The Compound Effect - Summary and review

Updated: April 7th, 2024
Published: January 12th, 2024


What is The Compound Effect about

This book is about the power of compounding, with many similarities to the Atomic Habits book by James Clear, who took a lot of inspiration from this book.

The 5 components of The Compound Effect


The first component of the compound effect is choices.Choices can be complex or simple. Small choices might not seem like much, but can represent huge positive change over time. Make sure to get on your feet and get started. Start small and ramp up. Here are some examples:

  • Writing one page on your business proposal each day => become a successful entrepreneur

  • Listen to a business podcast when working out => drive more revenue for your own business

  • Biking to work instead of taking the metro => become a fit and healthy person

2. HABITS ⚙️

The second component of the compound effect is habits.Habits are simply actions you do without thinking. Habits can be categorized by:

  • how easy they are to perform (simple vs. complex)

  • whether they are good for you (bad vs. good).

Let’s look at some examples. It is easy and good for you to go to bed 5 min earlier. It is also good for you to go running before work, but that might be a bit more difficult to achieve. Often bad habits are easier to complete, since they involve instant rewards.

Habits do not require conscious effort and can be done automatically due to practice over time. Encode the habits into your identity and change will come easily.

Chaining habits is a successful way to create new habits with less effort, where you add the new habit to a sequence of habits you already do.

Example: Let’s say you want to have a cleaner desk at work and happen to be an avid tea drinker. Well, each time you take a cup of tea, you also clean your desk of any mess. Voila! You got yourself a low-effort chained sequence of habits in place - making sure your desk is clean from now on.


The third component of the compound effect is momentum.Momentum represents a ripple effect of energy, and is what motivates you to keep going - when the going gets tough. Achieving momentum is getting the feeling of “I can do anything”.

The best way to create momentum is by achieving many small goals, and celebrating success. 🏆

Momentum starts slow before picking up steam. Think of it like pushing a snowball down a hill. ❄️

Once you have momentum going for you - you have the motivation to keep grinding.


The fourth component of the compound effect is influences.Your influences are the people in your life that you spend time with regularly AND what messages they offer. Your dreams might be larger than the environment your in - so to realize that dream you might have to get out of that environment.

We don’t just get influenced - we also influence others.

There are two main types of influencers 1. personal influencers, and 2. organizational influencers.

1. Personal influencers 🧑

The personal influencers are people you are in close contact with. These people play an important role in shaping your thoughts, ideas, and actions.

“According to research by social psychologist Dr. David McClelland of Harvard, [the people you habitually associate with] determine as much as 95 percent of your success or failure in life.” - Darren Hardy

Know who they are. Respect them for positives they offer and be cautious for negativity. Also, be careful making decisions based on advice from peers.

2. Organizational influencers 🏢

The organizational influencers are the companies we interact with regularly and their messaging. These organizations influence you as a customer in two ways:

  1. branding and messaging by the company themselves

  2. delivered messages from third parties partners to the company

Number two might be hard to spot. For example, ecommerce brands collaborating with TikTok for marketing outreach. Especially, if they sponsor native posts with influencer marketing - meaning the company dictate what we see and how we think, without us barely realizing it.


The final component of the compound effect is acceleration, which comes as a result after having mastered the first 4.

Everyone faces ‘walls’ or moments of truth where we feel there is nothing left to give. Approach these walls as opportunities. Everyone elses faces the same walls, which means success lays on the other side. It is only after theses walls that real growth happens.

Don’t just meet expectations - do it better and then do it better than that to multiply your success. Do the unexpected and stand out from the crowd. Take extraordinary action and harness the power of compounding.

Acceleration allows you to unlock your full growth potential - jumpstarting your income, life and success.

Applying the Compound Effect in your life

Step 1 is to start tracking progress right away. That will give you feedback to bring into a weekly follow-up session. Also, track others’ success and use as inspiration for your own work.

This is how to achieve exponentially compounding growth over time.