# Leo on Competitions

## There's beauty in chaos

Chaos is the science of surprises, of the nonlinear, of the unpredictable. Expect the unexpected. While most traditional science deals with some approach to try to predict phenomena, Chaos Theory deals with nonlinear things that are effectively impossible to predict or control. e.g. weather, the stock market, company culture.

Competitive Strategy and Competitive Intelligence are disciplines that can be confused as being constantly trying to predict next steps, therefore considered a traditional science. Like a Chess Master trying to predict the next moves of his opponent, in order to prevent him from gaining an advantage.

But how do we try to predict, when there is chaos? Simple answer, we can’t, but we can look for beauty (i.e. patterns) in chaos.

Let’s take a look at fractal mathematics, which captures the infinite complexity of nature. Recognizing the chaotic, fractal nature of our world can give us new insights and wisdom, from a different perspective. For example, by understanding the complex and chaotic dynamics of the atmosphere and winds, a skipper can navigate her sailboat to practically any desired location. By understanding that our companies and workplaces have a chaotic nature, we can hope to avoid actions which may end up being detrimental to our long-term well-being.

## Basic principles and concepts of chaos theory

• The Butterfly Effect: This effect grants the power to cause a hurricane in China to a butterfly flapping its wings in New York. It may take a very long time, but the connection, albeit weak, is real. If the butterfly had not flapped its wings at just the right point in space/time, the hurricane would not have happened. A more rigorous way to express this is that small changes in the initial conditions lead to drastic changes in the results.
• Unpredictability: Because we can never know all the initial conditions of a complex system in sufficient or perfect detail, we cannot hope to predict the ultimate fate of a complex system. Small errors in measuring the state of a system are amplified, rendering any prediction useless. Since it is impossible to measure the effects of butterfly wing flapping in the world, accurate long-range hurricane predictions attributed to this across the world is impossible.
• Chaos is not simply disorder. Chaos explores the transitions between order and disorder. This transition can be more interesting than anything else, many times. Think about mood swings in a spouse, and then effect it can have in the marriage ties.
• Feedback: Systems often become chaotic when there is feedback present. A good example is the behavior of the stock market. As the value of a stock rises or falls, people are inclined to buy or sell that stock. This in turn further affects the price of the stock, causing it to rise or fall chaotically.
• Fractals: A fractal is a never-ending pattern. Fractals are infinitely complex patterns that are self-similar across different scales. They are created by repeating a simple process over and over in an ongoing feedback loop. Driven by recursion, fractals are images of dynamic systems – the pictures of Chaos.

Bottomless wonders spring from simple rules repeated without end – Benoit Mandelbröt

## Another model: VUCA

Cited in Army War College documents extant as far back as 1987,  VUCA is part of the USAWC curriculum and learning environment.

The original curriculum by the US Army War College was and is about leadership, not CI. However, chapter 2 introduces the concept of VUCA to describe the environment where a leader will find him or herself.

VUCA: stands for Volatility, Uncertainty, Complexity, Ambiguity.

The VUCA model allows to characterize situations and events that occur in the environment that we operate, whether introduced by a competitor action or not.

All 4 elements are inter-related by two factors: (1) How much do I know about the situation, and (2) how well can I predict the results. Again, no exact science.

• Knowledge Depth: How much do you (think you) know about the situation?
• Prediction Accuracy: How well can you predict the results of your actions?

The way to leverage the VUCA model is by developing panoramic awareness, considering all 4 situations, in a 360 degree way. That sounds easier to do than it really is.

We live in a world where chaos exist. Beauty in fractals is a testament that even in chaos, complex yet identifiable patterns exists and once identified we’re golden. Look for the patterns, adjust accordingly, and accept that sometimes the traditional scientific method is not the ideal approach to gain insights from the opponent.

Happy thriving in chaos!