Chaos theory: principles and applications

Chaos Theory

The phenomenon of change is widely acknowledged as the only constant in life. Yet, ironically, most organizations are known to resist change. This resistance leads to organizational failure to adapt to a dynamic environment. However, ever since the pace of change has accelerated with the introduction of Information Technology, more efficient communication systems, and global competition, organizations are now becoming aware of the serious need to cope with and quickly adapt to change (Richardson). Thus, organizations are increasingly turning to chaos theory in order to understand and manage change in a dynamic business environment.

Interestingly, chaos theory was developed in the scientific world and later found applicable to organizational management (Stilwell, 1996). As Priesmeyer (p. 4-5) points out, chaos theory has found virtually universal application in fields as diverse as hydrodynamics, meteorology, biology, chemistry, physics, astronomy, cardiology, and organizational management because the theory suggests that change is the natural product of entirely deterministic processes. Since organizations are interested in learning how to manage change and prosper in a world of chaos, it is hardly surprising that they are now embracing chaos theory.

In fact, chaos theory has several important implications for organizational management. But before describing these implications, perhaps it is important to first explain the fundamentals of chaos theory. Chaos theory, which is also known as nonlinear systems theory, is based on the premise that the world is made up of complex systems that are nonlinear, dynamic, unstable, and unpredictable. This new scientific worldview is in sharp contrast with Newtonian science, which believed that the universe functioned in an ordered, stable, linear, and predictable manner (Goldoff, 2000). While Newtonian thinking led to a mechanistic worldview, scientific principles of management, and rigid organizational structures, chaos theory is now similarly revolutionizing principles of organizational management by suggesting that the principles should themselves be nonlinear. For instance, chaos theory suggests that organizational structures and cultures should not be fixed but allowed to evolve naturally in response to environmental changes (Stilwell, 1996).

Chaos theory may vest on the premise that the environment is made up of nonlinear and dynamic, complex systems, but it is important to note that the theory actually propounds that it is possible to discern shape and order in these systems by looking at the processes involved from a holistic view point (Goldoff, 2000). For, at the end of the day, it appears that these complex systems and processes work towards achieving order by responding or being open to the environment. Margaret Wheatley phrases this as "Life uses messes to get to orderly solutions." (Stuart, 1995).

The way chaos theory works is often explained by the "butterfly effect," or the fact that a butterfly flapping its wings on one side of the globe can potentially alter weather patterns on the other side of the globe as the weather system twists and churns over time. Thus, chaos theory highlights how a small and seemingly unrelated action can alter and magnify patterns of change so as to cause great future upheaval (Goldoff, 2000; Stilwell, 1996). This crucial insight on how change can occur has led to organizations realizing the importance of encouraging "butterfly effects" in response to environmental changes, be it in the area of organizational structure, culture, or even strategies.

True, that discerning the underlying structure of the complex systems that bring about change is often difficult because there are a number of myriad factors involved. However, chaos theory is nevertheless useful in understanding and managing what was previously considered to be uncontrollable, chaotic events and behavior. This is achieved by defining chaos as "the range of behaviors that deterministic processes can adopt." (Priesmeyer, p. 6) One such deterministic process is deemed as the organizational culture and structure itself. Indeed, this is precisely the reason why modern organizations are moving towards decentralized, leaner, flatter structures that allow for employee empowerment, self-organization and emergence (Richardson). By doing so, organizations are aiming to embrace chaos and diversity, which they believe will lead to multiple "butterflies" bringing about positive change (Goldoff, 2000; Stilwell, 1996).

Thus, as Petzinger (1999), Stuart (1995), and Richardson observe, chaos theory has led to organizations being viewed as organic or living systems that will find orderly solutions if they are allowed to do so. However, this does not imply that management should let go of all control. On the contrary, all chaos theory implies is that organizational management needs to be more sensitized to environmental changes, leading to flexibility, responsiveness, dynamism, and a reduced reliance on precise planning (Stilwell, 1996). For, as events unfold, there is always an allowance for freedom of choice in making decisions to change or stay with the nature of processes at work. The use of chaos theory, however, helps in tracing the "butterfly effect" of management decisions, and is, therefore, able to set direction in making new, effective decisions (Priesmeyer, p. 14).

For instance, chaos theory is useful in strategic management and decision-making because the chaos model emphasizes the need to look at non-average or nonlinear behavior as a source of change. Similarly, chaos theory stresses on the need for a future orientation in organizational strategies rather than a reliance on repeating the successful patterns of the past (Goldoff, 2000). In effect, the use of chaos theory in strategic decisions can, by itself, lead to organizations becoming more innovative and dynamic.