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MANAGEMENT quotes

By understanding industries as complex systems, managers can improve decision making and search for innovative solutions. ... Chaos [complexity] theory is a promising framework that accounts for the dynamic evolution of industries and the complex interactions among industry actors. By conceptualizing industries as chaotic systems, a number of managerial implications can be developed. Long-term forecasting is almost impossible for chaotic systems, and dramatic change can occur unexpectedly; as a result, flexibility and adaptiveness are essential for organizations to survive. Nevertheless, chaotic systems exhibit a degree of order, enabling short-term forecasting to be undertaken and underlying patterns can be discerned. Chaos [complexity] theory also points to the importance of developing guidelines and decision rules to cope with complexity, and of searching for non-obvious and indirect means to achieving goals.

When managers 'enact' the environment, they as Weick (1995) put it: "construct, rearrange, single out, and demolish many 'objective' features of their surroundings. ... they unrandomize variables, insert vestiges of orderliness, and literally create their own constraints." Through this process of sensemaking and reality construction, people in an organization give meaning to the events and actions of the organization. This occurs at two principal levels - - the individual and the organization

Overman (1996) in "New Science of Management" :

Are traditional social science methods incapable of dealing with the complex and indeterminate problems facing management today? It is not so much the wedding of scientific logic and method to management theory and practice that is problematic, as it is the outdated models of scientific inquiry that slow our progress. The new sciences of chaos and quantum theory [complexity] offer valuable metaphors and methods that can challenge the management research agenda into the next century [with]... the image of self-organization, dissipative structures, and dynamic complexity.

Organization Science in a call for papers for a special issue on applications of complexity theory noted:

A number of findings now seem fairly well established, including the following: (1) Many dynamic systems do not reach an equilibrium (either a fixed point or a cyclical equilibrium). (2) Processes that appear to be random may actually be chaotic, in other words may revolve around identifiable types of "attractors." Tests exist that can detect whether apparently random processes are in fact chaotic. (3) Two entities with very similar initial states can follow radically divergent paths over time. The behavior of complex processes can be quite sensitive to small differences in initial conditions. This can lead to highly path-dependent behavior, and historical accidents may "tip" outcomes strongly in a particular direction. (4) Very complex patterns can arise from the interaction of agents following relatively simple rules. These patterns are "emergent" in the sense that new properties appear at each level in a hierarchy. (5) Complex systems may resist reductionist analyses. In other words, it may not be possible to describe some systems simply by holding some of their subsystems constant in order to study other subsystems. (6) Time series that appear to be random walks may actually be fractals with self-reinforcing trends. In such cases we may observe a "hand of the past" in operation. (7) Complex systems may tend to exhibit "self-organizing" behavior. Starting in a random state, they may naturally evolve toward order instead of disorder. ( Anderson, 1996)

March, 1996 issue of Organizational Dynamics:

Chaos theory also makes a profound point that corporate executives need to internalize: beyond a certain point, increased knowledge, of complex, dynamic systems does little to improve our ability to extend the horizon of predictability for those systems. No matter how much we know about the weather, no matter how powerful the computers are, specific long-range predictions are not feasible. We can know, but we cannot predict.... Essentially, an organization must be flexible enough to adapt, creative enough to innovate, and responsive enough to learn. (Crossan, White, Lane, and Klus, 1996)

Wall Street Journal :

Mr. Michels acts as an agent in a 'self-organizing system,' a phrase biologists use to describe organisms that continually adapt to the environment without losing their basic identity. Although it is tempting to dismiss the idea as management-by-metaphor, a few companies are beginning to recognize how closely their operations resemble such systems in the natural world -- and how the lessons might be applied to the quest for success in the ever-changing market. (Petzinger, 1996a)

Kauffman's patch procedure:

living systems operate at their most robust and efficient level in the narrow space between stability and disorder -- poised at 'the edge of chaos.' It was here, it appeared, that the agents within a system conducted the fullest range of productive interactions and exchanged the greatest amount of useful information. People recognize this in everyday life: A slightly messy office is a productive one; rollicking families are happy; economies flourish under scant regulation. The edge of chaos, but not quite chaos itself. (Petzinger, 1996b).

In management jargon: the pieces must communicate, and not just at quarterly review sessions.

The basic idea of patch procedure: take a hard, conflict-laden task in which many parts interact, and divide it into a quilt of non-overlapping patches. Try to optimize within each patch. As this occurs, the couplings between parts in two patches across patch boundaries will mean that finding a "'good" solution in one patch will change the problem to be solved by the parts in adjacent patches. Since changes in each patch will alter the problems confronted by neighboring patches, and the adaptive moves by those patches in turn will alter the problem faced by yet other patches, the system is just like our model co-evolving ecosystems. (Kauffman, 1995:252-253)

The annealing process can also be looked at as one of deliberately introducing noise into a system to see what happens. Guastello (1995, chapter 4) refers to this as " . . . the chaotic controller."

Chaotic control works counter-intuitively by first adding a small amount of low-dimensional noise into the system. The reasoning is that the amount of sensitivity to initial conditions is not uniform throughout the attractor's space; sensitivity is less in the basin of the attractor and least in its center . . . Adding noise to the system allows the attractor to expand to its fullest range." (Guastello, 1995: chapter 4)

Kellert's (1995) article, "When is the Economy Not Like the Weather? The Problem of Extending Chaos Theory to the Social Sciences". Of this rampant use of complexity concepts, Kellert notes:

metaphorical extensions can serve as useful antidotes to previous importations of concepts and methods from linear dynamics. But the metaphorical use of chaos theory can be misused if terminology is construed too broadly, or if the criteria for chaos are interpreted too loosely. Normative conclusions, such as the contention that chaos theory proves the optimality of laissez-faire capitalism, run into even more serious problems.

Scott Barton (1994):

These definitions, although clearly metaphorical, bear little resemblance to the definition of chaos in the physical science. This paradigm, although new and exciting, offers no cure for the profound difficulties [management scientists] face in establishing reliability and validity in all of their research. Instead, it provides a new way of thinking about [organizational] systems. Ultimately, its value to [management science] will be a function of its ability to solve problems and understand phenomena more effectively than competing paradigms. As with all new paradigms, investigators need the latitude to be speculative at first ' the concepts of chaos, nonlinear dynamics, and self-organizing systems can allow investigators to explore a variety of areas from new and promising angles, ones that many may have never before considered.

What these metaphors can do is provide access to new ideas and new analogies for use in confronting the unexpected and the unfamiliar.

When any aspect of our experience strikes us as worth understanding, either for the first time or in a new way, we begin to search for [analogous instances]. ... I would say that just as we turn to a dictionary for the definition of unknown words in terms of unfamiliar words, so we look to phenomena of other sorts, whether natural or artificial, for analogs of things, qualities and events -- including aspects of our own experience and activity -- that we wish to comprehend. (Leary, 1990)

Monsanto, which not only adopted complexity science lingo -- but also reorganized the entire company around it.

"Experience teaches us that thought does not express itself in words, but rather realizes itself in them. A word in context means both more and less than, the same word in isolation: more, because it acquires new context; less, because its meaning is limited and narrowed by the context. The sense of a word... changes in different minds and situations and is almost unlimited. It is not merely the content of a word that changes, but the way reality is generated and reflected in a word (Vygotsky, 1986)."

Bill McKelvey (1998) notes:

"Organization science must define organizational microstates in addition to defining the nature of aggregate behavior. ' For physicists, particles and microstates are one and the same -- the microstates of physical matter are atomic particles and subparticles. For chemists and biologists, microstates are, respectively molecules and biomolecules. For organization scientists, microstates are defined as discrete random behavioral process events. ' The manner in which these kinds of activities are exactly carried out from one day to another, or from one person to another, or in one organization or another, is uninteresting to most organization scientists. The question is, should we assume they are all uniform or random? 'Would we expect all people on all loading docks to inspect pallets exactly the same way or all software response persons to open all calls exactly the same way? Probably not—people, loading docks, product, software, customers, and so on, all differ. '

Those studying aggregate firm behavior increasingly have difficulty holding to the traditional uniformity assumption about human behavior. Psychologists have studied individual differences in firms for decades (Staw, 1991). Experimental economists have found repeatedly that individuals seldom act as consistent rational actors (Hogarth and Reder, 1987; Camerer, 1995). Phenomenologists, social constructionists, and interpretists have discovered that individual actors in firms have unique interpretations of the phenomenal world, unique attributions of causality to events surrounding them, and unique interpretations, social constructions, and sensemakings of others' behaviors they observe (Silverman, 1971; Burrell and Morgan, 1979; Weick, 1979, 1995; Reed and Hughes, 1992; Chia, 1995, 1996). Although the effects of institutional contexts on organizational members are acknowledged (Zucker, 1988; Scott, 1995), and the effects of social pressure and information have a tendency to move members toward more uniform norms, values, and perceptions (Homans, 1950), there are still strong forces remaining to steer people toward idiosyncratic behavior in organizations and the idiosyncratic conduct of organizational processes:"

Articles:

"Hierarchical Selection and Organizational Adaptation" (Warglien, 1995), "Chaos and Transformation: Implications of Nonequilibrium Theory for Social Science and Society" (Loye and Eisler, 1987), "Complexity, Genuine Uncertainty, and the Economics of Organization" (Langlois and Everett, 1992), and "Chaos Theory and Organization" (Thietart and Forgues, 1995) have appeared in numerous journals including Industrial and Corporate Change, Behavioral Science, Human Systems Management, Journal of Management Inquiry, Academy of Management Review, and Organization Science. While one might expect a lengthy article entitled "Complexity, Organization, and Stuart Kauffman's The Origins of Order" (Westhoff, Yarbrough and Yarbrough, 1996) to appear in the Journal of Economic Behavior and Organization, it is a reflection of the breadth of the field to see reviews of Emergent Complexity: The Evolution of Intermediate Societies (Arnold, 1996) in American Antiquity and to read subscription notices for a journal entitled Complexity and Chaos in Nursing.

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