News and Insights

The Milestone Effect

At a client meeting last week, we highlighted the sell side process at RKCA and its many steps.  And, as expected, some variation of “wow that’s a lot of milestones!” was exclaimed.  This…almost always happens.   There are two answers to our approach in laying out a detailed Gantt chart tailored to each client and their process: Details matter in a transaction and there needs to be a mechanism memorialized to keep track of all of those details The Milestone Effect   What do I mean by The Milestone Effect? As a runner, the simplest explanation I can make is below. This graph, represents the distribution of over nine million marathon runners’ finishing times.  It comes from Eric Allen (et al.) in a paper entitled “Reference Dependent Preferences: Evidence from Marathon Runners.”1  

Screenshot 2023-05-21 at 4.07.10 PM

As Donald Rumsfeld famously said: “there are known knowns; there are things we know we know. We also

If you look at the distribution, notice that it not smooth.  Notice also that at the “threshold times” (3:00, 4:00, etc) it is clear that more runners finish JUST before the various threshold lines vs. after the lines.

In order to run a sub-3:00 hour marathon, you need to be at a 6:50 min/mile pace.  Based on this data, why is it that after running for ALMOST 3:00 hours at that pace, that you can somehow sprint up at the end to beat the 3:00 hour mark?  Aren’t you exhausted?  How do you get MORE energy at the end?  As someone who has run multiple marathons and endurance races, this did not come as a surprise to me: when you prepare for a race, you’re  setting a time goal which is a static H:MM and often times, its easiest to remember by making it at a half hour increment.

As humans, we love milestones.  We love rewards.  We love to collect points for airlines, for credit cards, for Starbucks.   As children, we collect stickers and stars for good behavior.  As employees, we love reviews and bonuses.  As bankers, we love to measure ourselves against our peers by how many deals we’ve done in a year.  

Too often, milestones are months away on projects in organizations.  When you sell your business, there is one MASSIVE milestone at the end, but getting there is hard.  Sure, you may have a banker that peppers in various check-in calls and talks broadly about process.  And that may work for you.

But at RKCA, we believe by increasing the frequency of milestones, we increase the excitement, we sustain the energy needed to keep going, and increase the velocity associated with getting a transaction completed.

Next time you are setting a milestone for your organization, think about this and try to increase the volume of mini-milestones to get there.  Once you’re done, let me know how it went.

Keep moving.

1.  Reference-Dependent Preferences: Evidence from Marathon Runners, July 2014.


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