MGT3901 Organization Theory
The Butterfly Effect: Managing Your Organization as a System Because most things in life are part of larger systems, some seemingly trivial events can have significant impact. For example, in 1961, mathematician and meteorologist Edward Lorenz took a shortcut in entering data in a weather prediction model. He innocently entered .506 instead of the full numeric value of.506127, and the result was a completely different weather prediction. In a 1963 paper, Lorenz commented that if the theory were correct, “one flap of a seagull’s wings could change the course of weather forever.” He later changed that metaphor to a butterfly, and now the phenomenon is widely labeled the “butterfly effect” – where seemingly little events can lead to more significant changes to the larger system. Though I’m a little cautious to source Wikipedia, here is the definition of the Butterfly Effect: “The butterfly effect refers to the idea that a butterfly’s wings might create tiny changes in the atmosphere that may ultimately alter the path of a tornado, or might delay, accelerate, or even prevent the occurrence of a tornado in another location. The flapping wing represents a small change in the initial condition of the system, which causes a chain of events leading to large-scale alterations of events. Had the butterfly not flapped its wings, the trajectory of the system might have been vastly different. While the butterfly does not ‘cause’ the tornado in the sense of providing the energy for the tornado, it does ‘cause’ it in the sense that the flap of its wings is an essential part of the initial conditions resulting in a tornado, and without that flap, that particular tornado would not have existed.” So the whole concept of the Butterfly Effect (which is similar to the Domino Effect) relies on the notion that everything is part of a larger system – in which small changes in part of a system can result in larger changes to other parts of that system. Consider a ball rolling down a hill. If you start the rolling at the top of the hill rather than 20 feet from the top, or even five feet from the top, the change in velocity will determine how far it can roll. Similarly, if there are changes in wind speed, surface tension, or any number of other variables, the eventual landing spot of that ball will change. Or consider the impact that small changes in our climate are having on various ecosystems. An increase of only 1 to 1.5 degrees Fahrenheit of warming is causing: changes in vegetation (notice the slightly longer growing season in Minnesota?!); wildlife to migrate to different habitats (notice how Canadian Geese don’t always migrate south now?); icecaps to melt, which is causing oceans to rise (which has a huge impact on worldwide shoreline, particularly in coastal cities); ocean waters to warm (which is killing coral reefs as well as certain plankton, which impact marine life’s shelter and food sources). Not to get into the politics – or even scientific root causes – of global warming, but the simple event of increasing worldwide temperatures by even 1 or 2 degrees is having dramatic effects on many ecosystems. Or consider the impact of too much use (and not enough regulation) of mortgage-backed securities. People across the world began to enjoy a false sense of wealth as their real estate values artificially increased last decade. Many would take on increasing levels of debt (and so would our banks), but when several triggers impacted the system (oil price increases, monetary policy easing, and federal budget deficits, to name a few), the system began to unravel and real estate (and stock market) values began to plummet, which in turn caused a slowing in economic output, which led us into a worldwide recession. Many would argue that we have not addressed the underlying issues that caused the 2008-10 recession,...
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