Chaos Theory and Its Benefit for Today's World

Postgraduate Certificate in Audit Management & Consultancy

When management theorists talk of 'difficult times ahead' they seem to be talking of market conditions, macro and micro, which are rapidly evolving, an environment which is unpredictable, uncertain, and uncontrollable. A kind of chaos. Thus, if the world is becoming a place which is forever changing, and organisations find that they cannot plan for the long run, or predict the market forces which they will 'inevitably' be subjected to, then can management theory provide guidance and inspiration which will help them survive this chaos?

Well, 'the true objective is to take the chaos as given and learn to thrive on it. The winners of tomorrow will deal proactively with chaos, will look at the chaos per se as the source of market advantage...Chaos and uncertainty are (will be) market opportunities for the wise...It is with that in mind that we must proceed." (Peters, T. (1987), Thriving on Chaos: Handbook for a Management Revolution. Vermont, Preface)

In other words, one approach is to treat chaos as a positive force, a situation of opportunity to not only survive but to evolve and thrive as an organisation. This essay will look at Thomas Peters' work in Thriving on Chaos (1987) (and any references to Peters' work in this essay are in regards to only this work of Thomas Peters). It will summarise the main points of his theory there within, and evaluate the extent to which it may or may not provide useful guidance and inspiration to deal with change and uncertainty (Ironically, Peters published this work around the time of the stock market crash in 1987).

Thomas Peters came up with 5 areas of management which would, he claims, "constitute the essence of proactive performance in our chaotic world" (Peters, T. (1987), Thriving on Chaos: Handbook for a Management Revolution. Vermont, p36). Within these areas Peters presents 45 prescriptions which he defines as an "urgent call for radical reform" (Peters, T. (1987) Thriving on Chaos: Handbook for a Management Revolution. Vermont, p37). Although Peters states that all his 'prescriptions' should be followed, he also suggests that a starting point is to "skim any of the five sections and pick the areas that appear most relevant to your current competitive situation" (Peters, T. (1987), Thriving on Chaos: Handbook for a Management Revolution. Vermont, p40). So, Peters is offering us a starting point of our choice for his revolution. He is offering us Guidance and inspiration.

In fact, it may be wise to set some parameters for what would constitute inspiration and guidance. Guidance, in the context of management theory, can be thought of as a theory or set of ideas which provide direction or advice as to a decision or course of action. Inspiration, therefore, could be where these ideas compel us to a particular emotion or action. The essay will now explore the 'five sections' and look for the guidance and inspiration that they may or may not provide.

Creating Total Customer Responsiveness: that is, those organisations which will survive are the ones which are successful in creating new markets through the development of new products or by constantly transforming current products. This is to be done with knowing the customers needs, preferences, tastes and wants, and can only be achieved by being continuously in harmony with the customer. Furthermore, it is essential here that the organisation and its members prescribe to this orientation towards customer responsiveness. So, it is essential then that the combination of a focus on sales and service becomes an integral part of the fabric of an organisations character.

This sounds rather much like common sense, the old adage that the customer is always right, or, that the customer always comes first. The difference here is that the approach prescribed by Peters is proactive, as opposed to reactive, to consumer demands. In fact Peters prescribes that organisations should "add at least ten value-increasing 'differentiators' to each product or service every 90 days" (Peters, T. (1987), Thriving on Chaos: Handbook for a Management Revolution. Vermont, p50). Thus, there seems a need for organisations to be, or become, more and more dynamic, and ever evolving in their customer focus, relationships, and consumer products and services.

It does seem, however, too prescriptive to be able to achieve all this for all organisations, all of the time. There are probably real (as opposed to theoretical) factors which would prevent such policy or approach from being fully implemented. For example, the lack of expertise, lack of funding, and lack of capital resources are all factors which may act against the achievement of the overall customer responsiveness goal. An organisation may have all the will in the world, but not the means to realise that will.

The assumption is that members of the organisation will embrace this new customer responsive ethos. This may never happen and so the prescribed approach would be futile. However, for an organisation which may find itself in a position of losing

touch with its customers and falling behind its rivals, Peters' proactive approach to customer focused management strategy here could provide some inspiration. It is left to the skill of the implementer of the new approach to infuse this vision in to the character of the organisation. Thus, belief in the customer responsive ethos is essential. Through his 10 prescriptions (Peters, T. (1987) Thriving on Chaos: Handbook for a Management Revolution. Vermont, p49, figure 3), Peters guides the organisation on how to implement the strategy. To either overhaul its approach to its customer, or to amend its approach as appropriate.

Pursuing fast Paced Innovation: Here, Peters prescribes that constant and continuous, fast paced, innovation is required in order to adapt to the ever changing, and chaotic environment. Peters does stress, however, that tolerance of expected failure is required. It may seem that in the business world failure implies financial loss. A huge loss, however, in reality may not be acceptable, and so, failure may in fact lead to a situation where "no further experiments will be made" (Handy, C. (1992) Understanding Organizations. Penguin. p315). However, Peters does make his approach attractive. He prescribes that organisations should "invest in applications-oriented small parts" (Peters, T. (1987), Thriving on Chaos: Handbook for a Management Revolution. Vermont, p194). This guidance is practical, and smacks of low risk, and low cost experiments, qualities which