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Butterfly Effect

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Submitted By lanalvk
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Before answering this question I think it is important to start with the chaos theory and its principles. Chaos is a science of surprises, nonlinear systems and unpredictability. Chaos teaches people to expect unexpected, to deal with impossible. In everyday language chaos means dynamic and random behavior. From the science perspective, chaos theory deals with nonlinear things that are effectively impossible to predict or control, like turbulence, weather, the stock market, our brain states, and so on. Chaos theory relies on basic principles: butterfly effect, unpredictability, order and disorder, mixing feedback and fractals. The answer on the question about shareholder’s focus on a single issue and its effect on a corporation lies deep in the roots of butterfly effect theory. Butterfly effect theory is often associated with Edward Lorenz, mathematician and meteorologist, who has proved from the theoretical example that formation of hurricane in one place depends on whether or not a distant butterfly had flapped its wings several weeks earlier. Thus, a butterfly that flaps its wings in Hong Kong can result in tornado in Texas. Small change at one place in nonlinear systems can result in large differences in a later state. The same scenario is related to a shareholder who can make a big change in the company just by focusing on a single issue. The answer is based on a scientific theory that a single occurrence, no matter how small, can change the course of the universe forever. Any corporation is a nonlinear world where even a small change or small error can have a big effect on a whole corporation. In linear systems the relationships between relevant variables is stable. In linear systems the relationship between cause and effect is smooth and proportionate. However, the business world is far from linear systems. There is a big dependency on an initial

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