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Brigid L. Bechtold
President, Brigid Bechtold Consulting, Minneapolis, Minnesota, USA
During more stable times, corporate executives developed their strategic plans annually, often by updating the previous year’s plan. As dramatic changes increased business uncertainty, executives began to involve more senior managers in strategic planning. They used an iterative process, asking for input on goals and then sharing the final plan. Simply by involving more managers, the process approach increased the level of information about customers, employees, and the business that was available to the planners. Some organizations used large group processes, such as future search conferences (Weisbord, 1992; Weisbord and Janoff, 1995) or real time strategic change sessions (Jacobs, 1994; Dannemiller, 1994), to simultaneously involve all parts of the organization in strategic planning. This method expanded the circle of knowledge from which the organization worked and fostered relationships among those implementing the strategies. This evolution of strategic planning from an executive event to a large-scale participative process has been healthy. It has tipped the balance from planning toward strategizing, but it is not yet enough. An annual event with an executive group—or even an annual process with a larger group—will not keep a company strategic in our rapidly changing business environment. Organizations today need an entirely different approach to strategizing; strategizing needs to be part of how companies do “business as usual” every day. It needs to be part of the web and fiber of their organizational culture. Chaos theory might be an appropriate model for an organization to use to determine how to embed strategizing into its daily operations. Chaos is a system theory that attempts to understand the behavior of nonlinear, unpredictable systems. It seems a fitting model to use to inform strategy development in today’s unpredictable business environment. Chaos theory Nonlinearity, bifurcations, and strange attractors – although such words do not typically emanate from strategy meetings, they are key concepts of chaos theory. To understand chaos theory as a model for strategy development, it helps to look first at general system theory. We are all familiar with systems, such as our work organizations and our families. A system is a set of parts that interact with each other and function as a unified whole. The qualities or characteristics evident only at the level of the whole and different from those of its parts create the system’s distinct identity. Boundaries delineate this system from the rest of the world, and rules govern the interrelationships among
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Empowerment in Organizations, Vol. 5 No. 4, 1997, pp. 193-201. © MCB University Press, 0968-4891
or structure and permanently redefine a system in new and unexpected ways. It would clarify and affirm its identity and purpose. This theory appears to be a fitting model to use to inform strategy development in today’s fast-changing business environment. history. and introduce new patterns into the system (positive feedback). connect itself with the evolving environment. ensuring their compatibility with the emerging order. making changes that are irreversible and thus. and draw that information into its self-generation. destabilize the existing state.EIO 5. Feedback also modulates the system. A system betters itself. Chaos theory and strategy development With chaos theory as the model. When fluctuations cause turbulence. Bifurcation points can cause sudden changes in direction. The organization .” it stays connected to its simultaneously evolving environment and enhances its ability to handle environmental changes. It would affirm or adjust the “strange attractors” of its values and culture as it clarified its purpose and future direction. Because a chaos system operates in an unstable combination of randomness and order. it needs to tap not only its more stable parts but also those at the “edge of chaos” that are chaotic or even dissipative. system theory is an abstract model through which we view the world in order to better understand its nature and how it operates. Thus. This “strange attractor” stabilizes the system while its natural growth process simultaneously propels it into chaos. Chaos theory views all dynamic systems as self-organizing in how they order and structure themselves and in how they grow and change.4 194 elements. An organization would approach strategy development in a manner that allowed selforganization and exploration of its “edge of chaos” or fringes. and sense of purpose (“strange attractor”) define its boundaries and guide its evolution and growth. For this. its identity. The organization would tap the information and intelligence of all its members. It sees a system as continuously transforming itself to a higher level of complexity. Interrelationships among the elements co-evolve with the system. character. the system transforms the rules for how it operates so it can better handle the changing environment. Chaos theory assumes that a system creates its own order and natural growth by integrating transformations into its identity and thus ensuring continual growth at a higher level of being. Because the system is nonlinear. which would in turn clarify its boundaries. strategy would emerge from the natural growth of the organization working to achieve its potential. Selforganization means not only emergent order and self-generation but also coevolution with the greater environment. creates its own future. small changes in initial stages can amplify exponentially and greatly impact the pattern of the system’s growth and evolution. and continuously adapts to its environment based on its intelligence and information. Though a dynamic system may appear to be chaotic. Chaos is an evolutionary system theory. Through the freedom of operating with an open flow of information from its “edge. it continuously changes and evolves. evolutionary. either to maintain the system stability (negative feedback) or to amplify deviations and anomalies.
Finally. and collaborate to produce a flexible. While a calendar date typically triggers an annual planning process. fluid plan for the organization. Relationships among members would evolve simultaneously. It also acknowledges that the organization is operating in an unstable combination of randomness and plan. It would look for new patterns emerging throughout the organization as it evolved into a higher level of being. Scenario planning (Van der Heijden. Chaos theory 195 . environmental fit. by definition. Formal strategic planning needs to be a continuous process because of rapid changes. In other words. A continuous process contains. and strategies. sudden opportunities. As chaos theory suggests. learn from each other. an acceptance of uncertainty and the ability to address emergent issues. fluid plan. The formal strategy development process Chaos theory suggests a need for a continuous strategy development process that involves all organizational members in the creation of a flexible. Feedback on strategy performance. In the process. needs.would have the freedom to adjust to small changes or to sudden phase changes as part of its natural strategy development process. small changes in the industry can amplify exponentially and greatly impact the industry’s future growth or permanently redefine the entire industry. A continuous strategy development process provides a means for handling such eventualities. The thought process that occurs in scenario planning is to consider a business idea against various scenarios that act as test conditions of possible futures in order to determine the viability of a business idea. Such an approach would increase an organization’s knowledge. it’s designed on the premise that even the best projections and plans for the future have a degree of uncertainty. and shifts in the environment. and flexibility as it evolved a sound business strategy. Strategy would continuously emerge as the system clarified its identity and purpose in relation to the issues it faced. a continuous process needs several ways to activate it. It further suggests that the formal planning process needs to be bolstered through strategic thinking and responsibility in other organizational processes. providing connections appropriate to the emergent system. An environmental change can necessitate a strategic redirection. uncertainties. 1996) is one approach that assumes successful strategy can only be developed in full view of the uncertainty that exists in any situation. Chaos theory could inform not only the formal strategic planning process but also the management systems and the organizational culture itself. This real-time approach to strategizing acknowledges the dynamic environment and the need to move quickly in today’s business environment. all members would come together. This model suggests that an organization’s formal strategic planning process needs to be a continuous process that involves all organizational members. chaos theory reveals the criticality of instilling strategic thinking into the web and weave of the organization’s culture. or dramatic environmental changes would be able to activate the process.
Management and strategic responsibility To create a successful business during times of turbulent change. perspectives. Greater involvement enriches the strategic process because people bring their knowledge of their work.4 196 In addition to being continuous. and thus gain opportunity share. and part of everyone’s job. Only with this totalsystem “distributed” approach to strategizing can a business succeed in our fast-changing business environment. participants have the opportunity to influence not only the future of their organization but also the direction of their industry. 1994. Whether an organization uses a large group approach or involves the full system in another way. the industry. the organization also needs strategic thinking to be part of its daily operations. a sense of ownership for the business. Jacobs. Strategic . A large group approach might be a good way to initiate involvement in a continuous strategic planning process because it acknowledges the value of all organizational members and integrates strategy development and implementation. also involves the entire organization. strategy implementation and generation need to be part of daily operations. This formal process needs the support of “distributed strategizing” throughout the organization. and involves all organizational members will help prepare a business to deal with turbulence. Thus. Hamel and Prahalad (1994) say that the goal of strategizing is to transform the industry. and the impetus and knowledge to instill strategic thinking in the organization. the strategy-making process must be democratic and involve a cross-section of the organization. organizations may opt to involve customers and suppliers in the strategic process. and addresses parts only in the context of the whole.” Another large group approach. Such an inclusive process will aid the implementation of strategies and achieve a unity of purpose in the organization. In fact. part of its culture. A formal strategic process that is continuous. this process must involve all organizational members. Whatever the formal strategic process. The “Future Search” method developed by Weisbord (1992) and Weisbord and Janoff (1995) employs democratic dialogue to consider organizational issues in a global context and focus on “common ground. this involvement needs to begin by ensuring that all members understand the process and know how to contribute their ideas and information.EIO 5. 1994). They combine strategy development and implementation to expedite a real-time response to a changing environment. and information will expand the strategic circle of wisdom. not just the organization. In addition to its formal process. It will also create energy. the “Real Time Strategic Change” method ( Dannemiller. combines plan and randomness. and the customers with them. includes input from customers. Their different knowledge. The intent of these large group approaches is to give everyone the big picture of the business and to encourage the formation of new relationships across the organization. Large group and participative approaches to strategy development implement the concepts of self-organization by involving the full system in the process and operating across organizational levels and functions.
1995. Following implementation. Everyone needs to take responsibility for strategy implementation and generation. these people are ignored – or terminated – but the organization needs their voices in strategy implementation and generation. Van der Heijden. who give Chaos theory 197 . with the dinosaurs. That integration can begin by simply bringing different groups together to discuss and clarify their understanding of the strategy. and all organizational processes. These are the voices most likely to tell of small changes occurring in the industry or the environment that could amplify exponentially and change the face of the industry. Often. managers could also gather feedback from this group. and share that feedback with the organization. Perhaps they break organizational rules in order to accomplish goals. Executives could connect those “on the edge. They could hold regular sensing sessions with different crosssections of the organization to elicit concerns and issues. 1996). Managers may also have to encourage differentiation if the organization ignores changes in the environment and fails to adapt in time. but on what this strategy achieved. or they be members who are viewed as rebels or outliers (Hamel. 1996). learning processes. They are the most likely to challenge the status quo of the organization and begin the emergence of new rules and order. With a common understanding. Differentiation and integration are critical for strategy implementation. Listen to the edge! The fluctuations that occur “far-from-equilibrium” or at the “edge of chaos” may be members challenging the direction of the company because of new technologies or information. and managers have to see strategizing as a responsibility. Their voices will enhance the organization’s ability to transform in stride with the changing environment. Executives also need to listen to the edge people and to all organizational members. They need to encourage divergent views and experimentation.thinking and responsibility need to permeate decision-making processes. These people at the edge may see customer needs emerging as the environment changes. Organizations need that information to determine whether the strategy accomplished what was intended. managers need to take steps to increase integration. Managers have the critical role of managing the dilemma between differentiation and integration in the organization (Nonaka and Takeuchi. People would ask. they can then coordinate their decisions and strategic implementation to ensure organizational success. all processes and decisions need to align with organizational strategies. If that happens.” who bring change. not on what was completed in strategic action plans. “Did we accomplish what we set out to do?” rather than “Did I complete my action items?” Feedback focusing on the effectiveness of the strategy would afford the organization the chance to adjust strategies as needed to achieve the goals and to operate at a higher level. To ensure integration. These people at the edge may simply be newcomers to the organization. If there is a lack of coordination in decision-making and groups are doing their own thing without regard to the impact on others. the organization will have problems implementing strategy.
Managers can enhance this activity by providing forums to address new and unusual ideas. Formal strategy meetings rarely generate strategies. rather. think innovatively. Organizations are complex adaptive systems whose members shape their business and future through spontaneous self-organizing (Stacey. Everyone in the organization needs to know what the strategic issues are and needs to take responsibility for identifying emergent issues. These relationships link individuals to the organization and to each other. and to generate strategy. Weisbord.EIO 5. Through connections with the larger environment and the freedom of operating with an open flow of information. Information processing and generation are means for the organization to better itself. as well as connections with the external environment. Patterns of connection and processes to facilitate communications and build relationships become core operational needs. Lunch time dialogues could provide the forum that people need to talk and generate new ideas. strategic thinking will naturally permeate the web and fiber of the organization’s culture. New strategic direction cannot be . Van der Heijden. create its own future. Exchanging and generating information are equally important. which ensures co-evolution. Stacey.4 198 stability to the organization. to be heard. 1995) – including the voices from the edge – to complete the big picture and develop future business success. Stacey (1992) views the list of strategic issues as the heart of strategic management. healthy relationships between the individual and the organization as well as among individual members are paramount to organizational success. and people need the freedom to own their own power. 1992. a manager can gather a crosssection of people who have energy around an idea and explore its possibilities. Hamel. With the formal process involving the full organization and all management systems attuned to strategizing. 1994. 1996). Self-organizing groups identify these issues and become involved in their successful resolution – although they may be outside their formal responsibility – because the issues are so important to the future of the business. Cultural web As chaos theory suggests. Weisbord and Janoff. and operate in new patterns. 1996. Strategizing needs full organizational involvement (Dannemiller. Executives only have the full picture when they regularly listen to a crosssection of the organization. 1992. Van der Heijden. With self-organization. 1994. connections among members in the organization. are critical for successful strategy generation and implementation. organizations need to operate at the edge of chaos. To do that. 1996). they surface strategies that have been brewing in different parts of the organization (Stacey. 1992. the organization stays cognizant of and connected to its simultaneously evolving environment. Through something as simple as a lunch time dialogue. relationships provide vitally important connections and interactions to the system. and continuously adapt to its environment. In addition to providing the means for sharing and creating information. Jacobs. 1996.
we have more data to work with. 1997). Future implications Involvement in strategy development increases everyone’s knowledge of the business. it can only emerge from the interactions between people in the organization and between the organization and its environment (Stacey. and sense of commitment and ownership. each person learns the value that people from different organizational levels and functions offer. A continuous strategy development process that is robust enough to deal with plan and randomness and that involves all members – that begins to define effective strategic planning during times of far-reaching and rapid change in our business world. and the people doing the work have the authority and responsibility to make decisions and implement changes. It comes from having a voice and making valuable contributions to the organization. Chaos theory 199 . Democratic principles value each person as a full participant in the process of governance. and assume each person is capable and responsible. It comes from having our ideas put forward. these values must be operative within the organization. feeling of connection to the organization. In the process. collaborated on. When power is distributed throughout the organization. Full-system involvement taps the knowledge of each employee by encouraging ongoing dialogue across the organization. It taps the capability and potential of the full organization and connects it to the business environment. improves communication. a strong customer focus. 1992). everyone can focus on the customer. an organization needs to operate with democratic principles. Continuous strategic planning increases knowledge of and connection to the business. This self-organizing approach ensures that the organization will continuously grow and emerge to a higher level. greater communication among functions and organizational levels. It comes from the opportunity to be involved in setting the direction and priorities of the organization. and augments commitment. and more ideas. an integration of management and doing. a strategy of continuous learning. Only when relationships are viewed as interactive and all people can own their power can the organization gain value from strategic participation. This process creates sound business strategy because of the breadth and diversity of knowledge and insight used to shape it.organizationally intended. With more perspectives. put power in the hands of the people. It creates a sound business strategy because the energy of the organization – the people – not only shape the strategy but also implement it. and implemented by the group. and an orientation toward community service (Bechtold. In order to implement a self-organizing approach to strategy development. A balanced distribution of power means that the authority to make and influence strategic decisions is distributed throughout the organization. Organizations that operate with democratic principles are characterized by a balanced distribution of power. In order for a participative strategy development process to be possible.
and sound business strategy—some organizations have realized that these are business imperatives. the answer begins with freeing employees to use their capabilities and decalcifying organizations so they can engage in the process. Competing for the Future. It works when executives view the process as “the discovery of emergent pattern” (Stacey. If we believe that a creative new order emerges unpredictably from spontaneous self-organization. The people in such an organization not only see clearly to the future. G. It succeeds when it opens a dialogue that invites all employees to share their observations. participative systems. pp. Vol. business. one might ask. Real-Time Strategic Change: A Consultant Guide to Large-Scale Meetings. and that technical. It has to allow for many possible outcomes and the ongoing emergence of strategies from across the organization at any time. companies will manage and organize in ways that give individuals the freedom to use their own initiative and authority. ideas.K. Much of current strategizing operates with a “hang your brains at the door” mentality for the majority of organizational members. “Strategy as revolution”. MI. The process has to accord people the freedom to collaborate in order to discover new directions. 5 No. (1994). “Toward a participative organizational culture: evolution or revolution?” Empowerment in Organizations. . K. But organizations are learning that today’s business challenges are too great for bureaucracy and can only be met with self-organizing. Boston. 4-15. The organization has to be willing to let the strategy emerge from the ongoing process of dialogue among all members. and determine how to accomplish them. as chaos theory informs us. How. it would seem wise for an organization to use a participative process for strategy development. (1994). (1996). that people are capable. July-August. and possibilities. 125). A process approach to strategy development works when it is implemented as a dynamic. involvement. Hamel. 69-82. Ann Arbor. The brilliance of even the wisest executive dims in comparison to the voltage of a full organization’s wisdom lit by the intellectual and emotional energy of all its employees. not just nice-to-haves. References Bechtold. in our rapidly changing business environment. Dannemiller Tyson Associates. (1997). and intent upon doing what is best for the organization. not an annual executive event. they are creating their future. Harvard Business School Press. ongoing process – what Hamel (1996) calls an open-ended process of strategic discovery. B. 1.EIO 5. and leadership capability and accountability lies with each person. can an organization successfully implement a full-system approach to strategy development? How can organizations tap the potential and benefit of chaos theory in their strategy development? Often.L. pp.4 200 Given this. G. p. Dannemiller. MA. Harvard Business Review. workers are told to do the work while elites go off and do the thinking. Hamel. Underlying the use of full-system strategic planning are the beliefs that the system has unlimited human potential and untapped capacity. trustworthy. and Prahalad. Commitment. C. decide which of them to follow. 1992.
R. and Takeuchi. Chichester. San Francisco.D. John Wiley & Sons. Managing the Unknowable: Strategic Boundaries Between Order and Chaos in Organizations. (1992). Berrett-Koehler Publishers. Berrett-Koehler Publishers.D. S. Stacey. H. Stacey. Future Search: An Action Guide to Finding Common Ground in Organizations and Communities. (1996). Berrett-Koehler Publishers. R. I. San Francisco. (1996). and Janoff. Real Time Strategic Change: How to Involve an Entire Organization in Fast and Far-Reaching Change. NY. (1994). M. Van der Heijden. M. Weisbord. Complexity and Creativity in Organizations.Jacobs. CA. San Francisco. (1992). San Francisco. San Francisco. Jossey-Bass Publishers. R.W. The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. (1995). Nonaka. (1995).R. Weisbord. CA. K. Berrett-Koehler. Chaos theory 201 .R. England. CA. CA. Discovering Common Ground. Scenarios: The Art of Strategic Conversation. CA. New York. Oxford University Press.
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