Know the metrics in your business to steadily track and incrementally improve, and seek for opportunities to exponentially increase the bottomline to a higher step.
It’s funny how some lessons stick with you, even when you least expect them to. For me, that lesson came from a subject I couldn’t stand: mathematics. From primary school right up to junior secondary, it felt like a chore, a set of rules I had to memorize just to get by. But that all changed in senior secondary school when I met a Ghanaian seminarian who taught Further Maths. He didn’t just teach equations; he taught me the essence of math, explaining how the universe and its systems are best understood through numbers and geometry. That was a complete mind-shift for me, and it laid the groundwork for how I now view business growth.
Years later, I learned about the concept of a “Step Function” and its application to life and business. It immediately made sense. Most businesses, especially at the SME level, aim for growth, but it comes in two distinct forms:
- The 1% Incremental Growth: This is the steady, gradual progress that follows an arithmetic progression. At our real estate investment cooperative, REICo, we saw this firsthand with an average 18% month-over-month growth in deposits in 2023. It was a gentle, upward slope on a graph, giving our business stamina.
- The Step Function Growth: This is the explosive, exponential leap that follows a geometric progression. In January 2024, we introduced a new investment plan that 5X’ed our monthly deposits in a single month. This wasn’t a gentle slope; it was a steep, almost vertical climb. It gave our business speed.
I’ve come to believe that a healthy business needs both. Incremental growth provides stamina, building a strong, resilient foundation. But without Step Function growth, which provides speed, a business can become stagnant. It risks being overwhelmed by faster competitors or sudden market shifts. A few years ago, a major Nigerian bank nearly folded because it relied too heavily on incremental growth, losing its agility until a new owner revitalized it.
But the reverse is also dangerous. Businesses that experience only Step Function growth without a solid incremental foundation can be like a bubble ready to burst. We saw this in the agricultural crowdfunding sector between 2016 and 2020. Money poured in too quickly without the necessary infrastructure, and when the bubble burst, investors lost everything. Similarly, the collapse of Enron in the early 2000s showed what happens when a company grows at an unsustainable, exponential rate without a solid operational base.
The lesson is clear: you must know your business’s metrics and work to improve them incrementally, but you must also actively seek opportunities for Step Function growth—the kind of innovation that yields a minimum of a 5x result. It’s about finding that key touchpoint in your value chain that can launch your business to the next level. For me, understanding this concept was a game-changer, turning a disliked subject into a powerful tool for success.