Chapter 10: Multiplying Exponential Improvements

Chapter 10

Multiplying Exponential Improvements

 

When all think alike, no one thinks very much.

— Walter Lippman

20 Squared Equals 400

Dogmatism is puppyism

come to its full growth.

— Douglas Jerrold

In Chapter 8, I introduced the idea of 2,000 percent squared benefits. It’s time to develop that point. The lesson is both simple and profound. If you expand those served by 20 times and reduce costs of delivering and employing the benefits by 96% at the same time, you’ll provide 380 times more benefits than if you simply did one improvement or the other.

Why? Either solution will provide 20 times more benefits. But combining the two solutions gives you 20 multiplied by 20 (20 squared) times more benefits, or 400 times more benefits than you had when you started. Subtract the 20 times more benefits you would have gained with a single solution, and you have 380 times more benefits by adding the right second solution.

What does that mean? You can create 2,000 percent solutions for developing 2,000 percent solutions. I find that multiplied opportunity to be pretty breathtaking.

At first, I didn’t appreciate that meaning. I only saw that it was a marvelous idea to marry benefit-expansion and cost-reduction 2,000 percent solutions. I was like the young child who first learns to stand one block atop another and marvels at the new edifice without thinking further.

Buoyed by this concept, I began to wonder how I might write about complementary 2,000 percent solutions. Clearly, the idea could be explained in a few sentences. In fact, it might be hard to write a full-length essay without padding the material with anecdotes.

Yet that didn’t seem like the right approach. For one thing, I found that most people were daunted by the idea of creating 400 times more benefits: They didn’t want to hear about it. At most, you would get a tolerant smile of the sort that an indulgent parent gives to a child who has just consumed five pounds of chocolates and isn’t feeling very well.

I quickly learned that talking about 2,000 percent squared solutions was much more comfortable for people. So the idea began to take shape in a new form: Why not integrate all of the work that had been done on the benefit expansion and productivity sides of the 400 Year Project into one book that would explain the concept of squaring the benefits from a 2,000 percent solution? Such an integration would help readers to know when to apply various elements from the earlier published processes and books related to the 400 Year Project. All I had to do was start writing: My subconscious mind would show the way.

Solitude Speaks Loudly

No encounter with yourself can be altogether sterile:

Something necessarily emerges ….

— E. M. Cioran

During the summer of 2005, I attended a conference hosted by Jack Canfield called Breakthrough to Success. I was interested in learning more about Jack, who had been a student at Harvard while I was. Fitting in with the reputation that you can always tell a Harvard man but you can’t tell him much, it’s rare for me to find a fellow Harvard grad being a helpful source of advice on anything. As a writer whose works sold one copy for every 2,000 that Jack did, I was sure I could learn useful lessons.

I thought that my Rushmore students would also be interested in the conference, and I suggested that they attend with me or send questions I could answer. One student attended, the one who had written the paper about creating a 40,000 percent solution. Over a week, we spent a lot of time with each other and enthusiastically explored the implications of his plan. For me, it was like being in a mental sauna filled with 40,000 percent solution steam. The week was also a lot of fun, and we were encouraged to join with one another in mastermind groups. The student and I did so, along with a very nice fellow from Michigan, Kevin Hill. I mentioned to Kevin that I liked football but had never been to a Michigan game. He kindly invited me to visit and let me pick the game. Kevin had connections in the athletic office and could get us good seats for any game in Ann Arbor.

Looking at our mutual schedules, the Penn State game looked like the one to see. Our schedules were set, and I bought airline tickets for the fall.

I was scheduled to leave early one afternoon. I drove from home quite a bit early because I was looking forward to my jaunt and didn’t want to be late. Things got off on the wrong foot, however, when I arrived to find that my flight had been cancelled and I was rebooked on an early flight the next morning.

Suddenly I had an unexpected free evening. When I came home, the house was empty because everyone thought I would be away in Michigan. So I sat down to jot a few notes on a pad, and the words just began to roll out of me about how people could efficiently create 2,000 percent squared solutions through the right kinds of business models. The thinking was going so well that I switched into writing rather than outlining and continued in long hand, not wanting to interrupt the flow by turning on the computer. Just to give you a sense of how unusual this was for me, I hadn’t done this much long-hand writing in over ten years. I prefer to type all my drafts.

I wrote late into the night and was very pleased with the material. Awaking early the next morning, I grabbed my pad and headed to the airport again. Between waiting at the airport and the duration of the flight, I had another four hours … and I kept writing. By the time I arrived in Detroit, my manuscript ran to more than 5,000 words.

I picked up a rental car and headed to Ann Arbor. Kevin showed me around the University of Michigan, and we had dinner at a great restaurant near his home. Then he kindly led me to his family’s lake-front summer home. I would have the whole place to myself for the weekend. It was a beautiful and tranquil spot. After he left, I pulled out that pad and kept writing late into the night.

Arising early the next morning, I started writing again in a high fever of inspiration. Kevin picked me up mid-morning and we left for the football game. The day was perfect. The game was amazing, and had a happy ending as Michigan won in overtime. We headed back with great feelings about the day. Kevin and I had another great dinner, and we planned to get together the next morning to spend Sunday with his family.

I couldn’t sleep so I sat up most of the night writing. Then I woke up early and kept writing. The time came and passed when Kevin was to arrive and I just kept writing. Then he stopped by to tell me his wife was sick and he was taking her to the hospital. I was on my own for the day. I looked out that window and at the stunning view, smiled, and kept writing.

By evening, Kevin’s wife had been sent home and we talked briefly. I kept writing.

The next morning, I got up early and kept writing.

Then I went to the airport and kept writing.

On the airplane, I kept writing.

I went home, and no one was there. I kept writing.

You get the idea. I had written by this time more than 25,000 words and knew I had something terrific. How’s that for a writing holiday? Thanks, Kevin!

Sorting Leaves

A hole is nothing at all,

but you can break your neck in it.

— Austin O’Malley

Writing is mostly rewriting. The good news is that I had written 25,000 words. The bad news is that I hadn’t revised anything as I was writing.

Let me explain. I normally write between 1,000 and 1,500 words a day. Before I begin any new writing, however, I go back and revise what I wrote the day before. This review serves two purposes: It shows me weaknesses in the writing that I need to address and gets me into the flow of the message I’m sharing.

To me, rewriting 25,000 words seemed like back-breaking labor. I wanted to get back into that first-draft flow, but I also knew I had to go back and rework. I also still had to input all those words into the computer, drudgery requiring many hours.

It’s a good thing that my discipline held. Although my subconscious mind had worked out a great plan for the book, the arithmetic wasn’t so good in places. The first chapter was filled with quantitative examples. Every time I looked at one of those examples, I spotted another mistake. That rate of error discovery continued for the next year. I felt like I was being asked to take a barrel of newly fallen leaves drenched by the rain and put the leaves into order by size: As I sorted the wet leaves, they kept slipping out of my grasp.

Sensing by now that I had taken on an enormous task, I decided that I had better get lots of help. In the past, no one looked at my writing until I was almost done. That approach wasn’t going to work for this project. I needed someone to pay attention to each of those slippery leaves I was struggling to put into the right order.

I asked everyone I could think of to help me by reading rough drafts and spotting errors. Fortunately, I had a virtual army of clients, students, colleagues, friends, and fans who were willing to help. I would send out a chapter or two and give people two or three weeks to respond. The results were scary. Everyone found different mistakes! And they found a lot of mistakes. Sometimes it took me longer to incorporate all of the corrections than it had to write and revise the material through several drafts. I had never struggled so much with my writing: It was then that I began to fully realize how difficult this book about 2,000 percent squared solutions was going to be to write.

20 Times Growth

Every one lives by selling something.

— Robert Louis Stevenson

Part of the difficulty with writing the book had to do with deciding on suitable metaphors for the topics we wanted to cover. From having seen thousands line up for bookstore signings by NASCAR drivers, I felt that fast driving should be part of the metaphor for this new concept. Almost everyone loves the feeling of going fast: It’s the basis of sports like skiing and snow boarding, part of the appeal of convertibles, and what excites fighter pilots.

The metaphor makes practical sense as well. We all know that we can only walk a few miles in a day. Take a fast car and run it on a smooth race track, and we can cover thousands of miles a day.

And we know that’s not the end of what speed can do for us. Put us in a supersonic jet that’s refueled in mid-air, and we can cover many more thousands of miles in a single day. Launch us into orbit with the space shuttle and we can circle the Earth every 90 minutes, covering more than 40,000 times as much distance in a day than we can by walking. Why was the space shuttle comparison important to me? A writer likes to know he has someplace to go in the future with his metaphor.

Before you drive fast, you need a good road. We’ve all bumped along on a heavily rutted, muddy track at less than 5 miles an hour and felt like we were riding a bucking bronco. Few would want to go faster on such a poor byway. Put yourself in a high performance car on the well designed and maintained German autobahns where there’s no speed limit, and you can feel your right foot itching to press down the accelerator pedal.

Some roads take you straight to where you want to go, while others just circle around. Other routes make huge detours before reaching the destination.

Why not choose road building as a metaphor for growing your organization by 20 times? You need to be able to reach being 21 times your current size; that’s like preparing a road for a fast trip. Well, that’s a metaphor we chose, the one we used for Part One of The 2,000 Percent Squared Solution. In that part we described the business-expansion process as five steps. The first step is to survey the territory to see what the ideal route is from where you are to achieving 20 times more revenues. You can think of this survey as being like taking a photograph from space and seeing what the most direct route is.

The second step is to come closer to Earth and locate practical obstacles that will require adjustments to your route. For example, if you are in the mountains, some of those peaks are going to require a detour.

The third step requires more thinking: Find the best routes over, around, and under the worst obstacles.

Now, you go back and consider if you could reasonably move or remove some of the obstacles you’ve been avoiding during the fourth step. Build one short tunnel in the right place, and you may eliminate a hundred miles of detours. If enough people will travel the upgraded route at a high enough speed, the tunnel will be worth the cost and effort.

Once you have your high-speed route, the most important fifth step arises: You need to publish a new route map and erect new road signs. If people don’t know the right directions to grow their operations by 20 times their current size, having figured out the route won’t do anyone else any good. It would be like my knowing how to create 2,000 percent squared solutions, but not telling you what I had learned.

What are some of the barriers to rapid growth? The list varies for each organization. Unless you are already quite a large, well-known firm, factors such as limited distribution, lack of awareness, a poor image, product and service faults, limited supply, delays in providing offerings, difficulties in using the offering, and inconveniences tied to when the offering is available can come into play. To make the issues easier to follow, Carol and I turned to an example from The Ultimate Competitive Advantage, Wall Drug, to demonstrate the process of rapidly going from where you are to grow 21 times larger. If you want to know more, read The 2,000 Percent Squared Solution (Mitchell and Company Press, 2007).

But, as we noted in our book, there’s more to directing an organization’s growth than what businesses do in attracting more customers. For instance, nonprofit organizations need to focus on being able to serve 20 times more beneficiaries with the same time and resources. In the same book, we focus on various ways to expand a hypothetical charitable food distribution operation for needy people; we show how the same time and resources can be used to spread nonprofit benefits further while making fewer demands on beneficiary time and resources. Nonprofits are all about reducing costs and inefficiencies while for-profits have a greater challenge in attracting attention and creating a desire to do business among current and potential customers. 

96 Percent Lower Costs

No one would remember the good Samaritan

if he’d only had good intentions.

He had money as well.

— Margaret Thatcher

Since cost cutting is the second part of The 2,000 Percent Squared Solution (the first part being expanding customers or beneficiaries by 20 times), we also needed a metaphor for that concept. It made sense to stick with metaphors that fit with driving fast. What about drawing on the metaphor of being a prudent vehicle owner? Race car drivers have a whole team just to be sure that the vehicles are in top shape. And if you didn’t put gasoline in your chariot, change the oil, and drive carefully, you could soon find yourself needing constant tows and expensive repairs. Be incautious enough, and you could quickly find yourself increasing your vehicle ownership expenses by an exponential factor.

Carol and I worried about the credibility of sharing such a large cost-reduction concept with readers who didn’t already know our work. We knew that many people deny that large cost reductions are possible. However, we had also learned that many more people achieved such large cost reductions than ever gained 20 times greater sales or beneficiaries.

We were greatly relieved when none of our advance readers or endorsers expressed any discomfort with our cost-reduction materials. I suspect that we were benefiting from the growing knowledge of how rapid productivity gains in semiconductors regularly drive down the cost of everything we use. For instance, a computer that cost tens of millions of dollars in the 1950s was outperformed by a hand calculator in the 1970s that cost less than $200. Today, a solar-powered hand calculator will run rings around the 1970s version and will probably be given to you as a promotional gift because it’s so inexpensive to make.

Most people are also aware that when offering and beneficiary providers work on cost reductions, the time, money, and effort expended by customers and beneficiaries aren’t usually taken into account. Here’s an example: I just filed the annual report for a corporation I manage. The government department that requires this report now uses an automated process that requires me to do all of the work. In exchange, my price for filing the report goes down by $16. The time it takes me to use their so-called low cost system, however, increases the time I spend by quite a lot. I’m getting paid a little better than a cashier at a supermarket to do the government’s work for it. That’s a lot less than I normally earn, so I’m not thrilled with the “deal.”

That said, it could be worse. To save even more for itself, a different government department decided that all corporate tax returns have to be filed using approved vendor software or it imposes a $100 fine. The software itself costs more than $100; the time it takes to learn the software is worth thousands of dollars; and the cost to hire a professional to do the same task is even more. I happily pay the $100 fine. Why? That’s a 2,000 percent cost reduction for me compared to the alternative of buying the software, learning to operate it, and key stroking all of my data into the software format. Doing this task without the software is simple work; it just requires filling in endless pages of numbers that wastes more than $100 worth of my time and an even greater amount of my patience. What’s the bottom line? The government agency gets to collect $456, the minimum excise tax, from the corporation. I would be glad to certify under oath that the organization only owes the minimum tax and just send in a check for $556 without wasting all of their time and mine, but this agency hasn’t considered that option.

Making substantial cost reductions that benefit organizations and their customers and beneficiaries is covered in Part Two, per the following guidelines:

• Sell your gas guzzler — eliminate the unnecessary

• Buy the economy model — employ an efficient business-model design

• Tune up your engine to eliminate stalls — avoid delays

• 1, 2, 3, go! — simplify, simplify again, and simplify some more

• Supply driver’s education — help the unskilled avoid accidents

• Use cruise control — automate important tasks that remain

• Write a great owner’s manual — add do-it-yourself features

• Take out insurance — check your solutions with outsourcing

• Pump your own gas — eliminate expensive outsourcing that’s not worth it

• Buy a lifetime guarantee — ask the world to compete to find breakthrough methods

• Have 30,000 miles checkups — repeat the cost-reduction steps

If developing skill in these tasks is your goal, I invite you to read the second part of The 2,000 Percent Squared Solution to learn more.

Do You Believe That?

He had been kicked in the head by a mule when young,

and believed everything he read in the Sunday papers.

— George Ade

Those who helped with improving the writing of The 2,000 Percent Squared Solution were very encouraging. I reminded myself that these were people who knew me well, and many of them had created 2,000 percent solutions. How would this book play in Peoria (the rhetorically average American town located in Illinois)? That was the question for which I had no easy answer.

I began sending advance drafts to every good thinker I knew who might become an influential endorser. Hopefully, if well-respected people testified that I wasn’t crazy, someone might take the idea of multiplying exponential improvements seriously.

I was literally overwhelmed by the positive response. Almost everyone I asked agreed to take a look, and all but two people eventually provided endorsements we could use in the book. And the comments were very generous. 

This reaction was an ironic contrast to the lack of interest Carol and I had received from our prior publishers. Should we contact other publishers? We would be back up against the old concern about sequels. Realizing that the structure needed to be kept intact if the book was going to work, I decided that self publishing would be a blessing in disguise. Whatever Carol and I would lose in distribution, we would more than make up for in having great content. And so Mitchell and Company Press was born. Now, we would also have an imprint for other sequels tied to the 400 Year Project that traditional publishers didn’t want to touch.

Copyright © 2007. 2012 by Donald Mitchell.