t to point
out that many deterministic systems display a “sensitive
dependence on initial conditions.” Poincaré described this
concept in the following way: “It may happen that small
differences in the initial conditions produce very great
ones in the final phenomena. A small error in the former
will produce an enormous error in the latter. Prediction
becomes impossible.” For example, Poincaré pointed out
that the apparent lack of order seen in many astronomical
systems was actually not random or chaotic. Instead,
astronomers were just not seeing the small changes in initial
conditions that were leading to humongous differences in
the final phenomena that were being observed.
Later, in the 1900s, Edward Lorenz officially coined the
term Chaos Theory. Lorenz studied Chaos Theory in the
context of weather systems. When making weather
predictions, he noticed that his calculations were
significantly impacted by the extent to which he rounded
his numbers. The end result of the calculation was
significantly different when he used a number rounded to
three digits as compared to a number rounded to six digits. His observations on Chaos Theory in weather systems led to
his famous talk, which he entitled, “Predictability: Does the
Flap of a Butterfly’s Wings in Brazil set off a Tornado in
Texas?" In reference to this talk, Chaos Theory has also
been described as the “butterfly effect.”
Application of Chaos Theory
Chaos Theory has a lot to teach people about decision
making in complex environments. The mathematical
concepts used to understand physical systems are now
being applied to social environments such as politics,
economics, business, and other social sciences.[ii]
Although applying Chaos Theory to business settings IS
still in its infancy, social scientists describe the following
applications as useful when making business decisions.[iii]
Originators: Henri Poincaré (1854-1912), Edward Lorenz (1917-2008)
Keywords: order, chaos, complex systems, determinism, butterfly effect,
sensitive dependence on initial conditions, nonlinear dynamics, chaos
dynamics
References
[i] Oestreicher, C. (2007). A history of chaos theory.
Dialogues in Clinical Neurosciene, 9(3), 279-289.
[ii] Richards, D. (1990). Is strategic decision making chaotic?
Systems Research and Behavioral Science, 35(3), 219-232.
[iii] Chaos theory and strategy: Theory, application, and managerial implications
Strategic Management Journal, 15, 167-178. Please cite this article as: esthermsmth, "Chaos Theory,"
in Learning Theories, September 23, 2017,
https://www.learning-theories.com/chaos-theory.html.
Chaos theory suggests that spending a lot of time trying to predict the future of complex, non-linear systems may be better spent elsewhere. Instead of trying to predict long-term future outcomes, businesses should consider and plan for multiple possible outcomes.
Chaos theory reminds business owners that small changes in business practice can lead to huge changes in future outcomes based on the concept of sensitive dependence on initial conditions. Some business managers underestimate the possibility for large unexpected changes, and should reconsider their mindset on this matter.
Chaos theory assumes that there is order behind seemingly random events. Even though businesses may not be helped by making long-term future predictions, they can make short-term forecasts to help with business decisions.
Because of the complexity and unpredictability inherent in complex systems, businesses need clear guidelines for employees to follow. However, since sudden and drastic changes are bound to occur, business owners should be ready to adapt these guidelines as necessary.
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