A World of Tipping Points

Think Different

Malcom Gladwell’s “The Tipping Point: How Little Things Can Make a Big Difference” was just one of the many books in early 2000s to drive up excitement around the new science of complexity or what was popularized as ‘chaos theory.’ Of particular interest was the potential for understanding and gaining insights into how tipping points occur, i.e., when ‘more becomes different’ as in when water turns to ice.

Understanding and even managing to bring about a tipping point requires a shift from linear to non-linear thinking. For example, scientists were able to model the rate at which polar ice caps are melting much more accurately when they included the effect of increased black water and decreased surfaces for refracting sunlight. Similarly, scientists became much better equipped to model how fast a disease like COVID will ‘tip’ into an epidemic based on materially relevant contributors, or how fast a small brush fire will ‘tip’ into becoming a wildfire.

Complexity theory has helped scientists gain insight into tipping points in a whole host of other interesting things affecting our lives, ranging from weather patterns, traffic jams, the economy, terrorist activity, to the expansion of the internet.

Operating State Tipping Points

But until now, complexity hasn’t been applied in any serious way to how organizations evolve into what we have referred to as their ‘Operating State.’ In our last blog, we introduced four distinct Operating States: Synergistic, Insular, Pluralistic, and Tumultuous. We argued that Operating State reflects how well a company’s people are aligned around Vision, Strategy, and Culture - the essential components that determine resilience and ingenuity.

The strategy for effecting a tipping point starts with detecting and assimilating ‘hot spots’ as depicted in the figure below. Leaders must always be on the lookout for hotspots. Hotspots represent a source of innovation. Take for example, 3-D printing. Developed in the 1980s and 1990s in Japan, it wasn’t very successful initially. But in 2010, the quality of 3-D printers improved significantly while prices dropped dramatically. Executives who saw the potential and were able to effect the required changes in their Strategic Framework, soon disrupted the market for on-demand manufacturing of industrial parts. 3-D printing is now rapidly spreading to a wide variety of industries, many of which are undergoing their own tipping points as a result.

Another example of a tipping point that had wide repercussions was Frank Gehry’s 1980s exploitation of CAD-CAM, originally developed for use in large-scale manufacturing industries such as aircraft and shipbuilding. Given his network of relations in the global design community, the potential for CAD-CAM in architectural design and construction was an inevitable discovery. The Bilbao Art Museum and Disney Hall in Los Angeles are testaments to the ‘tipping point’ he brought about in terms of the kinds of structures architects were now able to imagine, plan, and successfully erect.

As we stated in ‘Making the Magic,’ market Leaders are also likely to have Magic Cultures. It is their network of ties extending both internally and externally into their respective ecosystem that keeps them abreast of interesting and potentially important hot spots. But Leaders also need the right kind of culture to resist out-of-hand rejection of ideas whose potential is not immediately obvious. In fact, the further away the hot spot originates from where it is being considered for another purpose, the more powerful its effect but equally, the more powerfully it will be resisted.

Conclusion

How you manage the assimilation of hotspots is key to sustained success of Operating State and market position. Senior executives who succeed in understanding, engineering, and integrating hotspots will reap the benefits.

As always, your questions or comments are welcomed.