We always advise sustainable and social businesses to deploy the compound impact method when it comes to making important business decision. In this article we show you three ways to create compound impact as you start developing your market entry strategy for Germany. But before we get there, let’s shed some light on the term “compound impact” itself.

“Compound interest is the Eighth Wonder of the World. He who understands it, earns it; he who doesn’t, pays it.”
– Albert Einstein

Compound interest is the outcome of interest on top of interest, the way how an investment grows exponentially over time. The compound interest effect is probably one of the most important concepts to understand when you strive to generate wealth in a capitalist economic system.

The very nature of the compound interest effect is that you start seeing the results only after a certain period of time. The earlier you start to save money, the better and the longer you wait, the more you get in the end.

The are numerous articles you can read about it but more interestingly, this effect has been interpreted in ways that demonstrate how we can pursue personal and professional goals.


The Power of Small Steps
In the book “The Compound Effect”, the author Darren Hardy profoundly explored the power of small steps and the concept that over time, consistent, persistent small steps make overwhelming differences in life, both negative and positive. Every choice you make has an impact on your life’s compound effect. It’s simple – if you, for example, decide to change your eating and workout habits positively, you may not be able to see the differences in weeks or months but are most likely to reap the invaluable benefits of being healthy long after you retired.


Impact Investing
Another way of compound effect is “impact investing”. It refers to investments made into companies and organizations that strive for a beneficial social or environmental impact alongside a financial return. But impact investing can also happen on a small scale: by just buying products from companies with highly strategic plans for the triple bottom line, the people, planet and profit. For example, if you buy a WakaWaka Light, you first help to alleviate acute energy poverty in developing countries but then help create compound impact as the benefits of solar power unfolds especially in the long run. By providing safe light, health risks are reduced and children can study after sundown. This contributes to the country’s overall well-being along with the improvement of its economy.

So the term “compound impact” mentioned in the latter example is a derivat of “impact investing”, describing the idea to align profit and purpose:


In impact investing, generating compound interest means generating compound impact.


In other words: yes, you can use business as a force for good. Growing not only means growing profits but also growing your beneficial social and environmental impact.

But how does that work exactly? How do we break the high level concept of compound impact down to the small steps within your business that are necessary to achieve long term compound effect?

To answer this question on a more practical level, we make a start by describing 3 aspects that matter when we help sustainable companies to enter the German market.



1. Create and exercise a sense for compound impact
Entering a new market is a risky endeavor, for which you will need to allocate budget and internal resources. At the beginning of this project, make sure your strategy and action plan is effective. To better assess whether or not you are taking the best steps possible, create a sheet where you list the proposed actions with the effects they supposed to entail long term.

Oftentimes, when we focus on profitability too much, we tend to think about the short term outcome in the first place and that is not in favor of growing our long term compound impact. So writing down the compound impact effect, helps to recall the more important end goal in mind.

If you like to know more about this topic, read our blog post about increasing the odds for a positive triple bottom line.

Regarding your market entry, keep in mind that going one step back and answering the questions relevant to the German market is important to see the bigger picture and assess whether the steps you want to take are headed in the right direction. All the questions you answer when conducting a thorough market research.

 

2. Be patient
Various studies confirm that Germans are fairly slow when it comes to the adoption of new technologies and they tend to be rather suspicious towards novelties and innovation. Germans build trust over time and don’t like to be pushed upon which is why they don’t like loud advertisements or being cold called (which is a legal grey area by the way). They take their time but once they are convinced to buy from a new provider, vendor or producer and they deliver to their promise, they are very loyal and don’t leave just because a competitor is cheaper.

 

3. Target the army of multipliers
In order to overcome the barriers the Germans feel when it comes to buying a new product or using a new software, building trust is essential. The best way to accelerate the process is to deploy effective referral-programs which support word-of-mouth mechanisms. Germans value a friend’s or family’s opinion highly and trust their judgement. But also embracing online rating portals and encouraging user to publish their experiences for the crowd to read is a good way to promote your brand.

If you are patient, pursue your activities consistently and take the small steps persistently, you will be recognized within important target groups and sooner or later be rewarded with an army of multipliers. This is compound impact effect in action.

So when you decide to enter the German market, take time to conduct a thorough market research and when devising your strategy, allow it for relationship building in terms of time and marketing activities. Follow on your steps steadily and once you have built the trust amongst your target audiences, customers will reward you with (life-)long loyalty and free referrals.