A matter of chaos - some issues for hospitality

businesses
Edgar, David A; Nisbet, Laura . International Journal of Contemporary Hospitality Management ; Bradford
 Vol. 8, Iss. 2,  (1996): 6-9.

ProQuest document link

ABSTRACT
 
With reference to the concepts of chaos theory, this article proposes that long-term strategic planning is of little
benefit to businesses (especially small businesses) operating in the hospitality industry, and that managerial focus
should emphasize innovative and creative practices in order to sustain competitive advantage. To achieve this,
organizations need to have a clear vision of where they want to be and attempt to achieve this aim by adapting to
situations as they arise. Today's hospitality organizations should not try and overcome their environment by
predicting future outcomes but instead should change and adapt with the environment.

FULL TEXT
 
David A. Edgar: Napier University, Edinburgh, UK

Laura Nisbet: Napier University, Edinburgh, UK

Introduction

Today's businesses are operating in complex and turbulent environments with pressure to adapt and change in
order to survive. This has resulted in many organizations realizing that past theories and prescriptions which
assume that the "ideal" situation is one where all factors tend towards equilibrium and stability is seriously
flawed[1, 2]. The notion that recipes concocted by examining the past behaviour of successful organizations can
be used to realize success in other organizations is increasingly seen as an outdated view.

This article poses the question, "Is long-term strategic planning of benefit to businesses in the hospitality
industry?". This issue is considered in relation to the concept of chaos theory and the proposition that "long-term
strategic planning is of little benefit to businesses (especially small businesses) operating in the hospitality
industry" and that managerial focus should emphasize innovative and creative practices in order to sustain
competitive advantage.

Approaches to strategic planning

Strategic planning has evolved from the early years (pre-1950s) when budgetary control was the focal concern
through to the 1950s when long-range planning was popularized as a means of attempting to predict future
events[3]. At the same time the "systems approach" became popular whereby problems were tackled "holistically",
with a comprehensive systems approach[4], which sought to "decompose" the problem or process by means of a

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series of specific steps and systematic undertaking of each step. Whatever the focus of strategic planning, the
process comprises of some variation of strategic analysis, strategic choice (decision making) and strategy
implementation, whereby organizations evaluate their competitive position, seek sources of competitive
advantage and put their plans into action[5]. The process is believed to be circular in that past experiences can be
extrapolated with outcomes being seen as deliberate and intentional[6]. However, behavioural patterns are difficult
to predict and attempts to build a forecasting model are likely to be flawed if they rely on prior patterns.

Nature of hospitality organizations

There are a number of key elements relating to the nature of organizations. These are summarized by Stacey[7] as:

- organizations are systems influenced by and interacting with their environments;

- the system is such that connections between cause and effect are distant in time and space, making it difficult to
predict future structures; and

the complex, systematic nature of anorganization results in patterns ofbehaviour that are often unintended and
unexpected.

Specifically, organizations in the hospitality industry are widely recognized as being:

- highly labour intensive;

- spatially disaggregated and fragmented;

- operating in complex and dynamic environments; and

predominantly composed of smallindependent enterprises.

These characteristics require new ways of making sense of events and change and it is argued that the present
collection of techniques and principles for managing change is insufficient and new ways of understanding what
is happening are required[8].

Essentially, these "new ways" require a dynamic feedback system perspective whereby events are driven by laws
but are not ones of straightforward unidirectional causality, rather the systems take the form of non-linear
feedback loops where causality is circular[7]. Based on this premiss, all organizations can be seen to be
paradoxes, pulled between the stability of certainty (control; integration; and adaptation to the environment) and
uncertainty arising from a drive for innovation, excitement and independence. If the organization concedes to the
pull of stability it is much less adaptable and is less likely to maximize its potential. Conversely, if the organization
moves towards an unstable state it risks becoming disjointed and the prospects of disintegration increase. The
answers to these problems may lie in the concept of chaos theory - in essence, the means by which the
organization is sustained in the borders between stability and instability.

Chaos theory

Stacey[7] defines chaos theory:"

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When a non-linear feedback system is driven away from the peaceful state of stable equilibrium towards the hectic
equilibrium of instability, it passes through a phase of bounded instability (chaos) in which it displays highly
complex behaviour, in effect the result of the system flipping randomly between positive and negative feedback."

This paradoxical phase represents a border area between stability and instability, with both forces pulling the
system in opposing directions. While the system operates in this border area, neither of these contradictory forces
can be removed, instead, the forces are endlessly rearranged in different yet similar patterns. This generates
patterns of behaviour that are not only irregular but also absolutely unpredictable. Nonetheless, such behaviour
has an overall "hidden" qualitative pattern, resulting from fundamental properties of non-linear feedback systems
themselves, rather than any environment the system may operate in.

Hence chaos theory is the popular name for the study of non-linear dynamic systems, whereby even a system
which is perfectly deterministic may be impossible to predict accurately. The aim is to study the area between the
regular predictable behaviour and random unpredictable behaviour[9, 10], so as to define an irregular pattern over
time[6] and snatch order out of chaos through a "strange attractor"[11]. An attractor is a non-physical boundary
which relates to a particular system within which the behaviour of a system is turbulent or chaotic[12]. The
existence of such attractors ensures that there is a degree of stability within the system, binding that system to a
pattern of behaviour[13] and allowing what appears to be random movement to be predicted. There is, surprisingly,
a certain degree of order within a chaotic system. This paradox[1] derives from the fact that systems displaying
chaotic characteristics are operating somewhere between stability and instability and within certain boundaries. It
is argued that it is necessary for organizations to operate in this state of bounded instability if they are to be able
to change, move forward and progress[1]. Thus chaos is "order without predictability"[14]. For an organization to
renew itself then, it is essential that it keeps away from a non-equilibrium state at all times, since tending towards
equilibrium would result in destabilization and ultimate failure. However, this does not suggest that an
organization's future should be left to chance, indeed, if we have an understanding of the boundaries of the
system, together with accurate starting positions, computer simulation models could be used to make short-term
strategic forecasts[15].

Chaos theory can, therefore, provide a useful theoretical framework for understanding the dynamic evolution of
industries and the complex interactions among industry actors[15]. While chaos theory has obvious applications it
may be useful to focus on the properties of chaos in parallel with the nature of strategic planning in hospitality
organizations.

The argument

Chaos theory is applicable under certain conditions, termed "properties of non-linear feedback systems" or
properties of chaos[6, 7]. Such properties of chaos have been found to apply to non-linear feedback systems
inmeteorology, physics, chemistry, and biology[16], economics and social sciences[17, 18, 19, 20] and more
specifically, management and organizations[21, 22, 23]. By identifying the properties of chaos and comparing them
to the nature of organizations in the hospitality industry it should become clear that chaos theory is of more
relevance to hospitality organizations' strategic thinking than the traditional long-term strategic planning
approach.

Properties of chaos

Cause and effect

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In states of chaos an organization's system amplifies minute changes in starting conditions to cause major
unpredictable alterations in resulting behaviour. This "sensitivity to initial conditions", termed the Butterfly Effect
by Edward Lorenz[24] breaks the link between intentions and outcomes[1]. As such, it becomes difficult, if not
impossible, to identify which elements or linkages have led to a resulting behaviour and as such, the study of
cause and effect becomes redundant. Organizations are essentially negative feedback systems where
relationships are non-linear in nature. Understanding and explaining negative feedback systems is very difficult
although not entirely impossible, as armed with accurate information on the boundaries of the system, it is
possible to make educated guesses as to how systems will behave in the short term[2]. The weather is a prime
example of a chaotic system which has been modelled using computer simulations in an attempt to make more
accurate short-term forecasts[15]. This demonstrates that there is apparent order "within" and although it may not
be possible to make accurate long-term forecasts, it is possible to say with some certainty (based on past
evidence) that there may, for example, be a heavy snowstorm in the height of the summer or that there will be 45-
degree heat in December[2]. Levy[15] has suggested that similar computer simulation models could be used in the
case of strategic management to enable more accurate long-term planning, however, collection and accurate
recording of the types and amounts of information required to devise such a model seem virtually impossible to
achieve. Past statistical trends and patterns of behaviour may be identified and used to make general
assumptions, but with no accurate indication of cause and effect, such trends are highly unlikely to continue
indefinitely.

Retracing one's past

In states of chaos it is impossible to make retraceable steps due to the law of entropy - which is the loss of
information and energy within a system to the surrounding environment. Parry and Drost have attempted to
demonstrate the possibility of retracing one's steps by matching the key characteristics of chaos to the evolution
of Japanese management principles[25]. However, the inability to maintain absolute and infinitely accurate
records of all events and the inability to reverse time, makes retracing or replicating events an illusion and infinitely
improbable[26]. Moreover, traditional theories and paradigms have over-emphasized the linearity of planning,
suggesting that small actions or changes will have small outcomes.

Planning for the future

Controlling and co-ordinating organizational behaviour under chaos theory requires that events and actions be
implemented with inifinite precision. The slightest error serves to amplify and cause different behaviour from the
ideal, and logical, careful planning cannot ensure that a specified route will meet a specific end goal. This in turn
has significant implications for organizations attempting to set long-term strategies based on where they would
like to be in the future[15]. These properties of systems in chaos imply that organizations must abandon any
aspirations of controlling their long-term future. While it is not possible to plan, forecast or control a systems
development as chaos amplifies small changes to the system, it is possible to monitor the small changes and
determine how the organization or events will react in the short term. It is therefore perfectly possible to be in
control and to plan the short-term development of the organization. In the longer term, organizations should seek
to identify any similarities or irregularities in elements of patterns of change and determine, from these, acceptable
courses of action. Further, they should reject over-reliance on strategic analysis of past events, avoid constraining
cultures and reliance on probability, and focus more on building an innovative, creative, spontaneous and learning
form of organization and approach to strategy.

Conclusion

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The argument here is that long-term strategic planning has little relevance or benefit for hospitality organizations
and greater emphasis should be placed on adopting, implementing and facilitating the innovative and creative
organization[27, 28]. To achieve this, the organization needs a clear vision of where it wants to be and attempts to
achieve this aim by adapting to situations as they arise. Parry and Drost[13] offer the analogy of a surfer,
suggesting that today's hospitality organizations should not try and overcome their environment by predicting
future outcomes but instead should change and adapt with the environment.

A shift in traditional management thinking is required if we are going to be able to understand the increasing
complexities which surround us, not only in management but in every aspect of organizational life[29]. If one
perceives management as being chaotic then it may be just too complex to fit into neat models and equations.
With this in mind then, it is perhaps better to craft a strategy each and every day[30] and "respond to an evolving
reality rather than having to focus on a stable fantasy" of which traditional management thinking has become[31].

How then does the small business owner in the hospitality industry plan? Does he need long-term plans and
strategies to operate effectively? Or is it that unknowingly he has already embraced the concept and principles of
chaos theory by adopting a "troubleshooting" approach to management. This is the subject of a current
investigation by the authors which is attempting to quantify the usage of strategic planning, innovation and
creativity approaches in small operations in the hospitality industry. Given the structure and nature of the
hospitality industry, and the fact that creativity can be impeded by planning[5], a further question is posed: "Is the
teaching and educational focus of traditional strategic planning valid and appropriate or should courses focus
more on innovation and creativity as the foundations of strategic management?"

References

1. Stacey, R.D., "The science of complexity: an alternative perspective for strategic decision process", Strategic
Management Journal, Vol. 16, 1995, pp. 447-95.

2. Nilson, T.H., Chaos Marketing, McGraw-Hill, London, 1995.

3. Gleick, J. and Kaufman, W., "Strategic management for competitive advantage", Harvard Business Review, July-
August 1980, p. 157.

4. Ackoff, R.L., "Science in the systems age: Beyond IE, OR, and MS", Operations Research, Vol. 21, 1973, pp. 661-
71.

5. Mintzberg, H., The Rise and Fall of Strategic Planning, Prentice-Hall, New York, NY, 1994.

6. Hibbert, B. and Wilkinson, I.F., "Chaos theory and the dynamics of marketing systems", Journal of the Academy
of Marketing Science, Vol. 22 No. 3, 1994, pp. 218-33.

7. Stacey, R., Strategic Management and Organisational Dynamics, Pitman, London, 1993, p. 245.

8. Miles, R.E. and Snow, C.C., Fit, Failure and the Hall of Fame: How Companies Succeed or Fail, Macmillan, New
York, NY, 1994.

9. Diamond, A.H., "Chaos science", Marketing Research Vol. 5 No. 4, 1993, pp. 8-14.

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10. Gregerson, H. and Sailer, L., "Chaos theory and its implications for social science research", Human Relations,
Vol. 46 No. 7, 1993, pp. 777-802.

11. Covey, S.R., "The strange attractor", Executive Excellence, Vol. 11 No. 8, 1994, pp. 5-6.

12. Richards, D., "Is strategic decision making chaotic?", Behavioral Science, Vol. 35 No. 3, pp. 219-32.

13. Parry, B. and Drost, R., Fourth Annual CHME Research Conference, Vol. 3, Norwich, 1995.

14. Cartwright, T.J., "Planning and chaos theory", American Planning Association Journal, Winter 1991, p. 45.

15. Levy, D., "Chaos theory and strategy: theory, application and managerial implications", Strategic Management
Journal, Vol. 15, 1993, pp. 167-78.

16. Gleick, J., Chaos: The Making of a New Science, Heinemann, London, 1988.

17. Baumol, W.J. and Benhabib, J., "Chaos: significance, mechanism and economic applications", Journal of
Economic Perspectives, Vol. 3 No. 1, 1988, pp. 77-105.

18. Kelsey, D., "The economics of chaos or the chaos of economics", Oxford Economic Papers, Vol. 40, 1986, pp. 1-
31.

19. Anderson, P.W., Arrows, K.J. and Pines, D., The Economy As an Evolving Complex System, Addison-Wesley,
Menlo Park, CA, 1988.

20. Peters, E.E., Chaos and Order in the Capital Markets : A View of Cycles, Prices and Market Volatility, John Wiley,
New York, NY, 1991.

21. Nonaka, I., "Creating organisational order out of chaos: self-renewal in Japanese firms", California Management
Review, Spring 1988, pp. 57-73.

22. Stacey, R., The Chaos Frontier: Creative Strategic Control for Business, Butterworth-Heinemann, Oxford, 1991.

23. Zimmerman, B.J ., "Strategy, chaos and enquiry: a case study of Federal Metals Inc.", unpublished doctoral
dissertation, York University, Toronto, 1991.

24. Lorenz, E., "Predictability: does the flap of a butterfly's wings in Brazil set off a tornado in Texas ?", American
Association for The Advancement of Science, December 1979..

25. Parry, B. and Drost, R., "Is chaos good for your profits?", International Journal of Contemporary Hospitality
Management, Vol. 7 No. 1, 1995.

26. Briggs, J. and Peat, F.D., Turbulent Mirror - An Illustrated Guide to Chaos Theory and the Science of Wholeness,
Harper &Row, New York, NY, 1989.

27. Kanter, R.M., The Change Masters, Unwin Hyman, London, 1985.

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28. Drucker, P., Innovation and Entrepreneurship, Heinemann, London, 1985.

29. Johns, N., Comments made during Internet conference, "Hospitality industries: strategies for the future", MCB,
1995.

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1995.

31. Mintzerg, H. and Waters, J.A., "Of strategies deliberate and emergent", Strategic Management Journal, Vol. 6
No. 3, 1985, pp. 257-72.

Further reading

32. Lorenz, C., "Quantum leaps in a dangerous game", Financial Times, 22 September 1993, p. 21.

33. Palmer, T., "A weather eye on unpredictability", in Hall, D. (Ed.), Exploring Chaos: A Guide to the New Science of
Disorder, Norton and Company, London, 1994.

34. Ruelle, D., Chance and Chaos, Princeton University Press, Princeton, NJ, 1991.

35. Stewart, I., "Portraits of chaos", in Hall, D. (Ed.), Exploring Chaos: A Guide to the New Science of Disorder,
Norton and Company, London, 1994.

DETAILS

Subject: Chaos theory; Strategic planning; Hospitality industry; Small business; Competitive
advantage; Innovations; Creativity; Problems

Classification: 8380: Hotels &restaurants; 2310: Planning; 9520: Small business

Publication title: International Journal of Contemporary Hospitality Management; Bradford

Volume: 8

Issue: 2

Pages: 6-9

Number of pages: 0

Publication year: 1996

Publication date: 1996

Publisher: Emerald Group Publishing Limited

Place of publication: Bradford

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 Country of publication: United Kingdom, Bradford

Publication subject: Hotels And Restaurants

ISSN: 09596119

e-ISSN: 17571049

Source type: Scholarly Journals

Language of publication: English

Document type: Feature

DOI: http://dx.doi.org/10.1108/09596119610111659

ProQuest document ID: 228368936

Document URL: https://search.proquest.com/docview/228368936?accountid=107221

Copyright: Copyright MCB UP Limited (MCB) 1996

Last updated: 2019-09-06

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