The Butterfly Effect

Facebook Inc officially filed its initial public offer (IPO) on February 1, 2012.

The IPO will provide the funding vital for continued growth and help Facebook maintain its expansion and fend off competition from Internet rivals such as Google and Twitter. The company is expected to raise as much as $5 billion in the offering from its valuation of $75 billion to $100 billion.

Since its beginning in 2004, Facebook's growth has been incredible. With more than 845 million members worldwide, it would be the third most populated country behind leaders China (1.33 billion) and India (1.17 billion) if the virtual users of social networking site can be counted as a population. Some analysts estimate that 650,000 people sign up for a Facebook account every day. This simply means that Facebook may reach 1 billion users by this year. With more than 770 billion page views per month, the website has changed the way people across the globe communicate, from sharing photos of a baby smiling to organising political protests.

Many scientists believe that all the matter in the universe, even the cosmological Big Bang started from a small point. Facebook, a global Internet phenomenon, was first created by a computer science sophomore student, Mark Zuckerberg. With a sense of humour, he hacked into Harvard's security network, where he copied student ID images and populated his Facemash website. Zuckerberg launched the site as a type of "hot or not" game, where website visitors could compare two women students' photos side-by-side and let viewers decide who was "hot" and who was "not". Later Facemash was replaced with the Facebook for incoming students, faculty, and staff as a way to get to know other people on Harvard University's campus. Shortly afterwards, the website was expanded to other colleges in the Boston area, the Ivy League, Stanford University and gradually included high schools and other universities before opening to the public. Since then Facebook has evolved from a "Harvard thing" to the world's most popular social networking website.

Although Facebook was firstly built for fun, presently it has not only redefined social networking activities, changed human relationships but also created a new global reach marketing landscape. How can a small action at the beginning rapidly change the world? Perhaps we can explain this unpredictable phenomenon by a theory called the Butterfly Effect in which tiny changes within a complex system lead to results that are impossible to forecast. The butterfly analogy began in 1972, when a mathematician and meteorologist Edward Lorenz found tiny changes that should have been statistically insignificant led to completely different weather scenarios. He later delivered a famous article (Predictability - Does the Flap of a Butterfly's Wings in Brazil Set Off a Tornado in Texas?) that explained how the flapping of a butterfly's wings might have significant repercussions on wind strength and movements throughout the weather systems of the world, and theoretically, could cause tornadoes halfway around the world. Comparing this effect to the Domino Effect, where a simple linear row of dominoes would cause one event to initiate another similar one, the Butterfly Effect amplifies the condition and quantity upon each iteration. A good example of this is the Facebook Like button. Businesses can benefit from having a Like button on their webpage for sharing business content with clients and prospect customers. Some fashion brands did this to obtain 40,000 fans within a few days.

The Butterfly Effect may allow us to partly understand the far-reaching achievements of Mark Zuckerberg and also how slight fluctuations in one stock market can affect many others. Some people wish that the Butterfly Effect could automatically take their small success to a global scale. However, such success will not happen overnight. Success is actually a series of small achievements that contribute to a larger one. Unlike spreading rumours, success needs the results of proper choices and actions repeated daily over time. Leaders require a long-term focus, discipline, and perseverance, together with strategic actions to keep improving their business functions to stand out from the competition. Then the Butterfly Effect may elevate such businesses to become successful in a global environment.

Nutavoot Pongsiri is assistant governor at the Bank of Thailand. Follow his articles in Hi!Managers every second Friday of the month. The views expressed here are entirely the author's.