Chaos Theory and Organization Author(s): R. A. Thiétart and B. Forgues Source: Organization Science, Vol. 6, No.

1, Focused Issue: European Perspective on Organization Theory (Jan. - Feb., 1995), pp. 19-31 Published by: INFORMS Stable URL: . Accessed: 06/10/2013 23:50
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small changescan have big consequencesthat cannotbe predicted in the long term. literature in management is still frequently based on an implicit assumption of stability and a quasi-mechanistic view of organization. The purpose of the discussion below is to pinpoint these consequences from the perspective of organization science and to propose a chaos theory-based approach to understanding how organizations work. stability and instability. By taking initiatives. Forgues Universityof Paris-Dauphine. similarpatternsshould be found at differentscales. for those who run organizations. In this article. Jauch and Kraft (1986). also. management is not always a straightforward endeavor. Introduction From books proposing recipes for managerial success to academic research. When in the chaotic domain.97. It can be much more complex than what simplistic recommendations imply. i. an apparently random. January-February 1995 19 This content downloaded from 111. based on chaos theory. No. Finally.25 Copyright ? 1995. management has achieved the status of science. Forces of instability derive from initiatives organizational actors take. Third.discretenessof change.from chaos. several consequences. Fifth. One purpose of these artifacts is to create the illusion of managing to reduce cognitive 1047-7039/95/0601/0019/$01.This articlearguesthat these processesare embeddedin organizational characteristics and in the way organizations are managed. Prediction is difficult and replicability. Thanks to their power of closure. Organizations are presentedas nonlineardynamicsystems subject to forces of stability and forces of instability which push them towardchaos. intuition. When in a chaotic domain.Chaos Theory and Organization R. nonlinear system subject to internal and external forces which might be sources of chaos. These organizing attributes result from the multiple interactions between forces of stability and forces of instability the system is subject to.e. also. (Organization Theory.Severalof these properties-sensitivity to initial conditions. Researchers such as Fombrun (1986). 6. For some. attractionto specific configurations.. the artifacts assist the manager in making decisions and implementation of actions. organizationsare likely to exhibit the qualitativeproperties of chaoticsystems. political games between organizational actors. Nystrom et al. Divergence between forces of stability and instability and the frequent aperiodic coupling of these same forces lay the groundwork for chaos to appear.189 on Sun.e. Instead. But. the managerial artifacts are. structuralinvarianceat different scales and irreversibility-are used to establish six propositions. They tend to stiffen the organization around artificial working rules which prevent a natural adjustment from taking place between the internal and the external dynamic forces the organization is subject to. Chaos Theory. DMSP and Essec. but deterministically driven behavior-has organizing attributes. 75775 Paris Cedex 16 France Abstract Manyauthorshave stressedthe existenceof continuousprocesses of convergence and divergence. a source of disorder. Nonlinear Dynamic Systems) dissonance between what managers are supposed to do and what they can really achieve. This might be taken as an indication of the maturity the field has achieved. Quinn and Cameron (1988) and Weick (1977) have already challenged the view of a rational and mechanistic organization. can be generated by organizational actors who develop multiple and interrelated managerial artifacts. actors create internal disorder. chaos-i. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . 1. a form of stability.organizationsare potentiallychaotic. Thietart * B. In the same vein.. as a consequence. managerial artifacts can serve the purpose of creating islands of rationality and certainty and. A. However. a domain where a chaotic behavior can be observed. Prediction and replicability are seen possible. and random events come into play in shaping an organization's future.the path fromorganizationalstability to chaosfollowsa discreteprocessof change. Institute for Operations Research and the Management Sciences ORGANIZATION SCIENCE /Vol. (1976). hazardous. First. duringone single organizational life span or between two differentorganizationssimilaractions should never lead to the same result. can be drawn. evolution and revolutionin every organization. Fourth. Instability.68. new stabilitiesemerge -the strangeattractors-which are assimilatedto organizational configurations. However.when the organization is in the chaotic domain.Second. dynamic.becauseof the couplingof counteracting forces. chaos theory and properties of chaotic systems are used to suggest a new approach to understand how organizations work. The organization is presented as an open.

Grandmont (1986) and illustrated in Anderson et al. On one hand. Interest has been mainly stimulated by these systems capabilities in representing what were perceived. This is the second type of "equilibrium": explosive instability. Their attention was triggered by the Ruelle and Takens' article on fluid flow turbulence. small changes are accumulating exponentially to lead to an explosive situation.97. was able to generate behaviors as complex as those observed in nature. Finally. A paradigmatic shift is necessary to reconcile apparently divergent approaches to management. i. the system always comes back to its initial state.. the literature is still rather sparce and does not always provide insights on what we can infer from chaos theory." An Overview of Chaos Theory Chaos theory takes its root in the study of nonlinear dynamic systems.189 on Sun. i. On one hand. Ruelle and Takens (1971) showed that a simple deterministic model. as noise and randomness. In an explosive instability situation. we find new interesting situations (Ruelle 1988). lead to complexity. the state of the 20 ORGANIZATION SCIENCE /Vol. interest in these systems has grown among researchers of different scientific fields such as physics. i. Stacey (1992. the behavior can be completely erratic and generate a deterministic noise. 1892-1899). Priesmeyer and Baik (1989) on organizational chaotic behavior. as discussed by Swinney (1983). and Zimmerman (1990) on chaos theory and strategic processes. Natural scientists were the first to turn their attention to the study of chaos. First. This is not surprising because practices and research findings are based on idiosyncratic or averaged situations which can't be easily found elsewhere. a small initial change has an unexpected and important impact. THIETART AND B. in the past. When in a situation of counteracting forces. On one hand. Since economic data seem random. a logical step was to see if deterministic chaos. a system behavior which is apparently random even though it is driven by deterministic rules. i. the system can reach a stable equilibrium or point attractor which is independent of time. The behavior is said to be chaotic. We have to wait for the sixties and especially the seventies to see researchers start focusing on what was left aside before. Nonlinear dynamic systems have spe- Properties of Nonlinear Dynamic Systems A nonlinear dynamic system is a system where relationships between time-dependent variables are nonlinear. negative feedbacks which dampen the original change and tend to increase stability. when the system is driven by positive feedbacks. during these last 30 years. Much of the work done was focusing on regularity. In this situation. it is difficult to forecast where the system goes but to a complete collapse. We can also observe a form of periodic stability (periodic attractor) where the system periodically comes back to its previous state. Smith (1986) on dissipative structure and social systems transformation. chemistry and economics. This is the first type of equilibrium: stability. Organization science has not yet given full attention to nonlinear dynamics and their properties. the apparent unexplainable. January-February 1995 This content downloaded from 111. cific properties that mathematicians have studied for more than a century (Poincare. which reinforce the original change made in one of its variables. therefore. dubbed strange attractor. when we are in the simultaneous presence of counteracting influences.. Simplicity and determinism could. A. they are derived from past experiences and conditions which will be rarely the same in the future. 1993) on chaos and management. stability. the findings are often not durable. which dampen the influence of variables. the "stable-unstable. On the other hand. On the other hand. even in the organizations in which they originate. chaos is not always observed.e. under certain conditions. On the other. the complex. confirmed their assertion that deterministic chaos existed in nature. predictability. However. an apparent randomness created by deterministic rules. The science of chaos provides a new paradigm where two apparently irreconcilable visions of management-rational and quasi-mechanistic on one hand. was present. Economists soon followed with works in macroeconomics and finance as surveyed by Baumol and Benhabib (1989).e. Rasmussen and Mosekilde (1988) on chaotic behavior of management systems. when the system is directed by negative feedbacks. What seemed strange and could not be explained with traditional models was largely left aside.e. 6. Apart from the works of Gemmill and Smith (1985). This system has three types of equilibrium. Ceteris paribus. their external validity is frequently low.R. unexpected and disorderly on the other hand-can be reconciled. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions .68. Later experimental work. No. there is a sensitive dependence to the initial conditions. They cannot be easily adapted from one organization to the other. it can be contained within a strange shaped surface. equilibrium. Finally. (1988). 1. FORGUES Chaos Theoryand Organization Many managerial practices and research findings are neither universal nor time-relevant. Furthermore. Nonaka (1988) on firms self renewal. after a change..e. we may also find a more complex behavior. positive feedbacks which tend to reinforce the initial change and increase instability..

A mathematician. as time. Ruelle 1991) and to some extent. Finally. Furthermore. systems seem to be governed by relationships which dynamically interact with one another and are prone to chaotic behavior. From tomorrow's weather. or chaos. but more recently. However. a few months after. when in a chaotic state is considered. is equal to or greater than three." When in a chaotic state. 1. due to the perfect synchronism in time and space between the different variables that this requires. This scale invariant property has been well analyzed by Mandelbrot (1982a) in his work on fractals. p. a resulting more complicated behavior is observed. irreversible. 1989. a stock market is "self similar" from the largest to the smallest scales. which in turn is interdependent with some larger environment. the system will probably not find itself again in the same situation in the foreseeable future.68. However.97. it is unlikely that the same conditions will be found again in a reasonable future. or bifurcation. jet engine gas propulsion to demographic evolution. the effect of which multiplies as time passes. January-February 1995 21 This content downloaded from 111. The sensitivity to initial conditions is not new. then the system long-term evolution is impossible to predict. inside and outside ORGANIZATION SCIENCE/Vol. the simultaneous presence of a minimum number of counteracting forces create an apparent randomness. These attractors were first called strange by Ruelle because of their unexpected and strangely regular shape such as the ring-shaped attractor of Henon. we have to wait for Lorenz (1963 a. Consequently. The Organization as a Nonlinear Dynamic System Organizations also are dynamic systems governed by nonlinear relationships. "the complex organization is a set of interdependent parts which together make up a whole in that each contributes something and receives something from the whole. THIETART AND B. A. 62) says "even if reality is deterministic. similar to phenomena observed in nature. can lead to a dramatically different evolution. b) and his famous metaphor of the flap of a butterfly's wing which creates. consequences which could not have been predicted beforehand. FORGUES Chaos Theoryand Organization system-chaotic or stable-depends on the dynamic combination and on the relative strength of the relationships among its various elements. As Ekeland (1988. in economics (Brock and Malliaris 1989). Prigogine and Stengers 1984. any system has to come back one day to its initial state. from practical reason. No. the probability to see a system "reverse" to its initial state is extremely low. when the number of variables with different periodicity increases. Inside the attractor space. the impact of a variable change can be predicted only for the very short term. a small initial change. Artigiani 1987. It is an exponential instability. In fact. from stable equilibrium to periodic behavior to chaos takes place when an increasing number of variables with different frequencies are coupled between each other.R. was the first to suggest that if a small error in the initial conditions of a system is made. Another characteristic of chaotic systems is worth noticing. 6) pointed out.189 on Sun. A small cause can have a big effect. The multiple interactions between these relationships turn the simplest relationship we can imagine into a highly complex network of which behavior is impossible to anticipate. Especially in the case of dissipative systems-those which dissipate their energy-the chaotic evolution may get organized around structures that we find at different scales. it seems that chaos has several layers of ordering properties which are similar at different scales. For instance he showed that stock market evolution over several years reflected daily and monthly evolutions. The attractor creates an implicit order within chaos. Chaotic behavior is likely when the number of variables. 6. economic cycles and stock market evolution. water turbulence. Hadamard (1898). a storm. For Mandelbrot (1982b). But. Chaotic systems and their properties have received a considerable amount of attention in the natural sciences (Allen and Sanglier 1978. A new form of order is found out of chaos. As a consequence. Feigenbaum (1978) shows that a system passes from a stable to a periodic and from a periodic to a chaotic situation when the strength of the link (the value of a parameter) between variables changes. The passage. As Thompson (1967. Once in a state of chaos. That is to say that small variations in some of the variables might have monumental consequences. with diverse agenda. In theory. when looking at this complexity we can observe that it is also organized and that it reproduces at a smaller scale what is observed at a more global level. the butterfly wing shaped attractor of Lorenz or the sugar bread shaped attractor of Rossler (see Briggs and Peat. named the strange attractors. As a consequence. it may well happen that what we observe in this way is unpredictability and randomness. This property makes long-term forecasting impossible. to see awareness of this phenomenon growing among the scientific community. the system behavior is highly complex and unstable. for illustration)." Multiple organizational actors. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . p. a last property we would like to discuss is time irreversibility of a chaotic system. The apparent random behavior gets "attracted" to a given space and remains within its limits. System behavior.

for instance. planned and thought-out approaches are combined with muddling through. The separation between the manager as a planner and organizer.. is probably difficult to apply to less structured areas such as management.97. chance. 10). hesitation." Organizations can attempt to insulate themselves from the environment by controlling the external resources it provides (Pfeffer and Salancick 1978) or they can enact it (Weick 1979). p." Moreover. the organization evolves in an environment which has its own dynamics and with which a continuous exchange of information. 6. These actors have different frames of reference (Kahneman and Tversky 1984. In the same vein. Starbuck 1983).R. linear. In the latter. Padgett 1980. also. no direct relationship can exist between the different actions and action-takers of the organization. As a result. A. Pettigrew (1990. p. Finally. on one hand. Effects of decisions are rarely direct and instantaneous. and impulsive responses. resources and energy takes place (Thompson 1967). organizations encompass numerous actors. 1986). We are in the realm of nonlinearity and time. coexist within the firm. and they do all this in a dynamic manner. However. where laws are immutable. "the cause of the instability and limited duration of formal organizations lies in the forces outside. Wooldridge and Floyd (1989) suggest that separation between formal and informal systems (or between synoptic and incremental processes) is difficult to make. Reality is more complex. value systems and preferences which change over time and with experience (Lichtenstein and Slovic 1971. coordinated. stress the importance of emergent strategies in the strategy formation process. recognizes that "changes have multiple causes and are to be observed by loops rather than by lines. iReality contains elements of rationality. yesterday's action activates a reaction today which may lead to a new action tomorrow. other authors such as King and Cleland (1978). we generally observe that systematic. 1. a new layer of complexity. which has received a great deal of attention from researchers in the natural sciences. In this situation. formality and order mixed with intuition. and all of these in a dynamic mode. As Barnard (1968. informality and disorder. actions undertaken by some actors influence the actions initiated by others later on. search for solution and selection (Glueck 1980. hesitate. i. As a result. it seems that the qualitative properties of chaos theory have an explanatory and integrative power that organization theories could use 22 ORGANIZATION SCIENCE/Vol. where risk is measured. Chaos theory. The rational. 1990). With regard to strategy formation processes." They stress the indirect origins of the action which is observed. evaluated and implemented by a unique leader is mixed with intuition. the organization behavior is subject to external forces. 4) said. on the other hand. The environment might also act in selecting the organizations best fitted for survival (Aldrich 1979. In the same vein. January-February 1995 This content downloaded from 111. It is likely that the structure of the nonlinear dynamic organizational system changes due to the action of actors inside and outside the organization. Springer and Hofer 1978. on the other hand. To complicate things further. In the former. This adds a source of instability and. Steiner (1979). and as a hesitating and sleepwalking actor. planned process. Pinfield (1986) shows that structured and anarchic processes are complementary. Stagner 1969). "'preoccupation with the decisions runs the risk of imputing a direct relationship between the abstraction of mental intention at the individual level and the concreteness of action at the organizational level. at the same time. Mintzberg and Waters (1985). and in- duced and autonomous approaches (Burgelman 1983). It also changes subject to learning and experience. THIETARTAND B. FORGUES Chaos Theoryand Organization the organization. Tversky et al. interactive and dynamic than the one which is presented by reduced models which are incomplete at best. As Mintzberg and Waters (1990. and other processes where several internal and external organizational actors act and interact. 6) says.e. And the dynamics of these forces are impossible to predict or even describe with precision and comprehensiveness. They show that the strategy formation process is based not only on deliberate processes but generally involves a lot of dynamic interactions. We also know that structured and unstructured processes (Mintzberg et al. They sometimes have contradictory objectives and stakes and they intervene at different phases of the evaluation-choice-action process. take advantage of opportunities and miss others. is artificial. the process is not as linear and as smooth as a rational mind might wish. Hannan and Freeman 1977). 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . 1972. However. 1976). p. March and Olsen 1976. Lorange and Vancil (1977). organizations cannot be totally assimilated to natural systems. decisions originate from organizational "garbage cans" in which problems are generated from inside and outside the organization and the solutions are the outcome of an apparent random process between actors (Cohen et al. decisions follow an orderly progression: problem identification. No.189 on Sun. Relationships between different organizational system elements do not remain the same forever. Tversky and Kahneman 1981. on one hand.68. try to coordinate their actions to exchange information and to interact in other ways.

The qualitative properties evoked by chaos theory-sensitivity to initial conditions. answers to its problems. As Daft and Weick (1984. and then the organization itself. These experiments. p. It is through experimentation that organizational actors. The creation of such a repertory is perfectly coherent with the recommendations of Nystrom et al.R. Furthermore. as a consequence. January-February 1995 23 This content downloaded from 111. By giving the organizational actors enough freedom to experiment with new ways of doing things or by giving them enough resources to explore. It selects adapted modes of action to its changing working conditions. 286) say. as yet. we have seen that deterministic chaos can be found when there is the simultaneous influence of counteracting forces. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . even though the faculty for experimentation has been given deliberately to the organization.189 on Sun. as Nonaka (1988. without constraint. Some forces push the system toward stability and order. Thus experimentation is deliberately not aimed at a specific objective. They do not keep the organization on its planned track and objective. if forced to change its traditional responses. they are a source of disruption and disorder. the organization. the organization creates a catalogue of responses to different and. implementation of new forms of operation. indeed. the organization develops a catalogue of responses and stimulates learning opportunities through multiple experiments. might be in a better position to find an adequate course of action. Pascale (1990) describes the self-renewing organization as one which deliberately creates internal instability. Weick (1977). through experimentation. Knowledge. However. build their knowledge. for instance. The objective is to experiment and learn various modes of work which may later become the dominant feature. In the same vein. 64) says. are sources of instability and tend to push the organization out of its programmed course. Bygrave 1989) is illustrative of the way some organizations create the necessary instabilities to experiment with different types of innovations. innovation. new areas of growth. learning is a willingness to experiment and to search for other ways of doing things than those used in the past. through "bootlegging" or through planned decisions. under such circumstances. In the same vein. In the same vein. in parallel with traditional ways of doing things. These authors stress the need for the organization to develop a set of new responses. once put into practice. Since prediction is difficult in this situation. structuring and controlling. out of its stable equilibrium. could not be an organization. strange attractors. becomes the real source of learning. When confronted with an uncertain environment. FORGUES Chaos Theoryand Organization to their advantage. it is frequently preferable to let organizations find for themselves the types of operation they are best adapted to. thinks that self-organization originates from experimentation. Finally. Work on entrepreneurship (Burgelman 1983.68. A. managers will be forced ORGANIZATION SCIENCE /Vol. As Weick (1977. The responses in this repertory which will ultimately prove to be useful cannot be predicted in advance. and individual initiative. As a consequence. scale invariance. Experimentation. No. literally. THIETARTAND B. Self-organization is an organization which is able to discover. when they exist. it is necessary to allow freedom among the constituent units in the organization. disorder and change. the organization. It would be a maelstrom in perpetual change and revolution. The Organization as a Chaotic System In the review presented above on nonlinear dynamic systems and chaos theory.97. can select from its repertory of new forms of relationships and arrangements. unknown demands from the competitive environment. according to Senge (1990). Weick (1977) and March (1981) suggest that activities which are not directly connected with the organization's mission are a means to improve its capacity of response to complexity and to changing conditions. Argyris and Schon (1978) see seeds of change behind the numerous instabilities and incoherences which generally go with programmed actions. by exploring new areas. to generate creative conflicts between them. On the contrary. Organizations also have counteracting forces at play. and bifurcation processes-are powerful enough to offer another perspective from which to view the way organizations work. p." By doing so. The coupling of these forces can lead to a highly complex situation: a chaotic organization. Some other forces push the system toward instability and disorder: the forces of innovation. these include the forces of planning. For instance. is based on the same premise. enable the organization to create a repertory of responses to environmental demand. "for an organization to evolve continuously. Contributions on self-renewing and self-organizing organizations are coherent with works on organizational learning. time irreversibility. (1976). it prepares itself for new forms of operation which can be implemented when these new forms become the required answers to the emergent working conditions. 6. 1979) has suggested. the organization is not made only of experimentation. the organization is free to question and challenge its ways of operating and. 1. initiative and experimentation.

To fight against the feeling that they are in a situation where they are powerless. the organization's task is decomposed in a hierarchical manner. ( .. 1990) shows that the use of formal tools has other objectives than contributing substantively to the decision. These reasons. It is more the sense of doing and 24 ORGANIZATION SCIENCE/Vol. By doing so." managers rely on formal tools to create an illusion: the illusion of managing. the control of managers by the organization's shareholders (Fama and Jensen 1983. And on these islands. is a means to deal with important decisions. by providing an information network and encouraging communication (Quinn 1980). aims at minimizing the agency costs between the various layers of the hierarchy. Since. managers create islands of certainty. Thanks to the decomposition of a broad mission into elementary tasks. for instance. FORGUES Chaos Theoryand Organization to "wade into the ocean of events that surround the organization and actively try to make sense of them. traditional rational management schemes can be applied to their full extent. also. order contributes to the closure of a too complex system for a cognitively limited mind. to enable the organizational actors to position themselves within the power structure and the hierarchy. can be reduced. January-February 1995 This content downloaded from 111. 6) for whom "the survival of an organization depends upon the maintenance of an equilibrium of complex character in a continuously fluctuating environment. It should make their actions more coherent and predictable. ) Displaying the symbol reaffirms the importance of this social value and signals personal and organizational competence" (Feldman and March 1981 pp. This affirmation. As Weick (1979. however. p. it secures a better alignment of the different organizational actors' actions. cognitive dissonance. probably have a psychologically-based origin that the cognitive dissonance theory of Festinger (1957) can help to explain. No. 1. management control." Finally. planning. THIETART AND B.97. Formal tools are also used as a means of persuasion and to save time. Furthermore. "the gathering of information provides a ritualistic assurance that appropriate attitudes about decision making exist. why do so many organizations still use planning? Sinha (1990) provides an answer. suggest that planning might only be an artifact. For instance. also. management control as a means of coordination is helpful. 182). reliance on standardized decision rules is used to "avoid" uncertainty (Cyert and March 1963). Management control.68. The question remains as to what the real contributions of formalized approaches are and what pushes the organization to control and plan? Langley (1988. Order is also necessary to create the facilitating conditions of decision making. Here. As Daft and Lengel (1984. planning improves the readability of the organization and its numerous links with the environment. at the different organizational levels. organizing "is defined as a consensually validated grammar for reducing equivocality by means of sensible interlocked behavior.R.. p. She also agrees with Bower (1970). p. has been strongly challenged. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . He is in agreement with Armstrong (1982). Furthermore. they can proceed in a rational manner. 6. Here. contributes to a better coordination and monitoring of the diverse tasks the organization has to undertake in order to fulfill its mission. Hickson et al." They concur with Barnard (1968. For instance. important decisions which are generally characterized by numerous ramifications and complexity. Cyert and March (1963). Jensen and Meckling 1976) is supposed to result in a better alignment of the managers' and the owners' interests. If this is the case. 192) put it "in response to the confusion arising from both the environment and internal differences. With certainty.189 on Sun. order helps in creating the appearance of certainty. By formalizing the decision-making process. which stress the apparent nonutilitarian purpose of formal approaches. Planning is frequently presented as an effective means that firms use to achieve their mission. A. as formal tool of management. planning is presented as a means to manage uncertainty. As a consequence. It helps in closing a complex system that is too complex to be dealt with in a global manner. Internal control proceeds from the same logic: to master what the organization is doing. (1986) when they suggest that formal analysis is frequently used to justify decisions after the fact. which is created when managers are confronted with a problem that they intuitively know to be impossible to solve. For instance. managers avoid a reality which is in complete contradiction with what they are supposed to do and are paid for." Order is necessary." The organization needs order and stability to be able to achieve its mission as an organization. He shows that formal planning systems contribute to decisions which are perceived as being important and risky. Moreover. 3) suggests. which is in total contradiction with their mission and "raison d'etre. who suggests that planning is particularly important in situations where changes are crucial. organizations must create an acceptable level of order and certainty. She agrees with Quinn (1980) when he says that planning is partly used to make managers feel more comfortable. to fight against the cognitive limitations of the organizational actors. 177.

he shows that crises are more the result of complex. as Weick (1977). Meanwhile. In this complex situation. the order that formal tools provide. it can be disrupted. p. in creating a highly complex situation. Miller and Friesen (1980). some by forces of instability or. However. in his famous study on the Apollo 3 mission has shown. In the same vein. the organization is likely to remain in one of its dynamic equilibria. For instance. This is obviously the case for many organizations. 77. both forces might be at play in a balanced manner and lead to deterministic chaos. for instance. No.97. organizational culture. For instance. Rather than managing the inevitable chaos (taken here as a metaphor) of innovation productively. This is consistent with the quantum change theory of Miller and Friesen (1984) and the works of Greiner (1972). or chaos. A Potentially Chaotic Organization Counteracting forces are at play in most organizations.68. the higher the likelihood of encountering chaos.e. p. a condition which is frequently met in organizations. An organization will always be in one of the following states: stable equilibrium. This leads to the second proposition: PROPOSITION 2. is also unsettling. PROPOSITION 2b. our parenthesis). political coalitions and the existence of formal programs. FORGUES Chaos Theoryand Organization mastering that the formal tools provide. This change does not follow a continuum but takes place abruptly in a discrete manner. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . Whatever the state-stable equilibrium. 1. than their effective use which matters. periodic equilibrium. in his study of "normal accidents. Chaos is also more likely when the system variables follow different periodicity patterns and are highly coupled with each other. organizational actors have the power to change the relative importance of the dynamic forces at work. Based on the empirical and theoretical evidence discussed above. The change. A progressive and continuous change of the relationships between two or more organizational variables leads an organization.R. i. the higher the likelihood of encountering chaos. 611) conclude that momentum. PROPOSITION la. We expect to see a similar phenomenon taking place in organizations. Even though formal approaches help in closing the organizational system and make it more predictable. through aperiodic coupling. The larger the number of forces with differentperiodic patterns.189 on Sun. it seems reasonable to assume that organizations are subject to counteracting forces which follow various periodic patterns and which may contain the seeds of chaos. Some organizations might be dominated by forces of stability. managers can reduce a dissonance which has been created by their feeling of powerlessness. 6. We know that many nonlinear dynamic systems are frequently chaotic when the number of system variables is equal to or greater than three. The change can also take place through learning (Lant and Mezias 1992. tightly coupled relationships than the outcome of inadequate human actions. "managers in big companies often seek orderly advance through early market research studies or Pert planning. PROPOSITION 2a." Finally. The greater the number of counteracting forces in an organization. can be "very costly when it protracts an orientation that has proved to be dysfunctional. periodic or chaotic-the organization is in. Organizations move from one dynamic state to the other through a discrete bifurcation process. finally.." stresses the fact that complex systems tend to develop behaviors of their own. Perrow (1984). learning and experience modify the strength and the nature of the relationships between organizational variables. For example. when confronted by a too complex and unpredictable reality. PROPOSITION lb. As a consequence. these managers soon drive out the very things that lead to innovation in order to prove their announced plans" (Quinn 1985. in a discrete ORGANIZATION SCIENCE/Vol. Mintzberg and Waters (1985) where they show that organizations do not evolve in a continuous manner but step-by-step. A. search for order through excessive rationalism can be disruptive. Miller and Friesen (1980. continuity and stability of change in strategy and structure due to past experiences. January-February 1995 25 This content downloaded from 111. As a consequence. Organizations are potentially cha- otic. order may lead to chaos. Indeed. This leads to the first set of propositions: PROPOSITION 1. they increase the resistance to change and contribute. Bifurcation Process Toward Chaos We have seen that a system evolves from one state to the other through a process of period doubling or bifurcation when the coupling between various periodic variables changes. can lead the organization from a stable to a chaotic state or from a chaotic to a stable state via periodic behaviors. March 1991) and experience (Tushman and Romanelli 1985). THIETART AND B.

e. regardless of the type and degree of change. As a consequence. the impact of an incremental change can be predicted in the very short term. Within an attractor. the organization's evolution cannot be predicted. 6. small advantages created new advantages in the future for the newly founded firm. Prediction Impossibility When in a chaotic domain. the impact of a change has an unpredictable long term effect. even the slightest variation can have a great impact on the organization. the greater the exchange of energy and resources with the environment. In this situation. but behavior and. As a consequence. When in a chaotic state. they constitute an "envelope" to feasible behavior. a small change in one variable has an unpredictably large impact on the system's evolution. Isenberg 1988). As a consequence. with his logical incrementalism. i. Linearization of the system makes the link between cause and effect more direct. when the organization is in its chaotic domain. This is the famous "butterfly" effect.. nonlinear dynamic systems have a sensitive dependence on the initial conditions. there are many instances where incrementalism is impossible and where large changes will have to be made.189 on Sun. As a potentially chaotic system. It is admitted that the greater the dissipation is. a third proposition can be made: PROPOSITION 3. However.97. Even in the case of a small change. By proceeding by small steps. Within the configuration. islands of stability are likely to emerge in a sea of chaos. a situation where the entire domain can be explored by the organization (this is the case of "deterministic noise") and. it is the environment and the internal organizational dynamics that matter most. PROPOSITION 3b. Numerous examples exist where events do not take place as expected and where managers admit their powerlessness to predict what will happen tomorrow (see. from a stable to a chaotic state via an intermediary periodic behavior. 1. with their disjointed incrementalism. a situation where attractors limit behavior to a subset of the domain. also.e. it is just a question of time before an unexpected behavior develops. a high complexity exists and predictability is low. 26 ORGANIZATION SCIENCE/Vol. linearization is brought about with a small variations analysis. for example. because in the long term. In many situations. However. Vh"en in a chaotic state. Forecasting is impossible. By doing so. Organizational Configurationsas Strange Attractors Within the chaotic domain. they contribute to closing a complex system. unpredictability is the highest. Based on the discussion above. the managers are in a position to observe the direct effects of their actions. there is still a high degree of freedom.. Organization configurations have been widely discussed in the literature (Miles and Snow 1978. speculate that organizational growth strongly depends on the founding conditions. When in a chaotic state. Particularly in the case of dissipative systems which exchange energy with their environment (as it is the case of organizations). These attractors have an organizational equivalent: the organizational configurations which demonstrate regularities in their macro characteristics even though they may reveal large differences in their internal processes. however. January-February 1995 This content downloaded from 111. they can modify the thrust of their effort in an almost continuous manner and make the necessary reorientations. Nevertheless. patterns appear: the strange attractor. Proceeding incrementally improves the predictability of what managers do. FORGUES Chaos Theoryand Organization manner. THIETART AND B. Miller 1986. no one can predict the long term behavior of an organization when in a chaotic state. and Quinn (1980). They are recognizable patterns of structures and processes. In the latter. i. In mathematics. unpredictability are limited. In such cases. They observe that initial. better predictability can be achieved if the system is linearized. second.R. This leads to the fourth proposition: PROPOSITION 4. A. the faster the system tends towards its attractor. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . No. Small variations analysis is the mathematical equivalent of what Braybrooke and Lindblom (1970). These are step-by-step approaches which allow managers to proceed marginally. Eisenhardt and Schoonhoven (1990). These islands are the strange attractors. ceteris paribus. nonlinear systems are transformed into linear relations. two situations may occur: first. as a consequence. without radical shocks. In the same vein. PROPOSITION 3a. prediction can only be in the very short term. There is an equivalent in the realm of organizations. propose for the organization. Miller and Friesen 1984). In the former case. initial conditions will have a definite impact on the organization. For instance. managers make bets on the future since they cannot rely on forecasts. a small cause can have a big effect.68. whatever the horizon. rejoining Kimberly (1975) and Stinchcombe (1965). especially at a global scale and in the long term. ceteris paribus. organizations are "attracted" to an identifiable configuration. Whatever the quality of the managers and the quality of the actions.

If the scale invariance property of chaotic systems. Miller (1990) shows that the very actions which once produced excellent results might lead one day to failure. We are aware that ORGANIZATION SCIENCE / Vol. consistent with chaos theory. organizations. If the assumption made on the chaotic nature of organizations is correct. The six sets of propositions above are derived directly from the qualitative properties of chaos theory. the more likely is the "attraction" by the organization to a given configuration. unit. two identical actions taken by a same organization always lead to two different results. tend to go against this scale invariance property. As a consequence. similar PROPOSITION process patterns are found at the organizational. 5a. This challenges many approaches based on what the best organizations are doing. 6. generally. For example. similar behaviors and configurations should. it seems unlikely to be the case for organizations. 1. 5b. unit. similar PROPOSITION structurepatterns are found at the organizational. PROPOSITION 6b. The point here is not to confirm the assumptions made by these works but to rely on theories which have implicitly assumed scale invariance of some sort in organizations. PROPOSITION Organizational Scale Invariance Inside the attractor space. Cohen (1991) shows emerging convergences between results of research made on individual and organizational learning. generally. have a fractal form. generally. However. Consequently. No.68. no cause in one organization can have a same effect in another organization. results are different. FORGUES Chaos Theoryand Organization PROPOSITION 4a. organizations should have a fractal form. Similar actions taken by organizaPROPOSITION tions in a chaotic state will never lead to the same result. THIETART AND B. This literature generally assumes that there is a similarity between processes taking place at the organizational and the individual levels.97. generally. who advise organizations to "unlearn" in order to avoid falling into the trap of routine when new responses are required to confront organizational crises. we nevertheless suggest a fifth proposition. in his review essay. even in the case where actions are based on similar past experiences. As a consequence. For example. it reproduces at a smaller scale what is observed at a more global level. which asserts that such a property does exist. at the group and at the individual levels. a system can encounter the same situation several times. since the number of organizations is limited and much smaller than the number of possible situations and outcomes. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . That is to say that. the system's behavior is highly complex and unstable. holds for natural chaotic systems. When in a chaotic state. it is very unlikely that two similar situations across organizations will ever be observed. generally. we should observe several layers of similar patterns and configurations at the organizational. will lead to the same result. organizations are more likely to adopt a specific configuration than a deterministically "random" pattern. In the same vein. 4b. When possible. When in a chaotic state. In theory. PROPOSITION 5. Other theories. When in a chaotic state. To rely on successful practices as a basis to manage in a different context can only lead to deception. As an example and based on his thorough study on how successful organizations fail. When in a chaotic state. This is the scale invariance property. For instance. Even though there are opposite arguments for the existence of scale invariance in organizations. The greater the openness of an organization to its environment. however. at the suborganizational. we should. it is unlikely that the same action. we can observe that this complexity is also organized and that. PROPOSITION 6a. the same action taken by two organizations never leads to the same result. in an organization. in their chaotic domain. When in a chaotic state. group and individual levels. A. Research in organizational learning and cognitive processes makes assumptions that resemble our scaleinvariance premise. group and individual levels. Hhen in a chaotic state. be observed at different scales.R.189 on Sun. observe scale invariance in the organizational world. the propositions were related to research in the field of organization. taken twice. January-February 1995 27 This content downloaded from 111. the probability of seeing such a recurrence is so low that we can consider that a chaotic system will never find itself twice in the same situation. Not only are the results unpredictable but. Actions' Irreversibility The last proposition deals with the irreversibility of chaotic systems. However. A sixth proposition follows: 6. the work of Lawrence and Lorsch (1967) on the structural differentiation of organizational subunits needed to adapt to different environments is inconsistent with the preceding argument. This argument gives support to Nystrom and Starbuck (1984).

They are sources of internal disorder which might lead to major changes in the future. NJ: Prentice-Hall. 1. insists upon the necessary experimentation that organizations must undertake if they want to survive.68. because of the dissipative nature of open systems such as organizations. at the same time. invariance at different organizational scales (fractal forms). Furthermore. "Dynamic Models of Urban Growth. References Aldrich. Sanglier (1978). No. Already. Organizations and Environments. Disorder gives an opportunity to explore new ways of doing and acting. Researchers and managers are confronted with a major challenge that the incompleteness of traditional models cannot help to meet. several seem worth exploring. chaos has an underlying order: the strange attractor or the organizational configuration. Second. and M. Also. As a consequence. provides a means to explore diverse modes of operation. open new avenues for research. On one hand. Among these features. which is generally well explored in the natural sciences. nonreplicability of past situations (time irreversibility). incoherence. P. but not too much. H. M. 28 ORGANIZATION SCIENCE/Vol.97. January-February 1995 This content downloaded from 111. (1979). forces of order and stability are used to close a system which is too complex to be mastered by cognitively limited organizational actors. for instance. diverse and diverging activities from the organization thrust are all sources of instability. 6 Oct 2013 23:50:24 PM All use subject to JSTOR Terms and Conditions . Chaos theory. E. paradoxically. However. As a consequence chaos contains the seeds of new stabilities. attraction toward configurations (strange attractors). order is also an unsettling force. it might facilitate adaptation to the unknown demands of the environment. needs to be further researched in the realm of social sciences. Thus. put forward as a support to the propositions. is impossible to grasp. internal disorder. referring to the works of von Bertalanffy (1975) and those of Jantsch (1980). We also wish to thank Jean-Claude Thoenig and anonymous reviewers for their very helpful comments on an earlier draft of this article. let chaos develop because it is the only way to find new forms of order. such features as prediction impossibility (sensitivity to initial conditions). organizations face two contradictions: first. order is a means to create the illusion of management.R. A. Global reality. because it may be a source of chaos. This illusion is forged by organizational actors who are confronted with the impossible challenge of achieving a mission without having the capacity to succeed. For instance. The incompleteness is not too bothersome if models are limited to description and interpretation without attempting to prescribe and predict. On the other hand. Englewood Cliffs. The consequence of relying on submodels is that what we observe may be apparent randomness. These forces contain the seeds of order and chaos. and stepwise change processes (bifurcation) give a complementary theoretical support to several existing theories and. It creates resistance to change and leaves the organization in an artificial limbo. forces of change are destabilizing because of their tendency to push the system out of its "orbit. Concluding Comments Chaotic organizations are driven by counteracting forces of change and stability. Empirical research now needs to be done in order to explore in detail the implications of what has been proposed. from the individual to society as a whole.189 on Sun. FORGUES Chaos Theoryand Organization some of the work. the forces of change favor. 1. Smith (1986). the emergence of a new form of order and stability. It is an organizing force. Furthermore. Prescription and prediction imply perfect knowledge of the interrelationships between variables and their dynamics over time that we do not have. Acknowledgements We wish to thank Ivar Ekeland for introducing us to chaos theory." Experimentation. Allen. The combination of the forces of stability and change can push the organizations towards chaotic domains where deterministically induced random behavior is the rule. THIETART AND B. They create demands which are not necessarily consistent with the planned objectives. However. 6. the qualitative properties of chaos theory have provided several interesting insights on how organizations might work. the forces of order may create a high level of complexity and may be a source of chaos. through multiple coupling. by generating multiple responses. is more suggestive and does not constitute undeniable proof. 265-280. Search for order is an attempt to build islands of certainty and rationality where purposeful action can be undertaken. Since the evolution of the environment is unpredictable. look for order. And one or several modes can become the new organizational equilibrium whose characteristics are impossible to anticipate." Journal of Social and Biological Structures. They can become an organizing device and create the conditions for a new order to come. Order can lead the organization to act incoherently with respect to the constraints it is subject to. Experimentation with new organizational paradigms permits the development of catalogues of configurations from which the organization will be able to choose when the forces of change are more powerful than organizational viscosity and resistance.

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