Incremental development: what it is and why you should care

The idea that small actions, repeated over time, can inspire significant change is ingrained in the business world. This concept underpins many popular investment strategies and forms the backbone of how many of us seek to better our own lives, whether we’re trying to improve our diets or our finances.

It’s the basis of kaizen (literally, “change for better”), a popular business philosophy and a key doctrine of cost-conscious finance departments everywhere. Northwest Airlines famously saved $500,000 a year by cutting its limes into 16 pieces instead of ten (decades earlier another U.S. airline supposedly saved as much as $100,000 a year by removing one olive from its first-class salad).

But strangely, this emphasis on incremental change tends to get lost — or at least overlooked — when we approach some of the most complicated, significant problems of our world today.

Most of us, whether as donors or on the front lines of business, write about and work toward transformation. This is good news. Big goals inspire and motivate; they challenge us and bring out our best. But in pursuit of those audacious goals, we shouldn’t lose sight of the power of small advances.

Incremental improvements

Economists have found that when productivity grows 3 percent annually, the standard of living doubles in a single generation. But when productivity grows only 1 percent annually, it takes three generations for the standard of living to double.

Whether it’s productivity or poverty, food scarcity or education reform, small-percentage advances can have an outsize impact on the biggest societal issues of our time. China’s projected growth provides a clear example. By 2030 the country’s population will exceed 1.4 billion, according to U.N. estimates, and will account for close to 15 percent of the world’s total. Feeding that many people is clearly a massive challenge — but to meet it, China’s crop yield needs to grow only 2 percent each year.

History teaches this lesson as well. In his book How We Got to Now, Steven Johnson tells the story of Jacob Riis, a journalist in the 1880s who had been trying to draw attention to the dangerous, degrading living conditions in New York City’s tenements. Riis’s articles were impassioned but largely ignored. However, thanks to small advances in photography in the late 1880s — namely, the invention of a bright, steady-burning flash powder — Riis was able to photograph the dark, squalid conditions that many New Yorkers were forced to live in. His images achieved what his words couldn’t, sparking public outcry and helping to catalyze one of the most successful antipoverty movements in U.S. history. A decade later, New York State passed landmark legislation on building requirements.

What I find especially encouraging about Riis’s story is that it highlights the power of technological innovation — even relatively small improvements in flash photography — to catalyze tremendous societal change.

Whether it’s using Big Data to study traffic patterns — and thereby reduce congestion and accidents — or using Internet-of-Things devices to improve our ability to predict natural disasters, allowing us to prepare for them and minimize their damage, the possibilities of digital-driven innovation are as exciting as they are endless.

In a New York Times article earlier this year titled “AI and Big Data Could Power a New War on Poverty,” Elisabeth Mason, founding director of the Stanford Poverty and Technology Lab, highlighted how AI “tutors” could transform education by eliminating the inefficient one-size-fits-all approach of many modern classrooms, and how Big Data could allow for an “unbiased, ideology-free evaluation of the effectiveness of social programs,” changing not only the way governments measure these programs but also which ones they decide to fund.

These quantitative digital tools — artificial intelligence, advanced computing power, growing pools of data — are the most powerful drivers of the incremental change our world so desperately needs.

At WorldQuant, the quantitative investment firm I founded and lead, these tools are helping translate vast pools of alternative data into insights. This is allowing the analysis of more data than ever before, at even greater speed; and this quantitative firepower can be applied to everything from navigating equity markets to mapping cancer genomes.”

Digital fluency

But to fully realize that potential and maintain that pace of innovation, we need more people fluent in these digital languages, more men and women armed with the training and skills to not simply use this technology but to find ways to improve it and push it forward. Many have the desire and talent to learn but not the opportunity to do so.

That was part of the inspiration behind WorldQuant University, which offers a tuition-free online master’s degree in financial engineering. Education without barriers allows people around the world with valuable quantitative skills to be part of this digital-driven change.

As we work to reach more people and teach more subjects, I’m keeping in mind two lessons that the trailblazing photojournalist Jacob Riis learned. First, incremental improvements can lead to exponential advances. Second, transformation never happens in a flash.