1. Surfing the Edge of Chaos
Mandy Culver, Kristina Swartwout, Siva Murugesan

2. Strategy at the Edge of Chaos
New concepts in Management Thinking follow 4 stages
Introduction
Acceleration
Acceptance
Maturity
The stages go through a quick transfer rate with new ideas constantly emerging about the “best” strategy

3. Strategy at the Edge of Chaos
Strategic concepts are the threshold of management theory
SWOT
Five forces
Competitive advantage
TQM
JIT
These are the concepts that are the most widely used and accepted, but they cannot always be used in conjunction with one another and do not readily adapt.

4. Strategic Initiatives often Miss
Appropriate strategic responses do not always happen fast enough
“best” concept changes
Today’s markets are not in a static equilibrium
Markets and organizations are instead creative, evolving, and difficult to predict and control.
The “best” concept changes before management or the organization can adapt
We must have a strategic concept that will have a level of renewal and adaptation that will create successful execution

5. Complex Adaptive Systems – 4 tests
Agents acting in parallel
Continuously changing “building blocks” and creating new levels of organization and structure
Wind down over time if they are not replenished with energy
Pattern Recognition
Anticipate the future
These systems will recognize a pattern and use that pattern to predict the future and anticipate change

6. 1. Complex Adaptive Systems are at risk when in equilibrium.
Stable equilibrium equals death.
Equilibrium is often tempting – it hides in strong values, close-knit social systems, and operating systems.
Natural selection prevents death for all
Authentic diversity is key to preventing death
Science of Complexity has given us 4 principles
Stable equilibrium = death; so a system must cultivate variety
Example is yellowstone not allowing nature to use one of its internal controls of forest fires. This prevention of variety by the park caused a devestatingly large and hot fire that could have been prevented with the use of internal controls.
We are drawn to equilibrium and stability, and the more comfortable we get with it, the less likely we are to respond to change.
If you don’t adapt to change, you will die off

7. 2. Self-Organization and Emergent Complexity
Natural Equilibrium
Emergent Complexity
Simple creative breakthroughs lead to complex innovations
Example: wheel automobiles
You cannot see the end from the beginning
Many futures
Living-systems Approach
Focus on the individual area of the business, rather than top-down directives
If left alone, systems will merge toward natural equilibrium
Emergent complexity – a few patterns will create infinite variety, but systems will always settle down to a few or more orderly states.
Consequence of emerging complexity is that you can’t see the end from the beginning because complexity creates many possible futures, not one
Handle emerging complexity by focusing on individual areas
-what this network sees
-what stresses it is undergoing
-what is needed to unleash the potential

8. 3. Edge of Chaos
Move toward edge of chaos when provoked by a complex task
Positive and negative feedback systems should both be excited
Creative destruction characterizes the hazards near the edge of chaos
“The biggest single threat to our business today is staying with a previously successful business model one year too long” –Tim Mannon, HP

9. 4. You can’t direct a living system, only DISTURB it.
Weak cause-and-effect linkages
Small and isolated changes can have huge effects, while large changes may have little
Coyote population example

10. Conclusion
Complexity makes the strategic challenge more understandable
Understanding the complexity and adaptability of organizations argues for broadening the traditional strategic approach