Navigating the Corporate World with the Power of Pregnancy Hormone and the Butterfly Effect

What do pregnancy and sales commissions have in common? Other than the fact that both can induce feelings of panic and dread, they actually share a surprising similarity - they both demonstrate the butterfly effect in action. You know, that phenomenon where small changes in initial conditions can have big impacts on outcomes over time? In this article, we'll explore how progesterone, a hormone responsible for preventing menstruation and maintaining pregnancy, and sales commission structures exemplify the butterfly effect, and what lessons we can learn from them when making decisions in the corporate environment. So buckle up and let's take a wild ride through the chaos theory of decision making!

Let’s start with a relatively less-known miracle hormone, progesterone. It is one of the main ingredients of contraceptive pills, which essentially prevents pregnancy. ?However, once you are pregnant, progesterone plays a critical role in maintaining the pregnancy by preventing the shedding of the uterine lining and supporting the growth of the embryo.

?Similarly, the success of a sales commission structure can have different impacts based on the motivation of the sales team. If the team is highly motivated, commission can drive them to work harder and close more deals, leading to increased revenue for the company. However, if the team is not motivated, the commission can become the sole reason for working, leading to a negative impact on the total sales (see HBR article on motivation). This demonstrates that even within the same company, application of sales commission structure can lead to vastly different outcomes based on the environment/team it is used for. Interestingly, we all can agree that it is not news at all.. And yet somehow, it still comes as a surprise…

?These examples highlight the importance of considering initial conditions in decision making, especially in the corporate environment. No off-shelf solutions or one-size-fits-all approaches will work in every situation. This is where systems thinking becomes critical. Systems thinking allows decision makers to look at problems as interconnected and complex systems rather than as isolated events. It recognizes that small changes in one part of the system can have significant impacts on other parts of the system. In other words, decisions must be made with an understanding of how they fit into the broader system and how they will impact other parts of the system.

The chaos theory, or widely known term: butterfly effect, suggests that even small changes in initial conditions can lead to vastly different outcomes. With this in mind and systems thinking compass in hand, we can come up with three principles that can help making the right decisions in the corporate environment?

Principle 1: Identify the steady state conditions right.

This means understanding the current state of the system and how it's functioning. What are the key variables that contribute to success or failure? What are the potential bottlenecks or roadblocks? What is discardable / ignorable, what is not?

?

Principle 2: Make sure your mental model covers bifurcation points.

These are the points at which small changes can lead to drastically different outcomes. Think of it like a choose-your-own-adventure book - the decisions you make early on can lead to vastly different endings. By understanding where these points are in the system, you can make decisions that lead to the outcomes you want.

Principle 3: Be generous on the extremity of potential outcomes.

No matter how well you plan, unexpected things will always happen. That's why it's important to be flexible and prepared for a range of outcomes. Consider best-case, worst-case, and middle-case scenarios, and be ready to tap the extreme cases like black swan.

?By covering these three rules, you can increase your chances of making decisions that lead to favorable outcomes, and avoid the unintended consequences that can arise from overlooking the importance of initial conditions. Remember, the corporate environment is a complex and interconnected system - don't be afraid to dig deep and understand how it all fits together.