UK: APPLICATIONS OF CHAOS. - The theory's value for business cannot yet be predicted.

Last Updated: 31 Aug 2010

The theory's value for business cannot yet be predicted.

Every month the booklist lengthens: Organisations and Chaos; Managing Chaos; Chaos and Competitiveness; Chaos, Management and Economics; Chaos Frontier and now even Chaos Marketing. Everywhere conferences on chaos theory - or 'complexity science' as its more correct advocates prefer - draw large, and often distinguished, audiences. Here, it seems, is an idea whose time has come - a new gospel to rival total quality, perhaps, or a successor to business process re-engineering. But who outside academia has got to grips with complexity? More pertinent, is there anything in it for business?

Part of the difficulty with these questions stems from the very complexity of the theory: a broad cross-disciplinary body of work that draws on attempts of mathematicians and natural scientists to explain apparently unpredictable phenomena. 'It's not a discrete set of techniques or prescriptions, and, because of this, it's undoubtedly hard to get hold of,' admits Ralph Stacey, professor of management at the University of Hertfordshire Business School, and a leading UK theorist. 'It also goes against what we've been conditioned to believe seminars and management education are about: a repackaging of basically the same set of ideas, rather than something radically different.' What chaos theory offers, says Stacey, is 'a means of talking about what goes on inside organisations and making sense of the world in conditions of great uncertainty'.

For many observers, the theory's most valuable insight is the complete unpredictability of the behaviour of most systems, whether in nature or business. This is a fact of which Stacey, who worked as group planner for John Laing in the 1970s, is only too aware. 'I kept on returning to the question of why it is that long-term plans hardly ever materialise,' he says. 'Following on from that, if preparing such plans is irrational, why do we still do it?' The clear implication, according to Barry Johnson, formerly head of Northern Telecom's training institute and now a management development consultant, is that companies should re-examine what they can and cannot control. 'It tightens up an organisation's thinking and makes it clearer and more positive. It forces people to ask whether what they've been saying is realistic.' Stacey observes that some companies are beginning to drop some longer-term planning processes altogether as a result of such thinking.

Most of the leadership in the application of chaos comes, of course, from the US. Indeed, much of current work on complexity emanates from New Mexico's Santa Fe Institute. Dee Hock, founder and former chairman of credit card company Visa International, is one of several senior business figures currently exploring the lessons. Hock maintains that the structure of Visa - set up in the early '70s as a highly-decentralised, non-stock membership corporation - embodies many of the organisational principles encapsulated by the theory.

More recently, Citicorp, under the instigation of chairman John Reed, has been seeking to apply an understanding of complexity to its day-to-day operations. According to Colin Crook, the bank's chief technology officer, the use of complex adaptive systems analysis has so far produced 'very encouraging results'. The next stage, he says, is to look at the implications for corporate structure and corporate planning.

On this side of the ocean the response has been, typically, more cautious. Some UK-based companies, such as Unilever and Anglian Water, have incorporated aspects of chaos theory into their management development programmes. But most seem unsure of its value. David Plowright, senior personnel and training executive at Zeneca Pharmaceuticals and a delegate at a recent seminar on chaos at Roffey Park, claims that chaos theory acts 'as a stimulus or a model' that companies can draw upon. 'There is a need for people to look at the management of change in a slightly different way,' he suggests. 'It prompted us to look at a variety of scenarios, to use short, multiple experiments and then build on those that are successful.' Jim Cooper, human resource planner with the Shell group's petroleum engineering division, looked into the subject last year in the course of an exercise to determine the company's future manpower requirements. Echoing Stacey, Cooper maintains that complexity 'asks useful questions about the reasonableness or otherwise of trying to predict the future'. But such work is very much part of an on-going process, he points out. So far, it has produced little in the way of actual results.

Mike McMaster, managing director of organisational design consultancy The Praxis Group, sums up what appears to be the prevailing mood: 'A lot of people, both in the US and in Europe, are increasingly intrigued by the ideas behind the theory. At the moment, it's a case of saying "There's gold in there somewhere". We're just not sure where.'

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