The Power of the 1% Effect
Posted on 7th April 2025 at 10:01
How small gains drive big business results
There is nothing new about the concept of incremental gain. Many businesses and sports teams adopt this approach and built it into the way they operate, and for a lot of them it brings great success!
If, however, this is something new to you then let me explain.
If we take Formula 1 as an example, in the 1990’s the average pit stop time was 10 seconds; now in the 2020’s it’s 2.5 seconds. Now some of this will be down to changes in technology but it’s fair to say that most of it is down to incremental gain. Looking at every single component of the pit stop, from the refuelling to the design of the jack that lifts the front of the car through to the pit crew practicing over and over again to hone their skills, it’s all about looking for tiny improvements to make the overall process quicker.
And when all of the tiny improvements are added together then the gain is much more significant! Another brilliant example is the British Cycling Team and in particular David Brailsford who was the performance director between 1997 and 2014. He is famed for his success and has written great books on the subject. In simple terms he looked to improve everything the team did by just 1%. From the diet of the athletes through to the oil that was used in the wheel bearings of the bikes then testing things again and again to find out which formula gave them a 1% improvement. All of these gains combined together to lead to faster lap times and ultimately great success for the team!
How can this work in the business environment?
In all honesty it works in very much the same way as it does within sports teams. It’s about looking at all of the component parts of the business from operating processes to people skills and identifying where small improvements can be made.
There are very few businesses that could improve their performance with a magic bullet that fixes one big issue and bingo the performance goes up. For most businesses the issues that they have that are impacting on their performance are much smaller and are found in multiple places so with this in mind the 1% effect is actually a great way of looking at making improvements!
What are the challenges to this?
Fundamentally it’s a mindset shift that enables this. It’s difficult to change habits but if performance is to be improved or enhanced then this is where it starts. One of the key challenges in business when looking at incremental gains is the changes that are so often needed can be relatively small and therefore not seem ‘worth it’ in isolation. And if people don’t see value in making a change, then they’re much less likely to buy into it and create the new habits needed. It’s also important to understand some of the basics around change management - it’s no good just telling people that they need to change the way they do something. They need to understand the ‘why’ and how the change will benefit not just the business but them as individuals – the concept of ‘what’s in it for me?’. It’s also important to paint a clear picture of ‘what good looks like’ and when thinking about small incremental gains, it can take time to build the bigger picture to demonstrate how the tiny changes will build up to a more significant performance.
How impactful can a 1% improvement really be?
Working with an Automotive business recently we identified that a 1% improvement in their technician efficiency would increase their profit by c.£1500 per month. Now that may not sound much until you multiple that by 12 months and all of a sudden it’s £18,000 per year. And who wouldn’t want that added to their bottom line? But what would they need to do to achieve that 18k a year? A 1% improvement in efficiency equalled a 4 minutes saving per day in wasted time. This could have been easily achieved by placing the parts needed for the vehicles booked into the workshop closer to the technician’s work bay so they didn’t have to spend time unnecessarily walking to and from the parts department to collect the parts required!
How do you bring this to life?
There are two approaches required to bring this to life. Firstly it’s about understanding the processes and recognising where they could be improved - this is much easier for an outsider to the business as you’re not ‘wedded’ to the current way of working. Secondly it’s about understanding the people that are working with the processes and what causes them problems on a daily basis. More often than not the improvements in the process will fix the problems they have but where this isn’t the case then it’s a simple trade off - “if we can improve the problems you’re having, are you able to work slightly differently in this other area”? But this is all well and good, it sadly won’t be sustainable if there is no management buy in and critically no change management in place.
Why is change management needed for such small changes?
The reason change management is so important is it helps to embed the new mindset and subsequent habits. It’s all in the ongoing communication: the little reminders of why we are making the changes, the support when things don’t work out exactly how you’d planned it and even evolving the changes as you find out more about how the people work day to day.
Summary
It’s easy to dismiss small changes as ‘not being worth it’ but with the right mindset and solid change management principles in place, it’s more than possible to find significant improvement from multiple small gains. Remember F1 teams invest millions in trying to go a fraction of a second a lap quicker!
Dave Bownes
Director,
Haynes Oliver Limited
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