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Speed Review: Surfing the Edge of Chaos

Speed Review: Surfing the Edge of Chaos

Speed Review: Surfing the Edge of Chaos

The Laws of Nature and the New Laws of Business

by Richard T. Pascale & Mark Millemann

Building on the concept of the organization as a “complex adaptive system” — that is, as a living organism, not a machine — the authors show how the rules of nature are reflected in the world of business.

Review

How the Laws of Nature Reflect the Laws of Business

In Surfing the Edge of Chaos, consultants Richard T. Pascale, Mark Millemann and Linda Gioja add their voices to the growing literature devoted to the concept of the organization as a "complex adaptive system" - that is, as a living organism, not a machine.

Four Laws
In this work, the authors argue that business and nature share four fundamental laws:

  1. Equilibrium is death. When a living system is in a state of equilibrium, it is less responsive to changes taking place around it.
  2. Innovation usually takes place on the edge of chaos. In the face of threat or galvanized by an opportunity, living things move toward the edge of chaos - a condition in which experimentation is rampant, and new solutions are uncovered.
  3. Self-organization occurs naturally. As this experimentation and discovery is taking place, the components of the living systems self-organize, creating new forms that emerge from the turmoil.
  4. Living systems can only be disturbed, not directed. Living systems can't be directed along a linear path. Unforeseen circumstances are always going to appear. The best approach is to "disturb" the system in the direction of the desired outcome.

The authors use in-depth case studies of six organizations - Sears, Monsanto, Hewlett-Packard, British Petroleum, Shell and the U.S. Army - to illustrate the impact of these four laws on corporate success (or failure).

For example, the first law refers to the importance of disruption for both living organisms and companies. The authors use the problems of Sears in the 1980s and the devastating forest fires at Yellowstone National Park in 1988 to illustrate the danger of equilibrium, whether for a company or for a national park.

Why You Should Avoid Equilibrium
Imagine an organization with a strong culture built around strong values and a well-synchronized operating model that fulfills the needs of its happy customers. Such a company, write the authors, is in a state of equilibrium. "Balance, or equilibrium, occurs in nature when the components of a biosystem are in sync," the authors explain. "At the individual level, equilibrium occurs when an organism matches the requirements of its environment while meeting its own needs with the available resources."

What's So Bad About Equilibrium?
At first glance, a state of equilibrium would seem to be a highly desirable state for either the organism in nature or the organization in business. The problem in both cases, however, is that during a prolonged case of equilibrium, coping mechanisms for dealing with dangers and crises become rusty. "The environment in which an organism (or organization) lives is always changing," write the authors. "At times it is turbulent. Prolonged equilibrium dulls an organism's senses and saps its ability to arouse itself appropriately in the face of danger."

In other words, organisms and ecosystems need disruption, write the authors.

For example, write the authors, forest fires are beneficial in nature because they periodically disturb the equilibrium of the forest. Specifically, forest fires clear out the underbrush that grows on the forest floor. Without such periodic fires, the underbrush can build up to dangerous proportions, as 1988's Yellowstone Fire demonstrated.

At Yellowstone National Park, forest fires had been quickly extinguished to prevent injury to visitors. The National Park Service was keeping Yellowstone in an unnatural state of equilibrium. As a result, however, the brush and debris on the forest floor kept building ... until the park exploded into multiple forest fires after a lightning strike.

The same false sense of security and complacency can infect a corporation in equilibrium. Sears' decades-long history of success created a culture of compliance and acquiescence. To resist or question the directives of a boss, for example, was considered anti-teamwork. Compliance was also encouraged by Sears' extremely lucrative pension programs and career moves planned every 18 months (if the boss agreed).

In the meantime, no one at Sears noticed (or at least responded to) changes in the retail environment in the United States, including encroachment by aggressive competitors such as Wal-Mart. As a result, the once dominant retailer with the long and storied history found itself battling for its business life.

Only when CEO Arthur Martinez took over and began disrupting the equilibrium of the company (by, for example, closing down Sears' catalog business), did the company start to emerge from its slumber.

The concept of the organization as a living organism rather than a machine is gaining popularity with consultants and academics. The thought-provoking, in-depth case studies in Surfing the Edge of Chaos might help convince more managers to approach their own companies from this new perspective.