Tolerance

You're seeing it when a supply chain breaks down because a single supplier delivered components 2% outside specification. The system's tolerance was so tight that normal variation in inputs caused failure.

You're seeing it when a startup's financial model only works if customer acquisition cost stays below a specific number with zero margin for variance. The tolerance is too tight — any market fluctuation kills the model.

Stress-test your business model's tolerances. What happens if CAC rises 30%? If a key hire leaves? If a supplier fails? Where your tolerances are tight, either widen them through diversification or build explicit contingency plans.

Catmull designed Pixar's creative process with deliberate tolerance for failure. Every film went through an "ugly baby" phase where early versions were terrible — and the system was built to absorb that. Story reels were reviewed and reworked repeatedly; the Braintrust provided candid feedback without authority to mandate changes. This wide tolerance for creative deviation allowed radical ideas to survive the development process. Catmull understood that tight tolerances in creative work kill innovation — you get safe, formulaic output. By engineering tolerance into the system, Pixar produced films that were both artistically ambitious and commercially successful. Founders should recognise that the right tolerance depends on the domain: creative systems need wide tolerances; safety systems need tight ones.