Surfing the Edge of Chaos

Surfing the Edge of Chaos Rachel Nelson Anais Khalatbari Samual Lippmann

Introduction • Evolution of management thinking in the past 100 years ( S-curves) • Evolution of « strategic era » and the strategic concepts ( SWOT, Porter…) • Marshall: « theory of industrial organisation » : equilibrium model • Performance improvement

Introduction • « Complexity deals with a world that is far from equilibrium and is creating and evolving in ways that we cannot hope to predict » • « complex adaptive systems »: • Many agents acting in parallel • Generate multiple levels of organisation and structure • Vulnerable to death if not renewed • Anticipate the future and seasonal change

Introduction • 4 bedrocks principle of complexity : • At rick when in equilibrium (death) • Self-organisation : novel patterns, infinite variety, sum greater than the parts • Tend to move toward the edge of chaos • Weak cause and effect

Stable equilibrium = death • « for any systems to survive, it must cultivate variety in its internal controls » • Equilibrium = danger to successful established companies • Ex: darwinian process (natural selection)

Self organisation and emergent complexity • One consequence of emerging complexity is that you can not see the end from the beginning • Emerging complexity creates not one future but many

cha·os A condition or place of great disorder or confusion. cha·os 4: (physics) a dynamical system that is extremely sensitive to its initial conditions. A complex system. Chaos:

Articles: Diversification Key Element to Katsaki Enterprises • “By conventional business standards, Harry Cook rates as a curious sort of employer. When his workers leave him for better jobs elsewhere, he's delighted.”

Articles: Disruptive Technology Reconsidered • “In my opinion, the core of the definition of a disruptive technology is this: A disruptive technology is a technology that changes the bases of competition by changing the performance metrics along which firms compete.” • Erwin Danneels • When does a technology become disruptive?

“The Nature of Chaos in Business” • “The Nature of Chaos in Business offers answers to why such partnerships fail and how successful partnerships can be fostered through the complexity and supposed chaos of the situation. Based on models of complexity formulated and studied at the esteemed Santa Fe Institute, this guide demonstrates how complexity in business, as in nature, eventually falls into patterns. Through the recognition and use of these patterns, today’s businesses can leverage each other’s strengths into powerful alliances.”J. Garrett Ralls, Jr. with Kimberly A. Webb

Class Activity: • Form 4-5 groups: Yes, this can be chaotic, but eventually you will all stabilize into coherent, functional groups. • In these groups, think of either a company or product that caused chaos in the market place. • Explain, in relation to your example, how: • These companies/products took advantage of the equilibrium of the market. I.e.: they saw an opportunity that was not being filled • The innovation took place on the edge of chaos • Order/organization was established • You may substitute one of these subsections if you have an alternative piece of information about your example to share

Companies Who Have Used Chaos: • Ford: The Model T • Amazon: E-Commerce • Fed-Ex: Overnight Shipping

Resources: • “Publisher description for The nature of chaos in business : using complexity to foster successful alliances and acquistions / J. Garrett Ralls, Jr. with Kimberly A. Webb.” • http://www.loc.gov/catdir/description/els033/99020622.html • “Surfing the Edge of Chaos: The Laws of Nature and the New Laws of Business/Pascale, Milleman, Gioja” • http://www.randomhouse.com/catalog/display.pperl?isbn=9780609504093 • “Diversification key element to Kitsaki enterprises” • http://www.ainc-inac.gc.ca/nr/ecd/ssd/otm21_e.html • “Disruptive Technology Reconsidered: A Critique and Research Agenda” • Erwin Danneels • Special thanks to the House of Antioch for use of their film.

Surfing the Edge of Chaos