Complexity Theory and Strategic Change: an Empirically Informed Critique*
| Author | K. Houchin,D. MacLean |
| Published date | 01 June 2005 |
| Date | 01 June 2005 |
| DOI | http://doi.org/10.1111/j.1467-8551.2005.00427.x |
Complexity Theory and Strategic Change:
an Empirically Informed Critique
*
K. Houchin and D. MacLean
w
Curriculum Leader, Faculty of Business and Computing, Stevenson College Edinburgh, Bankhead Avenue,
Edinburgh, EH11 4DE and
w
Senior Lecturer, Department of Business and Management, University of
Glasgow, West Quadrangle, Gilbert Scott Building, University Avenue, Glasgow G12 8QQ, UK
Email: khouchin@stevenson.ac.uk [Houchin]; d.maclean@mgt.gla.ac.uk [MacLean]
We present a four-year ethnographic study of a public-sector organization and use
narrative to describe its development in terms of four complexity theory concepts:
sensitivity to initial conditions, negative and positive feedback processes, disequilibrium
and emergent order. Our study indicates that order emerges at the boundary between
the organization’s legitimate and shadow systems. We suggest that the underlying
dynamic leading to the emergent order is the need to reduce anxiety. Our findings cause
us to question the assertion that organizations are naturally complex adaptive systems
producing novel forms of order. We propose an alternate view that in social systems,
equilibrium-seeking behaviour is the norm; such systems can self-organize into
hierarchy. We draw attention to some of the difficulties we found in applying
complexity-theory concepts to a social system and conclude by advocating the
development of complexity theory through the incorporation of insights from
psychology and social theory.
Introduction
This paper uses complexity theory to help our
understanding of the development of specific
organizational characteristics in a newly formed
quango. In the last decade or so complexity
theory has been advocated as a way to help
understand organizational change and innova-
tion. Much of the literature promotes the theory
(Anderson, 1999; Colado, 1995; Stacey, 1995).
Organizational examples of how it is applied in
practice are not so frequent (Brown and Eisen-
hardt, 1997; Pascale, 1999; Shaw, 1997; Stacey,
2000). This article helps to fill that gap by
describing how key concepts of complexity
theory can be used to explain how order develops
in an organization. To contain the research within
manageable proportions, we limited our study to
four complexity-theory concepts: sensitivity to
initial conditions, negative and positive feedback
processes, disequilibrium and emergent order.
We have seen the development of different
approaches to complexity theory; however, these
four concepts are common to them all. The
research tells a story, the development of
AYTAG, a new regulatory quango, during its first
four years, and the order that emerged in it. One
of the authors worked in a key change-agent role
to bring about the unification of a diverse group
of people into a fully functioning organization.
She gained deep insights into the actions of senior
managers and staff as the organization developed
its identity through the emergence of patterns of
behaviour, which took the AYTAG away from
the order it originally set out to establish.
In this paper we offer the suggestion that
organizations can be considered complex recursive
systems rather than complex adaptive systems.
*
The authors are grateful to Dr MacIntosh and Dr
Mayer of the Department of Business and Management,
University of Glasgow, and to two anonymous re-
viewers for their helpful comments on an earlier version
of this article.
British Journal of Management, Vol. 16, 149–166 (2005)
DOI: 10.1111/j.1467-8551.2005.00427.x
r2005 British Academy of Management
We highlight the circularity of complexity-theory
concepts when applied to human social systems.
We follow the lead of Stacey (2000) and argue
that when applied to human social systems,
complexity theory has to be informed by psy-
chology and social theory.
Theoretical approaches to strategy
The study of strategy is multifaceted. There are
strongly differing opinions on most key issues.
The word is generally used in different ways,
suggesting that implicitly we accept various
definitions, even though formally we tend to
quote only one. In order to compare and contrast
the many different perspectives, it is useful to use
a structured framework. Mintzberg, Ahlstrand
and Lampel (1998) and de Wit and Meyer (1998)
both offer structured ways of looking at strategy
formulation and implementation. Whittington
(1993) gives us a useful model. He describes four
conceptions of strategy: classical, evolutionary,
processual and systemic, to help us distinguish
different strategic approaches. Tensions exist in
the literature, for example between strategy
content and process, strategies deliberate (An-
drews, 1987; Ansoff, 1984; Porter, 1980) or
emergent (Mintzberg, 1988), internally ‘driven’
(e.g. the resourced-based view of the firm, core
competencies) and externally ‘driven’ (e.g. Por-
ter’s five forces). There are calls for a more
dynamic view of strategy, which are essentially
seeking the reintegration strategy content and
strategy process; both strategic decision-taking
and strategy processes are emergent phenomena
(MacIntosh and MacLean, 1999).
Whittington, Pettigrew and Thomas (2002)
have indicated that strategy research has to move
away from its modernist heritage and become
more creative, whilst Prahalad and Hamel (1994)
recognize that the strategy field needs a new
paradigm to break from the limitations of
existing mindsets. Complexity theory may be
the theory to do this, reconciling the essential
unpredictability of industries and organizations
with the emergence of distinctive patterns (Levy,
1994). It offers the prospect of an holistic
framework that pulls together into a coherent
whole literature, covering a number of views of
strategy, some of which do not currently com-
mand much attention from strategy researchers
(Stacey, 1995). Many of the ideas which complex-
ity theory brings are not new. It is a reframing
that is provoking a second look at many of the
ideologically rooted management ideas and sees
them emerge from the theoretical foundations of
complexity (Anderson, 1999).
Complexity theory and the concept of
emergent order
The study of non-linear dynamics has led to the
development of theories such as chaos and
complexity. These are now being applied to the
study of organizations. The terms chaos, com-
plexity, complex adaptive systems and complex-
ity science are increasingly found in the strategy
and organizational development and change
literatures. In this article we focus on one of
these, complexity theory, developed from the work
of Prigogine and Stengers (1984). It has been
applied to social systems and offered as a dynamic
systems approach to the study of strategy (Parker
and Stacey, 1994; Stacey, 1991; Tsoukas, 1998).
Complexity theory deals with the nature of
emergence, innovation, learning and adaption
(Battram, 1998). It has developed along an
interdisciplinary path, taking insights and inputs
from mathematics, biology, computing and eco-
nomics (McKergow, 1998). It can offer valuable
insights into management and strategic issues (see
e.g. Brown and Eisenhardt, 1997; Cilliers, 1998;
MacIntosh and MacLean, 1999; Stacey, 2000).
Different interpretations of the theory are
offered (see e.g. Anderson, 1999; Brown and
Eisenhardt, 1997; Smith and Gemmell, 1991;
Stacey, 1995) suggesting that it is not a coherent
body of work underpinned by a robust theore-
tical framework. Complexity theory concepts
have been used to create a metaphorical language
for describing organizational change and devel-
opment (Lissack, 1997). Two interpretations have
emerged that share the common theme of
emergent order, but differ in their basic assump-
tions about how order emerges. They can be
described as the rules-based and connectionist
approaches (Cilliers, 1998).
The rules-based approach has its roots in
artificial intelligence, abstract mathematical mod-
els and in linguistic concepts such as deep
structure. Self-organization leading to the emer-
gence of order is effected through the repeated
150 K. Houchin and D. MacLean
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