Thriving in the Age of Chaos



I wrote an article for Wired UK’s August 2012 Idea Bank which I am reposting here.  I love the work of David Rowan and would like to thank him for publishing my thoughts.

We have entered an age of chaos (in the mathematical sense), marked by accelerated change and unpredictability. Witness 2008’s “de-correlation crisis” and Instagram’s sale; outcomes best seen as fractal.  I want to explore how to function, thrive and achieve balance in this brave new world.

The cloud is a seismic shift in how the economy operates and the culmination of a long process towards value-chain fluidity that started with accelerated globalisation.

To frame the impact of cloud, look back at Ronald Coase‘s theory of the firm. Coase says that the efficient boundary of any firm should stop when the external transaction costs are lower than the equivalent internal transaction costs. It is easier for companies to hire for the long term than to look for talent every day. You can focus on a very narrow core expertise set with a small team of talented people.

The cloud in turn ushers in the age of platforms and markets, where everything that can be priced dynamically will be. With the friction gone, you have the building blocks for a world of chaos, a world of fractal outcomes. We have known this to be true for a while in financial markets.

The advent of chaos is the core reason why you should work for startups or corporations that behave like them, because startups are the natural evolutionary answer to this new environment. Most corporations are defined by the quality of their planning processes, which in turn become objectives against which execution happens and achievements are measured. Corporate behemoths, faced with change, stumble and fall. In fluid markets where everything can be priced and exchanged dynamically, startups thrive. They are the elemental unit of a cloud economy, highly adaptable and insanely good at one thing. But large corporations cannot adapt at the speed necessary to remain best of breed in all aspects of their business. The same can generally be held true for the individuals that work for them. In startups, skills need to evolve fast; adaptability is a core skill.

Recent advances in neuroscience and psychology point to other reasons why this creative chaos may actually be good for us. Although there is nothing inherently “good” or “moral” about technological progress, there is something fundamental about the process of invention and innovation that appeals to all us. If life is a long arc, movement fundamentally gives it meaning, and innovation is an expression of that.

Mihaly Csikszentmihalyi attempted to understand what he termed “completely focused motivation”. He defined the notion of “flow“, the notion of being “in the zone”, where one experiences no self-consciousness, but rather the merging of action and awareness. The key conditions under which flow is achieved are the following: 

  • One must be engaged in an activity inherently rewarding, 
  • With ambitious but attainable goals; 
  • Benefit from a sense of personal control;
  • And receive direct and immediate feedback.

Compare the large corporation with the startup; the small and nimble environment of the growth company is designed to generate the conditions under which flow is possible. Large corporations were designed for the industrial revolution; work was modified to fit industrial processes. The corporation bends the individual to its requirements; no wonder work in these conditions makes us unhappy.

Abraham Maslow studied “exemplary people” such as Einstein. He defined two levels of needs: “deficiency needs” or “d-needs” (esteem, friendship and love, security and physical needs) and “being needs”, higher-level needs that lead to self-actualisation and betterment. The search for purpose and meaning is personal and never-ending, but difficult to achieve when the basic needs are not met. Startups are much better at providing these (self-esteem, confidence, sense of achievement and recognition), freeing us to find purpose.

We need to modify our longing for order and embrace chaos. This means designing companies that deal with it, and design work (and life) to achieve “flow”. You need work environments adapted to this new world that will help you towards the goals or flow and purpose.

Status and career are fleeting; inspiration and meaning are not.

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  • http://www.parkparadigm.com parkparadigm

    Great post Fred (& thanks for the link.) Here’s another one:

    “The cloud is a seismic shift in how the economy operates and the culmination of a long process towards value-chain fluidity that started with accelerated globalization.”

    http://www.parkparadigm.com/2009/04/02/somethings-change-everything/

  • JustinBanon

    The startup is evolving into the dominant organisation for embracing chaos and harvesting value in highly uncertain environments. Startup methodologies such as ‘lean startup’ and ‘customer development’ represent emergent algorithms for searching the product-market fitness landscape to analyse problems and synthesise and test solutions: ‘flow’.

    This change from large, lumbering organisations to rapid, iterative startups is a type of value-creation metastate transition; a move to a self-executing economy in which digital and social technologies are feeding-back to create new self-referential organisational forms. The rapid evolution and iteration of these forms enables them to embrace chaos and achieve ‘flow’ @JBanon

  • Erikgrueter

    Dude, this post rocks, i wish i could like your fractals page as well. you must read Taleb !!!!!!!!! http://en.wikipedia.org/wiki/The_Black_Swan_(Taleb_book)