This document discusses how organizations must adapt to increasing uncertainty and complexity in the modern business environment. It argues that traditional management methods focused on efficiency and control are challenged by today's unpredictable conditions. To succeed, organizations need to embrace self-transformation, harness complexity, focus on the future through scenario planning, and develop the agility and responsiveness to change. Drawing parallels between living systems and businesses, it suggests organizations aim for the "edge of chaos" through disequilibrium, self-organization, and non-linear approaches rather than direct control.

1. Harnessing Complexity
Revisiting the Assumptions of Organizations in Uncertain Environment:
Today Business and Organizations must learn to deal with uncertainty and complexity related to
production and delivery of increasingly complex products and services in a rapidly changing
uncertain environment. At times this raises and challenges the thoughts concerning the
effectiveness of traditional management methods, which primarily lay emphasis on efficiency and
strategic planning and control. An organization in today’s context to be successful must learn to
adapt, change and be creative. Survival today requires that businesses to learn to bring about self-transformation
with a view to adopt and change to harness and gain from complexity and
uncertainty
The future is fundamentally uncertain, yet there are discernable directions, even if signs point to
conflicting and multiple outcomes. For some, uncertainty justifies not thinking about the future, while for
others the uncertainty is a source of opportunity. Without a concerted effort to be future-focused,
organizations run grave risks of diminished importance or even oblivion in the fluctuating world of the
early 21st century. Thinking about the future increases the likelihood of success in the long run.
Industrialized countries are in a process of fundamental and rapid change. The globalization of
firms and markets has been the driving force behind a radical transformation process, which has
gained momentum with the information technology revolution and the liberalization and
deregulation of markets.
Globalization can be seen as a new stage in the development of the world economy; thereby
implying the merging of national markets into one borderless world markets, where as
"internationalization" in this context would refer to increasing border-crossing economic activities.
This has resulted in a growing worldwide integration and interpenetration of economic activities. It
has created new bases of competition such as quality and time, besides intensifying price and cost
competition by eroding national monopolies or oligopolies,
All global players now must be able to produce high quality products on low costs, sell them at a
reasonable price and deliver them quickly and in time.
Easier said then done, meeting the above competition criteria is not enough there is growing need
for today; firms’ competitiveness to depends increasingly on their capability to continuously
innovate new products and processes that better meet the demands of customers. Innovative
companies enjoy first-mover advantages in the product market and hence are able to charge
When faced with shifting market dynamics, emerging competitive threats, strategic mergers,
technology breakthrough or governmental imperatives, organizations must learn to redefine and
transform themselves, by building new capabilities as they move ahead. Identifying and
responding to undefined opportunities demands a deep understanding of values and clear vision.
Given this mandate it is really tough to identify new opportunities, launch new ventures and build
them into viable propositions.
Many organizations long for more stability, however savvy enterprises recognizes that this present
challenging environment provides fertile ground for finding and exploiting opportunities provided

2. they know how to adopt and acquire ability to become responsive towards the environment in
which they compete and operate.
The pressures facing multi businesses firms are multifaceted and unprecedented. The demand is
for having organizations designed to adapt to uncertain environment backed with powerful
corporate strategy. With competition intensifying companies are now discovering that success
depends on the combined assets, skills and capabilities of the firm as whole and not silos.
As the market place changes and evolves, the task of delivering outstanding sustainable
performance has become highly complex. Increasingly it involves the organizational design of
management structures and control systems that drive the strategic change, capitalize on new
opportunities, and minimize risk all without hindering the company’s flexibility and creativity.
Organizations who focus solely on core competencies and existing efficient processes often
become loser and those who remain successful do so by managing short run excellence even as
they drive long term innovation and change. All this calls for leading change and organizational
renewal, building organizational architecture that drives both incremental and disruptive
innovations and technology.
If we look at as to what has changed in last few decades then we find that business today is being
impacted by multiple forces, economic shocks, atomization of markets and demands, borderless
commerce, advances in technology, a sense of acceleration and deconstruction of business.
Monolithic markets of nineties have now migrated to micro-segmentation, multiple competitors and
short product cycles. Size does not guarantee continued success nor does a good reputation. Of
the 500 fortune companies, only few have figured in the top 100 list. Clearly business is under an
unprecedented pressure to perform and the key to perform in this highly turbulent environment is to
anticipate the future and work towards it.
Responsiveness to change
“It is not the strongest, who survives, nor the most intelligent but those, most responsive to
change” – Charles Darwin. The need as of now is to focus on innovation and acquire ability to be
responsive to change, quality and process improvement, adoption of sound values and
management by fact and feedback. Ultimately the responsiveness will turn out to be the difference
between survival and demise. Rapid rates of change, an explosion of new insights from the life
sciences, and the insufficiency of the old machine model to explain how business today really
works have revolutionized management thinking.
One of the biggest rewards from harnessing the complexity is achieving high rate of delivery of new
products and services coupled with rapid adaptation to changing conditions. By investing in
complexity organization develop products and services through captive supply chain, the model of
Self organizing networks. Innovative products and services emerge as a result of a changing
pattern of collaboration of network of suppliers, both by competing and co-operating, each expert in
its own domain. Organizing networks of captive supply chain is characterized by long term
relationships between the network participants, but does not always require the same partners to
be involved always and thus offer flexibility in terms of need base association and separation for
the production and delivery of different products and services.

3. According to Richard Pascale if you want your company to stay alive and then try running it like a
living organism, where the first rule of life is also the first rule of business – Adapt or die.
Four Common Principles of Life and Business
1 Equilibrium is a precursor to death
When a living system is in a state of equilibrium, it is less responsive to the changes
that are occurring around it. It is most at risk when it feels most secure. Organizations
often aim for equilibrium, for a short period of time equilibrium is fine but prolonged
equilibrium lulls organization into comfortable routines.
“The Law of Requisite variety” states for any system to adapt to its environment, it
has to incorporate requisite internal variety to cope with variety from outside – the
environment. Too much equilibrium can be mortal, because when rules of the game
changes once the winning formula for any organization becomes their own worst
enemy. It is evident that when the world around is changing fast at unprecedented rate
for any organization maintaining equilibrium is a threat to its future existence.
Organizations need new kind of agility that enables them to reinvent. One of the recent
examples is the demise of one of the great commercial Banks, J.P Morgan
GE Capital Corp makes small acquisitions to revitalize their corporate gene pool. It
amplifies survival threats and foster disequilibrium to evoke fresh ideas and innovative
responses. Similarly companies like Capital One, Cisco and many more follow the
same pattern of creating disequilibrium.
2 When threatened or when galvanized by a compelling opportunity, living things
move towards the edge of chaos
This evokes higher levels of mutations and experimentation and is more likely to result
in fresh new solutions. The edge of chaos is a condition, not a location. The objective
is not chaos but the edge of chaos, where there are more mutations and more
possibility for serendipity. Think about deadlines. When a deadline is far away, not
much happens. As the deadline approaches we feel the kick and start working to fulfill
the same. If we wait for too long, and try to do too much in too short of time, we freeze
up and crash – in other words we have gone over the edge into chaos. So it is very
essential to understand the difference between the two, as one is constructive and
drive the passion to work and excel whereas other is destructive and kills the
motivation.
Reaching the location of edge of chaos calls for business associates to have charters
to innovate, visualizing themselves to the repository of ideas i.e. obsessed with
creativity. However one has to be cautious of not crossing the border and landing in a
location of complete chaos i.e. going off the edge completely. Allow associates to view
themselves as entrepreneurs who are responsible for identifying and creating new
business ideas and solutions. Does this means that the edge of chaos is a condition of
relentless discomfort? The answer lies in the fact that it is always uncomfortable when
an environment has aspirations or structures that are so strong that your discomfort
makes you constantly hone your competitive edge. On the other hand completely
chaotic systems and organizations are non productive and destructive by nature. So it
is of utmost importance to find the edge of chaos, where company can experience

4. upheaval but not dissolution. Edge of chaos should be viewed as situation for
productive change. We can think of company 3M that foster this culture across the
organization.
3 As living things move closer to the edge of chaos, they have a tendency to self-organize,
and new form emerges from the turmoil.
It refers to ‘Self-organization” and emergence which is a major source of innovation,
creativity and evolution. Organizations should be designed to exhibit self-organization
and emergent behaviors. Think of as to how Linux has spread. It represents an
organization of open system software programmers, who have managed to generate
software for servers that host almost more than 35% of the Web applications. These
programmers represent an organization of people, all independent, who come up with
effective and robust solutions in their software because it’s constantly being tested and
evolving in real time.
Another example of successful self-organizing system could be cited as of Tupperware
worldwide. Each dealer is self-employed and must recruit others to host parties, those
who excel, as a host becomes dealers and the most successful dealers become the
Team leaders. It is claimed that more than 80% of homes in USA alone have at least
one Tupperware product in them.
If you are attempting a fundamental reinvention of how your organization approaches
the world, then clearly you need that collective intelligence, so as to arrive at solutions
that all of the stakeholders have to say and can come to grips with.
The way we manage organization will increasingly lays it foundation on living systems.
In fact an organization is a living system, once we get the foundation of how living
things work then the idea like self directing teams will become part of a fundamental
set of beliefs which states very clearly that in this era of change, we must enroll the
entire organization in discovering the way ahead.
Chaos is not the random, lawless, and meaningless behaviour it appears to be.
Instead, chaos is stable globally and unpredictable locally
4 Living systems cannot be directed along a linear path.
Unforeseen consequences are inevitable. The challenge is to learn how to disturb
them in a manner that approximates the desired outcome and then to correct the
course as the outcome unfolds. Unforeseen consequences are inevitable. The real
challenge is to disturb them in a manner that approximates the desired outcome.
Disturb, don’t direct means that we must rethink our old notions of social engineering
within the companies. Leaders must change their outlook of preconception that their
job is to make hierarchy perform. Today’s leader must remember that they need to
design organizational structures that are adaptable to change – self-reorganizing.
They all need to understand that in living systems, things happen that they can’t
predict, and once they do, then those events can set off avalanches with
consequences that they could have never imagined.
Reorganizing for Emergence

5. At this point of discussion we can conclude that business doesn’t unfold in a predictable, linear
manner, so we need to carefully think upon the rules, principles, inferences that we can draw that
most apply to this hyper turbulent and dynamic environment where nothing is certain. If we analyse
the above statement carefully then it simply implies that success of an organization in futre
depends on its ability to plan the business scenarios well in advance and accordingly reconfigure
its resource base with reference to participants of its value chain.
We can think of no concrete solutions however one can frame certain basic guidelines and they are
enumerated as follows:
1 Design, don’t engineer
2 Discover, don’t dictate
3 Decipher, don’t pre assume
Evolve design principles that disturb, but don’t direct. People often rely on social engineering to
create and enforce the rules, so it is better to design rather to dictate. As events unfold, figure it out
the effects – things that could never be predicted, but that need to be considered mainly because
outcomes can’t be dictated they have to be discovered as and when they happen. Once outcomes
start emerging you can’t dictate the fastest solution everywhere. You need to Decipher, and not pre
suppose, and this calls for creating a design for an organization that allows a community to lean
from itself, to come up with its own solutions to its problems. And then to have restraint not to try to
impose those solutions on every other community in the name of efficiency as each living system
has unique DNA pool and the same cannot be replicated exactly. Organizations are living systems
having their own gene pool and hence will have different approaches and styles of dealing with
uncertainties prevailing in the environment in which they compete and operate. Through self-organization,
the behavior of the group emerges from the collective interactions of all the
individuals. Often individuals if follow simple rules, the resulting group behavior can be surprisingly
complex and remarkably effective. Organizations that will last for long need to certain attributes
such as Flexibility, Robustness and Self organizing. We need to think today’s organization as self
directing living entity where role of leaders is to provide enough fertile ground where self
awareness and realization leads to intrinsic motivation, creativity and innovation which are rules of
the games of the new knowledge based economy.
In our today’s world of fast changing markets, evolving competitors and technologies, there is a
constant need to keep revising and updating knowledge and information about possible markets,
customer needs and technical possibilities – PLAN THE SCENARIO.
When I refer PLAN THE SCENARIO then I mean to think about alternative descriptions or stories of
how the future might unfold. Scenarios compile information about divergent trends and possibilities into
internally consistent images of plausible alternative futures. Scenarios are designed to systematically
explore future challenges and opportunities and aid in strategy development. In the process, they often
provoke the imagination, raise fundamental questions, make explicit our deeply held values, and stretch
our worldviews. Scenarios are not predictions of the future, as there are NO future facts. Rather,
they encourage people to think about how to navigate successfully across the different circumstances
that might be encountered. Scenarios can expand our ‘field of view’ and help people to see possible
threats and opportunities that would otherwise have remained hidden.

6. Scenarios are an investment in learning. A set of several significantly different scenarios helps
“bound the uncertainty” of the future so that organizations can systematically plan for future
contingencies and clarify their vision of the future they prefer. Scenario thinking is real l and not the end
product, but merely a powerful tool.
Organization can’t afford to imagine and design products and services which they feel might
succeed, thereby organize a system to produce and deliver the same –the efficient frontier.
Imaging about products and services that have customer appeal forces organizations to explore
the possibilities and decide accordingly (Creativity), followed by strict execution of what has been
decided to gain maximum advantage of efficiency in operations (Mechanical and Economic
optimization.), both are opposite qualities required.
Imagination and creativity thus must precede efficiency of execution. Role of creativity and ability to
explore the possible scenario will be the deciding factors of success. Exploration and experiment
means developing ability to tolerate “failure” and being open to new thoughts and ideas to harness
the true benefits from complexity by developing long term social relationship among the
participants of value chain.
Imperatives for succeeding in Uncertain World can thus be cited as
Corporations will have to develop a new dynamic approach to strategy formulation - collaborative, drawing
on key signals from all quarters, and constantly evolving in the light of new circumstances” Leaders of these
corporations will seek to build resilience and flexibility into the very fabric of the organization, by developing
a set of core capabilities”.
Corporations who succeed in the future will be those whose leaders remain steadfast in the face of
uncertainty, and who have the qualities to manage change effectively” Organization must plan their
scenarios for future and accordingly plan to allocate resources.
In order to arrive at what you do not know, you must go by way of ignorance.
In order to possess what you do not possess, you must go by way of dispossession.
In order to arrive at what you are not, you must go through the way in which you are not
Readings
Richard Pascale “Surfing the Edge of Chaos”
Kevin Kelly “New rules for the new Economy”
Allan M Webber “How Business is lot like life”
Jeffrey Goldstein “Self- designing organizations”
James Moore “Advent of Business Ecosystem”
Tapscott, D. Digital Economy. Promise and Peril in the Age of Networked Intelligence
McGraw-Hill, New York.
Teece, D. “Profiting from Technological Innovation: Implications for Integration,
Collaboration, Licencing, and Public Policy”,
Harper The Competitive Challenge: Strategies for Industrial Innovation and
Renewal.
Prahalad, C. and G. Hamel
"The Core Competence of the Corporation," Harvard Business Review,
Eliasson, G. “The Knowledge-Based Information Economy“, in Eliasson, G

7. Key Terms:
A “Disruptive Innovation” is a successfully exploited product, service or business model that significantly
transforms the demands and needs of a mainstream market and disrupts its former key players. Mainstream
markets do not initially appreciate its set of performance attributes, highly rated by niche market customers.
Mainstream market customers as well as competitor’s value different performance attribute sets and
therefore view the innovation as substandard.
Atomization Defined as the disintegration of an industry chain into ever smaller segments and
niches, atomization is also visible in the computer industry, among others.
Author: Prof.. Vinod.Kr.Sharma – Additional Director – Jagran Institute of Management - Kanpur