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Applying Marginal Gains to Business - It's Easier than You Think

Posted On - 03/12/2013 13:39:05

Focus Marginal Gains on Making More Profit
At the Target Open Day and in the last few workshops we've spoken a great deal about British Cycling's transformation. Of the critical, pivotal role of Sir Dave Brailsford.

But just what is the aggregation of marginal gains? And how would you even start thinking about it for a business? This workshop introduces you to the principle and shows you how to go about applying it.

Whether you want to drive a Rolls Royce or just put food on the table, everyone's goal in business is the same. You need to make money. And you need to make enough of it not just to fully pay your costs and people, but to have some left over for yourself. In short, you need to make a profit. And because this is the race you're competing in, this is where you need to start.

Now, the aggregation of marginal gains hinges on improving the factors that affect the performance of the outcome your aiming for. For us this is profit and the things that could increase or decrease how much of it we make. But to make marginal gains really work we need to break down profit into all the factors that affect it. Because remember, marginal gains is all about the disproportionately huge improvements that result from making many small ones.

To get in the right frame of mind it helps to think in levels. This is just for the sake of being thorough - it's got little to do with prioritising things (which is done for different reasons covered below). So with our principle outcome (profit) we start by thinking about the factors that directly affect it. There's many ways to think of this and what's below is just an example.

Think in levels, each representing the factors that affect the performance of the layer above
Break Down Goals, Level by Level
Once the principle outcome being sought has been initially broken down, each of its factors is then, in turn, considered an outcome and treated the same. So the next level of factors is created.

This process is repeated over and over, level by level, until there's either no more ideas on what could possibly impact performance or you hit a dead-end. The overall result is a sort of tree growing down from the top as profit is successively broken down into the various levels of factors that could achieve or impare it.

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