11 Lessons I Learned from Chaos Theory

My Introduction to Chaos Theory

Some years ago now I attended arguably the most interesting class of my college career. It was a mixed discipline seminar that took three of the best professors at the university and asked them to share one of the most important aspects of their field. Of the best of the best of the best was a section on Chaos Theory mathematics from a highly engaging math professor.

For the uninitiated, chaos theory demonstrates that small differences to dynamic systems can result in widely varying outcomes. For example, a small rounding error, or someone taking a liberty with rounding will generate a result to these particular equations that I certainly never would have guessed.

A variable of 1, 1.1, 1.01, 1.02, and 1.101 will land "illogically" as you plot them on a graph. The implications are far reaching, and meteorologists, engineers, physicists, and biologists actually deal with this on a fairly regular basis.

Whether you crave order or don't mind the chaotic, chaos math is some crazy stuff. It feels like the laws of the universe have somehow broken or folded in on themselves when 1, 2, and 3 are no longer connected. Unsettling as it may be, this theory opened my eyes. Years later, I've discovered this theory applies to far more than fluid dynamics and outer space.

Here are 11 things chaos theory has taught me about business.

1. More money does not mean more money.

Increasing income (revenue) does not mean that you will increase profits. You may not retain the same profit margins, capital expenses may be necessary, variable costs will likely rise. There is more than just one number to watch as a business owner.

2. More effort does not always yield better results.

"I can't work any harder" is the common cry of the solopreneur and small business owner. When you can't work harder, it may be necessary to work smarter, more efficiently, grow, or close. We want to feel in control, and pouring effort into a project feels like the way to get it done faster, better, bigger, to make more money - but sometimes it is not.

3. More marketing does not mean more customers.

Some businesses fail to embrace marketing. Others put all their faith in this dark art. More dollars invested do not always yield more dollars coming in, new customers, or happy customers. Carefully crafting a plan, executing it, being informed through experience, channel culling, and more are necessary. And then it still might not work out like it was drawn up!

4. More job applications do not mean more job offers.

Do you remember want ads? The Sunday paper really mattering? Job boards in the community center? We live in a brave new world, filled with rocket-ship phones and space-laser remote controls. Applying for a job has never been easier, and there has never been a population of employees more transient and employers less concerned about attrition. Getting a job offer is more random than it has ever been.

5. Bad economic conditions do not mean less money.

Many, many, many businesses went under during the Great Recession. Many more grew, prospered, and were born. One of my clients did not miss a quarter of growth for 20ish years, and I still don't think they have. It was an exceptionally managed company of competent employees who loved their jobs enough for them to be on the Forbes Best Employer list for years. Less money circulating does not mean it stops changing hands entirely.

6. Bad business practices do not make bad businesses.

Amazingly, just because a business is doing everything wrong does not mean it will fail. It doesn't even mean anyone will notice. I have seen numerous businesses make bad choices, or poorly managed that have done fantastically - at least for a time. This is often the result of environmental or economic factors, the power of a personality, or dumb luck.

7. Bad customer service does not mean less money.

I was in a store yesterday where a skilled professional provides a specific service. An affluent woman entered, and asked if the service had been completed. The professional said it wasn't. There was a mixup, and she became increasingly frustrated, at one point turning to me and saying, "he is a real @**." She then asked for a quote on another project. She will be back. Sometimes personality driven, other-times circumstance, industry, or gamma ray, customer service does not always impact business.

8. Bad employment practices do not mean unhappy employees.

Like an abused spouse, in some instances employees stay in employment relationships with terrible employers. I can't say if it's fear, Stockholm Syndrome, or self esteem, but some employees will endure. Some will work in abhorrent conditions, and some will agree to work in scenarios that defy labor laws. About this, all I can say is it is up to employers to hold themselves to the correct standard, and sane employees to protect their friends.

9. Bad outcomes once do not make bad outcomes every time.

The other day I spoke to a business owner about bounce-back offers. He told me bounce backs have never worked for him. I happen to know that in his industry and the geographic area he operates they are successful. The reality is that doing something once or a few times, or thinking we do something does not mean it will turn out the same way every time. In some instances, we are unable ourselves to objectively assess the failure points. Conversely, just because something worked for one person does not mean it will work for another!

10. All business growth is not a sign of business success.

More than once, I have seen a business charge ahead opening a new location, bringing on more employees, or building a new facility. Others say, "[so-and-so] must be doing something right." And then they close. Or a tax scandal breaks. Or or or. Whether you are a silent business partner, present, or absentee owner, remember that growth is not an inherent sign of success. It's a strong indicator, and needs to be looked at with at least a half dozen others.

11. All businesses do not need the same things.

Much to my chagrin, all businesses do not need VoIP phones configured through a PBX exchange and SIP trunk or CRM. They also don't all need SEO, a website, local search, or even business cards. Even two businesses in the same industry don't NEED the same things to be successful, depending upon customer base, business focus, location, or operating budget to name a few variables. Don't get me wrong, there aren't many I wouldn't recommend a website or business cards to, but there are some.

In the end, business is not formulaic. And winter is coming! How do you feel about chaos theory, and their application in business? Would you rather I just write about silent cellphones? Let me know in the comments below...

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Joe Nehila is a Principal at Nosoco, a business solutions company focused on small and medium-sized businesses. Nosoco has helped numerous small and large companies compete internationally through using pragmatic, iterative, novel solutions. For more information, visit them at their website or on their new LinkedIn profile.