There are many management methodology and philosophy that obtain business improvements as a basis for long-term business development. Some of the most popular in last years was Japanese improvement philosophy Kaizen that will be obtained in some of the next posts. Here I want to explore some practice that shows how small change impact on overall business and increases their business potential energy.
Butterfly Effect comes from Chaos Theory and with simplest words means that small things can have big effect. For example, if something is happened today, or something that you make today that is not recognized as something significant can change tomorrow. This term for the first time was used from Edward Lorenz, who did simulation about weather forecasting. When he takes the real number and shortcut on a number in decimal he received entirely different results. This difference in decimals he named as Butterfly Effect. With this phrase, he wants to describe that if butterflies flapping their needs in one place will change weather conditions on another place.
Butterfly Effect can have great impact on small businesses and entrepreneurs. In everyday activities of the small businesses, there are great changes. Each of these activities has some type of influence on general business functionality. Small changes in one process can have great effect on whole business.
But, butterfly effect can be seen in two different ways for the small businesses:
- Obtain positive effects from small changes.
- Obtain negative effects from small changes.
The first way, where butterfly effect means positive effects for the small business is something that is desirable for every small business. The positive effects are improvements of the businesses and this improvement increase overall business potential energy. With negative effects from the butterfly effect, we receive worst work of our business, and we must escape that because this effect decrease business potential energy. The task for entrepreneurs is to eliminate all negative butterfly effects and stimulating of the positive butterfly effects.
Let’s take some example. If we have the profit of $100 daily from our everyday activities in the business in one month, we will have $3,000.00 in profit and for one year this increasing will be $36,000.00. But, something that is really important with butterfly effect is that improvements bring everyday increasing of the profit as $100 first day, $110 second day, $120 third day and so on. This is a butterfly effect factor that increases or decreases the effect of the activities. When we have profit of $100 on every day than the butterfly effect factor will be 1.00. If we have every day increasing of the profit as $100, $110, $121 and so on the factor will be 1.1. In the table bellow is given one example of a butterfly effect factor of positive and negative butterfly effect factors.
You can note that with negative butterfly effect the profit on annual level will decrease from $36.000,00 to $13.970,00. That is decreasing with more than 60%. But, with positive butterfly effect the annual profit will increase from $36.000,00 to $47.000,00 that is increasing of more than 30%.
To make positive butterfly effect in your business you must stimulate improvements on all business levels. That mean stimulating each employee to generate improvement ideas that will brig continually change of the business processes that will bring positive butterfly effect in the business in general. In this way you must to developed many butterflies through your business that will make changes. Improvement is the process that must be everyday tasks of every business. Without improvement there will not be development of the businesses.
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