Saturday, 10 September 2016

Marginal gains aren't that marginal

In  2010, Dave Brailsford faced a tough job.

No British cyclist had ever won the Tour de France, but as the new General Manager and Performance Director for Team Sky (Great Britain’s professional cycling team), Brailsford was asked to change that.
His approach was simple.
Brailsford believed in a concept that he referred to as the “aggregation of marginal gains.” He explained it asthe 1 percent margin for improvement in everything you do.His belief was that if you improved every area related to cycling by just 1 percent, then those small gains would add up to remarkable improvement.
They started by optimizing the things you might expect: the nutrition of riders, their weekly training program, the ergonomics of the bike seat, and the weight of the tires.
And guess what? 
n 2012, Team Sky rider Sir Bradley Wiggins became the first British cyclist to win the Tour de France. That same year, Brailsford coached the British cycling team at the 2012 Olympic Games and dominated the competition by winning 70 percent of the gold medals available.
In the context of investing marginal gains of 1% over years of investments can run into millions.
Just to explain . Rs 1 lac invested over 20 years every month with fund giving 14% returns

Expected AmountRs. 131634628 (13.2 Crores)
Amount InvestedRs. 24000000 (2.4 Crores)
Wealth GainRs. 107634628 (10.8 Crores)

Amount Invested vs Returns

Amount invested  Rs 1 lac invested in another fund during same period with 15%

Expected AmountRs. 151595497 (15.2 Crores)
Amount InvestedRs. 24000000 (2.4 Crores)
Wealth GainRs. 127595497 (12.8 Crores)
Check out. Marginal difference of 1% results in wealth gain of over 2 crores..That explains the wise choice of investment plans which have various dynamics. Hence the role of Advisers

You probably won’t find yourself in the Tour de France anytime soon, but the concept of aggregating marginal gains can be useful all the same.
Most people love to talk about success (and life in general) as an event. We talk about losing 50 pounds or building a successful business or winning the Tour de France as if they are events. But the truth is that most of the significant things in life aren’t stand-alone events, but rather the sum of all the moments when we chose to do things 1 percent better or 1 percent worse. Aggregating these marginal gains makes a difference.
There is power in small wins and slow gains. This is why average speed yields above average results. This is why the system is greater than the goal. This is why mastering your habits is more important than achieving a certain outcome.

No comments:

Post a Comment