What Is Incremental Degradation In Business & Life?

What is Incremental Degradation?

Incremental degradation is an insidious force which destroys the quality of products over time.

We fall for incremental degradation when we forget about the fundamentals that brought us to our current levels of success.

This problem doesn’t just matter in the realm of business, but it can be disastrous in your personal life as well.

To best explain incremental degradation, we will look at a popular business parable.

I first heard of this mental model in Michael Masterson’s book ‘Ready Fire Aim’.

A Story of Incremental Degradation: Candy Corp

Candy Corp was the business behind the world’s best selling candy ‘Chomp’.

After many years of business their veteran CEO retired to play golf in Santorini.

His replacement was a young executive known for building businesses by cutting costs.

The new CEO ordered a meeting with all of the head managers of the firm.

“Do you know that our candy has 40 different ingredients?” The CEO asked.

“Yes, we go to great lengths to ensure each piece of candy has the perfect ratio of each ingredient,” replied one of the managers.

“Do you know if we cut out ingredient-27 we would save $3.6 million a year? Do you honestly think customers would be able to tell the difference?” The CEO asked with a smirk on his face.

The room was silent.

In all 100 years of business, the original recipe of Chomp had never been tempered with.

“Here is what we will do. We will cut out ingredient-27, but before we bring it to market, we will do a taste test against the original Chomp. If our customers can’t tell the difference, we will move ahead with the plan,” demanded the young CEO.

The room remained silent.

“Where do you think the $3.6 million will go? Everyone in this room will get a bonus for helping with this innovation.”

The room roared with excitement and all the managers were on board.

They did a taste test with 10,000 devout fans of Chomp, and 99.9% of them couldn’t tell the difference between the two candies.

They then went ahead with the changes and mass produced the new candy.

That year business was booming.

Everyone at Candy Corp was happy with the business savvy of the new CEO.

It wasn’t long after this initial success that the CEO hosted another meeting.

“Do you know ingredient-5 is costing this firm $8 million to produce? What if we replace it with this cheaper alternative from China? It’s about time we show our inclusivity!”

Everyone trusted the new CEO and several other changes were made to the product.

Each time they would test the version against the previous, and each time customers wouldn’t be able to tell the difference.

The CEO was on the cover of Forbes and earned an extra $50 million on top of his salary from bonuses and stock options.

Life was good for him, and he started contemplating his retirement to Mykonos.

Two years after the first changes to Chomp, the stock abruptly crashed.

People stopped buying Chomp.

Chomp went from number 1 in the world to number 34 in less than a year.

This was the biggest disaster in Candy Corp’s history.

The CEO called all the managers up for emergency meetings.

He grilled the marketing team for doing a lousy job, but they insisted they had not changed a single thing in their strategy.

They were actually spending more money on marketing than ever before.

Frustrated, the CEO went to the lunchroom.

He saw a Chomp bar on the table.

He opened it up and ate it.

It was delicious!

It tasted exactly how it did when he was a kid.

Clearly it wasn’t the candy that was the issue but something else.

The CEO looked at the wrapper and realized it was the original Chomp that he had just eaten.

He grabbed the latest version from a jar, opened the wrapper and squeezed it into his mouth.

“Ugh, this tastes like shit!”

He almost spat it out.

He suddenly realized the mistake he had made.

Each time they did a taste test with the candy, they tested the new version against the previous version.

They didn’t test the new versions against the original.

The difference between the versions was negligible.

However, the incremental degradation added up in the long run was astounding.  

They had changed Chomp so much that it was no longer the classic flavor everyone loved.

It became a Frankenstein.

After this realization, the CEO told production to bring back the original flavor.

It cost the company an extra $20 million a year to roll back the classic.

After several years Chomp returned to its number 1 position as a best seller and finally the CEO retired.

Incremental Degradation in life

You have several small habits holding your success together.

These habits might include meditation, reading, exercising or studying.

Humans love the path of least resistance, so we often skip these fundamental habits.

You rationalize to yourself,

“It’s only one time, it won’t hurt.”

This makes the habit easier to skip the next time.

Soon, before you are aware of it, you lose the habit and its benefit.

You forget about the things which brought you to your previous level of success.

Nature follows laws and every action had an equal and opposite reaction.

When you change your habits, your external world changes too.

You might notice the weight gain.

Perhaps your mind is not as sharp as it used to be.

Your relationship is in complete turmoil.

These circumstances occur due to incremental degradation.

The small things which change slowly day to day but accumulate with the passage of time.

Even celebrities are not immune to incremental degradation.

Before 2017 Conor McGregor was one of the hottest prospects in MMA.

Between 2011 and 2017 he had 17 victories out of 18 fights.

He became the first double champ in UFC history and had an amazing career ahead of him.

In 2017, he took on a big money fight against Floyd Mayweather (in boxing not MMA), which made him an easy $100 million dollars.

After the fight McGregor was never the same.

He became more arrogant, allegedly surrounding himself with ‘Yes Men’, drugs and hookers.

As of 2017 he has lost 3 out of 4 of his fights.

He is simply not the same fighter he used to be.

The money and fame corrupted him, likely destroying many of the habits he used to build himself to the top.

He’s an example of rapid degradation which can happen when you forget the basics.

What can you do about it?

The key to battling incremental degradation is to never abandon the basics.

The fundamental habits need to be honored.

Professional basketball players still practice the most basic maneuvers.

Everything is built from the basics, and you need to maintain them forever.

Don’t ever neglect the habits which got you here.

Do this and you will be one step closer to living and dying well.

By Isaac

I help people live and die well.