Innovation and Success in Times of Chaos: of Donald Trump, Netflix, Facebook and NASA

Innovation and Success in Times of Chaos: of Donald Trump, Netflix, Facebook and NASA 

Brexit. Trump. What's next? We are entering in a new era of chaos and unpredictability that brings new obstacles and challenges to running your company. While this era may be difficult, it doesn’t mean your business is destined for failure. In fact, Tefen believes in the opposite, that this time of chaos can be an opportunity to breed innovation and reach success that may have been previously unimaginable.
How do you act or plan in the face of the unknown when there is no precedent to help you find success? Read this month's Tefen Tribune to learn more.

By Ilana Weissberg, Content Manager

A business man walking on a thin rope, above a canyon which is the city

2016 was definitely not the finest moment of the polling system. The 2016 US election struck millions of people around the world with surprise. While the polls of the two-way race all predicted Hillary Clinton's definite win, the results were much, much different. Donald Trump won the US presidency with 306 electoral votes, leaving Hillary Clinton with only 232 – a gap of 74 whole electoral votes.

The inaccuracy of the polls may point to a certain essence of our era – we are living in a time of instability of prediction. Beyond the questionable polling system, this lack of prediction exists in the political-economic world; take the Brexit for example: the polls could not have anticipated the fact that eventually, the British people would vote to leave the European Union.

While these recent turns of events were dramatically unpredictable, so too are the implications of these political and economic decisions. And thus, we are now entering into a new chaotic era where polls mean nothing and the possibilities of what could happen in the future are not so black and white.

How do you act or plan in the face of the unknown when there is no precedent to help you find success? While this chaotic era can be a great obstacle for any business, it doesn't mean your business is destined for failure. In fact, Tefen believes in the opposite, that this time of chaos can be an opportunity to breed innovation and reach success that may have been unimaginable in a pre-Trump and Brexit world.

Chaos and the Business World

As we enter into this new era, let us first try to define chaos. Scientifically, chaos exists in various systems in nature. These systems are capable of endless variety, are dynamic, and result in unpredictable new patterns that emerge through the process of spontaneous self organization.1 Yet it is important to mention that "in the scientific sense, chaos does not mean utter confusion or a complete lack of any form. It means that systems driven by certain types of perfectly orderly laws are capable of behaving in a manner which is random and therefore inherently unpredictable over the long term […]. Chaos is a creative individual variety within an overall pattern of similarity."1 (Stacey, 1991, p. ix).

Defined in 1963 by Edward Norton Lorenz, chaos was intensively investigated in a variety of fields.2 Once discovered, the chaotic nature of systems began to be noticed not only in natural systems, but also in human organizations, "[s]ince human organizations are dynamic feedback systems just as nature's systems are".3 As a result, chaos exists also in the business world.

In fact, chaos can be seen as a needed element, a potential catalyst for change in an organization, according to Kapr and Helgø (2008). Once an organization's aspects of control, design, management interventions and micro-management are loosened, phases of chaos and uncertainty may emerge. Yet Kapr and Helgø claim that "[t]hese chaotic phases contain important elements of self-organization, self-governing, uncertainty, surfacing of new ideas, […] frustration, disagreements and diversity – all necessary for change".4 Chaos may be frightening, but it may also be a means of achieving innovation and developing breaking through ideas, that may change the company – and even the market.

And so, chaos is directly connected to innovation and development: "the central message of this new way of understanding how the world works [i.e. chaos] is revolutionary because it tells us that creativity, innovation, significant change, new strategic direction, all depend fundamentally upon conditions of disorder, ambiguity, chance and difference.".1

Many companies didn't survive the tsunami of change, chaos and economic instability. Yet a few companies showed surprising growth by identifying and answering a new unmet customer need, that arose from the time of a chaos.

This has been proven true in recent history when times of chaos led to success in companies that completely changed the way we consume news, television, media and communication, and even contributed to some of the most known scientific developments/technological developments.

Netflix and Facebook – Innovation in the Chaotic Financial Crisis of 2007-2008

The financial crisis of 2007-2008 was one most of the world could not entirely anticipate. Starting in the US, the crisis spread around the globe quite rapidly: central banks collapsed, the US stock market dropped down and swept away the European and the Asian ones. The entire world economy entered a chaotic period of economic freeze and uncertainty.

This was a chaotic time not only for businesses and stocks, but also for everyday people, who were losing their jobs and savings and therefore started looking for ways to cut back. When pennies are strained, entertainment is usually one of the first things people cut back on, but this means that a whole market opened up for affordable entertainment. Two companies that really developed and capitalized on this market were Netflix and Facebook.

Netflix managed to thrive despite the recession and to increase its subscriber's database by approximately 5 million more: this was also translated to Netflix's revenue, and in its Net Income – which increased substantially:

Netflix Subscribers, Revenue and Net Income, 2006-2009

Fig. 1: Netflix Subscribers, Revenue and Net Income, 2006-2009 (Source: Netflix)

Netflix managed to achieve that by allowing subscribers to stream an unlimited amount of TV and movies, while adding a variety of price plans and different, various services (www.business2community.com)

As for Facebook, in 2006 it decided to open its gates to the world, allowing everyone to create an account, instead of just university students. This action has gained enormous growth in the platform as well as in the use of social media in general.

Facebook Monthly Users, 2004-2013

Fig. 2: Facebook Monthly Users, 2004-2013 (Source: www.theguardian.com)

Today, the number of Facebook users continues to grow, and at the last quarter of 2016 is reported to have reached the colossal number of 1.8 billion users (Statista).

How did these two companies manage to be so successful? Moreover, how did they manage to gain their momentum in the midst of the recession? While the recession was on the loose, people preferred staying indoors, in order to spend as less money as possible on entertainment and leisure in general. Furthermore, the world outside the house was full with news about collapsing banks and stock markets, or with people talking anxiously about stressing finances. As a result, people preferred staying indoors only to avoid the possibility of encountering the chaotic situation awaiting them on the outdoors.

Both Netflix and Facebook identified the social implications of the chaotic era of the recession, and acted accordingly. Facebook provided its services for free, while Netflix provided people with more accessible TV and movie services, for a relatively lower fee than a monthly or yearly subscriptions in video libraries.

But even more than that, both companies offered people pure social escapism through the option of staying indoors and avoiding meeting restless people outdoors. Be it through a streaming TV, or catching up with friends through a friendly computerized social platform, which one can simply turn off once an unwanted content is encountered.

Both Facebook and Netflix managed to identify the need for change and adapt to this chaotic situation, by understanding their customers and their life circumstances. They were able to identify a new need in the emerging social and economic climate and leverage it into an innovative solution. The chaotic atmosphere of the recession changed the face of society and economy, in ways felt until today; and both Facebook and Netflix are successful in our days.

Economic chaos is not the only type of chaos which may be experienced. There is also political chaos, which affects an entire country. For example, for the USA, the post-Trump era is not the first chaotic era in recent history. In fact, NASA was born out of this type of chaos and political disruption. However, this too raised an opportunity to harness the chaos and use it to innovate, change the balance of powers and create beneficial inventions for human beings, society and companies.

The Sputnik Crisis and the Birth of NASA

On the dramatic day of 4 October 1957 the Soviet Union launched the first artificial satellite to orbit the Earth – Sputnik 1. It orbited the earth every 90-minutes, and was heavier than the satellite developing in the US, which was intended to be launched later on in Project Vanguard.1

This new, surprising launch of the Sputnik satellite created amidst the US citizens the fear of lagging behind the Soviet Union in technological capabilities. These concerns were amplified and increased when the United States learned that the Soviet Union tested that very same year the first intercontinental ballistic missile.2

The days followed in the US, after Sputnik 1 was launched, were turbulent; the American people's reaction was full of sense of chaos, and of tremendous fear. Roger D. Launius, former Chief Historian for NASA and now an Associate Director at the National Air and Space Museum in Washington, D.C., writes:

"Two generations after the event, words do not easily convey the American reaction to the Soviet satellite. The only appropriate characterization that begins to capture the mood on 5 October involves the use of the word hysteria. […] With the launch of Sputnik 1, the Space Age had been born and the world would be different ever after.".5

As a reaction to this turn of events, led by the Soviet Union, the US started investing resources in aerospace endeavors, technical and scientific educational programs, as well as authorizing the founding of new federal agencies that would manage air and space research. These endeavors have led to the foundation of NASA on 1 October 1958 – less than a year following Sputnik's launch. NASA's first mission was to develop a human space exploration – and continues in doing so until today.5

Yet NASA is responsible not only to the development of the space exploration, but also to many life-changing inventions which are used in everyday life and contribute to the well-being of many, many people around the world, through what NASA calls "spinoffs". These "spinoffs" are technological advancements led by NASA, that are originally planned to its space missions – but through adjustments made through various projects, may also contribute to the human kind. Here are two selected "spinoffs":

  1. NASA's continues founding and innovation of artificial muscle systems with robotic sensing and actuation capabilities, for the use in NASA's various space projects, are being adapted to advancements of artificial limb research. This creates better solutions for animal and human prostheses (Spinoff 2004) (Nasa Spinoffs).
  2. NASA has contributed to the harnessing of solar energy, as a means to create power for unmanned high-altitude aircraft. This has evolved, through a NASA-led coalition of companies, government groups, universities, and nonprofits, to create a high-performance economical solar-powered equipment, used in homes across the United States. It is relatively low-cost, reduces utility bills and pollution output – thus contributes to the environmental health (Nasa Spinoffsinteractive).

Using chaos to your advantage

Just like Facebook, Netflix and NASA were created out of chaos, the political and economic world today is in suspense with Trump's election repercussions. Today, Trump considers the future of USA's business affairs with Canada, Mexico, and even China. While still not able to practically decide on the matter (as he is still not officially in duty), he creates uncertainty as for the future of not only USA's economic ties with different countries, but as to the future of globalization, itself. It is a process that has started with the Brexit, and may continue in a larger scale.

This is not surprising, as Trumps' managerial method is one of chaos, too. He is reported by former employees as unpredictable, constantly testing his employees, and as holding a managerial style of "hands off-hands on", meaning, he is "not getting involved in everything each day – but swoop[s] in in a second and change[s] everything." (The Washington Post)

Yet while Trump's election brings chaotic times, it may also raise opportunities to harness the chaos. While chaos leads to unpredictability, it also yields new ideas, creations and events that change lives of people around the world, and the way we interact with each other. As we now enter this new era of uncertainty, instead of stepping back and trying to maintain through the chaos, we can use this as an opportunity to innovate, develop and grow in ways that seemed impossible before.

The question is, what is the direction that the current chaotic climate will take in both local and global business communities? And what will the implications of the recent turn of events be? Only time will tell.

 

[1] Stacey, D. R. (1991). The Chaos Frontier: Creative Strategic Control for Business. Oxford: Butterworth-Heinemann.
[2] Goksu, Alper, Kocamaz, Ug˘ur Erkin, and Uyarog˘lu, Yılmaz (2015). "Synchronization and Control of Chaos in Supply Chain Management." Computers & Industrial Engineering 86: 107–115.
[3] Stacey, D. R. (1993). "Strategy as Order Emerging from Chaos." Long Range Planning, 2(1): 10-17.
[4] Karp, Tom & Helgø, Thomas I. T. (March, 2008). "From Change Management to Change Leadership: Embracing Chaotic Change in Public Service Organizations." Journal of Change Management 8(1): 85-96.
[5] Launius, R. D. (n.d.). Sputnik and the Origins of the Space Age. NASA:  http://history.nasa.gov/sputnik/sputorig.html
[6] Department of State, Office of the Historian, United States of America. Sputnik, 1957. https://history.state.gov/milestones/1953-1960/sputnik

Eli Pelleg

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