Harnessing Chaos: The Catalyst for Innovation and Your Unique 8%

June 25, 2023 13 mins read

In the startup world, you’re either a genius or an idiot. You’re never just an ordinary guy trying to get through the day.

Marc Andreessen

Dear Reader,

Welcome to this week’s counterintuitive journey: embracing chaos. This isn’t about typical startup chaos or the overwhelming mayhem of an endless task list. This is about strategically harnessing chaos to bring focus, clarity, and a profound understanding of your mission, vision, and objectives.

This week’s topic isn’t about chaotic brainstorming or design-led thinking intended to kindle innovation. Instead, it’s about using chaos as a lens to better understand ourselves, our assets, our audience, our potential customers, and the possible pathways to reach our goals. Through this lens, innovation becomes a byproduct (an outcome) of our approach rather than our starting point.


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Every founder knows the feeling of a Friday evening realization: an insanely busy week with nothing to show for it, one spent keeping the wheels turning without driving the business forward. This is the FUNCTIONAL concept of chaos – the tasks that keeps you busy without fostering significant growth.

Also known as working IN the business, caught up in day-to-day operations. When do you work ON the business, developing strategy and perspective. You need to be both in the ditch, digging the trench, and periodically coming up for air to make sure you are heading in the right direction. This is the founder superpower that sets you apart, the challenging dance between micro and macro, the operational and strategic.

The process of chaos is what I want to focus on. Embracing the disorder that accompanies creativity and innovation, navigating the less trodden path, and stepping out of our day-to-day operations. This doesn’t mean losing control or neglecting important tasks, it’s an “AND” conversation, not an “OR”. Employing a deliberate strategy that gets you somewhere faster.

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Navigating Chaos: The Rules

Being a founder is walking a tightrope between order and chaos. In trying to maintain balance, we often impose artificial constraints that obstruct our path forward. To effectively leverage chaos, we must learn to dismiss what doesn’t matter in the present moment – this is the first rule of chaos.

The key to chaos is the ability to momentarily put aside perceived obstacles. Let’s say you’re considering a pivot to B2B. Concerns about long sales cycles, pricing changes, product upgrades, and a B2C-centric vision seem daunting. Enter the chaos rule. It prompts a straightforward reply: “Who cares?”

We’re not in the realm of logistics; we’re exploring possibilities. The value of chaos is its potential to uncover new paths, nothing more, nothing premature. Remember, “Only care about what you need to care about when it truly matters.”

This rule isn’t about avoiding problems. It’s about strategically delaying concerns, recognizing they’re not immediately relevant. It’s not about ignoring; it’s about stating their insignificance in the present context, allowing you to focus.

Remember the 80/20 Rule: 80% of results come from 20% of efforts. By focusing on the vital 20% during our venture into chaos, we allow ourselves to zero in on potential game-changers, while dismissing the inconsequential.

Embracing the Controlled Burn

As a founder, your focus is perpetually drawn to the immediate needs of your business, the overwhelming urgency of “now” that demands your immediate attention. The constant battle cry of slack notifications, an unrelenting calendly, ceaseless customer demands – every spark, without your immediate attention, has the potential to turn into a crisis.

Ergo: “Why think about next week when survival today is the main concern?” The answer lies in trajectory. A few degrees off your path today means you will wake up a year from now, likely in the same or worse place and nothing to show for it. You’ll regret working solely IN the business, not ON the business. This isn’t about neglecting urgent needs; it’s about carving out time to reflect on the bigger picture, to devise strategies that avert crises AND ensure sustainable growth.

It’s like the forest ranger’s ‘controlled burn‘ method. They light small, manageable fires to clear dense undergrowth, preventing larger fires. While these fires might seem counterproductive, they actually protect the forest from future uncontrollable infernos. Likewise, addressing the root cause of problems in your startup, rather than firefighting minor issues one by one, will always be a more effective strategy.

When’s the right time to embrace chaos? “The best time to plant a tree was 20 years ago. The second-best time? Today.” Embracing chaos, like tree planting, offers long-term rewards that outweigh your initial uncertainty and discomfort.

Harnessing the Power of Chaos

One thing many founders will agree on – startup journeys rarely follow a script. More common are tales of unplanned turns, surprising insights, unexpected customers, or daunting challenges that directed them to an unexpected, yet rewarding (or awful) path. It’s these moments (of chaos), that create the opportunity for ‘luck’ to strike.

Luck, some say, happens when preparedness meets opportunity. Being open to chaos, in essence, is being ready for luck. It’s about placing yourself at the intersection of readiness and opportunity, to hear and embrace the unexpected.

Dave McClure puts it like this “A startup is a company that is confused about what its product is, who its customers are, and how to make money.” He’s not wrong, a startup is often a question mark, but it’s also an exclamation mark. It’s a search for answers, but it’s also a celebration of discovery.

How does one navigate this chaotic energy? Anywhere you want – a product concept, a target market, a revenue model, a hurdle, or a hunch. The starting point isn’t as crucial as the mindset you bring – readiness to question, to challenge assumptions, and to accept the chaos.

The journey is iterative, not linear; the path winding, not straight. And that’s perfectly alright.

Harnessing Chaos: Dare to Challenge the Norms

Controlled chaos? Sounds paradoxical? It is this very oxymoron that drives innovation in lean, agile teams. Remember the electrifying, exhilarating rush when you were racing against time to launch your MVP. Swift decisions, intense brainstorming sessions, random moments of genius, a team unified to reach a shared (fuzzy) goal – this is high-performing chaos.

Dan Ward, in his book “FIRE: How Fast, Inexpensive, Restrained, and Elegant Methods Ignite Innovation,” vouches for the efficacy of small teams, shoestring budgets, and ticking clocks in delivering unmatched results.

The U.S Air Force’s $10 million Lightweight Fighter (LWF) project. Despite a meager budget (for the aerospace industry) and an aggressive timeline, a small team of innovators managed to develop two of the most successful fighter jets in history, the F-16 and the F-18.

How the U.S. Air Force used 1,760 PlayStation 3 consoles to build a supercomputer (Condor Cluster was the 33rd fastest in the world). In 2010, the Air Force Research Laboratory constructed this high-performance computing system at a fraction of the cost, displaying an extraordinary example of innovative, cost-conscious thinking.

The Apple Newton vs Palm Pilot…

Large organizations often stumble, stifled by bureaucracy, scale, and rigid controls. But it makes no sense, the catalyst for innovation is the same, regardless of scale. It’s that primal instinct you harnessed when launching your MVP – the embrace of chaos, the ‘do or die’ urgency, and the fearlessness of having ‘nothing to lose.’

As you scale and evolve, the stakes get higher. Sure, you have more to lose, and chaos transforms from an open-ended just do it, into a strategic tool you have to deploy carefully. How do you keep the essence of chaos alive while ensuring it doesn’t spiral out of control.

Controlled chaos isn’t about taming it, but guiding its energy, harnessing the uncertainty. It’s about igniting the dynamism of a compact team and leveraging constraints as a springboard for ‘moments’. Embracing this form of chaos is about daring to view uncertainties and limitations as opportunities.

Processes: Unleashing Creativity, Not Hindering It

In the realm of controlled chaos, it’s not about creating shackles but fostering an environment where creative thoughts can soar, guided by a robust framework.

Take the example of Pixar, they utilize a unique method known as “plussing,” a process that welcomes every idea and nurtures it constructively. Rather than inhibiting creativity, “plussing” provides a robust structure that channels innovative thoughts into concrete, impactful results.

Now, consider the Agile methodology. Agile is anything but rigid. It’s designed to adapt, fostering a rapid, iterative approach to product development, punctuated with regular evaluations and adjustments. The methodology doesn’t curb creativity; instead, it harnesses it, steering it within a framework that amplifies productivity while keeping the team aligned.

What about Toyota’s famous Lean Manufacturing process, which cultivated the notion of ‘Kaizen,’ or ‘continuous improvement’? Workers on the shop floor were encouraged to stop the assembly line if they saw a problem, allowing for immediate problem-solving rather than pushing errors down the line. This process didn’t stifle innovation; rather, it made every employee an innovator, constantly optimizing for excellence.

The strength of these processes lies in their ability to embrace and channel chaos. They’re not inflexible rules, but adaptable guides that bounce your startup into a consistent cycle of innovation and improvement. They’re the conduits that transform raw, chaotic energy into a powerful force driving your venture forward.

Identifying Your Unique 8% Amid Chaos

Consider this: an overwhelming 92% of your company is virtually identical to every other firm in your sector. The hierarchies, the back-office tools, the technical stack — they’re common, shared elements in a wide commercial ecosystem. This isn’t your differentiator; it’s your baseline, your business-as-usual.

Hidden within the day to day, you’ll find your unique 8%: the spark that ignites your proprietary IP, gets your customers excited, perhaps your secret sauce, your uniqueness amidst a sea of sameness.

You might contest this idea, pointing to cases where companies struck gold by reimagining a process from the 92%. Mailchimp & Slack, both born from an internally developed tool. Let’s be clear: these are exceptions that prove the rule.

The vast majority of startups can’t afford to spend invaluable resources on overhauling the 92%. Your time, money, and talent are better spent refining your unique 8%, the sliver of your business that sets you apart.

Don’t neglect the 92%. Keep it humming along efficiently with proven tools and methods. This ensures a stable foundation, freeing up your resources to focus on the 8%.

Controlled chaos isn’t about completely overhauling everything or having a blank canvas; it’s about identifying areas where flexibility and innovation can result in accretive growth. Focusing on your unique 8% is the most efficient and effective way to leverage controlled chaos.

Chaos Theory: The Science Behind the Phenomenon

While the business applications of chaos are amazing, the scientific concept is ‘chaos theory’. It explores how small changes in initial conditions can lead to wildly unpredictable results in complex systems. This phenomenon is famously known as the ‘butterfly effect’.

Coined by mathematician and meteorologist Edward Lorenz, is based on the metaphorical concept that the flapping of a butterfly’s wings in Brazil would set off a chain reaction leading to a tornado in Texas. An extreme example and not literal, it is 100% real.

One of the best examples comes from the video game industry, which saw a meteoric rise in the battle royale game genre. Hits like Fortnite and PUBG, can all be traced back to one small design change in an earlier game, ARMA 2. A modder (PlayerUnknown) tweaked the game rules to create a ‘last man standing’ mode. This minor alteration to gameplay mechanics sparked a wave of innovation and led to an entirely new genre, demonstrating the profound ripple effects of a small change. One modder (butterfly) ignited an entire industry (tornado).

In such a dynamic and interconnected environment as the startup ecosystem, understanding the concept of the butterfly effect is crucial. By paying attention to the ‘small flaps’ within your organization, you can leverage chaos theory to drive significant change and foster innovation.

Challenge for the Week: The Chaos Experiment

This week, foster a controlled form of chaos that can steer your broader strategy. Jump out of the details of daily operations and step back to gain a wider perspective on your strategic direction.

The Pause: Stop. Close your laptop. Assemble your core team, and separate yourselves from the minutiae of daily operations.

The Reflection: Ask yourselves: “Who are we? What do we do? Why do we do it? Who cares?” This is about stripping down to the core of your startup, reconnecting with your mission, and reassessing your uniqueness (and how that translates to your customers).

The Exploration: Broaden your scope. What’s happening in your industry? What are competitors and outliers doing differently? What do your customers love? This is the stage to identify potential pivot points, areas of innovation or definition of long term strategic goals.

The Application: How does this new understanding inform your broader strategy? Perhaps there’s a new market segment to tap into, or a product feature that can be innovated upon, or even a completely different direction to consider.

The Strategy Alignment: Finally, align this newfound strategic direction with your execution plan. This means bridging the gap between your big-picture strategy and the tactical actions your team undertakes. Keep an open mindset during execution, allowing for adjustments and tweaks informed by real-time feedback and results.

By actively inviting this form of chaos into your strategic planning, you allow room for new insights, foster innovation, and potentially discover avenues that rigid control or day to day mayhem might have overlooked. Remember, this exercise is about strategic chaos, guiding your startup towards novel solutions and remarkable innovation. This is your chaos experiment.

Community Spotlight (CPG Edition): Innovating Amidst Chaos

In the spirit of this week’s theme, shining a light on two founders within our community.

Their innovative products are perfect examples of finding their ‘unique 8%’ and using it to enter and make an impact in their respective markets. Just a quick note: we don’t have any affiliate relationship with these companies – community is circular.

HOP WTR: A non-alcoholic sparkling hop water that’s pushing the envelope on what refreshment can mean. Crafted with bold hops and mood-boosting ingredients, HOP WTR demonstrates that innovation can come in the most refreshing forms.

EXOH: The ultimate lip balms that don’t just nourish your lips but also awaken your senses with scents reminiscent of the things you love most. It’s a delightful twist on an everyday item, and we’re here for it.

So, here’s a shout-out to these trailblazers in our community. They’re living proof that when you dare to be different, you can create something extraordinary amidst the chaos.

Until next Sunday, embrace the chaos, uncover your unique 8%, and continue to challenge the status quo.

— James

(LinkedIn | Twitter | Tiktok)

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