In the 17th century, Isaac Newton’s new law of gravity could precisely predict the orbits of any two celestial bodies. But once he added a third, there was no solution.
Over the past 300 years, mathematicians have discovered that the 3-body problem is an example of a complex system, in which infinitesimal changes can lead to large, unpredictable outcomes.
Complex systems have many components that interact with each other. Examples are weather, ecosystems, companies, cities, stock markets, a living cell, the human body, and the universe. In a complex system, the flap of a butterfly’s wings in Brazil can set off a tornado in Texas.
Complexity and chaos explain why weather forecasts are unreliable; economic predictions are often wrong; and established companies can be disrupted overnight by start-ups.
The world in which we live has an increasing number of feedback loops, causing events to be the cause of more events (say, people buy a book because other people bought it), thus generating snowballs and arbitrary and unpredictable planet-wide winner-take-all effects.
Antifragile and lean
If life is unpredictable, what can you do?
First, become antifragile:
Follow simple rules and habits, especially those that have stood the test of time
Experiment and tinker, take lots of small risks
Build redundancy and reserves, with no single point of failure
Avoid negative black swans that could wipe you out
Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.
Finally, learn from “lean” principles used by Toyota and Silicon Valley start-ups.
In 1950, Toyota Motor Company had manufactured a total of 2,685 cars over 13 years. In comparison, Ford’s Detroit factory was cranking out 7,000 cars a day—executives gave orders and workers followed them.
Lacking Ford’s enormous resources, Toyota was forced to manufacture in small batches. To make this practical, they evolved the Toyota Production System (TPS): decentralized management and manufacturing practices to maximize customer value and minimize waste. Core principles included:
Become a learning organization through relentless reflection and continuous improvement at all levels
Right process produces right results—if there’s a problem, stop immediately and fix the process
Make decisions slowly by consensus, thoroughly considering all options, then implement quickly
Fifty years later, Toyota surpassed Ford in annual sales. Like the tortoise beating the hare, TPS enabled Toyota to become more efficient, profitable, and higher quality than Ford.
Toyota at this point in its development obtains brilliant results from average managers utilizing brilliant processes, while its competitors often obtain mediocre (or worse) results from brilliant managers utilizing broken processes.
In his book The Lean Startup, Eric Ries recommends entrepreneurs follow a Build-Measure-Learn feedback loop:
Choose a problem you think customers will pay to solve
Test your hypothesis by building a Minimum Viable Product (MVP)
Launch the MVP and measure results
Decide whether to improve the product or pivot to a new problem
With this rapid, iterative process, many Internet start-ups stumbled upon positive feedback loops that powered exponential growth:
The more users, the more useful Facebook’s network
The more searches, the better Google’s algorithms
The more buyers and sellers, the more valuable Amazon’s marketplace
Test fast, fail fast, adjust fast.
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