In business, the butterfly effect describes the phenomenon where the simplest actions yield the largest rewards. The butterfly effect was coined by meteorologist Edward Lorenz in 1960 and as a result, it is most often associated with weather in pop culture. Lorenz noted that the small action of a butterfly fluttering its wings had the potential to cause progressively larger actions resulting in a typhoon.

Understanding the butterfly effect

Businesses can leverage the butterfly effect by incorporating small positive actions that have significant positive consequences. These changes have the potential to bring benefits that far exceed the large sums of money a business spends attracting customers.

How is this achieved? Where should a business focus its efforts?

Using the butterfly effect to nurture relationships

Businesses are about people and success is reliant on strong relationships between employees, customers, and other stakeholders.

Let’s take a look at each group in more detail.

Employees

Richard Branson once said that employees come first, not clients. If employees are taken care of first, then they will naturally take care of the clients.

Common sense says that treating employees badly leads to an ineffective workforce. What’s more, employees are more likely to treat consumers badly who are then encouraged to take their business elsewhere.

Businesses should take the time to compliment their staff while also encouraging them to compliment each other. Indeed, the small action of complimenting one person has the potential to spread good vibes across the organization very quickly. In turn, a positive culture develops which is passed on to the consumer.

Customers

Customers are the lifeblood of a business, but countless organizations have frustrating customer service centers where it is difficult to talk to a real person.

Customer complaints are inevitable. While many complaints are perhaps illegitimate, many others provide valuable insights on how a company can raise their standards. The small action of responding to each complaint with grace and empathy leaves a lasting impression on the customer and ensures they walk away with a positive experience.

Stakeholders

Publicly listed companies make the mistake of treating their shareholders with disdain. Announcements are vague, infrequent, or deliberately worded to conceal bad results.

These companies must remember that many stakeholders are part owners in the company and treat them accordingly with open and transparent communication. Other stakeholders such as suppliers, distributors, and the community should also be subject to small, positive actions that strengthen relationships.

Butterfly effect best practices

Small actions are the foundation of the butterfly effect. Most are related to having a positive attitude, including:

• Being a good role model. Leaders are the most obvious candidates, as their words and actions rub off on subordinates. However, every employee can be a good role model by treating others with appreciation, positivity, and gratitude.
• Leaving personal issues at home. Personal issues that cause stress should never be brought into a work environment. When stressed individuals treat others with contempt, the butterfly effect can take effect but with negative consequences.
• Paying it forward. Some argue that this is vital to the butterfly effect in business, and for good reason. Small acts of kindness – without the expectation of reciprocity – can create a chain of small actions that lead to something substantial.

Key takeaways

• The butterfly effect in business describes the potential for small actions over time to yield much larger positive results.
• People are the most important aspect of the butterfly effect in business. Employees, customers, and other stakeholders must be appreciated for their respective roles in maintaining operational viability.
• To embrace the butterfly effect mentality, a positive attitude is key. Managers and employees alike must become role models for positivity by leaving personal issues at home and paying good vibes forward.

Read More:

• Business Models
• Business Strategy
• Marketing Strategy
• Business Model Innovation
• Platform Business Models
• Network Effects In A Nutshell
• Digital Business Models

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