I wrote this article a few years ago for my website as a resource to use for training purposes.
I suddenly realised that it is a real life example of exactly the principles I am looking to demonstrate in my article It's not all about money, which discusses the value of increasing the QUANTITY of Crypto in your Wallet. I think Marginal Gains is a dynamic business principle, presented here alongside an interesting case study, even if it is a slight departure from what I have been posting in the last week or so.
After the financial crisis of 2008 – 2012 companies all over the world have been looking for new ways to streamline their processes. Lean and all of its accompanying methodologies has become a holy grail for many different organisations as they endeavour to drive down costs and improve efficiency. However, Lean is not the only methodology out there. Another methodology that increasing numbers of organisations are looking at adopting is that of marginal gains. This works on the principle that a series of small changes can be aggregated to produce much more significant changes.
Lean: The core idea is to maximise customer value while minimising waste. Simply Lean means creating more value for customers with less resources.
Why could Marginal Gains be an option?
If production costs are too high in a manufacturing company and savings need to be made of 10% over the following year an option could be to reduce the workforce (and thus reduce staffing costs) to produce the necessary savings. The consequences of such an action could nevertheless be catastrophic as an adverse result of such an action could be a reduction of production capacity and a loss of sales. So in effect what really happens is that the company is downsized.
Marginal Gains: The doctrine of Marginal Gains is all about making small incremental improvements in any process that leads to a significant improvement when added together.
A far better approach would be to search for Marginal Gains to achieve the required savings. Rather than looking for a single large cost saving or efficiency improvement the implementation of a larger number of small measures, where each of which has a minimal effect but combine to have a large cumulative effect is less likely to have a negative impact on the company as any introduced change is spread across the whole organisation.
Case Study: Revolution in Team GB Cycling.
Until relatively recently Team GB were considered to be also-rans in world cycling as their performances could be described at best as average. Yet Team GB has since become the leading team in world cycling. In the last two Olympics, Team GB has won 16 gold medals and furthermore British riders have also won the Tour De France three times in the last four years.
So what has led to this remarkable turnaround?
When Sir Dave Brailsford became performance director of British Cycling, he set about breaking down the objective of winning races into its component parts as he believed that if it was possible to make a 1% improvement in a number of areas, the cumulative gains would end up being hugely significant. Thus he started to focus on a range of weaknesses and began to look at ways in which he could improve each of them. He did not view each weakness as a threat, but as an opportunity to make adaptations, and create marginal gains.
Under his tenure some notable changes were made
- Wind tunnel experiments showed that the bike was not sufficiently aerodynamic and it was discovered that this was because dust was accumulating on the floor and undermining bike maintenance. So he had the floor painted pristine white, in order to spot any impurities.
- The team started to use antibacterial hand gel to cut down on infections.
- At Team Sky, he redesigned the team bus to improve comfort and recuperation.
- Research was carried out on untested assumptions, such as the dynamic relationship between the intensity of the warm-down and speed of recovery.
As the team learned more, further marginal gains were made which rapidly began to accumulate. It could be argued that although the incremental changes he introduced made a huge difference his most significant contribution was his questioning mindset and a commitment to continuous improvement, which meant a fundamental dissatisfaction with the status quo.
This article was first published on my website, cited below in 2015 and the Case Study is based on information drawn from the BBC Website.