Page 71 - Complexity Perspective_Neat

'attractor'; in business terms a common interest that is viable
to pursue. The manifestation of chaos is typically in a crisis, where a
leader is faced with multiple interacting problems at the same time.
The risk is accelerating decline as the collapse is amplified by feedback
loops and resources disappear under a storm of negative
news. The leader must impose control to quell the chaos, manage the
feedback loops, and then pick out the different problems.

That said, at moments of chaos restrictive formal structures are
severely weakened allowing for the possibility of reinvention and
creativity. As was famously said in American Politics following the
2008 financial crisis, 'a crisis is too valuable to waste'.

For most formal organizations, falling over the edge into chaos
typically means a loss of organizational coherence often accompanied
by the rise of internal coalitions of self-interest and a loss of shared
vision. This internal collapse requires the assertion of some new,
commonly accepted agreement around which to organize. The chaos
theory metaphor here is an attractor. The process of transformation
becomes the creation of the new vision (attractor) and the alignment
of the agents in the system around it. Such a process is described
here.
Why is The Edge of Chaos Idea Interesting?

The idea of Edge of Chaos is a metaphor for a well-recognized problem
in a business organization: the tension between organizing to explore
or organizing to exploit!
Discussed most notably by Cyert & March (1963), the explore-exploit
problem is linked to the short-term - long-term profit problem. Profit
maximization (desired by investors in the immediate term) requires
operational optimization; operational optimization eliminates the
'slack' required to allow exploring the context for new opportunities.
Conversely, devoting resources to exploration to ensure long-
term survival reduces short-term profits; exploration also requires
different people with different personalities and will lead to a different
culture versus exploit-thinking. This is also known as the
Ambidexterity Problem: being able to do both.

The link to crisis happens when the context shifts. In a firm organized
to exploit a crisis can destroy its viability. A firm organized to explore
should survive but could also fail to settle to exploit any reinvention.

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