What Nature Can Teach Us About How Business Works Spring 2011

1. What Nature Can Teach Us About How Business Works Spring 2011

2. Let’s Step Back What do numbers represent to you? 2

3. To keep (the math) simple… • Let’s say that numbers represent empirically measurable units of something.

4. But are they? • Some numbers are “irrational” • Pi: 3.1415926535897932384…. • Phi: 1.618033988749895...

5. And what’s even more amazing…. • Is that these irrational numbers, particularly Phi, when “visually” represented display a precise geometric relationship that turns out to be ubiquitous in the universe.

6. Ubiquity of Forms – Golden Ratio Underlying rules dictate the formation of these shapes: - Phi: x2 – x – 1 = 0 - Golden Ratio / Angle: 137.5o Sources: www.stephenwolfram.com/publications/articles/general/88-complex/2/text.html http://jwilson.coe.uga.edu/emt669/Student.Folders/Frietag.Mark/Homepage/Goldenratio/goldenratio.html

7. Underlying Rules create these patterns The fact a simple underlying rule can re-create so much of what is found in nature, suggests these underlying rules govern how everything works.

8. Benoit Mandelbrot– Fractal Geometry Riverbeds / Trees Shells / Leaves / Tails

10. River bed

13. Ubiquity of Form

14. These Patterns are the Shape of Life Weather System on Mars

15. These Patterns are the Shape of Life. Plant

16. These Patterns are the Shape of Life…. Cabbage Staircase Rose Shells

17. So What? How Is this Useful in me getting Rich? This insight has lead to the emergence of a body of science, 30 years in the making, called SYSTEM THEORY. What is System Theory? The basic idea of system theory is that all things in the universe (rivers, baseball games and galaxies) can be viewed as discrete systems, operating under a defined set of rules. While the systems may be different, they exhibit strikingly similar behavior. If different systems behavior similarly, perhaps it's because they are connected.

18. So, How Do Systems Behave? At the simplest level, they display 2 kinds of behavior

19. What is Complexity Theory? What is Chaos Theory? All systems display 2 basic kinds of behavior: complex and chaotic.  Things tend to get complicated. Villages become towns, towns become cities and cities become nations. The basic notion of complexity is that there is a natural tendency toward higher levels of order. Things also tend to get chaotic. Famine, blackouts and floods disrupt otherwise ordered systems. Chaos is what happens when order is interrupted by something different. These competing forces make up virtually everything we experience in life. When these two forces collide systems are the most active, and often the most interesting.  In the world of technology and business, the intersection of chaos and order is where most innovation occurs.

20. Crystallization Patterns from an Evaporating Drop When order and chaos collide, that is where systems are the most active

21. River bed Trees So if you take that idea to it’s logical conclusion, you realize that every complex ecology, society, biology….are outgrowths of the same system. Further, business systems are outgrowths of the same system of rules. Which means that business systems should behave like other systems….turns out they do.