The Chaos Theory of Management is a relatively new theory that has enjoyed considerable study but also endured significant criticism. By examining the Rational Model, Ordinary Management, Extraordinary Management and Chaos Management, the researcher is able to see differing views of the universe and the business world within it. Chaos Management, which is newer than the Rational Model and combines Ordinary and Extraordinary Management, is dynamic and creative. However, Chaos Management is still a relatively young system that has yet to be proven by empirical data.
The rational model is based on the assumptions that the universe is as predictable as "clockwork machinery," that business organizations are also predictable and that good business management can obtain reliable outcomes from the organization (Rosenhead, 1998). According to this model, "good business management" consists of a Chief Executive Officer (COO) heading a united team of management personnel, all of whom have a vision or strategy supported by a conventional culture. Furthermore, this "good business management" guides the organization to focus on core business and competencies, "plays" to its strengths, observes and adapts according to the market, and primarily concentrates on profit (Rosenhead, 1998). This so called "good management" will also formulate goals, analyze the business environment, formulate strategies, evaluate and implement those strategies and strategically control the organization (Rosenhead, 1998).
Ralph Stacey, along with many other theorists, debunks the assumption of a well-ordered universe underlying the rational method. According to Stacy, theorists have discovered the complexity and chaos or creative disorder of the universe, which upends the rational model's orthodox notion of "good management" (Stacey, 2007). Ian Stewart's Does God play dice? The new mathematics of chaos illustrates the complexity and chaos/creative disorder of the universe are observable in such mundane systems as the weather (Stewart, 2002, p. 116), ecology (Stewart, 2002, p. 262) and fluids (Stewart, 2002, p. 175). Given this universal complexity and chaos or creative disorder, an organization's analysis becomes less important, determination of cause and effect become meaningless, the organizations vision becomes an illusion, agreement and common culture become dangerous, statistics become doubtful and long-term planning becomes extremely difficult if not impossible (Stacey, 2007).
Ordinary management is focused on daily problem solving to attain the organization's goals. Employing analysis of data, options evaluation, definition and implementation of goals throughout the organization's hierarchy, rational choice, and performance evaluation, this management style is centered on control and is based on a consensus of vision within the organization. According to Rosenhead, capable ordinary management is vital to cost-effective execution (Rosenhead, 1998). It should be noted that in ordinary management, rational choices are made based on certain assumptions. An illustration of Ordinary Management is found in James Rowe's Studying strategy:
(Rowe, 2008, p. 63)
In contrast to ordinary management, extraordinary management eschews rational decision-making because those certain assumptions upon which ordinary management may rely are no longer reliable. As James Rowe summarizes Ralph Stacey's world view, the world veers "from instability to instability or even chaos" (Rowe, 2008, p. 64). Extraordinary management focuses on open-ended change and requires unspoken knowledge and creativity through the use of informal structures. Those informal structures may include workshops, multidisciplinary teams, multi-unit teams and multi-level teams. The ideal use of these informal structures is a spontaneous assembly based on unusual circumstances such as conflicts or anomalies occurring in the course of usual management. Within these informal and spontaneously assembled teams, members speak of new assumptions which are "analogical and intuitive" (Rosenhead, 1998), and decision-making becomes a political process in which members posit their arguments to convince other members of their views. The term "extraordinary" may be misleading, for some organizations necessarily constantly operate by extraordinary management due to rapid changes in the economy, the product, customers and/or competition (Rowe, 2008, p. 63). Rowe's Studying strategy also provides a diagram of Extraordinary Management:
(Rowe, 2008, p. 63)
Chaos Management as a Combination of Ordinary and Extraordinary Management
Despite the fact that ordinary management and extraordinary management operate differently and necessarily engender a certain tension between them, both should exist in an effective organization (Rosenhead, 1998). Indeed, according to Parker and Stacey, the interaction between these two modes is the "key to strategic change" (Parker & Stacey, 2007, p. 70). This relatively new theory posits an open and complex framework instead of the traditionally "closed and simple systems" (Chatfield, 1997, p. 44). A capable organization must strike a dynamic balance between the two management models. A slavish adherence to ordinary management severely restricting the informal structures of extraordinary management will hamper the organization's ability to operate creatively; however, if extraordinary management is not sufficiently controlled, it will result in anarchy preventing the organization from attaining the daily tasks (Rosenhead, 1998). Fortunately, that dynamic and delicate balance means organizational members can trust that there are boundaries to the instability and "a new order will arise" (Chatfield, 1997, p. 46).
The responsibility for attaining and maintaining this delicate balance belongs to senior management. In order to keep the creative pot stirred, senior management must: ensure a diverse organizational culture; promote intra-organizational politics; promote a constantly adapting group of issues and goals (Rosenhead, 1998). To that end, senior management should rarely intervene and only at key points, understanding the probable outcome of that intervention and resisting the temptation to force behavior into a preconceived path or pattern (Rosenhead, 1998). Senior management also plays the role of devil's advocate, provoking conflict, upsetting equilibrium, turning small changes into large ones and emphasizing the impacts of coincidental events (Rosenhead, 1998).
Experts disagree about the importance of analysis in this ordinary/extraordinary management method. Stacey draws a sharp distinction between rationality and creativity, believing the usefulness of analysis is minimal (Stacey, Managing the unknowable: Strategic boundaries between order and chaos in organizations, 1992). In Stacey's estimation, senior management should provoke and help dialogue rather than preside over elaborate analysis (Stacey, Complexity and creativity in organizations, 1996). Shallice believes that there are some instances in which certain unique situations involve complex thinking and a strong interplay between rationality and creativity (Shallice, 1996, p. 1410). Going even further than Shallice, Poincare believes that even exhaustive analysis can play an important foundational role in reaching a creative breakthrough (Poincare, 1946).
Understanding that this dynamic mix of ordinary/extraordinary methods can prove threatening to orthodox organizational administrations, scholars have examined and articulated the benefits of chaos management in terms speaking to traditionally ideal outcomes. Stacey, in particular, takes great pains to explain these outcomes. The "chaotic" combination of ordinary/extraordinary methods may enable an organization to not only adapt to genuine environments but also to create those environments by creatively addressing events. In addition, consistency is not the only source of success; contradiction may also lead to organization success when creatively addressed. Furthermore, organizational success need not come from a dictated vision; rather, success may come from engaging in the creative and self-bolstering cycle employed by informal structures. Finally, successes are not limited to mere increments; rather, the chaotic/creative process may result in revolutionary change/success (Stacey, Complexity and creativity in organizations, 1996).
Criticisms of Chaos Management
Though the theory of Chaos Management is intellectually exciting, it has not escaped rather severe criticism regarding several aspects, presented here in no particular order of importance. First, Stacey's insistence on organizations operating on a sustained chaotic edge is considered unnecessarily dangerous and unnatural. Some experts believe that the truly unique events offering opportunities for creativity are necessarily ephemeral and the organization naturally and rather quickly moves to either a breakdown or back to equilibrium (Rosenhead, 1998). Secondly, there is little empirical evidence, other than anecdotal evidence, to show that the theory actually works. Chaos theory is too young to be effectively integrated in enough organizations to yield substantial data about its results (Rosenhead, 1998). Third, the parameters of studying Chaotic Theory's effects within organizations have not been well-defined. The current form of the theory lacks specificity about whether the organization or the environment or both should be the foci of observation (Rosenhead, 1998). Fourth, the relationships and interactions between ordinary and extraordinary management methods are not well-defined and interconnected enough to gather reliable data about their effects on each other (Rosenhead, 1998). Finally, the wedge that Stacey draws between the creative politics of an organization and rationality is deemed unrealistic. Though Stacey advocates a deliberately political process devoid of rationality, each member has his/her individual rationality and there are common and "overarching" constraints within an organization that require feasible outcomes (Rosenhead, 1998).
This work explored different business management models. The Rational Model, which is the more traditional model, assumes that the universe is predictable, that business organizations are also predictable and that traditional business management can achieve predictable outcomes. The traditional business management team consists of a COO and a united management team with a common vision and a common culture. The rational model moves in predictable business ruts of focusing on profit, business competencies and core business, and uses the organization's perceived strengths. The Rational Model has…