; Anniversary edition (15 Sept. 2020)
About the author
Darren Hardy is a highly sought after keynote speaker, bestselling author and the publisher of Success Magazine. Previously, he was the executive producer of two television networks, The People’s Network, and The Success Training Network.
Darren also mentors many of today’s high-performing CEOs, advises many large corporations and sits on the board of several companies and non-profit organisations.
About the book
In this book, Darren Hardy distilled the fundamental principles that have guided the most phenomenal achievements in business, relationships, and beyond. It is a concise and practical guide on mastering small choices that determine big outcomes dictating the course of our lives—a great book for everyone who wants to improve and achieve success in any chosen area of life.
Key insights
“This book is about success and what it really takes to earn it. It’s time someone told it to you straight. You’ve been bamboozled for too long. There is no magic bullet, secret formula, or quick fix. You don’t make $200,000 a year spending two hours a day on the Internet, lose 30 pounds in a week, rub 20 years off your face with a cream, fix your love life with a pill, or find lasting success with any other scheme that is too good to be true. It would be great if you could buy your success, fame, self-esteem, good relationships, and health and well-being in a nicely clam-shelled package at the local Walmart. But that’s not how it works. […]
What this book is about, with all the unnecessary noise, fat, and fluff removed, is what really matters. What really works? What half-dozen basics, when focused on and mastered, constitute the operating system that can take you to any goal you desire and help you live the life you were meant to live? This book contains those half-dozen fundamentals; they comprise the operating system called the Compound Effect.”
“Small, Smart Choices + Consistency + Time = RADICAL DIFFERENCE”
The key message is that small smart changes applied consistently over a long period of time lead to massive results. That’s what The Compound Effect is all about.
This book is a quick-reading and definitely inspires you to review your behaviours and habits. It also comes with free tools.
All you need to do is start making these tiny changes in your life and see the magic of the compound effect. The Compound effect principle is universal for all areas of life.
The power of the compound effect
“The Compound Effect is the principle of reaping huge rewards from a series of small, smart choices. What’s most interesting about this process to me is that, even though the results are massive, the steps, in the moment, don’t feel significant. Whether you’re using this strategy for improving your health, relationships, finances, or anything else for that matter, the changes are so subtle, they’re almost imperceptible. These small changes offer little or no immediate result, no big win, no obvious I-told-you-so payoff. So why bother?
Most people get tripped up by the simplicity of the Compound Effect. … What they don’t realize is that these small, seemingly insignificant steps completed consistently over time will create a radical difference.”
That is brilliant. If we focus on small, smart choices in life, we can improve any area of our life.
Our culture is all about getting something right here and right now. Immediate gratification. Moreover, some say it’s the way we are wired by nature. But successful people think and act long term – strategically. It’s all about small habits, which make a difference in the long run. Delayed gratification.
To demonstrate the magic of the compound effect, Darren uses a simple example:
You have two choices. You can get $3 million in cash right now or, you can get a penny, which will double itself every day for 31 days. Which would you choose? Let’s assume you go for immediate cash and your friend chooses a doubling penny.
If you take that $3 million today, you look pretty cool on day 1. And even on Day 5 when your friend gets just 16 cents. And on Day 10, you still look awesome when he gets $5.12. On Day 20, your friend is only up to $5,243. But that’s when the magic of the compound effect kicks in. Fast forward to Day 31. Your friend gets $10,737,418.24 to your $3 million. Who looks cool now?
The “Magic pennies” principle works the same in all the areas of your life.
Darren writes:
“The difference between people who employ the Compound Effect for their benefit compared to their peers who allow the same effect to work against them is almost inconceivable. It looks miraculous! Like magic or quantum leaps. After thirty-one months (or thirty-one years), the person who uses the positive nature of the Compound Effect appears to be an “overnight success.” In reality, his or her profound success was the result of small, smart choices, completed consistently over time.”
When you think of it from the parenting perspective, the first few years of your child may look like a real struggle for you. But if you make small smart choices every day (e.g. healthy eating habits, self-regulation techniques, nurturing a growth mindset, etc.), you will reap the compound effect benefits when they grow older.
Unfortunately, small bad choices also compound. You’ll not see an immediate effect of one piece of cake on your weight. But if you keep eating cake consistently, you might be surprised by your reflection in a mirror in several months.
So the bottom line is that the small choices we make every day have a profound impact on the results we experience in the future. So it’s better to be aware of these choices and make them consciously.
“Choices are at the root of every one of your results. Each choice starts a behaviour that over time becomes a habit.”
Take a moment to think about what you want in life. Which small, smart choices you can make every day that could compound into positive changes for you in the future? Make a list and rock it 🙂
Choices – stop living on autopilot
“In essence, you make your choices, and then your choices make you.”
Our life consists of choices – bad or good, conscious or unconscious. And our success depends on which choices we make every day. That’s why we need to get better at making them. How? The answer is quite simple: stop living on autopilot and start making conscious decisions.
You are RESPONSIBLE for what you do, what you don’t do and for what is done to you. Period.
Therefore, choose to be responsible for your relationships. Choose to be grateful every day. Choose to be responsible for your failures and the lessons they’ll teach you. Choose to be responsible for your luck.
Hardy actually reveals the Luck Formula:
“The (Complete) Formula for Getting Lucky: Preparation (personal growth) + Attitude (belief/mindset) + Opportunity (a good thing coming your way) + Action (doing something about it) = Luck”
And the key point is that we all can choose to influence or neglect each part of that formula. Luck is in our hands.
That reminds me of Nathaniel Branden – in “Six Pillars of Self-Esteem” (check out the notes), he writes:
“To feel competent to live and worthy of happiness, I need to experience a sense of control over my existence. This requires that I be willing to take responsibility for my actions and the attainment of my goals. This means that I take responsibility for my life and well-being.”
That’s The Practice of Self Responsibility – the Third Pillar of Self-Esteem. And it’s something that we need to instil into our children’s minds right from an early age – we are RESPONSIBLE for our choices and behaviour. So powerful.
Your secret weapon – your scorecard
“All winners are trackers. Right now I want you to track your life with the same intention: to bring your goals within sight.”
If we want to change something in our life, firstly we need to become aware of it. That’s the number one step. Best way to do it? Start tracking!
What is the area of your life where you want to be successful? Think about it for a moment. Want to lose some weight? Start tracking everything you eat. Want to be more productive? Start tracking how you are spending your time.
“At any given moment, I want you to know exactly how well you’re doing. I’m asking you to track yourself as if you’re a valuable commodity. Because you are. I’m asking you to start tracking. Doing so will revolutionise your life, and ultimately, your lifestyle.”
Start tracking one habit for one week. And see what happens ☺.
Willpower vs Why-power
“Assuming willpower is what you need to change your habits is akin to trying to keep a hungry grizzly bear out of your picnic basket by covering it with a napkin. To fight the bear of your bad habits, you need something stronger. […]
Forget about willpower. It’s time for why-power. Your choices are only meaningful when you connect them to your desires and dreams. The wisest and most motivating choices are the ones aligned with that which you identify as your purpose, your core self, and your highest values. You’ve got to want something, and know why you want it, or you’ll end up giving up too easily.”
You can make significant improvements in your life only when you know your WHY. In “Grit” (check out the notes), Angela Duckworth highlights that all gritty people have a purpose. Basically, they know their WHY. And that’s what helps them achieve success.
Hardy also adds:
“If your why-power—your desire—isn’t great enough, if the fortitude of your commitment isn’t powerful enough, you’ll end up like every other person who makes a New Year’s resolution and gives up too quickly and reverts to sleepwalking through poor choices.”
Take a moment to reflect on this. What is your WHY? Why do you want what you want? E.g. if you want to be a better parent/spouse, why do you want it?
Behave yourself
“Alright, let’s map out your process for achieving the goals you’ve decided upon. This is the doing process—or, in some cases, the STOP-doing process.
What stands between you and your goal is your behavior. Do you need to stop doing anything so the Compound Effect isn’t taking you into a downward spiral? Similarly, what do you need to start doing to change your trajectory so that it’s headed in the most beneficial direction? In other words, what habits and behaviors do you need to subtract from and add to your life?
Your life comes down to this formula:
YOU —> CHOICE (decision) + BEHAVIOR (action) + HABIT (repeated action) + COMPOUNDED (time) = GOALS
That’s why it’s imperative to figure out which behaviors are blocking the path that leads to your goal, and which behaviors help you accomplish your goal.”
So simple and so powerful. To improve something in your life, your actions (behaviours & habits) should match your words (choices). Basically, integrity should become your best friend.
If you say your family is one of your top priorities, but you work 24/7 and don’t spend time with them, then they are not really. If you say you want to be healthy, but “you’ve got Doritos dust on your fingers”, you should clearly work on your integrity.
Now. Take a moment and reflect on what you do that gets in the way of you achieving success in your life? What behaviours will help you achieve success?
Then work on eliminating your bad habits and behaviors and installing good ones. Easy-peasy 🙂
Game changers – how to change your habits
“Your habits are learned; therefore, they can be unlearned. If you want to sail your life in a new direction, you have to first pick up the anchors of bad habits that have been weighing you down. The key is to make your why- power so strong that it overwhelms your urges for instant gratification. And for that, you need a new game plan.”
So here is the plan to eliminate bad habits (check out the Bad Habit Killer worksheet as well):
- Identify the trigger. Find the cue that triggers your bad habit. Think of what, who, when or where.
- Clean house. Get rid of the triggers that kick-off your bad habit
- Swap it. Figure out which bad habits you can replace with better ones
- Ease in. Take small steps to change the habit (like really small – Atomic Habits)
- Or jump in. Go cold turkey and change as many bad habits as possible at once.
“You will never change your life until you change something you do daily. The secret of your success is found in your daily routine.”
– John C. Maxwell
For installing good habits, you need a different skill set. The main thing is staying aware:
- Set yourself up to succeed. That’s what James Clear called “The 1st Law of Habit Loop” – Make it Obvious (check out our Atomic Habits notes).
- Think addition, not subtraction. Instead of focusing on what you’ll be loosing, focus on what your new habit will add to your life
- Go for a PDA – Public Display Accountability. “Get Big Brother to watch you”. Create a peer pressure that would help you be committed to your new behaviours.
- Find a success buddy. Set up regular catch ups with a coach or a person who has similar goals. And keep each other accountable.
- Competition and camaraderie. Organise friendly competition with your friends, family, colleagues.
- Celebrate. Celebrate your wins. Make your habit satisfying ☺
Power of routine
“Of all the high-achievers and business owners I’ve worked with, I’ve seen that, along with good habits, each has developed routines for accomplishing necessary daily disciplines. It’s the only way any of us can predictably regulate our behavior. There simply isn’t any way around it. A daily routine built on good habits and disciplines separates the most successful among us from everyone else. A routine is exceptionally powerful.”
Love it. Identify your goals and new habits you want to install, and then create daily rituals. A routine.
Darren also shares great wisdom: sometimes, it’s really hard to control your day as it unfolds. But you can definitely control your mornings and bookends. So start and finish strong. And be consistent.
And that’s so true for both parents and children – routine is super important. When you think of it, we spend most of our time with kids in the morning and in the afternoon. So we can always start the day with good habits (e.g. workout with kids, setting goals for the day, healthy breakfast). And we can end the day strong (e.g. bedtime routine, family dinner, playtime)
Question for you – which one good parenting habit you can incorporate into your daily routine today?
Action steps for you:
- Start tracking at least one behaviour in one area of your life you’d like to change and improve (e.g., money, nutrition, fitness, recognising others, parenting… any area).
- Identify your core motivation. Think about what gets you fired up and keeps you fired up to achieve big results. You can use the Core Values Assessment for this.
- Identify your top 3 habits that support your parenting goals. Think of your top 3 bad habits that take you off course from your parenting goals. Which 3 new habits you would like to develop to be the best parent?
Quotes from the book:
