How to Avoid the Dark Side of Compounding

Hello and welcome to the Curiosity Chronicle, a weekly podcast where I provide actionable ideas to help you build a high performing, healthy, wealthy life. Today's podcast is brought to you by AG1 by Athletic Greens, my all in one daily supplement. Seriously, there's a reason this stuff has been a staple of my morning routine since 2011. To find out why, go to drinkag1.comsahil and take advantage of a limited time offer. Now onto today's how to Avoid the Dark side of Compounding in an ancient fable, a young inventor arrives at a king's court to present the king with his latest invention, a game he calls chess. So pleased with the new game, the king offers the inventor any reward he desires. The young inventor replies, your Highness, I do not ask for money or jewels. I simply ask for a little rice. A single grain on the first square, two grains on the second, four, four on the third, eight on the fourth, and so on for the full 64 squares of this chess board. The king, surprised at his luck to get off so easy on his blank check offering, smiles and obliges, summoning his treasurer to make good on the request. As the treasurer begins to issue the rice to the inventor, it slowly becomes clear that the king has underestimated the request. By the end of the first row, 128 grains are placed on the final square. By the end of the second row, 32,768 grains are placed on the final square. By the middle of the third row, 524,288 grains are placed on the square. Realizing he has been duped, the king signals to his guards and the young inventor is executed, a cheeky smile still plastered across his face. The cruel king was smart to act when he did, for if he had allowed the process to continue, he would have owed the inventor over 18 quintillion. The that's 18 with 18 zeros after it. Grains of rice. This infamous story, which has been told and retold in a variety of formats, is perhaps the most vivid visualization of one of the greatest forces in our natural compounding. It's a magical force for growth in your life. 1 Albert Einstein is rumored to have referred to as the Eighth Wonder of the World. But it can also be your worst enemy. Today I want to talk about how to avoid the dark side of compounding the perils of the compound mistake. We can begin by referencing an image made famous by author James Clear in his best selling book Atomic Habits, which you can find in the email version of this podcast. Or on the web version. While most of the dialogue focuses on the 1% better every day, which results in a 38x improvement, the 1% worse every day is just as important. It effectively zeroes you out. It knocks you out of the game. When I was playing baseball at Stanford, the coaches had a metric they liked to track for pitchers called the compound mistake. The idea was simple. After a bad on field event happens a hit, walk, error or hit batter, what did the pitcher do next? Did he let the bad event spiral out of control? Or did he control the situation and get the next batter out? When looking at all the data from the several years of games, what they had found was that avoiding the compound mistake was far and away the most important metric for success. You didn't need to be flashy, you just needed to avoid stacking negatives. If you could do that, you would find a way to win. The realization here is powerful. After a failure or mistake, the next decision has elevated importance. This is where you can stop the negative compounding and start a move in the right direction. It took me many years to realize that the compound mistake was actually a wonderful metaphor for life. We can't always control the first bad event, but we are in control of how we let it impact us going forward. We are in control of our response. If we can avoid the compound mistake, we will find a way to win. Three steps to avoid the compound mistake. I developed a simple approach, three steps to avoid the compound mistake in my life. Step one Create space. Viktor Frankl, the Austrian philosopher and Holocaust survivor renowned for his contributions to psychology, has a brilliant quote that I love. Between stimulus and response, there is a space. In that space is our power to choose our response. Our power is in the space that we can create between stimulus and response. Creating that space is the key. Force a pause, take a walk. Gather your breath. Most compound mistakes are the result of a rushed process of allowing the situation to speed up on you. Slow it down. Step 2 Evaluate the new situation. Fighter pilots use the OODA loop framework for making decisions in the heat of battle. The most important part of that framework is the loop. They take in the new data and evidence from the prior decision and use it to orient themselves for the next decision to be made. Your failure or mistake created new data in an entirely new situation. Take the time to understand the new dynamic and what you've learned from the new data gathered. This leaves you more well equipped to make the next decision a great one. Step three Execute. You can't get anywhere without taking the first step. If you've created space and evaluated the new situation, it's time to act, execute on the chosen course of action and monitor new incoming data to assess the result. Remain flexible and adaptable during this phase as unforeseen challenges may arise, requiring a reassessment of the situation and a potential adjustment of the course of action. If you follow those three steps, you'll avoid stacking negatives and make steady progress over the long run. In in every arena you choose to enter, you are one good decision away. The beautiful thing about life is that no matter where you are today, no matter how deep in the darkness, you are always just one good decision away from being in a better place tomorrow. Don't worry about the hundreds or thousands of decisions that you will have to make to get to where you want to be. Just focus on the next decision. Failures, mistakes and slips are inevitable on the journey, but if you can avoid the compound mistake, avoid stacking negatives. You'll always find a way to win. That's all for today's piece. I hope you enjoyed it. I hope you learned something and I hope you'll share it with others. As always, until next time, stay curious. Friends.