The dimensions of decisions: Using time, scale and compounding change to your advantage

The dimensions of decisions: Using time, scale and compounding change to your advantage

Lachlan Smith

Lachlan Smith

Managing Director

As humans, we have issues predicting the future. Our biases cause us to inaccurately understand the effect of time, scale and change that our decisions have.

This can be problematic when considering strategic decisions.

In this article, I’d like to dig into three interesting aspects of the cause and effect chain to add some more dimensionality to our decision-making world.

These three topics are:

1. Time

Time enables us to move the problem from the static and introduce the possibility of change.

It is often underestimated in decision-making how long the effects of decisions last. Time adds interesting complexity to problems – it makes them dynamic. It brings into being the need for prediction, for cause and effect to be considered.

2. Scale

The scale of what you’re trying to change with your decision can weigh heavily on its effectiveness. Scale can also be thought of in the sense of how big or small the impact of your decision could be. It can also influence the rate of change.

3. Rate of change

Rate of change brings together the elements of time and scale. The rate of change amounts to how the impact of your decision changes over time.

Firstly, we can consider how quickly something will change. For example, it may change slowly over a very long period – waves crashing against a rock. Or, it may change quickly over a short period of time – like a kettle boiling water.

FSC Group

Notice how both these examples reference linear change. The rate of change can also increase and decrease over time. This is where things start to get very interesting – as we enter the realm of exponential change.

The power of exponential change

Exponential change can also be referred to as compounding. This is the dynamic that Einstein apocryphally described as “the most powerful force in the Universe”.

I define compounding as something that will continue to grow more valuable over time at an increasing rate. Compounding is thought about in terms of compound interest, but it affects many other aspects of your life and decision-making.

Using time, scale and compounding change to your advantage

We see executive coaches all the time, but if you’re a new graduate, is it worth investing in someone to help you in your career? Let’s explore this using our model.

Well, a good coach will likely be able to help you improve faster than you would have otherwise, and therefore, should help you move forward in your career quickly.

This advantage at the start of your career can compound, so the return is likely to be exponential over time. Like in the graph below.

FSC Group

By this logic, investing in training and coaching is hugely beneficial. The value to you is represented by the area under the graph. When shown this way, we can see that it’s an absolute bargain. After all, Roger Federer has a coach, so why shouldn’t you? With this risk-reward profile, the decision isn’t even close.

It turns out this is true of almost any decision that you think will compound its positive benefits over time, note: if you think it will compound, you’re almost certainly undervaluing the activity in the present.

The 1% improvement method

There’s also the type of compounding that comes with incremental change. The 1% improvement method that is espoused in the book Atomic Habits and was used by the Sky Racing Team in the Tour de France is a good example. 

The philosophy is simple: improve 1% every day. Just small tiny improvements. Do this enough and you’ll be surprised at the cumulative effect.

Let’s look at this through our model, using time and skill. This is an approach that I’d describe as manual compounding. Some decisions have an automatic compound effect. In this instance, you make a lot of easy small decisions over time. It looks like this on the graph:

FSC Group

Each time you improve 1%, the “size” of your skill base becomes larger. The next time you improve 1%, your 1% is adding more than the previous improvement to your skill base. You are growing the scale piece by piece.

In this way, committing to a practice of improving something once a day is another decision that’s incredibly undervalued in the moment. Without understanding how things change over time and scale, you wouldn’t ever bother.

It’s another example of how we instinctually undervalue decisions in the present.

Our decisions now have effects into the future, some small and some large.

By thinking of the scale of the impact of your decision and how it will change over time, you can start to make decisions based on future value to you.

This is a powerful tool that your future self will thank you for.  

Making career decisions at FSC

The thinking I’ve espoused in this article speaks to a philosophy we hold dear at FSC. When it comes to our people, we place huge importance on helping them value the decisions we make today, knowing that these decisions will pay off at a compounding rate in the future, not only for their own development, but also for the benefit of the wider FSC business. We’re nothing without our people, after all.

This philosophy underpins our Professional Development program, a process we designed from the bottom up in-house. The program focuses on helping our people figure out what they want outside of work, what they want in their career, what they’re good at, and what they enjoy doing. From there, we design a unique development plan around their priorities.

Day to day, each team member belongs to a 5-person team led by a team leader and mentor. Mentors support their team in setting their yearly goals, with regular check-ins to guide them on their way. Teammates can also lean on each other for help in developing their skills and reaching their goals. 

As a fast-growth company, there are new positions and opportunities opening up all the time, so we make sure to invest in our people so they can rise to the challenge. We’re really proud of the FSC professional development program but feel it’s just a launching point and we look forward to making it even better into the future. We believe it’s a key element of what makes FSC a great place to work.

A final thought

Compounding change and the 1% rule impact much more than just our career. In reality, the three aspects of the cause and effect chain I’ve discussed can be applied to almost anything in your life. 

Remember this next time you’re spending time with your kids on a Sunday morning, practising a hobby or learning a new skill. If you know that it will be worth more in the future than it is today, you’re likely undervaluing it now.

FSC is a growing business; are you part of the next big thing?

If you’re interested in learning more about FSC and our career opportunities, get in touch.

FSC Group

Tagged Under