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Why marginal gains theory in sport is relevant to business

July 25, 2017

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Type: Corporate Finance, Latest Blogs, Trending

The factors behind the spectacular gains seen by our Olympic athletes in recent years have increasingly come under the spotlight by businesses, as they seek to uncover ways to boost productivity and protect margins in the wake of the exchange rate devaluation following the Brexit vote, and the continuing uncertainty over the likely outcome of the Brexit negotiations.

 

Some of the most striking gains in recent years have come from Team Sky and the UK Olympic cycling teams.

 

These gains stem in large part from the processes used by Sir David Brailsford, the performance director of British cycling and the general manager of the Team Sky cycling team. Brailsford has spearheaded the track cycling revolution in Britain and is acknowledged as the “man who reinvented the wheel”.

 

Brailsford realised as many businesses owners do that there is no magic bullet (or not a legal one anyway!) to turn high performance into elite performance.

 

Brailsford’s philosophy of marginal gains came from the idea that if you breakdown everything you could think of which goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together.

 

Many businesses are starting to look at how these principles could be applied, or could be applied in more detail than is currently the case.

 

Marginal gains is not a new theory (this itself is another lesson for businesses), some of the principles had been applied in Formula 1, and it builds on established Kaizen management theories. What is interesting is how Team Sky turned the application of the theory into an art form.

 

Brailsford and his team started by optimising the things you might expect: Nutrition of riders, weekly training programmes. But Brailsford and his team didn’t stop there, they searched for 1% improvements in areas that were overlooked by almost everyone else, famously hiring a surgeon to teach athletes proper hand washing techniques to minimise illness, literally no stone was left unturned in the search for marginal improvements.

 

Applying marginal gains to business.

 

Magic bullets are very rare in business certainly in the current competitive environment where new ideas are quickly copied.

 

However whether it is profit improvement, cash flow management, efficiency of the budgeting process,  supply chain, sales performance or service response, marginal gains can be applied to any process in any organisation either in the public, private or charity sector.

 

An example is the John Radcliffe hospital in Oxford. The hospital looked for ways to improve the performance of its intensive care unit through the application of marginal gains theory. They focused on patient recovery times, this was identified as key because if a patient recovers faster beds open up, and the hospital can treat more people.

 

Management started by breaking down the recovery process, and reviewed the area of patient rest and particularly sleep as a key factor in the recovery time of patients. The hospital implemented a number of often  very small measures designed to reduce noise levels on wards to improve sleep, including reducing/blocking the noise from machines, lighting, and even reducing noise from bins.

 

So how can marginal gains theory be applied to your business:

 

  • Be clear on what success would look like for your organisation (this is much easier in sport than business)
  • Decide the key areas which require improvement to achieve success- for example productivity, cash flow, response times, staff retention, recruitment etc
  • List out all the processes affecting these areas.
  • Think about all the contributing factors to these processes, such as the work environment, technology, staffing etc. Anything that has an impact needs to be captured. Ensure key stakeholders are consulted in this process to ensure buy in.
  • Break each process down to its constituent parts, so you can step back and see the process in its entirety.
  • Get a fresh perspective from someone who doesn’t use the process.
  • Ask why and what is each component of the process doing. What value is it adding, if you can’t come up with a good answer for either question, you have found a potential marginal gain.
  • Crucially ensure management have the ability and determination to drive through the sometimes difficult decisions which may flow from the above process.

 

One of the key aspects of marginal gains theory is the focus on continual learning. Processes are constantly refined and improved as performance data comes in, and new areas of improvement are identified. An environment and culture focused on optimum performance and teamwork are crucial.

 

If you would like to discuss the how marginal gains theory applies to businessses, or you would like to speak with a member of our team, please contact Ian Waddingham or call 01772 821021 to be put in contact with a menmber of our Corporate Finance team.

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