By katie simpson on August 27, 2014
Earlier, I read about a new app called Acorns. The idea is pretty simple: round up your digital spending to the nearest dollar and use the change for investing. So, let’s say you just bought something on Amazon for $5.76: the app rounds up to $6 and puts 24 cents into your investment account.
Acorns wants to make investing a no-brainer…and gets to the crux of how we create habits. Photo Source: DRKT
This concept isn’t entirely new: some banks have been doing the same thing but with savings accounts. When you make purchases with your credit or debit card, the card rounds up to the nearest dollar and the change goes into a savings account. A friend of mine did this and loved it: she was able to easily start a wedding fund without ever having to think about it.
That’s great Katie, but what does this have to do with business?
Great businesses must change over time. Consumers’ expectations change, competition rises, technologies change, you know all of this. Sure, Blockbuster changed with the rise of DVDs, but then Netflix and Redbox came on the scene, and now large box rental stores have mostly gone out of business.
What happens when you don’t innovate. Photo credit: Dwight Burdette
While businesses recognize the need of change, they are made of people. Unfortunately, people on the whole tend to be bad at making changes. The University of Scranton found that only 8% of people successfully achieve their goal (and it gets harder as you get older). People know that exercise is good for them, but they can’t seem to make it happen.
If employees can’t make change, how can a business change? Even if you have the knowledge of what needs to happen, making it happen can be far more difficult.
Research on human behavior reveals an interesting finding: The crux of the problem isn’t change, but that we don’t know how to make changes in a sustainable and effective way. Often, we want to makebig, large scale changes: I want to lose 30 pounds, or grow my company’s revenue by 30%.
So why don’t we? BJ Fogg, who researches human behavior, acknowledges that there are three variables to making any change: motivation, ability, and how easy it is to do. Radically changing your revenue streams, for instance, can be incredibly difficult. That requires an intense amount of motivation.
Only problem: motivation isn’t consistent. If we’re trying to start an exercise regimen, it can be tempting to sit down after a long day and just watch TV. When it lags all of a sudden we’re sitting back, feet propped up, hands deep in an Oreo container.
But there’s a way around this. Make your long term goals into tiny tasks that add up. These will become so easy that it requires very little motivation. The changes will be so small, that you can make the change a habit. Then, celebrate it.
This is why the Acorns model is important: Acorns makes investing easy. By rounding up on purchases it’s a low cost to the user. Yet this small switch adds up over time. Even if you roll over just 50 cents a day, after one year you’ve invest more than $100. Then, you get to watch your money grow. Suddenly you have the money for a mortgage, or a down payment on a car. With nearly half of millennials keeping all their money in savings, a simple app like this can be the beginning of a long term investment strategy.
Instead of focusing on large scale innovative changes to your business, companies can grow and thrive by focusing instead on small changes that build up to those larger, long term goals. Some ways to apply this to your business:
Want better insight into business tech trends?
Is your company spending too much time in meetings?
Do you find yourself tired at work?
Businesses still need large strategic change. We need a vision of where we’re going and the goals we’re trying to achieve. But to get there successfully, science reveals that we need to take easy and small actions to get there.
As we continue to adopt beneficial tactics, our businesses will thrive as well. If you can make the changes, small, easy, and habitual, you’ll find your strategic changes more effective and long lasting.
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