The Perfect Storm: The Butterfly Effect on Business

The butterfly effect refers to the ability of one incident being able to make huge impacts on the future. This sentiment is echoed in the theorized capability of a butterfly’s wingbeat causing a hurricane on the opposite of the world. While this idea is certainly ominous, when applied to business it has an altogether different (and more hopeful) outlook. The butterfly effect in business promotes the notion that small acts can have huge results, with a focus on a firm’s communication with people.

The Golden Rule

When the people that interact with a firm are treated well and feel valued, they are much more likely to have a positive attitude toward the firm, and in turn pass this sentiment on further down the line. This continues until a positive spider web of experiences evolves into something far larger (not unlike that of a wing-flap’s evolution to that of a tornado). This approach in business is known as “Stakeholder Theory”, whereby businesses place importance on the various people within their business and beyond (customers, suppliers and employees) and see them as entities to be valued, rather than objects from which the highest price, the cheapest cost or the lowest wage can be extracted. The immediate effects of this are obvious; a happy customer who feels like they’re really cared for is much more likely to become a patron. A supplier who isn’t constantly in turbulent negotiations surrounding prices will be much more accommodating in the case of invoice delays and may even opt to provide trade discounts in the future. This theory boils down further to ‘The Golden Rule’: treat people the same way that you want to be treated. An employee who knows they are valued is sure to put in a good shift and the idea that they have a future with the firm further reinforces the sentiment to work hard. It’s no wonder that the companies that either actively or subconsciously incorporate the butterfly effect into their businesses are some of the most successful in the world.

Weathering the Storm: The Firms With Wind in Their Sales

Finance and capital management firm Workday prides itself on its ability to create a distinct workplace environment in which their employees can thrive. This is in part thanks to the creation of a globalized outlook in its company culture. This, in simple terms, means that the firms six ‘core values’ (which unsurprisingly contains employees, customer service and integrity) allow for employees to feel a connection or rather ‘culture’ which goes beyond their shared office space. This is particularly useful in the firm’s ability to create global teams of employees from different bases due to this universal culture. By ensuring employees feel valued on an individual scale, the company can in turn enable cooperation on an international scale, which culminates in Workday being ranked as the best place to work in Ireland.

The French beauty giant Sephora places a great emphasis on how it values its customers. The company appreciates how beauty-care products are very much personal products, shaped by personal views. Sephora feels it is only right for customers to therefore be able to engage in a personal experience. The beauty behemoth has introduced the ‘Sephora’s Virtual Artist’, where patrons can try on products from multiple categories using their smartphone camera. The brand has strived to make strong links between themselves and the wider beauty community thanks to the benefits made possible through digitalization. This has culminated in their ‘Beauty Insider Community’, which fosters rapport between company and customer. The brand’s embrace of the digital age is best reflected in their collaboration with Google Home to create voice recognition powered beauty assistant, which provides tips on beauty and skincare. Sephora have recognized the opportunities from digitalization, but also their responsibility in providing both a valuable product and service to their customer base. This is best highlighted in the firm’s policy of not paying a commission to employees. This has two effects; customers can be certain that the advice that they receive is genuine, as agents have no incentive to prioritize one product over another. Agents in many cases enjoy this policy as it means they can be more comfortable and genuine in their workplace- thus creating an overall better work environment.

Patagonia, as I have written before, are renowned for their stakeholder approach to customers, employees and, namely, suppliers. The retail firm has stringent codes to ensure not only that they treat their suppliers fairly, but also that their suppliers are ethical companies themselves. The latter is particularly important in the context of the butterfly effect; although Patagonia may not be dealing directly with poor third party supplier relations, they may suffer the repercussions of scandals which affect those firms, as seen with Primark and the Rana Plaza building collapse in 2013.  Patagonia not only ensures that their suppliers receive a fair price for their product, but they also monitor the minimum wages of the different countries from which they source and ensure these rules are being adhered to. The company also audits the goods it receives to ensure compliance with its social and environmental standards and is a founding member of a plethora of multi-stakeholder initiatives. While the effects of Patagonia’s activities may not seem at first obviously beneficial to suppliers, it does provide a platform from which they can engage in more business, as an indirect accreditation of manufacturing from Patagonia.

It’s the Little Things

The companies mentioned above are great examples of how small actions can give way to movements far greater than ever imagined, by placing importance on the little things. The same fact holds true for malpractice. All companies can heed the warning characterized through the butterfly effect, whether that be for better, or for worse.

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