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BUSINESS BOOK SUMMARIES

Surfing the Edge of Chaos
The Laws of Nature and the New Laws of Business

By: Richard Pascale, Mark Milleman and Linda Gioja

Business Book SummariesSummary by Lydia Morris Brown, Business Book Summaries

According to Pascale, Millemann, and Gioja equilibrium is considered a good thing because it is associated with balance. It occurs in nature when the components of a biosystem are in sync. At the individual level, equilibrium occurs when an organism is able to live in its environment successfully and to meet its own needs with available resources. Then something occurs (e.g., a fire in Yellowstone Park or commerce on the Internet) and, abruptly, the environment is destabilized. Those things that have been dormant, such as the thicker-than-usual brush on the forest floor or unmet customer needs, suddenly ignite, changing everything.

On a small scale and in a short time frame, equilibrium can be desirable, but over long intervals and on very large scales, it becomes a problem. The environment is always changing, and sometimes the change is cataclysmic. Prolonged equilibrium dulls an organism’s senses and saps its ability to react quickly and appropriately in the face of danger. When long periods of stability lull companies into equilibrium, it is the equivalent of a death sentence.

However, not all living systems fall prey to equilibrium. The first reason has to do with the Darwinian struggle for survival. Looking at the competitive corporate landscape, it is apparent that new rivals constantly converge on the same market and fight relentlessly to obtain a better position on the economic food chain. No niche is safe. The second is the genetic diversity that comes as a result of sexual reproduction-homogeneity begets vulnerability, while diversity begets the ability to survive. When GE’s Jack Welch challenges each of the company’s business heads to hire people with e-commerce or other nontraditional backgrounds, and to come up with viable "destroy-your-business.coms" options, he is fostering this kind of diversity.

Humans have an important advantage over nature when it comes to disturbing equilibrium. Companies, as intelligent entities can, in theory, recognize danger and/or opportunity before the fact and mobilize themselves to take appropriate action. Moreover, human learning can be codified and passed on, via the social system, to future generations, making that knowledge a part of the "genetic structure."

Nonetheless, causing disequilibrium, by mobilizing this kind of adaptive intent, is not natural, especially for executives who have always been rewarded for their operational competence. But, what is unnatural within traditional frames of reference becomes sensible and accessible within the framework established by the principles of complexity.

  • Equilibrium leads to death. When a living system is in a state of equilibrium, it is less responsive to changes in the environment, which places it at maximum risk.
  • In the face of threat or compelling opportunity, living things move toward the edge of chaos. This leads to higher mutation and experimentation, which is, in turn, likely to lead to fresh solutions.
  • This awakening causes the components of living systems to self-organize, and new forms and routines emerge from the turmoil.
  • Because unforeseen consequences are inevitable, living systems cannot be directed along a linear path.
    Thus, they must be disturbed in a manner that comes close to the desired outcome.

This management model, based on the nature of nature, is not a metaphor of how human institutions operate, but it is how they operate in reality. Understanding this important distinction is tantamount to understanding that it is natural for corporations to behave like adaptive organisms and that to do otherwise is to beg for extinction. Thus, the natural model will thrive and persist over Newtonian traditions because the marketplace insists that it be so and because it is more closely akin to what human beings really are and to how they relate to their environment.


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