Complexity Theory

Scientific theories of complexity have more recently been applied to organizations as a way of explaining the emergence of change. Complexity theory states that within organizations, multitudes of small non-linear events (at an individual, department, unit or organizational level) generate patterns that can eventually lead to strategic change. For example, a sales person may change a product slightly to meet a particular customer’s requirements. One by one, other sales people may offer these nuances to other customers, eventually leading to a strategic change in the products on offer. [2] This is an example of a positive feedback loop leading to a particular, but unpredictable course of action. Within organizations, a multitude of actions and consequences happen every day due to the sheer number of relationships that exist – between employees, with customers, suppliers, partners, etc. Therefore, any one initial action may set in motion a chain of events that leads to strategic change. So, if strategies emerge through complex systems, how can this be managed? According to some complexity theorists, organizations benefit strategically by operating at the ‘edge of chaos’.

The ‘Edge of Chaos’

At the ‘edge of chaos’, organizations do not have complete top-down control and are not in a state of complete instability – they are in a state of mixed order and disorder.[3] Just as in nature, systems operating at the edge of chaos are more adaptable, creative and resilient. Constant adaptation and self-organization means that they are flexible enough to meet the challenges of an unknowable future. The role of management in organizations operating at the edge of chaos is to establish the conditions that enable change and adaptability. Ralph Stacey advises that this can be done by: [4]

• Removing complete top-down control to allow autonomous groups to self-organize and set their own goals and objectives
• Ensuring power is not gained through fear. Fear leads to compliance and submission, so removing this leads to a more complex learning and dynamic atmosphere
• Cultivating multiple cultures in order to gain fresh perspectives and insights, e.g. international secondments and cross-team working
• Presenting ambiguous challenges instead of long-term objectives and visions to encourage new creative approaches
• Exposing the business to challenging situations, such as taking on demanding customers and competing directly with top class competitors
• Devoting explicit attention to improving group learning so that teams are highly skilled at interacting with each other
• Creating resource reserves so that groups can exploit opportunities as they appear
• Paying attention to detecting and selecting small changes within a system in order to identify the real issues, problems and opportunities therein

Changing Strategic Direction

So, what are the consequences for planned strategies? Does complexity mean that any change plans are doomed to morph beyond all recognition? Macintosh and Maclean believe that planned strategic change can indeed be achieved by using complexity theory to facilitate change. Termed ‘conditioned emergence’, this theory states that organizations can bring about change by creating the conditions in which successful transformation can occur. This is achieved through a three-step process:

1. Conditioning: The organization must first identify the ‘rules’ in the organization that underpin the present state of the organization. This may include the kind of people recruited or the customers taken on. Once the rules are uncovered, the organization can go about constructing new rules that underpin and support the new strategy.

2. Creating far from equilibrium conditions: In this phase, the organization moves away from current practices into unfamiliar territory by restructuring in order to create an open environment in which the new roles can take hold.

3. Managing the feedback process: Resistance to change will often create pressure to restore old practices. Once a new structure has been put in place, it is essential that managers reinforce new rules. Managers must look for and encourage the small signals that reinforce the new rules so that the effects can be magnified. Similarly, negative feedback should be minimized. Macintosh and Maclean’s model focuses on redesigning the rules within the organization. By determining the characteristics of new strategies without prescribing the exact form, planned strategies can evolve as intended.