Chaos Theory and Business Management

“Welcome to the Jungle” goes the beginning of a song that I’ll bet your kids know and you probably air guitar along with also.  Which brings us to Chaos Theory which, when applied to business and organizations, may help us see through the uncertainty of our times.  Chaos Theory is a scientific principle describing the unpredictability of systems.  Recognized in the 1980’s it has actually been around since the mid 1800’s.  The premise is that systems reside in chaos.  A System generates energy, but without predictability or direction.  This idea of chaos theory can be applied to everything from weather to water flow to the management of organizations.

Edward Lorenz of MIT is credited with discovering one of chaos theory's fundamental principles—the Butterfly Effect.  The Butterfly Effect is named for its assertion that a butterfly flapping its wings in Tokyo can impact weather patterns in Chicago.  More broadly applied, the Butterfly Effect means that what may appear to be insignificant changes to small parts of an organization can have exponentially larger effects when put into place.

In a business world where innovation, change, competitive advantage and the impact on strategy are discussed daily, why is this idea of chaos and embracing the uniqueness of “the New” so difficult?  I believe it is because we confuse order with control.  If your company is like most, it probably looks very different than it did even just 6 months ago.  How you now compete and survive in the jungle of business will be driven at a high level on how you let your company and team members self-organize, grow and evolve.  This type of management style is critical in today’s competitive environment where we sometimes need to break it to make it better.  

As long as the change occurs within the boundaries of your company’s overall vision and culture, you should strongly benefit from the resulting creativity and innovation.  Chaos theory shows the need for effective leadership, a guiding vision, strong values, organizational beliefs, and most importantly open communication. 

Have you ever worked for a group where you were told that you could not have a conversation with a higher up or express your ideas?  Knowing a bit about Chaos Theory and Management may be some good food for thought for you.  Chaos Theory is important here for business leaders because it is critical to embrace the idea, sometimes just for the sake of the idea.  We would be wise to remember that order is in fact not control, and pulling in fresh ideas is the life blood of innovation and change.

  Innovation and change are the pillars of developing a high-functioning team.  Members of effective teams frequently change and recreate the role that each team member plays depending on the needs.  While someone may not be the formal leader, an informal leader may emerge because they know just the right way to address the need of the group.  The most successful leaders understand that it is not the organization or the individual who is most important, but the relationship between the two.

Tom Peters, one of the most influential business writers of our time, asserts that we live in "a world turned upside down," and survival depends on embracing "revolution."  According to Peters, “We must learn to love change, as much as we have hated it in the past.”