Why do some people and some companies do better than others?  They may start in the same place, but some thrive and grow while others stagnate or even wither.  Those that do well might think it is because they are exponentially better, smarter, or faster.  Those that don’t do well think it is because they are unlucky. They might say that “the rich get richer while the poor get poorer” and make it sound like happenstance or good fortune is the underlying cause.  But research has shown that what some think is “genius / talent” and others believe is “luck” may likely be neither.  More likely, it is just the power of accumulated advantage at work over time.  In business and life, it is invaluable to understand how and why the principle of accumulated advantage works.

Compounding Tiny Gains

Let’s start by understanding what it is and how it works.  Accumulated advantage is the compounding value of small improvements, consistent effort, focus and sound decision-making over a long period of time.   This consistent effort of small improvements, focus in a singular endeavor and decisions that help (not hinder) that direction accumulate.  But instead of the accumulation having an arithmetic effect (as in 2+2+2+2+2+2+2….), the impact starts arithmetic but then increases exponentially (as in 2+2+2+2x2x2x2x2…).  Initially, the actions seem tiny and insignificant.  But when they are laser-focused, consistent and combined with incremental improvements, they eventually add up to produce exponentially higher levels of success.  The more successes are accumulated, the easier it becomes to gain the next win.

Let’s use a common concept that most everyone can understand to demonstrate a compressed example of the power of accumulated advantage.  It’s referred to as “going viral.”  When a social media post or video “goes viral”, it means that it has gathered a lot of views, likes and/or shares in a very short amount of time.  It starts with a few hundred in minutes and tens of thousands within the hour.  The algorithm on a social media platform, such as YouTube, Twitter or LinkedIn, then recognizes that post or video is resonating with its users (which the platforms want and reward) so then it feeds that post or video to more and more users.  That, in turn kicks up the views, likes and shares to an exponential level.  That builds faster and faster.  As people hear about or come across that post of video with over a million views on YouTube, for instance, there is an innate desire to see why that particular video has drawn so much attention.  People feel drawn and compelled to watch a video that develops a reputation and has an impression on so many people versus a video with 5 or 10 views.  That is the concept of cumulative advantage at work.  At first, the post or video had a tiny advantage over other content posted at the same time.  Initially, it might get a hundred views, likes and shares vs. some other content only generating a dozen.  But that tiny advantage repeated over and over in the first hour accumulates to the point where it triggers the algorithm and then the technology transforms the arithmetic gains into exponential gains.

Likes/Shares/Views
20,000 15,000 10,000 5,000 1,000
	1 2 3 4 5 6 7
	Hours after posting

Cumulative advantage or accumulated advantage happens with people and businesses.  Malcolm Gladwell, in his book Outliers, discussed the impact of this on people.  Gladwell confirmed that advantages tend to accumulate over time, and those who are given an early push get more advantages as time goes by and those who are put at a disadvantage continue to get limited resources.  For example, children put at an advantage over their peers and friends from an early age – such as kids who are coached in a sport from a very early age — will lead to meaningful differences in performance that persist for extended periods.  Someone like Tiger Woods, who was taught and coached to play golf by his father from the time he was a tiny tike, is as much a product of cumulative advantage as it is sheer talent.

Case in point.  Imagine two girls who both aspire to being professional violinists.  One is born to parents who are wealthy, educated and live in an upscale neighborhood.  The other is born to immigrant parents who are working class and live in an economically-depressed neighborhood.  Both have mostly the same amount of talent when they start off.  The first girl’s parents hire a private instructor to give their daughter lessons three times a week.  They enroll her in concerts and competitions to demonstrate her mastery over time.  She is encouraged to perform for her family and praised for her progress.  She has other friends who are also learning to play an instrument.   The second girl’s parents cannot afford private instructors.  She is encouraged to play in the school’s orchestra, which practices once a week.  She has a single concert performance each year.  She doesn’t have any friends who play an instrument and her parents never have time to listen to her perform.

Who has the better chance at becoming a successful violinist? While both children may start with the same skill level and potential, the initial advantage of the first child accumulates.  Over time, accumulative advantage starts to make a difference in the level of mastery.  The first girl is likely to progress through skill levels faster.  This will lead to better performances.  Competition will lead to more confidence and validation.  Each advantage will build on the next.  By the time both girls have been playing for 10 years, the difference in their skill level, confidence and dedication will likely be very different.  More likely than not, the first girl is likely to be the better violinist.  That is how accumulated advantage works.

There are countless examples of how cumulative advantage has differentiated the success of some companies from others.  Amazon is a great example of how cumulative advantage led the company to dominate the ecommerce space.  Bezos, who already had accumulated advantages in his personal and professional life through education, marriage and professional achievements, then pivoted into the ecommerce space.  He had never started his own business, but he had Wall Street connections, was married to an accountant and had a stepfather who was willing to invest in his business.  Those small advantages afforded him a slight edge over other competitors.  Over time, he focused, improved and reinvested all earnings back into the business.  Those small incremental advantages added up and eventually Amazon soared.

How to Generate Accumulated Advantage

The concept of accumulated advantage was developed by R. K. Merton in 1968.  A poor immigrant who achieved an accomplished career as a researcher and sociologist, Merton authored a significant paper called “The Matthew Effect” which showed how Nobel Prize winners benefitted from a lifetime of snowballing advantages, not necessarily earned through merit.  Over decades of research, this idea that small advantages accumulated over time creates unstoppable momentum in many areas including career advancement, wealth, social status, educational opportunities, and even health.  This momentum will continue constantly unless there are countervailing processes that interrupt that momentum.

That makes it sound like those with the advantages will always do better than those without them.  That’s where the idea of genius and luck usually kick in.  But that does not have to be the case.  According to Mark Schaefer’s book Cumulative Advantage, there are five factors that can help any person or business to develop the same advantages and build the same momentum, even without a lifetime of inherited benefits, such as wealth, social status, or educational opportunities.  This also applies to businesses that may not have a deep well of capital, brand awareness or deep industry connections.  A person or business can gain a cumulative advantage by:

1. Identifying an initial advantage – Coca Cola, McDonalds, and Dunkin Donuts are three examples of companies that were ‘first to market’ with their concept.  Did Ray Crock invent hamburgers?  No.  But he was the first to recognize the brilliance of “fast food” and provide a way through real estate franchising to make “fast food” available to people everywhere.
2. Discovering a niche or vein of timely opportunity – such as how logistics companies are thriving since the start of Covid.
3. Creating significant awareness of a project, product, career, achievement or organization through a “sonic boom”
4. Gaining access to a higher orbit by reaching out and reaching up to powerful allies – as the saying goes, it not what you know but who you know that counts.
5. Building the momentum through constancy of purpose and executing on a plan – this is the least popular but most achievable way for people and companies that don’t have the benefit of many advantages to build their own advantages.  Incremental improvement may sound more abstract than it is.  Even a marginal gain of even 1% daily over the span of a year yields sizable results.  The goal is to build a system of achieving focused small wins, consistently or daily, to achieve large long term value.

Keep in mind that not all incremental activities are valuable because performing many activities at once can detract from compounding actions. Working on 10 different career paths at once will result in a Jack-of-all-trades and a master of none.  It is, instead, better to find a single path to focus on as early as possible in order to get the most out of compounding activities.  For businesses and individuals, the challenge, of course, is that focus is hard in a world with limitless options.  This is where perseverance, tenacity and consistency are key.  Small improvements daily, consistent effort, focus and sound decision-making over a long period of time add up and produce success.  Try it!

Quote of the Week

“Momentum begins with an initial advantage, and that is accessible to anyone because there are ideas all around us, all the time.”
Mark Schaefer

© 2021, Keren Peters-Atkinson. All rights reserved.