Fibonacci Business Model?

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DesignIdeas

posts: 100

Sep 28, 2006 9:32 AM ET Quote Report Abuse

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Are you familiar with the Italian Mathematician`s famous sequence of the way life itself forms? The simple addition formula starts with (0, 1,1,2,3,5,8,13,21...etc.) It adds the number before it to the next number.

Everything in nature seems to follow it`s pattern from plants to sea shells as they develop.

In business have you ever heard of using the "Fibonacci Sequence" in planning your future growth?

Tony Russ

Design Ideas Marketing Associates

www.designideas.tv

P.s.: It even makes a great musical tune. Here is the sequence put to music...

http://bostonnewsletter.tripod.com/FibonacciMainMelody.mp3

P.p.s: More info...

The Fibonacci Waltz

by Ted Froberg
rendered entirely in Apple`s GarageBand Software

The Fibonacci Waltz is a composition whose theme is derived from one of Number Theory`s most interesting sequences. Fibonacci numbers appear in the growth and structural patterns of all living things.
Born in Pisa, Italy, Leonardo Fibonacci (c1170-c1240) was one of the first mathematicians to introduced the Hindu-Arabic number system to Europeans. While studying in India he became interested in a series of numbers first described in 1150 by Indian mathematicians wherein each value is derived by adding the previous two. In a book published in 1202 entitled Liber Abaci (literally: Book of the Abacus), Fibonacci explores this series and its practical application by posing the following problem: Starting with one mating pair of rabbits, how many pairs exist each month if, after every month, another pair is born to every pair old enough to mate (at least one month old)? The solution is the series of values (1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377...) that would thereafter become known as Fibonacci numbers.

Several hundred years passed before something strange happened: people began noticing these numbers appearing everywhere in the structure of living things. The number of petals on a flower, the number of spirals on a pine cone, the dimensions of a seashell, the number of leaves sprouting from a stem, even the number of digits on your hand ... Fibonacci numbers appear everywhere. It was as if nature had used Fibonacci numbers as a blueprint for life itself. (click here to view a short PowerPoint slide show).

The main theme of The Fibonacci Waltz is derived by converting Fibonacci numbers into musical notes. The conversion is a simple substitution cipher. Hence, the first six Fibonacci numbers (1, 2, 3, 5, 8, 13) point to the first, second, third, fifth, eighth and thirteenth notes on a scale. Using the familiar 7-tone diatonic scale - the white keys on a keyboard - these notes are C, D, E, G, C and A.

More music samples...
http://web.tampabay.rr.com/warhawks/FibonacciWaltz.html

hostclick

posts: 129

Sep 28, 2006 10:20 AM ET Quote Report Abuse

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I`ve heard of using Fibonacci to predict the "value" of a particular future but never in relation to planning a companys growth. I would certainly be interested to hear more but in general am somewhat of a skeptic.

CraigL

posts: 9051

Sep 28, 2006 7:12 PM ET Quote Report Abuse

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The problem with predicting the future is that it`s always a lot easier when you`re looking back on it. ;-)

People are starting to become more aware of the overall life relationships of things like the Fibonacci series, Phi and the Golden Ratio, and other strange and interesting mathematical relationships. Numerology and Cabalistic numbers have been around a long time, and fractal math became a hot item in the art world not too long ago (not to mention the scientific community).

So what can we do about it? Wouldn`t this be the fabled "key to success?" Some artists have consciously applied some of these master rules to their work, and it`s led to some success. In ancient Greece, architects used the math to build structures. Some say that in ancient Tibet and Egypt, some of the seemingly impossible building events resulted from having a superior understanding of these types of things, which understanding has been lost over the ages.

We can look back at the history of a company and perhaps see how the sequences or formulaes were at work. We might see that unsuccessful businesses didn`t have these sequences. Alright, but aren`t we dealing with something so complex that it would need a super-computer to work out the variables, like predicting the weather accurately?

I think you`re asking about complexity theory, and how to apply it to the business model. The problem seems to be that the mathematicians are still working out the details of the theory, in those arcane symbols nobody seems to understand except other mathematicians. It`d sure be cool if we did understand it, but that brings up another question:

Suppose ANYthing you wanted on a material basis were free. Suppose a "gizmo" that could copy anything at all, from a pin to a skyscraper, perfectly and exactly. All resources needed by anyone for life and survival, comfort and security are free, in this supposition.

What would you do with your life? :-)

DesignIdeas

posts: 100

Sep 28, 2006 10:55 PM ET Quote Report Abuse

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Interesting thoughts CraigL!

Thank you!

Thanks Hostclick!

Tony Russ

tdpubs

posts: 1

Oct 05, 2006 8:53 PM ET Quote Report Abuse

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I`ve been interested in the theories of Numerology and Leonardo Fibonacci for a long time. I`m not yet sold on Fibonacci as a predictor but the concept is very intriguing in regards to nature.

-------------------------

DiD Publishing Inc., produces books, advertising and marketing materials on the web and in print. If you are looking to target a specific audience; to educate or entertain them, I can assist you in your objective.

CraigL

posts: 9051

Oct 06, 2006 1:13 AM ET Quote Report Abuse

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Since this topic is in the speculative and esoteric realm, I`d propose that a better predictive model might be along the lines of how anything associated with a real item also resonates to everything surrounding it. In other words, taking a look at John W. Keely and his work with vibrations and energy.

The problem is "useless information." What it means is that there`s enough there to be intriguing, but not enough for practical implementation. We can`t prove or disprove whatever information we have, so we can`t actually use it for something.

The Fionacci series is a mathematical pattern, and we know we can sometimes use fractal math to generate interesting results. We observe certain patterns, thinking they likely mean something, and so we naturally wonder how we might use them. But there`s a gap between the observation and the utilization. How to bridge that gap is one of the most fantastic aspects of the human mind, and has generated all of humanity`s inventions.

infinique1

posts: 143

Jul 01, 2010 3:19 AM ET Quote Report Abuse

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Interesting thoughts. I've yet to see a Fibonacci business model to date.

twityhunter

posts: 1

Jul 05, 2010 12:25 AM ET Quote Report Abuse

Points: 1 Vote

Hi...,

Really nice thought.. Interesting.... Thanks for sharing...

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panasonic telephone system northampton

jacen

posts: 13

Jul 08, 2010 2:58 AM ET Quote Report Abuse

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I came across Fibonacci concept in maths and computer programs (algorithms & data structures) but it being related to business model is something new, as the forum members above say. How does it relate or work - is there anything from academic sources?

drfroth

posts: 1

Sep 05, 2011 9:01 AM ET Quote Report Abuse

Points: 1 Vote

I have been thinking about this one for quite some time (over a decade) and I just had a realisation about how to implement it in a startup situation using a reverse balance sheet approach. If you are not familiar with a reverse balance sheet approach, suggest you quickly look it up before you read on - it'll be worth it ;o)

If the sequence goes 0,1,1,2,3,8,13,21,34,55,89, etc - what if we use the sequence to model not the 'amount of growth' but the 'multiple of growth' at set time frames.

For example:

0,1

At the point in time where I have the idea for a startup, the existing capital in the business is 0 (zero). At the point where seed capital is injected into the business we have 1 (the actual amount needed should be determined in a startup business plan).

1,1

The next phase would then be the period of time it takes to earn the equivalent of the seed capital. What I am proposing is; lets say it takes 6 months between obtaining seed capital (1) and breaking even (the second 1), then 6 months could be used as the accounting period for planned fibonacci growth in a business.

1,2

Using a reverse-balance-sheet approach, planning and budgeting would be strategically pre-determined where 2 x seed-capital is projected to be reached in another 6 months time. Strategy and planning decisions and execution would flow from this financial growth model. If the target was reached earlier than expected, then organisational attention should divert to other matters such as the well being of the people in the business, etc - at least until the next cycle. This is kind of over-simplistic but I trust you get the drift. I am basically saying that fibonacci growth ought to be sufficient growth, over and above that you may not be engaging generative win/win systems dynamics somewhere in your business and may like to turn your attention there before something comes unstuck.

This is obviously theoretical at this stage but I trust that those of you on this site are of the type that won't need 100% correct details but will get the 'drift' of what I am generally proposing and run with it.

Using reverse balance sheet approach would simplify setting and monitoring growth targets (healthy ones at that) and in so doing simplify planning so as to promptly redirect attention around enabling the business systems (a biopsychosocial system) to achieve each financial goal (a fibonacci series multiple) in a dynamic autopoiesis with the whole human business system.

My hypothesis is that companies experiencing growth considerably in excess of fibonacci growth are unlikely to be sustain their growth rate over time - a riskier investment for a would-be investor.

The next part of my investigation in the area will be around stock and flow in fibonacci growth as applied to startups. If you have a look at a nautilus shell (a famous example of fibonacci growth in nature) it appears that each segment of the nautilus is like a "taking-stock" of progress before the next growth. Could this be a model for the proportion of cash reserves, assets purchases etc?

I shall have to try this on one of my new startups. Or all of them :o)

This is not advice of course (but it is what I would do).

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