The Butterfly Effect in Business

The Butterfly Effect is a popular term used in discussions of Chaos Theory.  It refers to is the seemingly insignificant actions that have a dramatic impact in systems like weather and climate.  In business we often don’t look at an insignificant action and connect it to the resulting change in business.  You must keep in mind that dots aren’t always connected by a straight line.

I have to add a small aside here.  I was going to tell the story of fictitious restaurant, the story is true but I didn’t want to use the actual name of the restaurant so I thought I would use the name of a small Mexican restaurant that was located in my home town which closed over 40 years ago.  To be safe I Googled the restaurant name and there are a bunch of them with this name in Virginia.  My next choice was a take off on a restaurant we visited in San Diego many years ago.  The restaurant was Tio Leo’s, we had a wonderful meal and enjoyed the experience.  So my idea was Tio’s Taco and it turns out a restaurant by that name is located in Riverside California.  Well then how about a name that isn’t Spanish sounding like Rocky’s Taco, oops Chicago, Taco Train, McFishy’s . . . let’s just say Restaurant X.  Nope, that’s located in Congers, New York and it’s part of the Xaviars Restaurant Group.  Well let’s go with it but name a different town.

Restaurant X is a successful little restaurant in the town of Bentley, Alberta.  Bentley is in central Alberta near popular Gull Lake.  In the winter months the town businesses cater to locals.  Summer brings an influx of tourists and cottage owners that spend time at the lake during the warmer months.  The owner of Restaurant X hires a new manager that comes with what appears to be a great track record and a promise to increase profits.  This new manager starts in April just before the beginning of the busy summer season and he slowly makes changes to reduce costs.  First, it’s a change in a few suppliers from the meat supplier they have used for the last four years to the paper products.  At first things look great.  The cost reductions quickly show up on the bottom line.  But there’s growing dissatisfaction with the local patrons.  The food quality and serving size has gone down.  Heck even the toilet paper leaves a poor impression on these good folk.  They don’t frequent the restaurant as often, and they talk about their disappointment with their friends and neighbours.  Before this becomes apparent, the summer patrons arrive.

Time goes by and after the influx of summer traffic goes away Restaurant X struggles through the following winter.  The owner wonders what happened to his successful little restaurant.  What are the other restaurants in town doing?  Maybe it’s the economy, people aren’t dining out as often.  No one connects the dots and Restaurant X closes.

It’s important to look at your businesses “big picture” and make sure your customers are happy.  Analyse everything about the business especially the guest/customer experience.  Think like a customer, talk with your customers, or hire someone to survey.