Emerald Group Publishing Limited
Copyright © 2000, MCB UP Limited
Using chaos to stimulate emerging Internet business
Using chaos to stimulate emerging Internet business
Stan Freid and William Gellermann
Abstract Managers are using the chaos paradox – riding patterns of order hidden in turbulence – to stimulate the profitable emergence of an Internet business. Successful companies are sensing when to leverage patterns in chaos and forming technical and marketing alliances in response. They are also learning when to let chaotic patterns simply evolve. Balancing action and inaction is key to surfing turbulent waves of exploding Internet growth. The authors identify and explore five principles for managing in the chaos of Internet e-business.
Keywords: Chaos, Business plan, Decision making, Organizations, Profitability, Internet
Looking beyond Y2K, managers are using the chaos paradox – riding patterns of order hidden inside turbulence[1,2]. From scores of managers coping with daily business chaos, we have learned three lessons:
in our Internet economy, the path to profit lies in understanding patterns hidden in chaos;
new markets come out of stirring fresh energy into chaos; and
stimulating an emerging business is not an oxymoron.
...Profit lies in sensing the order in chaos and learning to surf its hidden patterns...
When George Conrades, chairman and chief executive officer of Akamai Technologies Inc., an emerging Internet business, was asked to describe the challenges, priorities, and chaos facing Akamai, he parried with, "What do you mean by chaos?" Avoiding Ian Stewart's pithy definition – "Chaos is not random, it is apparent random behavior resulting from precise rules; chaos is a cryptic form of order" – the interviewer offered common synonyms: turbulence, turmoil, and disorder.
This exchange was stimulated by a comment made by Akamai's marketing vice president, David Goodtree, to a New York Times reporter. Goodtree said, "The whole name of the game here is to push content to the edge of the Internet – very, very close to the end user." He went on to explain that he was referring to how Akamai's FreeFlow system is distributing Web-page content and slashing intolerable Internet congestion.
The story of how Akamai has survived the turbulence of transforming a hot new, MIT-laboratory technology into a profitable business is full of lessons for today's emerging e-businesses on the Internet. Akamai's journey through chaos, seeking and attracting early venture capital and a proven management team, underscores a theme central to doing business at the speed of the Internet: Profit lies in sensing the order in chaos and learning to surf its hidden patterns.
Akamai's experience illustrates five essentials for any business surfing in the Internet's growing chaos:
Set a clear context to focus your energies. (Akamai's focus is on ultra-fast and reliable Internet content delivery backed by a 100 percent, no excuses guarantee.)
Coordinate activities to stay in concert within your context while dynamically sensing and responding to the Internet economy's turmoil. (Akamai has no two-year strategy, but senior managers redefine their goals every 90 days, and weekly review meetings drive consensus solutions that work.)
Absorb uncertainty and keep on making decisions in spite of the uncertainty. (A willow tree bends, but does not break in a hurricane.)
Recruit a team of world-class managers and allow them to "tend their own gardens."
Keep your organization structure very flat. (Akamai's senior managers report directly to the CEO, who sets a coherent context of purpose and principles and then coordinates their activities but stays out of their way. Their e-mail culture keeps everyone instantly informed.)
David Goodtree admits to working 12-hour days, seven days a week and swears, "But it's fun!"
Akamai models an innovative business process in action, redefining possibilities by removing the shackles of the Internet's contraints. But along with all this energetic action, serendipity plays a strong role in defining its dynamic path. That path began when Tim Berners-Lee, inventor of the World Wide Web, challenged Tom Leighton to break the logjam of Internet congestion. Akamai's birth was induced by the energy of Leighton's MIT team developing dynamic load-balancing algorithms; initial funding by Battery Ventures, Polaris Venture Partners, and others; the leadership of its CEO, George Conrades; and its team of world-class managers.
Born in Internet chaos, Akamai, with scores of technical and business partners, is building an accelerated network for speeding content delivery anywhere from two to ten times and guaranteeing 100 percent access to the most heavily trafficked Web sites. Akamai is riding the Internet's chaotic momentum and using it to stimulate its emergence within a powerful global web of Internet enterprises. Before Spring 1999, this complex web of relationships emerging around Akamai was hardly predictable.
George Conrades sees the tension between "making Akamai happen" and just "letting it emerge" on its own. He admits, "We do both. I never know what's around the corner; that's what makes me keep coming to work." E-businesses emerging in Internet turbulence must sense when to act and when to lay low, when to leverage shifting patterns in chaos and when to just sit back and watch them evolve. Doing business at the speed of the Internet means honing exquisite balance and timing.
In his 1998 book, Emergence: From Chaos to Order, John Holland defines emergence as a process driven by an underlying procedure. The process is perfectly free to generate all kinds of possibilities as long as process procedures are not constrained by couplings hidden in their environment. He also describes it as a product of nonlinear interactions that are context-dependent. And after commenting that "emergence is mysterious," he adds, it is "paradoxical, … smacking of 'get rich quick' schemes, … generating surprising complexity, … animated-dynamic… The behavior of the whole is much more than the behavior of the parts."
...E-business emerging in Internet turbulence must sense when to act and when to lay low, when to leverage shifting patterns in chaos and when to just sit back and watch them evolve...
Holland's model of emergence gives us a complex picture of how intelligent agents (they might be people and/or businesses) are behaving, learning, adapting, and interacting in unpredictable nonlinear patterns. This picture offers insight into Akamai's arena where the game of revolutionizing the delivery of Internet content is now being played out. The game is complicated by players who freely exchange energy with one another while exchanging energy with their underlying Internet ecosystem. (see Cisco's Web site for its 1999 story, "The Internet ecosystem: business model for the Internet economy.") Akamai is a player, creating and controlling chaos to unbind the delivery of Internet content.
In Akamai's Internet arena, the web of players includes leading software and hardware producers (Apple, Microsoft, and Cisco), content providers, ISPs, streaming media companies, and all kinds of e-businesses engaged in consumer sales and business-to-business commerce. Today, while the Internet ecosystem is becoming more complex, it is also growing at warp speed. Forrester Research projects that by 2003, consumer sales will jump to $108 billion while business-to-business commerce on the Internet will reach a prodigious $1.3 trillion.
Stimulating this growth and its own emergence, Akamai has been forming technology partnerships with Cisco, Apple, Microsoft, and Real Networks and is seeking others. In 1999, they participated with Cisco, UN Development Programme, and KPMG to produce the largest ever, week-long Internet musical event, NetAid. The event stimulated a new worldwide focus on alleviating the chaos of extreme poverty. The seed is planted. A global web of enterprise, human enterprise, is emerging.
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