Hidden Potential: The Science of Achieving Greater Things
January 6, 2025
4 min read
📚 arvy's Book Club
arvy's Teaser: We overvalue talent and undervalue growth. Adam Grant's research shows that the people who achieve the most aren't the ones who start the best — they're the ones who improve the fastest. The same principle applies to companies, portfolios, and wealth-building itself. Potential isn't fixed. It compounds. Here's what an organisational psychologist can teach you about investing.
The Book in 60 Seconds
Hidden Potential: The Science of Achieving Greater Things (2023) by Adam Grant challenges the idea that success is determined by innate talent. Drawing on psychology, education research, and stories of unlikely achievers, Grant argues that growth rate matters more than starting point — and that the right systems, environments, and mindsets can unlock potential that traditional metrics completely miss.
Adam Grant · 2023 · Psychology, Growth & Achievement
Idea 1: Growth Rate Matters More Than Starting Point
Grant's central thesis: we're obsessed with current performance and blind to trajectory. The student who scores 70 and improves to 90 has more potential than the student who scores 95 and stays there. The employee who struggles initially but learns fast outperforms the "natural" who coasts. Starting point is a snapshot. Growth rate is a movie.
The same applies to companies. A business with CHF 50 million in revenue growing at 30% annually is more valuable than one with CHF 200 million growing at 2%. Wall Street consistently undervalues growth trajectories and overvalues current size — creating opportunities for investors who look at trajectory instead of snapshots.
The question isn't "how good are you?" It's "how fast are you getting better?"
The Investor Lesson
Look for companies with accelerating growth — expanding margins, growing market share, increasing R&D productivity. A company that's improving faster than peers is compounding its competitive advantage. Current earnings are a snapshot. The rate of improvement is what determines long-term value. (→ Quality Investing)
Idea 2: Small Improvements Compound Into Extraordinary Results
Grant shows that hidden potential isn't unlocked through dramatic breakthroughs but through consistent, incremental improvement. The examples are striking: the language learner who practices 20 minutes daily outperforms the one who does weekend marathons. The athlete who improves 1% per week becomes elite within two years.
The mechanism is compounding — applied to skills, knowledge, and habits instead of money. Grant calls it "building character skills": the discipline to show up daily, the resilience to recover from setbacks, and the proactivity to seek feedback.
The Investor Lesson
This is literally how compound interest works. CHF 500/month at 7% doesn't feel exciting for 10 years. Then it becomes extraordinary. The investor who adds CHF 500 consistently for 30 years ends up with ~CHF 610,000 from CHF 180,000 invested. The "hidden potential" of disciplined, boring, automatic investing is the most powerful force in personal finance. (→ Calculator)
Idea 3: The Right System Unlocks More Potential Than Raw Talent
Grant's most provocative argument: environments and systems matter more than individual talent. Finland's education system produces world-class results not by selecting the most talented students but by building systems that help every student improve. Companies that invest in learning cultures outperform those that hire only "stars" and expect them to perform without support.
The investing parallel is direct: your system matters more than your stock picks. An investor with average stock-picking ability but an excellent system (automatic investing, proper diversification, low fees, long time horizon) will beat an investor with brilliant intuition but no system (emotional trading, concentrated bets, high fees, short-term thinking).
The Investor Lesson
Build the system. 3a maxed, savings plan automated, portfolio diversified across quality companies, fees minimised. The system does the heavy lifting. Your job is to not interfere. Grant's thesis applied to investing: potential is unlocked by environment (the system), not just talent (stock-picking skill). (→ Savings Plan)
What This Means for Swiss Investors
| Grant's Principle | Swiss Investor Application |
|---|---|
| Growth rate > starting point | Don't worry about starting late or starting small. CHF 200/month started now beats CHF 0/month waited until "the right time." The rate of improvement (consistency) is what matters. |
| Small improvements compound | CHF 500/month doesn't feel extraordinary. Give it 30 years: ~CHF 610,000. Hidden potential is what compounding does in the decades you don't notice. (→ Calculator) |
| Systems > talent | The Swiss system (3a tax advantages, capital gains tax-free, automatic investing) is the "Finnish education model" of wealth-building. The system is better than your intuition. Use it. |
arvy's Take
What holds up: Grant's reframing — trajectory over snapshot, growth over talent, systems over stars — is genuinely useful for both life and investing. The compounding parallel is direct: hidden potential is exactly what CHF 500/month looks like for the first 10 boring years before it becomes extraordinary. And the "systems > talent" argument is the best case for automated investing we've read outside a finance book.
What's missing: Grant's examples occasionally oversimplify — not every underdog story is replicable, and survivorship bias is real. The book also doesn't address investing directly. And some sections feel padded — the core ideas could be tighter.
What we'd add: Grant proves that potential compounds. So does money. The practical application: start now, automate everything, and stop worrying about whether you started too late or too small. The hidden potential of CHF 500/month over 30 years is CHF 610,000. The hidden potential of waiting for "the right time" is CHF 0.
3 Sentences to Remember
1. Growth rate matters more than starting point. Start now, start small, but start.
2. Small improvements compound into extraordinary results — in skills, in habits, and in portfolios.
3. Your system matters more than your talent. Automate, diversify, and let the decades do the work.
Buy the book
English (Amazon) · Deutsch (Amazon)
Also in Book Club: Psychology of Money → · 5 Types of Wealth →
Unlock your portfolio's hidden potential.
Start small. Stay consistent. Let compound interest turn ordinary into extraordinary. Pillar 3a + savings plan from CHF 1/month.
This article was written by Thierry Borgeat, Co-Founder of arvy, and reviewed by Patrick Rissi, CFA, and Florian Jauch, CFA.
Disclaimer: This article is for general informational purposes only and does not constitute personal investment advice. Amazon links are affiliate links. arvy is a FINMA-supervised asset manager.
