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Hit your 20 miles every day
Two growth records
Both were small, technology-driven companies with the same kinds of products, customers, and potential. The first averaged net income growth of twenty-five percent a year, varying by about 15 points either way, so it almost never rose above 30 percent or fell below 20. The second averaged 45 percent, varied by 115 points, rose above 30 percent in two thirds of the years, and ranged from plus 300 to minus 200.
The 20-mile march
The first company was on a 20-mile march. Picture walking across the United States and covering 20 miles every day, in good conditions or bad, into the wind or across hot coals. The alternative is big days when conditions are good and a day in the tent when they are not, and that was the second company. The march can take other forms too: profit every year at Southwest Airlines, or the doubling of components every 18 to 24 months at Intel.
Why consecutive matters
The key to the march is the word consecutive. A commitment to hit the mark for 20, 30, or 40 years without a miss forces decisions today that put the company ahead of disruptions 7 or 12 cycles down the road, because maximizing this year's results would guarantee a miss later. The more turbulent the environment, the greater the results for companies that march consistently.
Why does volatility drag down compounded growth?
Growth compounds by multiplying, so a swing down costs more than the same swing up gains. A 50 percent loss followed by a 50 percent gain leaves you at 75 percent of where you began. The wider the swings, the larger the gap between the average annual figure and what actually accumulates.
How has Southwest Airlines kept turning a profit?
Southwest reported a profit every year from 1973 through 2019, a streak of 47 years that was unmatched among major US airlines. That run held through fuel price spikes, recessions, and the aftermath of September 11, 2001. The airline's single aircraft type and point-to-point routes kept its costs low enough to stay in the black in lean years.
Why did chip components double so regularly?
In 1965, Intel co-founder Gordon Moore observed that the number of components on a chip was doubling at a steady pace, and in 1975 he revised the period to roughly every two years. The observation, later called Moore's law, turned into a target that guided research budgets across the chip industry. Companies planned their products to meet the doubling, so the pace was partly set by the industry's own schedule.
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