Marginal Differences Create Outsized Returns

Good morning & happy Sunday. Since it was finals week, I don’t have much content to share with you other than this one thought… it’s worth the read.

Thought of the week 💭

There is a marginal difference between good and great but the outsized returns of being great are worth everything.

Last week I talked about effectiveness over efficiency. Most things I do are done well, but not great because I always prioritized efficiency over effectiveness.

Caveat:

I still do most tasks until they are “good enough”.

In my opinion, it’s not worth spending time and energy trying to make everything great. However, the one thing you are trying to make great or be great at, you shouldn’t cut corners on.

So picking ONE thing to focus on is important. You can move 1 inch in every direction, or 10 inches in one direction. 

Here’s what’s crazy about being great vs. good at your ONE thing:

Observationally, the difference between good and great is marginal. However, the returns you get from being great instead of good are worth everything.

Example 1: The Peloton Bike has very few different attributes than a regular spin bike. But those small differences make Peloton the go-to at-home fitness brand.

They get OUTSIZED returns for being marginally better… it’s unfathomable!

Example 2: Good food vs. great food is often separated by a few ingredients, a few changes to the recipe, and the slightly unique presentation of the dish.

But these small differences separate a Michelin-star restaurant from a high-end one.

And the returns from having a Michelin-star restaurant are everything: fully booked months out, ability to charge 2x or even 3x standard prices, etc.

Example 3: Google vs. Bing: 

Bing’s revenue was $12.2 billion last year, and Google’s was $237.8 billion.

There are little to NO differences between Google search and Bing, but the slight benefits of using Google make it practically a monopoly over the entire search industry.

So the point is this: Marginal differences = Outsized returns.

However, the uncomfortable truth is to be just marginally better, it takes hours, months, or even years… but it’s worth literally everything.

Being marginally better takes so much focused energy, which is why it’s important to first identify what your ONE thing is.

Here’s an example to put this into perspective:

At the Olympics, first place gets gold, second place gets silver, and third place gets bronze.

You know what fourth place gets? Nothing.

You know the difference between first and fourth place? 0.13 seconds.

Sprinters spend 10+ years of their lives trying to shave off ~0.10 seconds…

Relatively speaking, 0.10 seconds seems so marginal.

It is.

But the difference between winning gold, and not even standing on the podium means the world to a sprinter.

Signing Off 👋 

I’m leaving you with 1 question:

Identify your one thing. The one thing you want to be great at or make great.

What are the marginal differences that when completed, will provide you with outsized returns?