A famous thought experiment asks: if you had a chessboard and placed one grain of rice on the first square, two on the second, four on the third, doubling each time - how much rice would you have on the last square?
The answer is over 18 quintillion grains. More rice than has ever been produced in human history.
The maths behind this is called compounding. And it is one of the most powerful and counterintuitive forces in any kind of improvement.
Why compounding matters
Warren Buffett started investing at age eleven. By thirty, he had built a meaningful track record. By fifty, he was wealthy. By his eighties, he was worth over $100 billion - not because his investment strategy became dramatically better, but because he had been compounding returns for longer than almost anyone else.
The same logic applies to process improvement. A team that spends a single month improving a trial balance loading process might save two hours per entity per quarter. Across 20 entities over five years, that is 800 hours recovered. And because those recovered hours can be reinvested in further improvements, the gains compound.
If you had invested £1,000 at an annual return of 10%, you would have:
- After 10 years: £2,594
- After 20 years: £6,727
- After 30 years: £17,449
The same £1,000 at 15% annual return over 30 years becomes £66,212. The rate matters - but the starting point and the duration matter more.
Why delay destroys compounding
The single most damaging thing you can do to a compounding process is delay starting it.
Every year you wait is not just a year without gains - it is a year without the gains that would have compounded on top of those gains. The cost of not starting is invisible and tends to be dramatically underestimated.
In tax technology, this often manifests as waiting for the “right” moment: when the new ERP goes live, when the team has more capacity, when there is budget for a larger programme. Those conditions rarely arrive on a schedule. Meanwhile, the manual process continues.
The compounding case for starting now - with something small and achievable - is almost always stronger than the case for starting later with something comprehensive.
The virtue of starting small
The Amazon River drains more water than the next seven largest rivers combined. It began as a trickle in the Andes, thousands of miles from the ocean.
The Grand Canyon was carved by the Colorado River - gradually, over millions of years. No single storm created it.
Small, consistent forces produce the most dramatic long-term outcomes. The same is true of process improvement in finance and tax.
A team that builds one Alteryx workflow this quarter - something that saves four hours a month - has something to build on. They understand the tool. They have confidence from a working example. The next workflow takes less time to build and delivers more value faster.
A team that waits to build a comprehensive automation programme has nothing to build on. And the comprehensive programme rarely arrives on schedule.
What this means in practice for tax teams
You do not need a business case for a £200,000 technology programme to start improving your process. You need one person, a clear problem to solve, and permission to spend a few weeks building something.
The criteria for a good first project are deliberately modest:
- One clear input - a consistent, predictable data source
- One clear output - a specific deliverable that currently takes manual effort
- One willing person - someone on the team who is curious about the tool and has time to learn it
The result does not need to be perfect. It needs to work, and it needs to demonstrate that improvement is possible.
From there, the compounding begins.
A practical first step
If you are reading this and thinking “we should really look at this for our team,” the most useful thing to do is identify one specific process - not a category of processes, but one - where manual effort is clearly disproportionate to the value it adds.
Write it down. Put a number on how long it takes. Then explore what it would take to reduce that time by half.
You do not need to solve the whole problem. You need to start. The compounding takes care of the rest.
If you would like to talk through what a first step might look like for your organisation, get in touch. We have helped teams start small and build something meaningful - without a large programme, and without a long wait.
