Career Trajectory – impact of Compounding vs Network effect
Compounding effect:
Doing simple things well consistently over a long period of time will produce exponential outsized results.
99% of Warren Buffet’s wealth was generated after his 52nd birthday, outsized result of doing simple things well over long period of time. Warren’s business partner Charlie Munger has attributed their success to "consistently avoiding stupidity instead of trying to be very intelligent".
“10,000-Hour Rule” was conceptualized by Malcolm Gladwell in his book outliers. I am not sure about precise 10,000 hours but there is no denial that time is the most important ingredient of genius – ask Serena Williams, Sachin Tendulkar or Lionel Messi.
All overnight success takes about ten years – Jeff Bezos.
Network effect:
According to HBS – “the term network effect refers to any situation in which the value of a product, service, or platform depends on the number of buyers, sellers, or users who leverage it. Typically, the greater the number of buyers, sellers, or users, the greater the network effect—and the greater the value created by the offering”
Success tends to be overnight but sustaining and converting it into long term accomplishment is not easy. Nevertheless, networks provide unlimited opportunities to be an overnight success.
Case study : San-Japanese expat living in Singapore and working in financial services by the day and enjoys writing about food and cultural gaps by the night.
Let’s imagine his potential career trajectory for his side gig
Compounding:
San consistently submits his writing to Strait times - largest circulating newspaper editor in Singapore, his writing finally gets the editor’s nod for publication after multiple attempts. Strait times has c400k average daily circulation and may lead to book advance and royalty agreement from the reputed publisher. In the compounding scenario, probability of success increases/decreases with time.
Network effect:
San's LinkedIn post titled “Indian foods in Japan are actually North Indian foods” goes viral – generating more than 1.5 million views and 21K reactions. This post's overnight success, if sustained and converted may change his career trajectory – full time food blogger, cultural gap coach, author or Japanese goodwill ambassador posting in South India.
The key to success was winning the hearts and minds of network participants thereby getting a nod from Linkedin algorithm. It is about ability to connect as opposed to flawless grammatically correct prose for prestigious new paper.
Any viral post is bound to attract trolls such as “Food pictures should not be posted in Linkedin”. Little do they know, high engagement for food pictures may lead to new Linkedin product propositions specialising in food, you never know, San may even head the division.
What is preventing you from playing in both of these arenas?
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