SYSTEMS & CHAOS

THEORY

Brian Futterman & Scott Renick

"
Gee whiz, look at that system!
 Chaos and Complexity
(anything but)

  Complex adaptive systems

  Evolving rules, dynamic environment, interacting agents
  Ants scale to organizations
  “Anti-equilibrium”

  Chaos vs. stasis – two possible states of a CAS with shifting

patterns and group interactions; constantly in flux

  “Companies don’t innovate; markets do.” –Dick Foster

 …meaning…

Complex adaptive systems behave in CHAOTIC ways.

 Beinhocker says:

All are open systems comprising a

number of agents whose dynamic
interactions self-organize to create a
larger structure. Eric Beinhocker, Strategy at the edge of Chaos, 1997
Writing about cities, forest ecosystems, the immune system, and the Internet.
Beinhocker says:

EMERGENCE!
Closed vs. Open Systems

Beinhocker,E.D. (1997) "Strategy at the edge of chaos." The McKinsey Quarterly, 1, p. 27

 Punctuated Equilibrium
(Complexity with Chaos)

Shocks to the equilibrium

(punctuations) relative to the
Change in organizational ‘status-quo’ (stasis)
productivity
…this behavior is Chaos

Adoption of
ESSPs

Beinhocker,E.D. (1997) "Strategy at the edge of chaos." The McKinsey Quarterly, 1, p. 32

 What Chaos does

  Bifurcations (divergence) occur when an organization has to adapt

to a new, punctuated, equilibrium.
  This adaptability is found at the edge of chaos.

  Strange attractors are possible scenarios/results that lie at the end of

a bifurcated sequence of chaotic events. Many exist.

Beinhocker,E.D. (1997) "Strategy at the edge of chaos." The McKinsey Quarterly, 1, p. 35

Bifurcations

CHAOS!
 A familiar example of strange
attractors

1.  Company is developing a product.

2.  Needs (rules) change in the market (system) because it is complex

and adaptive.

3.  Every attempt to address the changes is an attempt to reach

equilibrium, which is itself evolving.

4.  Whether the product is a fad or a flop (each a strange attractor)

relies on the indeterminable (chaotic) effect of the decisions that
are made over time (bifurcations).
 History repeats itself ?
Well, it’s complicated.

  McBride, 1999:
“…chaos refers to what might be called ordered disorder”

  Patterns will emerge and may resemble a trend, but cannot

be used for anything beyond mass generalizations.
…behaviour in chaotic systems may be perceived as
unpredictable. Periods of inactivity may be punctuated by
sudden change, apparent patterns of behaviour may disappear
and new patterns unexpectedly emerge. Such behaviour
emerges in complex systems. This chaotic behaviour does not
indicate a lack of order. Rather, the order is difficult or impossible
to describe in simple terms and requires complex narrative description.

McBride, 2008
EMPHASIS ADDED
 Systems Theory

  Entropy = disorder
  …double negative…

  Negative entropy = increased order (not as much disorder)

  Companies work towards negative entropy by promoting

openness & feedback
  Feedback can be positive (amplifying) or negative (dampening)
Chaos describes a system that is predictable in principle but unpredictable in practice.
Although the system follows deterministic rules, its time evolution appears random.

“Chaos”, Scholarpedia 2009

 Sources

Beinhocker, E. (2000). Strategy at the Edge of Chaos. McKinsey Quarterly, 1-17.

McBride, N. (n.d.). Chaos Theory and Information Systems (pp. 1-13, Tech.).
Leicester, UK.

McBride, N. (2005). Chaos theory as a model for interpreting information systems in

organizations (pp. 1-22, Tech.). Leicester, UK.

Wikipedia contributors. “Systems theory.” Wikipedia, The Free Encyclopedia.

Wikipedia, The Free Encyclopedia, 18 Jan. 2010. Web. 22 Jan. 2010.

Wikipedia contributors. “Chaos theory.” Wikipedia, The Free Encyclopedia.

Wikipedia, The Free Encyclopedia, 21 Jan. 2010. Web. 22 Jan. 2010.

Wikipedia contributors. “Chaos.” Scholarpedia. Scholarpedia, 26 Jan. 2010. Web.

26 Jan. 2010.
SYSTEMS & CHAOS
THEORY
For more, visit our CGT581 blogs:

www.brianfutterman.wordpress.com
www.srenick.com/blog

Brian Futterman & Scott Renick

"