The ubiquitous role of the exponential

Chaotic systems are driven by rapidly increasing changes of some kind or another. Mathematicians use formulae to express such changes, but they are more easily visualised by looking at graphs. Figure 1 is a typical exponential graph, visually showing the effect of increasing change. It could be a graph showing the rapid increase of information, computer speeds, RAM memories, hard disc sizes, transmission speeds, number of Web sites appearing, number of people starting to use the Internet. These are just some of the exponential changes that are responsible for creating the turbulence and chaos in the world of e-business and e-commerce.

Figure 3.1 - Exponential change

The graph illustrates the way in which some events can change at a progressively increasing rate. It represents the way the spread of information gathers pace as it spreads through a community: going faster and faster as more and more people become aware and are able to tell others. It starts slowly, gathers pace, moving faster and faster towards a destination. Keep this shape in your mind. It is the mechanism that powers Chaos, and, more importantly, provides the essential key to understanding how to create successful strategies in e-business and e-commerce.

In an environment of change the exponential is the single most important concept to be understood: it is the basis of most happenings and strategies in the Information Age. This contrasts strongly with the activity and plans in the traditional corporate world of the Industrial Age, where the main concerns are for stability and steady state. In the Industrial Age's corporate world of business planning and management the exponential is seldom encountered. It has very little relevance in conditions where conservatism and the status quo are at a premium. Everything is done to avoid situations that spin rapidly out of control; strategies are used to control them and damp down the causes of rapid change.

In the Information Age, trying to resist or control change is futile. The optimum strategy is to look for and exploit runaway changes; seeing them as sources of new opportunities. There are hazards, but, Information Age strategists will be aware of the dangers of riding the crests of these waves and will take suitable precautions.

Entrepreneurs are able to exploit the phenomenon of the exponential in other ways. It enables them to start enterprises from small beginnings and with limited amounts of capital and then see their businesses build at an ever increasing rate. Small businesses can start off in niche markets and then use the power of the exponential to rapidly encroach upon corporate domains. Entrepreneurs can start businesses unobtrusively, slowly, before the corporate powers become aware.

Where an entrepreneurial business relies on its exceptional service, or, some creative initiative, it can use word of mouth in place of expensive advertising: tapping into the potent power of the exponential. In the environment of the Internet, word of mouth can be immensely effective, cheap and many of orders of magnitude faster than it is in the conventional world. It can easily surpass the results obtained through sophisticated marketing and advertising techniques used by large companies in the conventional world of mass media.

In the rest of this book we are going to see the ubiquitous power of the exponential appearing over and over again because it is the driving force of the Information Age. It is the force that creates Chaos and you don't have to look far to find examples of the exponential at work creating Chaos and ever increasing change. Consider the rapidly increasing size of computer memories, the increasing speed of computer processors, the escalating size of disk storage space. Cast you mind to the Internet: the increasing rate at which people are getting connected, the fast expanding number of servers, Web sites and Web pages. Look at the rising speed of signal transmission, the rapidly broadening bandwidths. Look at the rate at which fiber cable is being laid, new satellites going up. Look at how businesses are increasingly taking an interest in the Internet and the Web. The whole edifice is alive with exponentials that are the known purveyors of Chaotic activity.

If it were possible to represent the Internet as an equation, it would contain dozens of exponentials reflecting all kinds of expanding elements. This why the environments of the Internet, e-business and e-commerce are liable to become exceptionally chaotic with the potential to produce radical new patterns of business - not only for entrepreneurs but for the corporations as well. This could include government departments and involve the whole of the bureaucratic organisation upon which they are founded.

The advent of the printing press, steam power, electricity, telephones, internal combustion engines, air travel and transport. had major impacts on our civilization and the way we lead our lives. Yet none of these had as many concurrent exponentials coming into play at the same time and at such breathtaking speed. It is in this world of exceptional rapid changes and chaos that we have to find the most appropriate strategies for living, surviving, competing and succeeding.