Life gets busy. Has The Compound Effect been gathering dust on your bookshelf? Instead, pick up the key ideas now.
We’re scratching the surface here. If you don’t already have the book, order the book or get the audiobook for free to learn the juicy details.
The compound effect was released in 2010. The book highlights the importance of everyday decisions in guiding us towards our life goals. The compound effect will help guide you towards building momentum, making a plan, changing your habits toward being good, and tackling your limits. Eventually becoming a New York Times and Wall Street Journal bestseller, this book challenges the “Get Rich Quick” approaches to business. Instead, it offers a collation of the fundamental principles to achieving success in all facets of your life: Personal relationships, professional pursuits, and individual motivations. These principles are supported by years of meeting and interviewing some of the most successful people in the world. This book summary is sectioned into the book’s six chapters, providing you with the essential points from each of these chapters.
About Darren Hardy
Darren Hardy has been at the forefront of the business world for over 25 years now, starting his first business at the age of 18. He is a well-established public speaker, a renowned business advisor, and a former publisher of the highly popular SUCCESS magazine.
Chapter 1 – The compound effect in action
Darren Hardy starts the book by introducing us to the most crucial concept for the reader to understand: The Compound Effect. Hardy describes the compound effect as “the principle of reaping huge rewards from a series of small, smart choices”. Hardy argues that consistently making smarter choices, over a long period, is what made the most successful people in the world so successful. Consistency is the fundamental principle that runs throughout this book.
Hardy provides a useful analogy for readers to understand how small changes in your life and decision-making may seem unimportant. Still, if done consistently, they can make a huge difference. He urges readers to consider the scenario: Would you rather have $3 million upfront or one penny that doubles in value every day for 31 days. As humans, we naturally want the immediate gain, and most would choose the first option. However, if your primary goal is to be as successful as possible, the second option is better. With the second option, you will have $10 million by the end of day 31.
Hardy highlights that success doesn’t happen quickly; for example, after 19 days, you only have $5,243. At this point, you might feel like choosing the second option was a bad idea. However, you have to look at the bigger picture and the long term goal.
The second option has a compound interest. We can produce compound gains in our own lives by making the correct decisions consistently over a long time.
Hardy notes that for us to benefit from compounding’s fantastic benefits, we have to be patient and keep faith. Compounding is impacting us every day, so we must use it for our benefit.
How can you start doing this?
- Take responsibility for your life
- Write down six positive steps that you can implement in your daily life, no matter how small
- Write down six negative actions that you frequently do, no matter how small, and attempt to eradicate them
- Identify areas where you used to succeed but no longer do due to complacency
Chapter 2 – Choices
“If you want to have more, you have to become more. Success is not something you pursue”– Darren Hardy
The first chapter highlighted the importance of the small choices we make each day, specifically how they compound into much more excellent life outcomes. In this chapter, Hardy offers guidance on how to get better at making choices.
Hardy provides a beautifully simple answer. You have to stop living your life on autopilot and instead start making conscious decisions within your life. It is easy for us to fall into an autopilot that isn’t conducive to obtaining our life goals. Sometimes we have to actively and consciously make decisions to stay on track with our goals.
Conscious decision making means that you need to start taking responsibility for the relationships in your life. Start taking responsibility for the mistakes you made and the lessons that these mistakes can teach you. Start taking responsibility for your luck; Hardy describes luck as the sum of an individual’s preparation, attitude, opportunity, and action. Don’t use luck as an excuse as you have control over your luck.
Start to track all of the small decisions you make on the daily. Do you want to be more productive? Track how many hours you are working, how many hours you sit on your phone, and how long it takes you to shower in the morning. Keeping track of the small decisions that compound you towards or away from your higher goal will keep you on track.
The final thing Hardy suggests is just to start. Start these things now. The sooner you implement these changes, the faster they will become habits, and the sooner you will reap the rewards.
How can you start doing this?
- Identify an area of your life you want to change
- Identify the parts of this area that you are not taking responsibility for
- Start tracking at least one behavior related to this area of your life
Chapter 3 – Habits
“Creating new habits will take time. Be patient with yourself. If you fall off the wagon, brush yourself off (not beat yourself up!), and get back on. No problem. We all stumble. Just go again and try another strategy; reinforce your commitment and consistency. When you press on, you will receive huge payoffs.”– Darren Hardy
Before reading this book, your habits are likely formed unconsciously and aren’t guiding you toward your ultimate goals. Habits are things we do on autopilot, as they have been strengthened through practice. To take control of your life, you must master your habits. You must remove your bad habits and create new good habits.
This chapter breaks each step down to produce helpful habits, via clear and concise lists of actions.
How can you take responsibility for your habits?
- You must acknowledge the impact that habits can have on your life. Do so by considering the compound effect spoken about earlier
- You need to identify a significant motivator for why you need to change individual behaviors
- Set yourself attainable goals and visualize what success, relating to these goals, will look like
- Remove the bad habits holding you back
- Create good habits that will help elevate you towards your goals
Darren also provides clarification of how you can identify a significant motivator. As an individual, you have to define your core values. You must also find inspiration that motivates you; it does not need to be profound; it just has to drive you towards your goals. Finally, you must set short, compelling, and awe-inspiring goals.
How can you eliminate bad habits?
- Identify the things that are triggers. Think of the 5 Ws and attribute them to your bad habit. Why, what, who, when, and where.
- Eliminate these triggers from your environment
- Substitute this bad habit with a good habit that provides you with similar rewards, e.g., swapping eating an unhealthy takeaway with treating yourself to a game with your friend
- Decide whether you can change this habit instantly. Some habits are better removed slowly, while others are easier to remove if you go ‘cold turkey’
How can you create good habits?
- Start as you mean to go on. Your motivation will always be at its greatest on the first day you decide to make a change.
- Eliminate as many barriers between you and your desired action, e.g., if you want to start eating better make sure you remove all the unhealthy snacks from your cupboards
- Always focus on what the good habit will add to your life, rather than what you might be losing
- Make this change in habit public. Your habits being public will foster accountability and create a peer pressure that will steer you in the right direction. Similarly, find somebody who you can update frequently
- Create small competitions for yourself, such as beating your previous records
- Celebrate by rewarding yourself when you successfully implement a good habit
Chapter 4 – Momentum
“Some of our best intentions fail because we don’t have a system of execution. When it comes down to it, your new attitudes and behaviors must be incorporated into your routines to affect any real, positive change. A routine is something you do every day without fail, so that eventually, like brushing your teeth or putting on your seatbelt, you do it without conscious thought.”– Darren Hardy
Building good habits is fundamental to producing a positive compound effect. However, we need momentum to help push us through the tough times when we struggle to maintain a good habit. Momentum is that feeling when it is odd that you haven’t had your daily run or haven’t read your daily chapter. You want it to be odd missing your good habit that day.
One way to build this momentum is to master your daily routines. In the book, Hardy provides an in-depth outline of what he does every morning and what he does every evening. Irrespective of what his day entails, he completed these things without fail. Hardy explains that as long as you can control your mornings and evenings, you know you are starting and ending your day strong.
Importantly, though, Hardy also points out that if a ritual or routine is no longer producing powerful results for you, then don’t be afraid to change your routine. Although you want to be consistent, you want to be consistently positive. If you notice part of your routine is no longer contributing positively, swap it for something positive for you.
With the start and end of your days in check, you can now start focussing on your weekly, monthly, and quarterly rhythms. To do this, Darren recommends using a Rhythm Register to track your regular habits and actions across these timeframes.
Finally, make your habits and rituals sustainable. You do not want to get burnt out. Similar to the point raised in the first chapter, small positive changes that are consistent are often better than short-term explosions of positivity. Plus, surround yourself with supportive people who will be understanding of your small changes.
Chapter 5 – Influences
The environment around them hugely impacts humans. Therefore, Hardy recommends exposing yourself to an environment that makes establishing a compound effect easier. Exposing yourself to a positive environment involves taking control of the information you absorb, the associations you make, and the physical environment around you.
Taking control of information
The human brain is an information processing machine. Darren provides a two-step solution to ensuring that the information going into your mind is far better. Firstly, guard against garbage. Try to avoid the news and media. Secondly, join the drive-time university. You should try and absorb audiobooks and courses whenever you are unable to read conventionally.
Take control of your associations
Hardy cites a study that suggests that the people we associate with could determine as much as 95% of our success or failure in life. Therefore, we must take control of our friendships. We must consider whether those surrounding us are supportive and inspiring. If they are not, then why are they not supporting and inspiring? Try and distance yourself from these people. Later, Hardy suggests you visualize imaginary friends who would be supportive and inspiring in reaching your life goals. Hardy also suggests we limit our time with loved ones; focus on quality rather than quantity. Finally, he recommends that the readers consider how they can replicate their best friendships by finding where they could meet them and how they could connect.
On top of these steps, we must identify people who share similar goals, values, and determination as yourself. Finding these people will help you build accountability. Plus, we must find mentors and advisers who can advise on how to get where they are. They must be in a position where you would like to be in the future.
Take control of your environment
Within this short section, Hardy is talking about both your physical and mental environments. We must eliminate all the incomplete, poisonous clutter, both psychologically and physically, that influence our lives.
Chapter 6 – Acceleration
As well as engaging with all of the steps laid out by Darren Hardy, we can multiply our results by always giving a bit more energy or thought to our efforts than usual. Approach obstacles as opportunities to overcome them. These are the times when real growth happens. The times when it was easy to make good choices consistently were just a warm-up for the obstacles.
Hardy also encourages readers to consider that most people have similar obstacles, and most people give up when they reach them. The reason very few are highly successful is that very few can overcome these obstacles. Remember that considerable success is there for you on the other side if you can become someone who can overcome life’s obstacles.
As well as being one of the only ones who can overcome obstacles, become someone who thinks and behaves outside of the box. You want to be different than the average person. You want to be extraordinary.
Meeting expectations is good, but always try and exceed your expectations. Exceeding your expectations will multiply your success.
Related Book Summaries
The Almanack of Naval Ravikant by Eric Jorgenson