The 4% Edge: How Roger Federer’s Secret to Greatness Can Transform Your Business

Chris Homa

Yesterday, a video of Roger Federer, arguably the greatest tennis player ever, popped up on my feed. It was his 2024 Dartmouth commencement address; a speech I’ve watched many times. One passage resonates: Federer revealed he won 80% of his career matches but only 54% of the individual points within them. Just a 4% edge in points separated the legend we revere from someone we’d never know. That thin margin got me thinking: what separates extraordinary businesses from their competitors?

At Red Rock Strategic Partners, we’ve worked with enterprises that sustain this 4% edge, achieving consistent greatness. Four principles are repeated in every case:

1. They are Simple, Organized, and Disciplined: You have probably seen highlights of Roger Federer doing things on a tennis court that do not seem physically possible. However, I would argue that you do not remember almost 99% of the points he ever won because they were straight, down the line, great fundamental tennis. While complexity is sometimes necessary, most of the time, great fundamentals will do more to help us sustain the 4% edge. We must frequently remind ourselves that the seemingly mundane tasks are often the most crucial. A great exercise for your organization during formal meetings is to look at what is most essential to your business (your mission, your values, your current strategy) and ask the following:

   1. Have we removed all nonessential variables from the equation to focus on what is most critical to our success?

   2. Have we organized our systems and process in a way that we are executing with the right people at the right time for the right reason?

   3. Are we executing on what is most important day in and day out with absolute consistency?

      
      

2. They Take Seriously the Sunk Cost Fallacy: There is a very wise Japanese proverb that goes, “If you get on the wrong train, get off at the next station. The longer you stay, the more expensive the return trip will be.” In financial services, we constantly tell our clients that a reliable plan has more to do with limiting risk than maximizing returns. Yet, we oftentimes do not turn that lens inward and apply it to our own businesses. Every strategy is not perfect, every hire is not a rock star, every client is not a great fit. The sooner we go about admitting to, learning from, and correcting our mistakes the easier we can sustain our consistent 4% edge and continue to grow.

   
   

3. They are Consistently Not Stupid: One of my favorite quotes is by the late, great Charlie Munger of Berkshire Hathaway, “it is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” I would say without hesitation that Mr. Munger was able to maintain a consistent edge of 4% or better during his tenure at Berkshire. In my experience supporting organizations that are consistently not stupid, they spend an inordinate amount of time focused on three things:

   1. Do we have a consistent standard and is everyone held accountable to that standard? This does not necessarily create barriers to action, but it definitely puts guardrails in place of how far afield actions can go before being reigned in.

   2. Are we consistently specific and intentional in our execution? Meaning we are not winging it.

   3. Are we always on the lookout for blind spots? Constantly searching for risks that could potentially harm our business in the future of which we are currently unaware.

      
      

4. They are Intentional About Change: Every business needs to innovate and evolve over time to stay relevant and competitive. Innovation is often a fine line between “that’s the way we’ve always done it” and completely reinventing the way we do business. Too far in the former direction and we become stagnant. Too far in the latter direction and you bring New Coke to market (for those of us old enough to remember). In a 4% edge organization, change is extremely well thought out and purposefully executed. Before initiating any substantial change, I am always reminded of the three questions posed by the great economist, Thomas Sowell, to debate the merits of imposing a policy change:

   1. As opposed to what? Generally, this means as opposed to what we are currently doing.

   2. At what cost? This does not strictly apply to monetary costs. Will training be required to get people up to speed? Will this impact tech stack in any way? Will this cause operational disruption? Do our clients want a new product or service?

   3. What evidence do we have to support our conclusion? Well informed, data-driven decision making. We need to go well beyond forecasting and anecdotal evidence to ensure the change we make will realistically lead to the results we intend to achieve.

      
      

Compound interest is the eighth wonder of the world. A 4% edge seems inconsequential, but builds unstoppable momentum. Federer’s career, like every successful business, proves the power of maintaining a consistent edge. Today, pick one principle—simplify a process, ditch a bad strategy, or plan a smart change—and act. That’s your first point in the many wins to come.