Laplace & Demons

On quantum mechanics in strategy

Pierre-Simon, marquis de Laplace, was unquestionably a genius. The French scholar and polymath not only developed some of the most fundamental equations in mathematical physics and postulated the existence of black holes so far ahead of his time that he is considered not to have had an effect on modern theory (ponder that for a second), he also invented probability as it is popularly known today.

In one of his many famous works on the topic, A Philosophical Essay on Probabilities (published in 1814), Laplace introduced what would become an even more famous hypothetical being; a vast intelligence able to calculate with precision all that which had existed and ever would exist. He wrote:

“We may regard the present state of the universe as the effect of its past and the cause of its future. An intellect which at a certain moment would know all forces that set nature in motion, and all positions of all items of which nature is composed, if this intellect were also vast enough to submit these data to analysis, it would embrace in a single formula the movements of the greatest bodies of the universe and those of the tiniest atom; for such an intellect nothing would be uncertain and the future just like the past would be present before its eyes.”

Though he never used the moniker himself, this intelligence was later dubbed Laplace’s demon.

In principle, the argument holds if reasoned based on Newtonian mechanics – they are inherently deterministic and view the universe as a clockwork of sorts. With enough calculative capacity, the being in question would indeed be able to calculate all of the past and predict all of the future with perfect accuracy.

But then along came quantum theory and changed everything.

As Sean Carroll detailed in Where Quantum Probability Comes From, traditional mechanics will describe a system, its functions and how it evolves over time. Quantum mechanics do too, but with an entirely new set of rules governing what happens when the system is observed or measured.

The crucial distinction for the present conversation, however, is that while outcomes can be predicted in traditional theory, they cannot be predicted with perfect confidence even in principle in quantum theory. Rather, the best that one can do is to calculate the probability of obtaining each possible outcome – and this, as it happens, is what eventually made Albert Einstein quip that God is playing dice with the universe.

Strategy discourse, you see, suffers from a very similar problem. Traditional thinking presumes that we are able to tell, with certainty, what will happen if we choose to take any given action. In our collective eyes, organizations and markets alike are ordered in Newtonian ways – with sufficient data, we too will be able to calculate the future with perfect accuracy. If we do A, then B will happen.

But just as how quantum mechanics exorcize Laplace’s demon, so too does complexity theory vanquish all false hope of linear causality; it provides the quantum mechanics to the traditional notion of business physics. It moves us from certainty to probability, from binarity to multiplicity.

Or to put it differently, it changes the essence of strategy from one of sacrifice to that of moving from equiprobability.

Of course, this can be rather mentally cumbersome a conclusion. We would much prefer someone to tell us precisely what to do, describe not merely the paths but the individual steps to take, paint the world in easy-to-understand monochrome and ignore the colorful nuance. 

But even if we had infinite data (which we do not) and infinite calculative capacity (which we do neither), the most precise predictions would “merely” cover all potential decision trees (in quantum theory, branches of a wave function). Any individual within it would still experience to them seemingly random events. Thus, we would be able to predict the proverbial universe, but still not what would happen to the individual, and by extension an organization, within it.

And this should have a much bigger impact on strategy than it does. 

As quantum theory and complexity theory alike prove, it is inherently impossible to guarantee an outcome. Instead, strategists should focus on improving the odds of one. Not only would it increase our chances of success, but it would also lower the risk of failure.

God may be forever playing dice with the universe, but Laplace’s demon should haunt us no longer.

Onwards and upwards,
JP