The Delta of the Deltas

In mathematics, there’s a concept and symbol known as delta.

It is represented by the following greek letter Δ that looks like a triangle.

In this context, delta = change.

If sales were $100 million last year, and $110 million this year, we would say the delta is $10 million.

Management consultants will use the term “delta” as a shorthand way of asking questions about how a particular metric has changed over time.

For example:

Partner: What’s the delta in profits over the last 3 years?

Associate: A decline of $300 million or 30%.

"The delta of the deltas" is a concept that I turned into a quasi-mathematical metaphor back in January 2009.

As you might recall, this was a few months after the Great Recession of 2008 (which began in October).

Senior executives and CEOs were just shell-shocked at the rate of change in the geo-economic environment.

In the span of 20 days, every assumption every company had about the size of markets, customer demand, market prices, supply chains, industry capacity, availability of financing changed.

The delta in the external environment before vs. after October 2008 was enormous.

At the time, I was giving a lot of speeches to CEOs about how to not only survive this major economic crisis but actually to thrive.

One of my main ideas was for CEOs to compare the rate of change externally in their marketplace versus the rate of change internally within their organizations.

(In this case, I was referring to changes in decisions, focus, operational approach, financial management and the like.)

Conceptually speaking, in many industries, the external environment changed 40 “percent.”

In comparison, most companies had only changed 3 “percent” that year.

My argument is when the world changes at a 40% pace in one year, and you’re only changing at 3%, you’re in the process of being left behind.

The mathematical concept is illustrated by this formula:

When...

(External Rate of Change) > (Internal Rate of Change) = You are Screwed

External Delta > Internal Delta = You are Screwed

In these specific circumstances, changing too slowly can often be much riskier than changing too fast.

This was a major mindset shift for the hundreds of CEOs I spoke to that year.

As it applies to you, you always want to be monitoring the rate of change in three specific domains:

1) Your industry
2) Your employer
3) Yourself

The ideal ratio is:

Your Career Skills Delta > Your Employer’s Delta > Your Industry’s Delta

When this is true, your career acceleration exceeds that of your company as a whole; and your company’s acceleration exceeds that of the market it serves.

This is an optimal set of circumstances in which to build a career.

You end up gaining within a company that’s gaining within its industry.

This would be the equivalent of being a rising star at Amazon or Apple before their meteoric rises.

In the Amazon and Apple cases, they were innovating and changing at a rate that was much faster than the rest of their industry.

The same dynamic applies in every industry. The absolute level of change, improvement, and innovation doesn’t matter as much as the relative one.

If your company doesn’t innovate at the level that Apple does, but it innovates 30% more than its competitors, that’s more than good enough.

Conversely, the worst ratio is:

Your Industry’s Delta > Your Company’s Delta > Your Career Skills Delta

If your company is falling behind within its industry and you’re falling behind within your company, that’s bad news. It is the worst of all worlds.

Here are two corrective actions to take.

First, if (your industry delta) > (your company’s delta) and that ratio isn’t temporary, you need to change companies. Sooner or later it’s going to be a big problem.

If your company’s delta > your career skills delta, the solution is a little different. In this case, you need to find some way to improve your skill set.

Failure to do so means at best you’ve just hit a ceiling in your career (and will become a “lifer” in your current role) or at worst your position in the company has an expiration date.

On the flip side, if all the deltas are in your favor, it makes sense to keep it that way. Make the deltas even bigger.

This causes your employer to leave competitors behind at an even faster rate.

It also allows you to rise in your company at an even faster rate than average performers.

It’s worth being mindful of the delta of your deltas.

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3 comments… add one
  • Marc Leprince Sep 24, 2017, 9:19 pm

    Hi Victor!

    Even after following you for over 3 years now, your articles never cease to captivate me!

    This article in particular resonated with me because it really matches my situation at work. My company, my division and my role are in a flux. Without disclosing too much, my company’s cash cow is fading due to competition and a changing landscape. However, my division is growing steadily and is one of many channels expected to open and deliver new revenue for the future. Out of the whole company, mine is one taking major steps for change. Interestingly enough, as volatile and uncertain as it is, I feel strangely safe unlike many of my colleagues – where their division heads have not instigated this level of change.

    My job tasks may change, my director has been removed, divisions have been merged, split and recombined… I couldn’t explain why I was welcome to such change but after reading your article I think I understand. We are working hard to change faster than the environment around us and adapt ourselves. It’s certainly not comfortable, but I definitely feel safe in my job and career.

    • Victor Cheng Sep 24, 2017, 11:54 pm

      Marc,

      You point out an interesting feeling that I’d like to emphasize for others. When you’re changing faster than the external environment, it definitely isn’t comfortable. Speed and change can be a messy process. BUT, like you I think it is preferable to standing still while the rest of the world passes you by. With the latter, the outcome of being left behind is known. The only uncertainty is the timing. With the former, it’s hard but the realm of possible outcomes is wide open, not yet known, and within one’s ability to influence.

      -Victor

  • Marc Leprince Sep 24, 2017, 9:23 pm

    Extra note!
    I was following the Skills Delta > Division Delta > Environment Delta. So although don’t really have a clue where my career and company will go in the future, I am very confident the path in front of me will take me to where I need to go.

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