The power of Marginal Gains 

 Radrennen

These  CEOs  improved  a  few  small  things  across  their  revenue  creation,  by  just  a  few  percent. Look  at  what  happened  to  their  revenue  results.

 David  Brailsford’s  is  now  one  of  the  highest  profile     success  stories  in  professional  sport.    In  2010  however,   when  he  took  on  the  job  as  GM  and  Performance     Director  for  Team  Sky,  Britain’s  new  professional     cycling  team,  success  seemed  a  very  long  way  away.      

 Up  until  then,  Britain  was  a  perennial  under-­‐achiever   on  the  world  cycling  state.    Brailsford  was  tasked  with changing  that.    His  approach  was  staggeringly  simple.      

Brailsford  championed  a  philosophy  of  what  he  called   “marginal  gains  -­‐  the  1  percent  margin  for  improvement     in  everything  you  do.”  He  believed  that  if  he  could  improve  every  area  related  to  cycling  by  just  1  percent,  then  those  small  gains  would  add  up  to  a   remarkable  overall  improvement.  

David  and  his  team  began  with  the  obvious  things:  training  programs,  bike  designs  and  weights,  rider nutriIon  and  the  like.    Then  they  moved  onto  the  less   obvious  elements  –  those  hidden  beneath  the  surface.   They  started  looking  for  1  percent  improvements  in  seemingly  insignificant  areas  overlooked  by  other  teams:  improvements  to  the  geometry  of  bike  frames, tire  inflation  and  resistance  on  the  road  surface,  rider  hygiene  -­‐  even  to  the  level  of  the  pillows  they  slept  on and  how  they  washed  their  hands. No  potenial  for improvement  was  considered  too  insignificant.    

Brailsford  was  convinced  that  if  he  could  harness  these   aggregated  1  percents,  Team  Sky  could  win  a  Tour  de France  in  five  years. They  took  three!

In  2012,  Bradley  Wiggins  became  the  first  British  cyclist to ever  win  Le  Tour.    In  that  same  year,  Great  Britain  won     eight  gold  cycling  medals,  12  total  cycling  medals  and  set     three  world  records  at  the  London  Olympics.    Britain’s     coach? David  Brailsford.

So  phenomenally  successful  has  the  last  decade  been  for   British  cycling  it  has  been  referred  to  by  many  as  its golden  age. So- what  can  David  Brailsford  and  Team  Sky   teach  us  about  making  more  revenue?      

The  Aggregation  of  Marginal  Gains    

Business  leaders  frequently  overestimate  the  importance   of  one  defining  moment  and  underestimate  the  value  of   making  better  decisions  on  a  daily  basis. Almost  every habit  that  we  have – good  or  bad – is  the  result  of  many   small  decisions  over  Ime.    

How  easily  we  forget  this  when  we  want  to  make   changes.    So  often  we  convince  ourselves  that  we  can  and should  be  like  Steve  Jobs – that  change  is  only  meaningful if  there  is  some  large,  immediately  visible  outcome associated  with  it. Whether  it  is  losing  weight,  building  a   business,  or  making  a  sale,  we  often  put  pressure  on ourselves  and  our  people  to  make  some  earth‐shattering   improvement  that  will  change  our  world  for  the  better  as   if  in  a  single  instant.    

Meanwhile,  improving  by  just 1 percent  isn’t  notable – it   isn’t  even  noticeable. In  fact  it’s  frequently  plain  boring – and  therefore  it’s  more  than  often  completely   overlooked. But  it  can  be  just  as  meaningful  and   powerful.  It  also  comes  with  way  less  risk – and  cost.    

Unfortunately,  the  same  pattern  also  works  in  reverse.  When  you  find  yourself  stuck  with  bad  habits  or  poor   results,  it’s  usually  not  because  something  happened   overnight.  It’s  the  sum  of  many  small  poor  choices –  a 1 percent  decline  here  and  there – made  over  time,  that   eventually  appears  as  a  major  problem.

marginal-gains
These  CEO’s  improved  a  few  small  things  across  their  revenue  creation,  by just  a  few  percent.    Look  at  what  happened  to  their  revenue  results.
The  Power  of     Marginal  Gains.
For  any  decision,  there  is  basically  no  discernible   difference  in  outcome  between  making  a  choice  that is  1  percent  better  versus  one  that  is  1  percent  worse. Either  way,  you  won’t  notice  much  today. Or  even   tomorrow.  But  as  time  goes  on,  these  small   improvements  or  deteriorations  compound  until  one  day   you  realise  you  have  a  very  big  gap  between  where  you   are  and  where  you  thought  you’d  be.    In  fact  there’s  a huge  difference  over  time  between  slightly  better  or   worse  decisions.  Small  choices  don’t  make  much  of  a difference  at  the  time,  but  add  up  over  the  long­‐term.    

When  things  start  slipping,  even  by  only  small  amounts,   They  frequently  go  unnoticed  because  the  immediate Impacts  are  often  so  small  they’re  invisible.   But  it’s  the   compound  effect  of  keeping  on  going  with  those  poor decisions, of  never  realising  and  taking  action  to  get  back  on  track  that  causes  the  biggest  problems.

„Small improvements over time lead to stunning results. Why? Because consitency is the mother of mastery. and incremental improvements are the father of exceptionalism.“ Robin Sharma

You  probably  won’t  find  yourself  in  the  Tour  de France  anytime  soon,  but  the  concept  of  aggregating marginal  gains  can  be  enormously  powerful  in  the   world  of  marketing  and  selling.  Most  people  love  to talk  about  their  successes  as  individual  events.  We  talk  about  running  a  great  campaign,  closing  a  big  sale  or  building  a  successful  business  or  winning  the  Tour  de  France  as  if  they  are  events.  But  the  truth  is  that  the  truly  significant  things  in  revenue  creation  aren’t  stand-­alone  events  at  all,  but  rather  the  sum  of  all  the  often  unspectacular,  seemingly  insignificant things  we  can  choose  to  do 1 percent  better  or 1 percent  worse.  Aggregating  these  marginal  gains  makes  a  difference. There  is  immense  power  and massive  revenue  gains  on  offer  by  harnessing  those small  wins  and slow gains.

In  2005  a  small  group  of  management  consultants  working  on  revenue  improvement  began  exploring  the   effects  aggregated  marginal  gains  could  have  on   corporate  revenue  generation.  In  the  decade  since,  135  organisaIons  from  14  different  industries  and  4   different  continents  have  proven  that  it  works  – to  the   tune  of  24%  compounding  year-­‐on-­‐year  improvements;  literally  billions  of  dollars  of  additional  revenue  unlocked   mostly  by  small  wins  and  subtle,  unspectacular  changes.  

In  2005  the  average  corporate  revenue  pipeline   converted  3.7%  of  sales  opportuniIes  into  closed  sales. By  2015  that  figure  has  declined  by  46%  to  a  fraction over  2%.    The  other  way  to  interpret  that  staIsIc  is  to   say  that  98%  of  corporate  sales  opportuniIes  fail  to  turn   into  sales.    

In  fact,  according  to  the  2014  Revenue  Performance   Index,  71%  of  sales  leads  fail  to  turn  into  appointments   or  calls,  74%  of  appointments  or  calls  fail  to progress  to   an  offer  being  made  to  a  customer  and  a  staggering  86%   of  the  offers  that  are  made  fail  to  result  in  a  customer   making  a  purchase.  These  dismal  performance  statistics horrify  CEO’s  and  Boards. But  they  should  also  provide   hope – because  of  the  power  of  aggregated  marginal   gains  to  deliver  exceptional  improvements,  rapidly.    

If  1%  fewer  leads  fail  to  become  appointments,  and  1% fewer  appointments  fail  to  become  offers,  and  1%  fewer offers  fail  to  become  sales,  the  overall  yield  of  the   system  can  improve  by  12%.  Turn  those 1  percents  into 2 percents  and  the  system  yield  goes  up  by  24%.    

Unfortunately  the  negative  mirror  image  to  this   equation  described  earlier  also  holds  true.  One  percent  declines  in  those  metrics  can  drive  revenue  down  as easily  as  improvements  can  drive  them  up.

About  RPMG and BSO

The  Revenue  Performance  Management  Group  (RPMG) and BSO Performance GmbH as partner of RPMGI  has  been  helping  organisaions  around  the  world  find  and   aggregate  those  small  percentage  revenue  performance   gains  into  double-digit  year-­on-year  sales  productivity  and   revenue  system  yield  improvements  since  2005.  To  learn  more  about  how  our  Revenue  Performance   Acceleration  framework  can  do  the  same  for  your   organisation,  visit  our  website  at  www.rpmgi.com  or in German http:/bso-p.com/leistungsangebot/leistungsangebotumsatzperformance or   email  us  at  info@bso.com.

 

Kontakt:

Wolfgang Röcher

BSO Performance GmbH

wroecher@bso-p.com

+49 151 42305767

www.bso-P.com

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