The Relevance Of Chaos Theory To Organizations Today Essay

Length: 16 pages Sources: 15 Subject: Business - Theory Type: Essay Paper: #47855871 Related Topics: Supply Chain Management, Project Management, Organizational Design, Project Manager
Excerpt from Essay :


Today, organizations of all sizes and types rely on different types of projects to achieve their objectives. Indeed, project management has become a discipline unto itself in recent years and a growing body of scholarship has been developed in response to this trend. Moreover, there are also international organizations such as the Project Management Institute which are dedicated to helping business practitioners improve their project management skills. Although there remain some mixed views concerning optimal project management strategies, there is a growing consensus that successful project outcomes depend in large part on how well a specific project is organized from the outset, including most especially the initial conditions under which it will be pursued. In addition, the initial conditions of a given project also include the respective design and structure of an organization, which are the primary focus of this study. In sum, the likelihood of successful project management initiatives can be improved or diminished depending on the starting conditions under which a project is launched. To gain some new insights into these issues, the overarching purpose of this study is to identify what initial factors are most salient in promoting successful project management outcomes. The basic design of the study is exploratory, drawing on chaos theory which maintains that even minor changes in the initial conditions of a project can have a profound effect on the success of the projects outcome. While additional research in this area is required, the findings that emerged from this study underscore the need for thoughtful project design and implementation in order to optimize the effectiveness of modern project management strategies. Finally, the study also identified a significant trend towards assigning effective project management a high priority in organizations of all sizes and types, making studies of this nature especially timely and relevant at present.


Today, businesses of all sizes and types are faced with an increasingly complex and globalized marketplace that demands effective strategies to achieve and sustain a competitive advantage. Indeed, the vast majority of project-driven companies have encountered countless novel challenges to achieving their goals in recent years due in large part to the growing complexity of the environment in which they compete. To identify some viable strategies that can help in this regard, the purpose of this study was to determine what initial factors are most salient in promoting successful project management outcomes. Drawing on the basic principles of chaos theory which maintain that even minor changes in the initial conditions of projects can have major effects on their outcomes, this study used an exploratory research strategy that focused on three main areas: the origins and fundamental tenets of chaos theory, current applications of chaos theory to organizational design and structure and the implications of chaos theory for business practitioners. Finally, a summary of the research and important findings as well as recommendations for business practitioners and suggestions for further study are presented in the studys conclusion.


Background and overview of chaos theory

During the early 1960s, a Massachusetts Institute of Technology professor of meteorology, Edward Lorenz, became interested in determining why weather was so difficult to forecast (Glenn, 1996). In fact, accurately predicting any weather patterns beyond a day or two seemed beyond the ability of meteorologists at the time. Based on Lorenzs original thinking about these constraints and his subsequent experimental inquiries, a veritable scientific revolution which has been termed chaos theory resulted which has transformed the manner in which business practitioners conceptualize the problems that are arrayed against their organizations (Oestreicher, 2007). In essence, a chaos theory view of the natural environment in which organizations operate holds that the world is a nonlinear, complicated and unpredictable system [and] refers to systems which while displaying disorder contain a kind of order hidden inside them, and present disordered, nonlinear, unpredictable behavior in systems (Namaki, 2018, p. 41). In other words, even when humans are able to discern orderly patterns, there are invariably underlying factors involved that will have unexpected effects on the outcome of a given event.

Other authorities also cite the decades immediately following Lorenzs original conceptualizations of chaos theory as being particularly formative in shaping its application to modern organizations. For example, according to Millerd (2020):

In the 1970s and 80s a new field of research began to emerge called chaos theory. Scientists were looking at complex dynamic systems and trying to understand how they emerge and evolve. They drew inspiration from the natural world, looking at phenomena like how organisms grow in the wild, and how weather evolves. Eventually, they began applying the lessons to fields such as finance, biology, economics and eventually, organizations. (para. 5)

While this incarnation of chaos theory is relatively recent in its introduction to the scientific community, its basic precepts actually date to antiquity. For instance, according to Moshiri (2002), Chaos theory is rather new in science, but it is rooted in ancients' perception of the world (p. 29).

Indeed, ancient theorists seemed to intuitively understand that the same survival activities, such as hunting strategies, frequently produced mixed results which made absolute predictability all but impossible. In this regard, Moshiri notes that, The main idea [of chaos theory] is that although a complex system, such as the world, seems to be generated by a random, and therefore, unpredictable process, it may run by a nonlinear deterministic process (p. 29). In some ways, like fuzzy logic, chaos theory suffers from a branding problem since its title connotes scientific and technological complexity, but in reality, the fundamental principles of chaos theory are in fact fairly intuitive and readily understandable by ancient and modern humans alike. In sum, chaos theory is a branch of mathematics which focuses on developing a better understanding of different types of complex systems in order to gain some type of analytical insights (Adewumi, Kagamba & Alochukwu, 2016).

Thi primary focus is based on the inevitability of unpredictable and unexpected -- behaviors in complex systems that are caused by even miniscule changes in the systems initial starting conditions. In this regard, one expert on chaos theory advises that, Chaos theory is the science of surprises, and not always pleasant surprises (Schmarzo, 2017, para. 4). It is reasonable to posit that practitioners in most disciplines would actively seek out ways to avoid unpleasant surprises that could derail their efforts, and it is little wonder that chaos theory has been used for a wide array of applications. For instance, Schmarzo (2017) adds that:

While traditional science deals with predictable phenomena like gravity, electricity, or chemical reactions, chaos theory deals with nonlinear things that are mostly impossible to predict, calculate, or control, like turbulence, a bar brawl, the stock market futures, debris flying out of the bed of a truck, or a child darting onto the street. (para. 4)

As noted above, the basic principles of chaos theory are fairly straightforward and include the following:

The so-called butterfly effect: This is probably the most common principle; that a butterfly flapping its wings in one part of the world can eventually cause a hurricane in another part of the world. Here is a more realistic way to describe...


Peoples lives are an ongoing demonstration of this principle.

Unpredictability: Because it is impossible to fully know all the initial conditions of a complex system in sufficient detail, it is also impossible to predict the ultimate fate of a complex system. Even slight errors in measuring the initial state of a system could be amplified dramatically, rendering any prediction useless or even wrong.

Mixing: Turbulence describes how two adjacent points in a complex system could eventually end up in very different positions after time has elapsed. Examples: Two neighboring water molecules may end up in different parts of the ocean or even in different oceans. Or a group of helium balloons that launch together eventually landing in drastically different locations.

Feedback: Systems often become chaotic when there is feedback. A good example is the behavior of the stock market. As the value of a stock rises or falls, people are inclined to buy or sell that stock. This in turn further affects the price of the stock, causing chaotic, unpredictable stock price movements (adapted from Schmarzo, 2017, para. 6).

The latter principle is referenced time and again in the management literature concerning the application of chaos theory to organizations but the other three elements are also relevant depending on the specific circumstances. Nonetheless, the feedback loop that is an inherent component of chaos theory is especially significant since management initiatives routinely receive ongoing feedback from project managers and other stakeholders that can have a substantial impact on the projects outcome. This consideration also makes it clear that project management is not a static enterprise but rather requires ongoing oversight and thoughtful responses to changes in the operating environment.

One of the more noteworthy findings that emerged from the research concerned the fact that while even miniscule changes can have major effects down the road, major changes tend to have less effect on the outcome when the organizational design and structure is appropriate for the purpose. For example, according to Millerd (2020), The individual behaviors and reactions of people within a complex system are unpredictable, but they are linked to one another. The feedback from each of those unpredictable actions will give feedback to others in the organizations and influence their subsequent decisions and reactions (para. 7). In other words, the extent that everyone is on board with respect to a given projects successful outcome will likely be the extent to which the feedback loop is responsible for contributing to this success (Millerd, 2020).

Taken together, it is clear that chaos theory represents a valuable tool for modern business practitioners that are routinely confronted with seemingly inexplicable variables that ultimately have an effect on their ability to achieve organizational goals and these issues are discussed further below.

Application of chaos theory to organizational design and structure to improve project management outcomes

Since its formal introduction in the early 1960s, chaos theory has experienced some important changes and expansions on its original tenets which can be summed up, for comparison purposes, as follows:

Complex systems are unpredictable and disorderly;

It is an essential process for natural systems to renew and revitalize;

Small changes in initial conditions create enormous consequences; and,

Similar patterns take place across layers (i.e., fractal geometry) (adapted from Englund, 2009, p. 2).

Over the past several decades, though, the increased application of chaos theory to various organizational settings has resulted in a new perspective which is called complexity science (Englund, 2009). In an organizational context, complexity science also includes the following concepts which have special importance for project management applications:

Information is the primary organizing force share widely;

Develop diverse relationships;

Embrace vision as an invisible field;

People have similar needs and corresponding responses;

Working together is a source of meaning and purpose;

Establish a shared sense of purpose (Englund, 2009, p. 3).

Although the items in the foregoing list of additional chaos theory-based concepts may appear unrelated, they all share the feature of representing an initial starting point of some sort for any project management initiative. It is therefore essential to ensure that organizational design and structure are aligned with these concepts in order to optimize the likelihood of successful project management outcomes. For example, according to Englund (2009), Each of these points provides guidance for organizational behavior (para. 6). Consequently, implementing the appropriate organizational design and structure which takes these points into account represents an essential element of effective project management.

While these considerations are perhaps most relevant for larger companies given the larger number and presumed additional complexity of their projects, the same considerations are also highly relevant for small- and medium-sized enterprises since project success is invariably associated with organizational performance, productivity and profitability. In other words, it is possible to pln for success by optimizing the initial conditions for any project to enhance its likelihood of success (Djavanshir & Khorramshahgol, 2006). As Englund concludes, You need to create conditions for people to make connections, because those initial conditions provide the idea or practice that could lead to resolving a major issue or inventing a new product or service (2009, para. 7). Both of these types of outcomes are critically important for growing a business as well as securing and sustaining a competitive advantage in todays globalized marketplace (Doherty & Delener, 2015). These findings also mean that an informed application of chaos theory to organizational settings can provide a number of important benefits and these issues are discussed further below.

Implications of chaos theory for business practitioners

The implications of the foregoing findings for business practitioners who are searching for ways to improve their project management strategies in order to achieve their organizational goals are multiple and significant. In fact, in recent years, a number of so-called management fads have come and gone while business practitioners continue to seek a viable analytical tool that can help them better understand the dynamics of the business environment in which they compete. For example, Levy (2007) points out that, One of the enduring problems facing the field of strategic management is the lack of theoretical tools available to describe and predict the behavior of firms and industries (p. 168).

The challenges that are associated with this inability to predict the behavior of firms and industries are further exacerbated by the sheer numbers of actors that are involved in most organizational settings, especially those with far-flung international operations where cultural and time differences can limit effective communications (Levy, 2007). In addition, the unpredictability and volatility of a given competitive environment depends on the type of industry that is involved. In some cases, organizations enjoy length periods of stability with little competition. This type of situation may cause complacency on the part of business practitioners who are rudely awakened to the harsh realities of their predicament when unexpected innovations or new competitors enter the marketplace. In this regard, Levy (2007) emphasizes that, Even if we know that oligopolistic industries are likely to experience periods of stability alternating with periods of intense competition, we do not know when they will occur or what will be the outcome. Similarly, it is almost impossible to predict the impact of the advent of a new competitor or technology in an industry (p. 169).

These realities do not mean that business practitioners are at the mercy of the whims of the marketplace, but they do underscore the need for continuous vigilance…

Sources Used in Documents:


Adewumi, A., Kagamba, J. & Alochukwu, A. (2016). Application of chaos theory in the prediction of motorized traffic flows on urban networks. Mathematical Problems in Engineering. DOI:

Djavanshir, G. & Khorramshahgol, R. (2006). Applications of chaos theory for mitigating risks in telecommunication systems planning in global competitive market. Journal of Global Competitiveness. 14(1), 15-24. URL:

Doherty, N. & Delener, N. (2015, December). Chaos theory: Marketing and management implications. Journal of Marketing Theory and Practice, 9(4), 66-75. DOI:

Englund, R. L. (2009). Applying chaos theory in a project-based organization. Paper presented at PMI® Global Congress 2009—EMEA, Amsterdam, North Holland, The Netherlands. Newtown Square, PA: Project Management Institute.

Gayeski, D. M. & Majka, J. (1996, September). Untangling communication chaos: A communicator's conundrum for coping with change. Communication World, 13(7), 4-9. URL:, J. E. (1996). Chaos theory: The essential for military applications. Newport Papers. 10. URL:

Levy, D. (2007, June). Chaos theory and strategy: Theory, application, and managerial implications. Strategic Management Journal, 15(S2), 167-178. DOI: 10.1002/smj.4250151011.

Millerd, P. (2020). Integrating chaos: Building resilient organizations with chaos theory. Boundless. Retrieved from

Moshiri, S. (2002, Fall). A review on chaos and its applications in economics. Iranian Economic Research, 4(12), 29-68. URL:

Namaki, Z. (2018, January). The application of chaos management theories in organizations. International Journal of Management Technology, 5(1), 39-45. URL: https://www.

Oestreicher, C. (2007, September 9). A history of chaos theory. Dialogues in Clinical Neuroscience, 9(3), 275-285.

Safian, R. (2012, February). Generation flux. Fast Company, 162, 37-41. URL: web.a.ebsco

Schmarzo, B. (2017, August 10). Why understanding chaos theory is important to your business. Dell Technologies. Retrieved from schmarzo/why-understanding-chao s-theory-is-important-to-your-business/.

Stapleton, D., Hanna, J. B. & Ross, J. R. (2006, March 1). Enhancing supply chain solutions with the application of chaos theory. Supply Chain Management. DOI: https://www.

van de Vliet, A. (2020). Order from chaos: Chaos theory. Management Today. Retrieved from

Yudin, A. (2008, April). From chaos to trends in forex. Futures: News, Analysis & Strategies for Futures, Options & Derivatives Traders. 37(4), 38-40. URL: ezproxy.

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