In respect to short-term phenomena, there is no system. There is only chaos.
The fastest growing field of modern mathematics is the theory of complexity. It shows, with rigorous mathematical proof, that complex systems do not allow prediction; they are controlled by factors that are not statistically significant. This has become known as the “butterfly effect”: a whimsical but mathematically rigorous (and experimentally proven) theorem shows that a butterfly flapping its wings in the Amazon rain forest can and sometimes does control the weather in Chicago a few weeks or months later. In complex systems, the climate is predictable and has high stability; the “weather” is not predictable and is totally unstable. And no complex system can exclude anything as “external.” In respect to the weather, that is, in respect to short-term phenomena, there is no system. There is only chaos.
Economics and economic policy deal with short-term phenomena. They deal with recessions and changes in prices. Contemporary economics and economic policy assume that the system, the long term, is made by short-term policies, for example, changes in interest rates, government spending, tax rates, and so on. For a complex system this is simply not true, as modern mathematics has now proven.
ACTION POINT: Identify the long-term phenomena affecting your organization. How will these affect your organization in both the short term and the long term?
The New Realities
* Source: The Daily Drucker by Peter F. Drucker