RESEARCH
Chaos theory:
Attractors, strange attractors and
organizational decision making
Michele Vincenti, MA, MBA, C.Mgr.
Organizations exist as structures that are continually
challenged with external stimuli that test the boundaries
of established strategy, culture, policy and procedure.
These functioning organizational structures can be
oriented towards attractor or strange attractor states
that either absorb and dampen external stimuli and
return to equilibrium, or embed these stimuli and
achieve another level of development, yet stay within a
recognized path trajectory, respectively. Strange
attractors are unique from other phase-space attractors
in that one does not know exactly where on the attractor
the system will be. Within the science and theory of
chaos, we have the concept of feedback.
Feedback is the process by which system outputs
return as inputs; this information is then used to adjust
the process, similar to proportional–integral–derivative
(PID) controllers used in engineering systems. Within an
organizational setting, external feedback is given only
for two reasons: to acknowledge conforming
performance or to provide stimuli that may adjust
organizational processes according to some requirement.
By receiving feedback from an external source,
organizations can compensate accordingly and maintain
a state that is stable and familiar, yet adjusted
somewhat, to the feedback. The transition from
attractor to strange attractor is the difference between
settling into a constant, predictable equilibrium, and
continually seeking another trajectory that constantly
seeks to find this stability (equilibrium). Using a
metaphor we can say that at the edge of chaos we find
a new temporary equilibrium for the system. With
increased complexity and the decay of clear causal
relationships, even the most rigid organizational plans
can succumb to the inability to maintain an attractor
state, falling into a stable, yet effectively long-term
unpredictable strange attractor state that may
(predictably) spiral out of control.
The concept that a small change creates complex
behaviour is more visual if we use the famous butterfly
concept illustrated by Edward Lorenz. Lorentz had
shown that the future state of the system was very
sensitive to the initial conditions used for the calculation,
Summer 2012
CANADIAN INSTITUTE OF MANAGEMENT / INSTITUT CANADIEN DE GESTION 27
Dr. Matthew Jelavic, C.Mgr.
and even a deterministic system could be inherently
unpredictable over the long-term. With reference to
Lorentz's strange attractor, the famous statement on
chaos says that the flapping of a butterfly's wings in
Tokyo can cause a tornado in Texas. A mathematical
rounding error can lead to wide variations in the final
product over successive computations. The importance
of how a small error can create a very significant change
is part of the study on the fractals. In his paper, the
mathematician Benoît Mandelbrot explains fractals,
using the famous question “how long is the coast of
Britain?” His answer was “it depends”. It depends on
the measurement unit we use. The paper examines the
coastline paradox: the property that the measured
length of a stretch of coastline depends on the scale of
measurement. In fact, we can empirically understand
that the smaller the increment of measurement, the
longer the measured length becomes.
These concepts hold equally true for subtle changes
made within an organization, at various levels, leading
to multiple bifurcation points and the consequences of
those changes having an unpredictable result. Although
these systems are fundamentally deterministic, they are
not easily predictable, and this concept of chaos has
important implications for management application.
Lorenz’s model is essentially saying that because of the
interaction of multiple systems on each other, the non-
linearity results in unpredictability in the long term.
However, the unpredictability doesn’t mean that the
system is producing random events. What chaos theory
is saying is that there is order in the universe, visible
through the strange attractors’ shapes, but we cannot
understand yet the reasons why shapes show geometric
regularity. The reason why the system is unpredictable in
the long term is that we never know all of the
interactions occurring. This principle applies to all
systems regardless how small they are and, of course,
business organizations are no exception. However, an
important distinction has to be made between the terms
‘chaos’ and ‘randomness’. A randomness example has an
erratic behaviour and no path can be determined. A
chaotic behaviour, if analyzed in more detail, can reveal
28 CANADIAN INSTITUTE OF MANAGEMENT / INSTITUT CANADIEN DE GESTION
order and lead to short-term predictability.
Complex systems often have no discernable pattern
that can be observed by casually analyzing them. Within
complex organizations, decision-making at all levels sets
forth a cascade of events that influences other events
and diverge at multiple bifurcation points which test
existing strategies, culture, policies and procedures.
These existing strategies, culture, policies and procedures
can maintain the functioning of an organization within
an attractor state or, depending on the level of change,
can take an institution (for good or bad) into a strange
attractor state of situation-to-situation compensation
without ever finding final equilibrium; just a cascade of
ongoing stable variations. Change must be planned in
order to bring a system at the edge of chaos (the next
bifurcation), and not left to randomness. The system
must be viewed as a whole when changes are applied;
understanding that a change, even if small, can influence
the whole system, positively or negatively. Looking for
clues far away from the symptoms of any organization,
you will be amazed on what you can find to correct or
direct your organization in the path you choose.
Using an example, a simple shift of the water cooler
to a more central location within the administrative
offices of your organization could influence productivity
to be measurable on its financial statements. It will take
a very keen eye to recognize that the location of the
water cooler or the transfer of a certain administrative
assistant or junior engineer to another department was
the flapping wings of the butterfly. Management
through holistic analysis and multifaceted, multi-criteria
data acquisition and forecasting (not just relying on
financial results or budgets) will allow the organization
RESEARCH
to set forth operational and strategic initiatives that
reflect the inherently chaotic nature of management.
Look for feedback from sources not directly close to what
you think the problem is. Use the nonlinear approach
that creates the strange attractors. Use feedback
constantly, and more frequently. Make the feedback
process a regular part of your everyday business. Ask for
it and provide feedback as many times as possible.
The system is larger than what it seems and its
continuous change will create resiliency. The
organization will become ready for change because we
make it a constant inherent aspect of the system.
Nietzsche once said “what doesn’t kill us makes us
stronger”, and, after all, in nature dynamic stability is
maintained through struggle for survival. By viewing the
entire organization at once and connecting all aspects of
the organization through network analysis, the manager
is in a better position to see the intricate relationships
that can shape the trajectory of the organization.
Michele Vincenti is a Certified Management Consultant (CMC) and the
founder of Alvana Business Consulting Inc. in Vancouver, BC. He has
more than 25 years of experience in consulting in the areas of Change
Management, Strategy and Wealth Management. He consults
internationally and he is near completion of his PhD in Human
Organizational Systems. He teaches at international universities and he
holds an MBA from Royal Roads University and an MA in Human
Organizational Systems from Fielding Graduate University.
mvincenti@AlvanaBusinessConsulting.com Phone: +1 (778) 968-6084
Dr. Matthew Jelavic is a Professor within the School of Science and
Engineering Technology at Durham College and Adjunct Assistant
Professor within the Faculty of Business and IT at the University of
Ontario Institute of Technology. He holds a Doctorate in Business
Administration from the Grenoble École de Management and a Master's
Degree in Management Sciences from the University of Waterloo. Dr.
Jelavic possesses over 16 years of experience in the field of engineering
and management within private industry, academia and consulting
practice.

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Summer 2012