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Complexity Theory and Strategic Change: an

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British Journal of Management, Vol. 16, 149166 (2005)

DOI: 10.1111/j.1467-8551.2005.00427.x

Complexity Theory and Strategic Change:

an Empirically Informed Critique*
K. Houchin and D. MacLeanw
Curriculum Leader, Faculty of Business and Computing, Stevenson College Edinburgh, Bankhead Avenue,
Edinburgh, EH11 4DE and wSenior 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 organizations legitimate and shadow systems. We suggest that the underlying
dynamic leading to the emergent order is the need to reduce anxiety. Our ndings 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 diculties 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 specic
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 innovation. 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 Eisenhardt, 1997; Pascale, 1999; Shaw, 1997; Stacey,
2000). This article helps to ll that gap by
describing how key concepts of complexity
theory can be used to explain how order develops
*The authors are grateful to Dr MacIntosh and Dr

Mayer of the Department of Business and Management,

University of Glasgow, and to two anonymous reviewers for their helpful comments on an earlier version
of this article.
r 2005 British Academy of Management

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 dierent
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 rst
four years, and the order that emerged in it. One
of the authors worked in a key change-agent role
to bring about the unication of a diverse group
of people into a fully functioning organization.
She gained deep insights into the actions of senior
managers and sta 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 oer the suggestion that
organizations can be considered complex recursive
systems rather than complex adaptive systems.

150

K. Houchin and D. MacLean

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 psychology and social theory.

(Stacey, 1995). Many of the ideas which complexity 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).

Theoretical approaches to strategy

Complexity theory and the concept of

emergent order

The study of strategy is multifaceted. There are

strongly diering opinions on most key issues.
The word is generally used in dierent ways,
suggesting that implicitly we accept various
denitions, even though formally we tend to
quote only one. In order to compare and contrast
the many dierent perspectives, it is useful to use
a structured framework. Mintzberg, Ahlstrand
and Lampel (1998) and de Wit and Meyer (1998)
both oer 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
dierent strategic approaches. Tensions exist in
the literature, for example between strategy
content and process, strategies deliberate (Andrews, 1987; Anso, 1984; Porter, 1980) or
emergent (Mintzberg, 1988), internally driven
(e.g. the resourced-based view of the rm, core
competencies) and externally driven (e.g. Porters ve 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 eld 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 oers 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 command much attention from strategy researchers

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, complexity, complex adaptive systems and complexity 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 oered 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 economics (McKergow, 1998). It can oer valuable
insights into management and strategic issues (see
e.g. Brown and Eisenhardt, 1997; Cilliers, 1998;
MacIntosh and MacLean, 1999; Stacey, 2000).
Dierent interpretations of the theory are
oered (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 theoretical framework. Complexity theory concepts
have been used to create a metaphorical language
for describing organizational change and development (Lissack, 1997). Two interpretations have
emerged that share the common theme of
emergent order, but dier in their basic assumptions 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
articial intelligence, abstract mathematical models and in linguistic concepts such as deep
structure. Self-organization leading to the emergence of order is eected through the repeated

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Complexity Theory and Strategic Change

application of simple rules. Connectionist approaches to complexity have neural networks of
interconnecting nodes as their basis, and are
supported by more interdisciplinary groups
comprising neuroscientists, psychologists and
engineers. The networks have no central control
in the classical sense. Processing is distributed
over the network and the roles of the various
components change dynamically (Cilliers, 1998).
Change and transformation are dependent on the
capacity of the network to learn by changing the
nature and number of the nodes in the network,
the pattern of connections between them and the
strength of these connections (Wood, 1999).

Applying complexity theory to strategic

organizational development
Although there are dierent complexity theory
interpretations, a number of common concepts
are observable. These include the concepts we are
using in this study: sensitivity to initial conditions, the presence of disequilibrium and feedback processes, all of which interact to produce
novel forms of order. These concepts form the
theoretical basis for our study.
Complexity theorists see organizations as
complex adaptive systems. They argue that one
of the major insights the theory brings to strategy
theory is that an organization can be viewed as a
non-equilibrium system (Parker and Stacey,
1994). According to complexity theorists such
as Stacey (1996) the concept of the organization
moving from one stable state to another as a
result of change is awed. Rather, complex
adaptive systems are non-linear and highly
sensitive to initial conditions. The activities,
events, routines, behaviours and human interactions existing in an organization at a specic
point in time form the initial conditions for the
emergence of future order. Some of these will be
amplied through feedback and others dissipated
through the system. Non-linearity can result in an
initial condition having a disproportionate eect
on an emergent outcome of the system as a
whole. Apparently insignicant transactions
within organizations can lead to large organizational changes (MacIntosh and MacLean, 1999).
Complexity theory is a departure from the
more traditional approaches to strategy, which
downplay the unpredictability of the long-term

evolution of organizations. Unplanned action is

inevitable and not necessarily a result of ignorance or incompetence. Complexity theory makes
it dicult to avoid confronting the fundamentally
paradoxical nature of management, in which
managers must employ a rational loop within a
shared mental process when they are close to
certainty, and use other processes that generate
instability if they are to bring about organizational transformation.
Strategy theorists commonly use negative feedback models, in that action is informed by the
perceived need to close the gap between desired
and actual behaviour. Action tends to be
corrective and/or in accordance with a prior
designed order. Such models, for example
Porters (1980) industry structure and value-chain
analysis, promote the continuation of regularity
and stability that are equated with success.
Complex adaptive systems, in contrast, self
organize. Self-organization is the natural result
of non-linear interaction, not of any tendency of
individual agents to prefer or seek out order.
Such systems are driven by positive and negative
feedback processes that are found in the dierent
organizational systems. The formal rules and
planning systems making up the legitimate
organizational system govern day-to-day organizational behaviour. They use negative feedback
processes, allowing the organization to carry out
these activities in a rational and stable manner
and push it towards equilibrium. The informal
system (Schein, 1992) or organizational shadow
system (Egan, 1994) is where positive feedback is
seen to operate, which takes the organization
away from its desired state. There are interactions
in the shadow system where no one is in control,
but patterns of controlled behaviour appear, leading to emergent order that profoundly inuences
the actual evolution of the organization.

Complexity theory limitations

Applying complexity theory to strategy and
organizational development is not without its
problems. The variety of denitions, the doubts
expressed as to whether it is a theory, theories or
a framework and the dierent meanings given to
the terminology associated with complexity are
all problematic (Morel and Ramanujam, 1999).
Complexity theory has developed out of the

152
study of physical systems. It is being applied to
social systems in keeping with the tendency of the
social sciences to follow the physical sciences.
Gersick (1991) has shown us how understanding
similar theories from dierent research domains
can suggest thoughtful insight for others. Others
ask if it is reasonable to apply theories that have
their origins in the natural and biological sciences
to social organizations, without necessarily taking into account fundamental dierences between
the physical and social sciences (Chia, 1998;
Goldstein, 2000; Reason and Goodwin, 1999).
Complexity theory concepts have been developed
by studying systems such as insect colonies,
chemical phase transitions and physiological
systems, in which the distinctive nature of the
human being is not an issue. The temptation is to
take ndings from these systems and apply them
directly to human systems. Gemmill and Smith
(1985) for example, use the human immune
system as an example of a dissipative structure,
and then oer dissipative structures as a model
for organizational transformation. Beinhocker
(1999) states that, as both biological evolution
and business evolution are complex adaptive
systems, we can employ tools that help us
understand biological evolution to help us understand the evolution of business strategy.
Many of the results cited in the complexity
literature are the outputs of computer simulations and not rmly grounded in empirical
observations (Goldstein, 2000; Rosenhead,
1998). McKelvey (1997, 1999) argues that we
need a systematic agenda linking theory development with computational-model development
and the testing of model structures with realworld structures. It is dicult to see how such
models can account for the intricacies of human
behaviour that include the role played by
emotion, the options humans have to interpret
and adjust or break rules, and the fact that
humans belong to many systems which may or
may not have easily dened boundaries. Our best
use of complexity theory for understanding
organization development may be as a metaphor
giving us new insights, rather than trying to
search for common principles across a variety of
very dierent systems (Morgan, 1997; Tsoukas
and Hatch, 2001). However, even that has to be
treated with caution; given dierences between
human beings and, say, phase transitions in
physio-chemical systems, metaphorically derived

K. Houchin and D. MacLean

assertions about the natural uidity of organizations have to be exposed to empirical scrutiny if
they are to be made the basis of an alternative
conception of organization and management.
The fact relatively few academically robust
empirical organizational studies are reported in
the literature is a concern for us. Case studies
undertaken by Brown and Eisenhardt (1997) and
MacIntosh and MacLean (1999) are examples of
trying to move complexity theory onto a practical
footing, but both are relatively short-term studies. Neither explored in sucient detail such
issues as the eects of dierent social settings on
the rms they were studying. Stacey (1996), Shaw
(1997), Grin, Shaw and Stacey (1998) and Seel
(2000), give examples of consultancy assignments
where they have applied complexity-theory concepts to organizational-change initiatives. They
describe work that they did to create situations to
increase connectivity and positive feedback so
that novel forms of order could emerge. They do
not say how eective their interventions were
over the longer term. Relatively new and
insuciently tested theory is advocated as a
sound approach to strategic change. According
to McKelvey (1999) without a programme of
experimental testing complexity applications . . .
will remain metaphorical and if made the basis of
consulting agendas . . . are dicult to distinguish from witchcraft (p. 21).
A major motivator for this paper is to increase
the empirical examples of the application of
complexity theory to strategic organization development. Our study is of a complete organization over a four-year period, allowing much more
opportunity to explore emergent order. Of
critical importance to this paper is human
reaction to change, such as the desire to avoid
anxiety, and the impact this has on human
behaviour. During the research process, Author
One was a contemporaneous participant in the
development process rather than a researcher or
consultant dipping in and out of the organization. This allowed us to access psychological
attributes such as defence routines, which require
close observation over a long period in order to
be identied and surfaced. As a result, our
conclusions dier considerably from authors of
previous empirical studies in the assumptions
they make about the application of complexity
theory to social systems. Our research has
allowed us to highlight the shortcomings in

153

Complexity Theory and Strategic Change

using some of the complexity theory concepts, as
well as to question the ease with which a theory
developed from physical systems can translate
readily to the social world of human systems.

The organization studied and the

purpose of the research
AYTAG is a quango and its business is environmental regulation. Formed in 1996, it combined
River Purication Boards (RPBs), industrialpollution inspectors employed by central government and some environmental-health functions
from local authorities. Author One joined
AYTAG a month after its formation as training
and development manager. In the reports produced about how the new organization should be
structured, in the rst corporate plan and in
statements the corporate management team made
to sta, there were clear indications of the future
order that the organization wanted to achieve.
AYTAG set out to be an organization with:
(1) wide spans of control;
(2) an emphasis on employee exibility;
(3) empowered managers, delegation to its lowest point;
(4) an emphasis on value for money;
(5) a strong centre to knit the business together
out of the organizations predecessors;
(6) a reputation as an inuencer in environmental matters as well as a regulator.
The authors interest in complexity theory and
the organizational situation oered the opportunity for case-study research. The purpose of the
research was to study the organization through
the concepts of complexity theory identied
earlier, to gain insight into the order that emerged
in AYTAG and why it was similar to, or dierent
from, what was initially desired. The research
would allow us to take a view on the usefulness of
complexity theory to our understanding of
strategic organizational development.

begins with exploratory research. A suitable

starting point is a single case study (Brown and
Eisenhardt, 1997; Eisenhardt, 1989; Parkhe,
1993; Yin, 1993). Tsoukas and Hatch (2001)
suggest that a narrative approach indicates and
supports the logic of complexity theory. The
dominant frame of reference for research in
management and strategy is quantitative. This
informs the goals and methodologies of researchers. From a complexity-theory perspective
reductionist approaches to researching organizations are likely to produce misleading conclusions. Stacey (2000) deals with this issue by
arguing for a reexive methodological position to
seek out the patterns of behaviour that lead to
emergent self-organizing processes. Such a position is consistent with complexity theory, with
insights regarding the research coming from the
broad principles of the theory itself.
As an employee of AYTAG, Author One was
not able to stand outside the organization as an
objective observer. This made it almost impossible
to use a positivist or post-positivist methodology.
Observations would be unavoidably observerdependent (Weick, 1979). According to EasterbySmith, Thorpe and Lowe (1991) the role of
the researcher as an employee is appropriate when
the researcher needs to become totally immersed,
and experience the work or situation rst-hand, as
sometimes it is the only way to gain the kinds of
insights sought. The authors took an ethnographical approach. Such an approach favours local,
historically contextualized social inquiry and is
sensitive to the qualities of emergent phenomena.
There were elements of participant inquiry, as
Author One was a participant in the development
of AYTAG. Deep insights were gained as Author
One had an ocial role in a legitimate control
system while simultaneously participating in the
shadow system. Theory developed from deep
insights gained from working in both systems is
more accurate and more appropriately tentative
because the researcher must take into account the
intricacies and qualities of the particular context
(Pettigrew, 1997).

The research methodology

The research process
We have highlighted the fact that complexity
theory is relatively untested in social systems.
Parkhe (1993) argues that the development of
theory should follow a research route which

Data gathering covered a four-year period from

May 1995 to August 1999. For information
about the setting up of AYTAG in the year prior

154
to its becoming operational in April 1996,
historical data were collected. The remaining
data were collected as they were produced. Data
collection was a real-time activity from May 1996
to August 1999. The majority of the sta in
AYTAG were professionals who used research
information on a regular basis. This meant that
there was a great deal of easily available explicit
information, which made secondary-data collection straightforward. The authors interest in
complexity theory ensured that both tacit and
explicit data were collected (Stacey, 2000; Seel,
2000). The main method of data collection was
participant observation. This allowed the authors
to examine situations rst-hand from participants points of view and observe what people
actually did, rather than reporting what people
said they had done. Author One kept a personal
diary. She had access to operational, policy and
administrative sta at all levels of the organization through her work activities. During the four
years, informal conversational interviews were
conducted with all of AYTAGs managers
(approximately 150) and semi-structured interviews were conducted with three members of the
corporate management team.
During the course of the research a great deal
of data were gathered. Hand-collected data such
as interview notes and the personal diary were
transcribed. All the data including corporate
plans, emails, management-team reports, workshop outputs and transcribed, hand-written data,
were put in date order.
Once the data were in date order, mind
mapping (Buzan, 1991) and process mapping
(Langley, 1999) were used to group the data
around individual themes. As a result of this
exercise the dominant themes were:
 the Business of AYTAG;
 the initial structure and recruitment of managers and sta;
 the Budget crisis and subsequent restructuring;
 business planning in AYTAG;
 the Science Reviews;
 human-resource initiatives;
 development of environmental strategies.
Each of these was written up as a narrative
account telling a chronological story of what
happened in AYTAG. The narrative accounts
were then used to map events and actions against
the key concepts of complexity theory sensitiv-

K. Houchin and D. MacLean

ity to initial conditions, disequilibrium, feedback
and emergent order. There was continuous
checking back and forth between the original
data and the narrative accounts. In the following
sections is a discussion of the ndings, ordered in
reference to the key concepts of complexity theory.
Complexity theory is relatively new; the
research path is less well-dened, so it may be
perceived as high risk and overly subjective, with
knowledge produced that is not necessarily
generalizable. Throughout the data collection
and analysis, validity procedures were used to
minimize bias. These included a variety of data
sources, exposing ndings to others for comment
(Yin, 1993) and maintaining a continuing awareness of the collusive processes that can occur
particularly when a researcher is also an employee (Gilmore and Krantz, 1985). These procedures
diminish some of the distortions which can occur
in qualitative research. The perspective from
which the research conclusions are derived can
then be communicated more clearly.

The development of AYTAG

When AYTAG was formed there was a strong
vision for the organization contained in its
strategic objectives and mission statement. Together they expressed the new state which the
organization wanted to reach. Its complex initial
conditions inuenced the way in which it moved
forward. So many of its sta came into the
organization over a very short period of time
not having worked together before and with so few
policies and procedures to guide them. Once
AYTAG became operational, disequilibrium-creating actions occurred, positive and negative feedback processes operated which altogether produced
the actual future state of the organization in
August 1999 when this research ended. This process
is described in diagrammatic form in Figure 1.

Initial conditions in AYTAG

AYTAG was a public body established by a
government that favoured the centralization of
services. It took over services previously provided
by public-sector organizations that were more
directly accountable to the local community. Its
formation was disliked and opposed by locally

155

Complexity Theory and Strategic Change

Figure 1. The emergence of order

elected representatives. AYTAG was required to

operate within a framework set by central government for managing its business. Initiatives such
as eciency scrutinies and key performance
indicators had to be implemented.
All the members of AYTAGs Main Board
were appointed by the Secretary of State. A chief
executive, a former civil servant was appointed in
August 1995 and a lean structure with wide
spans of control was decided in September
1995. Five directorates were formed. Two,
Corporate Services and Environmental Strategy,
were based at the head oce. The other three
were regional operational directorates. The ve
directors, the senior and the middle managers,
had all worked in predecessor organizations.
With the exception of head-oce sta, most
employees had worked in former River Purication Board oces.
The day-to-day operational business of AYTAG was carried out in the three Regions, in
science laboratories or in multidisciplinary environment-protection teams. Corporate Services
contained the support functions; nance, personnel, management services, information technology and public aairs. The Environmental
Strategy Directorate developed policy in relation

to environment protection, sponsored research

and promoted the non-legislative aspects of
environment protection.
Over 500 employees came from 63 dierent
predecessor bodies and around 150 were directly
recruited. AYTAGs transferred employees retained their terms and conditions and rates of
pay. The RPB sta had worked in small
organizations with relatively undierentiated
structures. Local-authority sta came from organizations larger than AYTAG with clearly
dened central-support departments. These former organizations were hierarchically structured
and paternalistic in their cultures. The nature of
their regulatory work was reected in an aversion
to risk and a dependence on rules and procedures. On transferring into AYTAG, many
managers found themselves managing interdisciplinary teams and much more was demanded of
them. Multi-skilled teams of professional environmental-protection ocers were seen as critical
to the development of a one-door approach to
which AYTAG expected to move, as well as
ecient and eective use of sta resources.
To facilitate the integration of employees,
Introduction Workshops were delivered in
1996 and attended by every employee. The

156
workshop facilitator commented in his report in
October 1996 that although sta were enthusiastic and committed to making AYTAG successful,
their public-service background did not prepare
them well for the changes they were going
through, nor for the relatively unstructured work
environment that was currently in place. A
comment by an environment-protection team
leader continues this theme: we feel like the rump
of a benign dictatorship after the dictator had been
got rid of. Floundering, unable to take decisions.
The nature of AYTAGs work meant that it
employed a very high proportion of graduates
who, in their previous organizations, had jealously guarded their professional expertise. The
front-line professionals coming into AYTAG,
and the managers that led it, were inexperienced
in organizational mergers and their aftermath. In
1996 there was enthusiasm for environmentprotection work throughout the organization. It
was this enthusiasm that held the organization
together in its early life.

Disequilibrium conditions in AYTAG

When looking at disequilibrium in AYTAG we
identied six themes which might be seen as
facets (or drivers) of uidity or instability. Their
range meant that every employee was aected in
some way during the period of the research. The
rst of these was the implementation of largescale sta-development programmes such as the
Introduction Programme, multi-skilling training
for environment-protection sta and a management development programme for all managers.
The second theme was the high level of
recruitment activity. There were several reasons
for this: an initial shortage of professional sta,
internal moves as individuals changed jobs to
increase their salaries, new regulatory duties
coming to AYTAG that increased its overall
numbers and high levels of temporary appointments in administrative positions. Implementation of human-resource management initiatives
was the third theme. Following on from organization-wide job evaluation and pay and grading
exercises, new job descriptions, pay structures and
terms and conditions were all introduced in
October 1998. An appraisal and development
scheme was implemented from March 1997. The
rst attempt to develop this into a performance-

K. Houchin and D. MacLean

related pay scheme in 1998 was rejected by over
80% of employees. A revised scheme was implemented without union agreement in March 1999.
Senior management change was the fourth
theme. One director, two senior environmentprotection managers and a regional scientist left.
These departures were used as opportunities for
restructuring, primarily aecting environmentprotection teams and corporate support sta.
During the research period for example, the
personnel department had four directors and the
nance department three.
The 1997 Budget crisis was the fth theme. In
March 1997, AYTAG recognized that it was
unable to meet its tax bill and would be
considerably in debt at the end of its rst
nancial year. Discussions on funding continued
until August when additional money was secured
from central government. The budget crisis led to
the demise of the Corporate Services Directorate.
At their meeting on 23 July 1997, the Corporate
Management Team agreed that the three Regional Directors and the Environmental Strategy
Director would have the responsibilities of
Corporate Services distributed between them,
except for nance. Part of the central-government
agreement for giving additional funding was the
recruitment of a nance director.
While gathering data for this research we
became aware of a mismatch between what was
formally stated as wanted and what actually
happened. This formed our sixth theme. A diary
extract from 27.6.97 gives a avour of this. J said
he had spent six months with hydrology heads
developing a strategy for ood risk. He said it
was a requirement for AYTAG to do it. I went
to the CMT and they threw it out saying we dont
have to do it. I dont know why they employ
experts if all they do is ignore them. The
mismatch between saying and doing caused
conicting priorities, arising most frequently between policy advisers and the regions as operational managers did not want to release resources
to enable government-led strategy implementation.
The variety of the disequilibrium incidents was
considerable. They aected every employee to
some extent. Employees could nd themselves
either prevented from receiving training or
spending too much time on training courses as
a result of large and sudden uctuations in
budgets. They could nd themselves working
long hours because of recruitment shortages,

Complexity Theory and Strategic Change

reporting to a rapid succession of line managers
with dierent ways of working or carrying out
tasks that they were told were important only to
nd that their work came to nothing.

Feedback processes in AYTAG

Feedback processes acting against achieving the
desired new state
We identied feedback processes acting against
achieving the desired new state which we grouped
into seven themes.
(1) The moderation of expressed plans. Many
initiatives introduced in AYTAG failed to be
implemented in full, such as multi-skilling
environment-protection ocers, and the impetus to achieve them tended to die away.
(2) Continuation of traditional ways of working.
There were decisions taken and actions left
unchallenged that indicated to employees
both overtly and covertly that they could
maintain their old ways of doing things. For
example, inherited hierarchical structures
remained and budgets were not devolved.
(3) Perceived lack of a cohesive Corporate Management Team. One of the themes that
continued throughout this research was
employees views of the corporate management team, who were seen as not working as
a team, having disparate views, each member
working to their own agenda.
(4) Actions weakening a corporate approach.
These actions included abolishing the post
of corporate services director and splitting
the sections he managed between other
directorates, creating a corporate planning
team chaired by a regional director and
failure to recruit new information technology
sta to the Corporate IT department.
(5) Non-acceptance of ownership and responsibility.
The Introduction Programme run in 1996
highlighted concerns relating to lack of trust,
ownership of issues and an inability to take
action through a perceived lack of authority.
These themes continued to be raised throughout the period of this research.
(6) Relationships are more important than tasks.
The consultants running the 19981999 management-development programme reported
that in AYTAG the maintenance of relationships between people was more important

157
than carrying out tasks required if the
organization was to achieve its stated strategic aims. An example is the slow implementation of management information systems.
When new work came to AYTAG, organization-wide systems were installed. Inherited
local systems for capturing environmental
data had been developed by managers who
moved into AYTAG. They were incompatible and could not be used on an organizationwide basis. However they were not replaced.
(7) Running away from Bad News. On a number
of occasions, bad news had to be given.
When this happened the giver of the news
distanced themselves from it either by taking
leave or arranging for more junior sta to
inform others. A high-prole example of this
was the Chief Executive going on holiday in
April 1997 after sending all sta an email
announcing the size of the budget decit.

Feedback processes working towards achieving the

desired new state
There were many feedback processes taking place
in AYTAG that encouraged the organization to
move forward to new ways of working. We
identied six themes in these feedback processes.
(1) Support for a strong centre and a corporate
approach. The initial structure of AYTAG with
its two central directorates, one controlling
administration and the second directing strategy and policy formulation and implementation provided the basis for a strong centre.
(2) Encouraging a sense of belonging to the
organization. One of the aims of the 1996
Introduction Programme was to act as a
unifying inuence to help sta feel part of the
new organization. AYTAG also encouraged
a sense of belonging through its communication systems: all sta had access to email and
an intranet. There were regular social and
environmental newsletters, and well-attended
sporting and recreation clubs.
(3) Encouraging sta empowerment. Throughout
the period of this research, sta were
encouraged to communicate their ideas and
opinions, and take on more responsibility
through participating in working groups,
project teams and attending corporate-training and development events.

158

K. Houchin and D. MacLean

(4) Encouraging sta with broader skills and

knowledge bases. The need to change skill
bases was recognized very early for environment-protection sta and scientists, all of
whom had previously worked only in one
environmental medium. Training and development programmes were provided to all sta
to achieve the changes required to skill bases.
(5) Developing the management process. The
majority of AYTAGs managers had come
from small organizations where they had
managed others with the same technical
skills. In AYTAG they were increasingly
required to act dierently. Team leaders
managed multifunctional teams. Managers
divided their time between their operational
work and contributing to the corporate
development of the organization.
(6) Increased focus on delivering the business.
During the research period, AYTAG became
much more business-focused through its corporate and business planning systems, through
target-setting, thorough its sta appraisal
schemes and through its external communications. The communication of its work to
industry and to the public at large continued
to expand. High-quality external communications were considered essential to its business.

Emergent order in AYTAG

Statements made and actions taken at the start of
AYTAG tell us about an organization that had
decided it needed a strong centre to unite its
members and drive it forward one that wished to
be exible and empowering, seeking to inuence as
well as regulate. Early actions taken to promote
this way of working included the design of the
organizational structure, the Introduction Programme and the work done by the Corporate

management team thinking through the culture

they wanted in the organization. The subsequent
development of management competences, the
management-development programme and multiskilling training also helped take the organization
towards a new equilibrium. However, over four
years, the changes that these initiatives were meant
to bring about did not take root and the organization did not reach the published desired state. Table
1 briey describes the order that did emerge.
From wide spans of control to hierarchical
organization
In 1996 AYTAG had a at structure, with no
more than three layers of management between
the chief executive and front-line sta. The only
exception to this was in its science function. From
the beginning of 1998, the chain of command
across the organization began to increase. Incremental structure changes in the operational
directorates and in central administration units
increased the layers of managers. Informal
hierarchical arrangements began to appear in
the policy teams. The reviews of the science
function brought little change and the inherited
organizational structures with their long chains
of command were retained. Over the period of
the research, AYTAG left in place hierarchical
structures that it had inherited, and acted to
increase hierarchy in areas where it initially had a
at structure. What emerged was a traditional
hierarchical organization.
From employee exibility to emphasis on
traditional professional specialisms
Two important interlinked initial conditions for
AYTAG were the skills and traditional careerdevelopment paths of its incoming sta. These
employees were skilled in well-dened, single

Table 1. Emergent order

April 1996 desired future state
The desired equilibrium
(1)
(2)
(3)
(4)
(5)
(6)

Wide spans of control

Emphasis on employee exibility
Empowered managers, delegation to its lowest point
Emphasis on value for money
Strong centre
Inuencer and Regulator

Actual future state August 1999

The new equilibrium
(1)
(2)
(3)
(4)
(5)
(6)

Hierarchical organization
Emphasis on traditional professional specialisms
Increasingly restricted managers, increase in bureaucratic procedures
Emphasis on cost reduction
Regional independence
Regulator target-driven

Complexity Theory and Strategic Change

media disciplines; their career development was
based around membership of single-discipline
professional institutes. Flexibility was very dependent on multi-skilling front-line sta and
building the condence and management expertise of the team leaders so that they could manage
multi-skilled professionals.
Early actions that AYTAG took to broaden
the skills base of its workforce did little to move
the organization away from its initial conditions.
The inuences of traditional working practices
remained strong, and they were reinforced
through delays to training programmes caused
by the 1997 budget crisis and the introduction of
new pay and grading structures in 1998, which
favoured specialists. The eects of incrementally
changing the structure, creating specialist teams,
reducing the number of managers and increasing
the number of single-discipline specialists all acted
as organizational-level positive feedback, taking
the organization away from its desired equilibrium. Interestingly, at the individual level, this
was manifested as negative feedback, as employees
sought to dampen-down organizationally sanctioned change in order to retain the individual
practices that they brought with them to AYTAG.
Three-and-a-half years after AYTAG became
operational, the skills base and working practices
of its scientic and environment-protection employees remained much the same. The organization had limited success in shifting from its initial
conditions; its workforce, with few exceptions, did
not become more exible. What emerged was an
organization with a workforce that retained its
traditional skill mixes.

159
behaviour was that the corporate management
team spent much of its time on non-strategic
issues and, as a result, was perceived as not giving
strong direction to the organization. In the
absence of direction, managers continued with
individual tacit actions to dampen-down change
and pursue a reversion to the conditions they had
known before AYTAG. As the organization
developed, managers freedom to operate was
gradually eroded. Budgets, for example, became
less devolved. The desire for empowered managers
lessened, and what emerged were managers
increasingly occupied in complying with procedures. Some felt very frustrated, while others felt
more comfortable, as they had disliked the lessstructured environment they had found themselves in when they joined AYTAG.
From value for money to eciency and cost control
Although value for money was regarded as an
essential aim for AYTAG, in reality it was never
pursued. The emphasis from the beginning was
on the negative feedback mechanisms of eciency and cost control. The yearly corporate
plans made minimal reference to value for
money, referring only to cost control and
eciency. It is likely that the organization
perceived value for money and eciency as the
same thing. The cost control and procurement
measures put in place were feedback processes
that prevented the organization looking for value
for money, and what emerged was an organization preoccupied with eciency.
From a strong centre to regional independence

From empowered managers to increasingly

restricted managers
Looking at AYTAGs initial conditions, we see
that most of its employees came from hierarchically structured organizations with managers
having limited freedom to take decisions. All of
AYTAGs managers came from such organizations, and were unfamiliar with other ways of
operating. The organizational structure implemented in April 1996 gave managers considerable
freedom, but they opted out of taking control.
They did not take decisions they could have taken.
Instead they passed them on to higher levels.
These actions were largely tacit and they created
individual feedback processes. One result of this

AYTAGs Centre was made up of two directorates Corporate Services and Environmental
Strategy. Directors and senior managers in
AYTAGs predecessor organizations who transferred into AYTAG were in powerful positions in
regional directorates. Prior to AYTAG, these
managers had had control of their administrative
and planning functions. From the beginning, the
regions were quick to complain and criticize the
centre. This criticism came to a head after the
1997 budget crisis, with the Corporate Services
Director taking the blame for it. The collective
power of the central administrative departments
was weakened by giving control of both the
department and of corporate planning to regional

160
directors. These changes took AYTAG away
from the desired equilibrium it was allegedly
attempting to reach.
Gradually it became acceptable for the regions
to do their own thing. Regional directors were
able to take independent actions such as restructuring and oering salaries outside personnel
guidelines. These actions continued to strengthen
the directorates at the expense of the organizations
centre. What emerged was an organization with a
weak centre, which was unable to oer direction,
and AYTAG failed to reach its desired new state.
From wanting to regulate and inuence to
regulator
The predecessor bodies making up AYTAG were
experienced in working locally in regulatory
activities. An initial condition for AYTAG was
the lack of experience of the members of its
corporate management team operating nationally
as inuencers. Non-regulatory matters were
drawn together into one policy section in the
Environmental Strategy Directorate. During
1996 this role began to be downplayed. Requests
to appoint an education ocer were turned
down. Two years later, the jobs of the employees
in this section were downgraded in relation to
policy sections covering regulatory functions.
Reference to AYTAGs inuencing role was
made in corporate plans. However by the time
the 1998/1999 plan was produced the organization was still stating AYTAG is also increasingly
seeking to develop policies to inuence the
approach of others implying that very little
development had occurred. In August 1997, when
the production of the corporate plan was put
under the control of a regional director, the
emphasis shifted to target-setting for the regulatory functions, but there were no targets for its
inuencing role.
Each year in the annual reports there was less
emphasis on reporting AYTAGs educating and
inuencing role. The way in which AYTAG was
funded made it dicult to increase spending on
non-regulatory issues. Increased grant-in-aid was
not available to fund non-regulatory activities so
they had to be met by reorganizing and
reprioritizing other activities, which AYTAG
did not do. AYTAG did not shift signicantly
away from its initial regulatory condition, and
what emerged was an organization that was

K. Houchin and D. MacLean

primarily a regulator with its inuencing role
underdeveloped.

The eects of anxiety on emergent order

For some employees the move to AYTAG was
exciting; for others it was an anxiety-inducing
experience and they took action to attempt to
reduce the anxiety they felt. The anxiety-reducing
measures had two aspects: rst, they were actions
taken in order to feel in control; second, they
were attempts to avoid conict. Anxiety-reducing
activity created individual negative-feedback processes, which attempted to bring the organization
back into a state of equilibrium as experienced by
individuals in previous organizations.
Negative feedback reduces connectivity between the elements in a system. AYTAGs
anxiety-reducing measures all gave rise to a
reduction in connectivity, as they progressively
reduced the quantity and diversity of interaction
between individuals. Initiatives in AYTAG gradually involved fewer and fewer people. Working
groups became smaller, training and development more localized. Such actions strengthened
anxiety-reduction. As a result, change initiatives
to bring about new ways of working and suitably
supporting styles of management were minimized
or died out altogether.

Order emerging at the boundary

When we looked closely at where order emerged
in AYTAG, we found that it was at the boundary
between the organizations legitimate and shadow systems. In this respect our work echoes that
of Stacey (1993, 1995, 1998), who has highlighted
the importance of this boundary. The legitimate
system tries to pull the organization towards a
new order; it is the source of stability. The tacit
processes of the shadow system, in contrast, are
the source of instability. In other words, the
boundary between stability and instability is the
boundary between the shadow and legitimate
systems.
AYTAG was sensitive to its initial conditions.
In the legitimate system, these were to do with its
formation, structure, remit and the appointment
of sta. In the shadow system there was a mixture
of anxiety and excitement. There were memories

Complexity Theory and Strategic Change

of a prior organizational life and pre-existing
networks some strengthened, others weakened
as a result of the positions key sta were given.
Disequilibrium was found in the legitimate system,
brought about by the expressed desire to create an
organization considerably dierent from any of its
predecessors. The shadow system of the organization was closer to a state of equilibrium, as there
was scope for individuals to retain old working
practices and networks. In the legitimate system,
negative feedback operated to drive the organization towards a new order. Feedback in the shadow
system was negative when viewed at the level of
the individual, as employees attempted to get back
to the way in which they worked previously. At
the level of the organization, however, that same
shadow-system feedback could be viewed as
positive, a source of instability, as it took the
organization away from its desired new state.
As AYTAG developed, what emerged was a
dierent organization from that which was
originally envisaged. Its published aims were
not realized. The former director of Corporate
Services made the comment after structural
changes following the 1997 budget crisis the
window of opportunity is shutting. Our niche
will be regulation. AYTAGs an immature
organization. When it settles it may be very
stodgy. What emerged was a hierarchical, regulatory organization, retaining traditional professional specialisms, rather than a exible, inuencing organization with broad-based professionals
and empowered managers.

Discussion
Earlier in this paper we briey commented on
existing strategy theory, suggesting that a more
holistic approach is required for the study of
strategic organizational development. We can
now examine how complexity theory enables us
to describe the development of AYTAG. It has
helped us create a rich description of its development and allowed us to make use of and
interpret a wide range of data within the one
framework. It has enabled us to take a holistic
approach to studying the organization, and to
include issues often ignored by the more traditional approaches.
Using key concepts of complexity theory to
describe the development of AYTAG has identi-

161
ed its emergent properties and provided an
explanation of why these properties developed in
the way they did. The emergent properties apply
to the AYTAG system as a whole. It is these
properties that shaped AYTAGs dynamics, which
in turn shaped its approach to strategic development. However, we also found in this study that
there were diculties in applying complexitytheory concepts to a social system. These diculties justify Chias (1998) and Goldsteins (2000)
comments on the need for circumspection in
attempting to transfer complexity-theory formulations from the natural to the social world.
A general view put forward by complexity
theorists is that instability in systems results in
positive-feedback processes dominating to bring
about change, and new or novel forms of order
emerge (Mitleton-Kelly, 1998; Prigogine and Stengers, 1984). Empirical organizational studies by
Brown and Eisenhardt (1997), Shaw (1997) and
MacIntosh and MacLean (1999) reect this view.
However, the present research, in contrast, shows
that destabilizing a social system such as an
organization does not inevitably lead to novel
forms of order. Although there were continuous
destabilizing activities, ranging from training programmes to a budget crisis, the order emerging in
AYTAG was very little dierent from that which
had existed in its predecessor organizations.
Calls for the creation of disequilibrium and
positive feedback to facilitate the emergence of
novel forms of order are based largely on the
study of complexity theory in physical systems
(Prigogine and Stengers, 1984). Social systems are
dierent from physical systems in their complexity. The rules that determine the interactions in
social systems are socially constructed, and are
not xed by laws of nature (Berger and Luckmann, 1966; Weick, 1979). Human agency can,
for example, alter the parameters and structures
of social systems (Levy, 1994). In a social system,
everyone has a psychological state, and this has
to be factored in when considering the behaviour
of that system. We found that negative individual-level shadow-side feedback leads to the
social system attempting to return to a previous
order. That same feedback is perceived as
positive at a higher level. Thus, when infused
with human issues such as memory and desire,
the role and nature of feedback, and the
distinction between positive and negative variants, become somewhat blurred.

162
Critical to our understanding of emergent order
in organizations is the role of anxiety and the
actions taken to reduce it by individuals and
groups (Stacey, 1993). Anxiety is present as a
general sense of unease. It is generated when
change is indicated or implemented and it is
found in the shadow system. Strategy theorists
in general focus their theories on the legitimate system. With the exception of Stacey (1993,
1995, 1998) and Shaw (1997), the shadow system
is largely neglected by them. In order to study it, it
is necessary to draw on theories that do not have
their roots in physical systems. Such theories
usually come from the behavioural sciences.
Destabilizing activities and actions taken to
reduce anxiety were continuing features of
AYTAGs development. Both can be traced back
to the organizations initial conditions. This
nding caused us to consider that the concept
of disequilibrium as described by complexity
theorists may be less helpful in facilitating the
emergence of novel forms of order in a social
system. Novel forms of order will not necessarily
emerge as a result of destabilizing events. We
need another way of visualizing the concept of
disequilibrium if it is to be helpful to our
understanding of the behaviour of complex
adaptive social systems such as organizations.
Complexity-theory researchers, for example
MacIntosh and MacLean (1999), applying the
theory of complexity to the analysis of social
systems describe disequilibrium as a dynamic
between stable and unstable states. We oer a
possible alternative view of disequilibrium in
complex social systems such as organizations.
As a result of this research we would like to
suggest that this dynamic can be thought of as
anxiety. Indeed, in such systems, disequilibrium
and anxiety can be considered synonymous. It is
the presence of anxiety that keeps a complex
social system in disequilibrium.
The causes of anxiety or disequilibrium are
found in the organizations legitimate system
which in AYTAG included changes to working
practices, reporting lines and organization-wide
development programmes. When organizations
make changes such as restructuring, merging,
shifting skill bases this causes anxiety levels to
rise or expressed in complexity-theory terms
causes disequilibrium in the system.
Anxiety is something that human beings try to
get rid of and they seek to replace it with the

K. Houchin and D. MacLean

equilibrium of comfort and security. Menzies
(1960) and Argyris (1992) are among the authors
who have written on how humans working in
organizations build defences against anxiety. The
natural tendency for humans is to seek equilibrium and this can be done by reducing anxiety
through conict avoidance, taking actions to
retain control and minimising change (Janis and
Mann, 1977). These activities give rise to
individually-driven negative feedback and reduce
connectivity between the individual elements in
the social system. Disequilibrium is then displaced as the system tries to regain equilibrium.
Actions to dampen-down anxiety that move the
organization towards an equilibrium position are
found initially in the shadow system; they are
usually tacit and at an individual level as they
were at rst in AYTAG (Egan, 1994).
All systems including social systems are subject
to constraints. Stacey, Grin and Shaw (2000)
draw on the work of Elias and Scotson (1994) to
introduce the constraints placed on group members in social relationships. Elias and Scotson
state that a basic social impulse is the creation
and maintenance of power dierentials. This
theme is picked up by Streateld (2001), who
argues that power is a constraint that excludes
some communicative actions and includes others.
Reducing connectivity between elements in a
social system results in an exclusion of some
communicative actions and so leads to power
dierentials. Power dierentials in organizations
are expressed as hierarchy.

Are organizations naturally complex

adaptive systems?
Authors such as Anderson (1999) and MitletonKelly (1998) argue that one of the major insights
that complexity theory brings to strategy theory
is that the organization can be viewed as a nonequilibrium system. As noted earlier, viewed from
this stance, the concept of the organization moving
from one stable state to another as a result of
change is awed. However, the present research
leads us to question this view. Our suggested
proposition is that disequilibrium is anxiety;
organization is a defence against anxiety, and
organizations thus tend towards stability. Paradoxically, though organizations can self-organize,
from the perspective of this case study when they

163

Complexity Theory and Strategic Change

do so, they tend to retreat from the very uidity
which enables self-organization. In the state
towards which they are attracted, they are not
naturally occurring complex adaptive systems such
as are studied in the natural sciences if anything
they are our defensive responses to such systems.
Our research ndings indicate that the natural
tendency of a complex social system is the
creation of equilibrium rather than novelty.
When disequilibrium is present in the form of
anxiety, the shadow system initiates the creation
and maintenance of power dierentials and selforganizes into hierarchy to reduce anxiety and
suppress novelty (Stacey, 2000). The desire to
reduce anxiety produces patterns of stability, rst
within the organizations shadow system. Such
patterns include the repetition of behaviours
which are present in an organizations initial
conditions. As these patterns stabilize they
become part of the legitimate as well as the
shadow system, and the drive back towards a
previously recognizable equilibrium is reinforced.
In AYTAG, what initially began as individual
actions, such as managers opting out of taking
decisions, resulted in organizational action that
took AYTAG away from having a devolved
structure with a multi-skilled, professional workforce, back towards a traditional, hierarchical
organization with single-discipline professionals.
In social systems, hierarchy is the result of selforganizing, and anxiety-reduction actions are
entirely natural emergent outcomes. The suggestion here that, in the absence of anxiety and
power dierentials, organizations would exist as
complex adaptive systems is tantamount to suggesting that organizations would exist in the absence
of the fundamental processes of organizing!
The concept of an organization as a natural
complex adaptive system may well be a myth. We
are suggesting that equilibrium expressed as a
desire for harmony and security is the norm in
social systems as they seek to avoid anxiety.
Complex systems made up of human elements
tend not to exist away from equilibrium. Such
systems are not pushed towards chaos when the
system is in disequilibrium. They tend to gravitate towards a previously experienced equilibrium position. This is the exact opposite of what
complexity theorists claim about living systems
(Brown and Eisenhardt, 1997; Pascale, 1999).
Nevertheless, this is what happened in AYTAG
as it tried to return to previous operating styles

that had been in place in its predecessor organizations. Stacey, Grin and Shaw (2000) and
Streateld (2001), in acknowledging that hierarchy
is an emergent property of organizations, appear
to be moving to a position which corresponds with
our observations that organizations stabilize over
time. However, rather than viewing organizations
as complex adaptive systems, following the lead of
Brans and Rossbach (1997), we can draw on the
work of Nicholas Luhmann (1982) and regard
them as complex recursive systems, continually
trying to reproduce themselves in the same way.
Our understanding from the study of living
organisms tells us that the majority only experience short-term survival. They do not adapt and
this is may also be true for organizations.

The circularity of key complexitytheory concepts

Tsoukas and Hatch (2001) argue that interpreting
the features of complex systems from a complexity theory perspective is dependent upon the
position of the interpreter. From our position, we
encountered problems in dening and trying to
separate dierent key complexity-theory concepts. There was a degree of circularity as initial
conditions, disequilibrium and feedback all appeared as facets of one dynamic. It was dicult
to dene what exactly is meant by initial
conditions. The actual circumstances created by
the formation of the organization such as its
designed systems mattered less than the preconditions that existed as memories. The latter
formed a legacy which dominated the initial
conditions. We found that connectivity drove feedback, which in turn inuenced connectivity. Working at the boundaries of dierent organizational
systems was essentially working on connectivity.
Anxiety produced connectivity changes which
altered feedback mechanisms. Anxiety-reducing
actions caused people to withdraw, which reduced connectivity and created negative feedback. This in turn further reduced connectivity,
so that connectivity and feedback appeared to be
dierent sides of the same coin. The unifying
phenomenon of anxiety was dierent from what
we expected from the complexity-theory literature. This may not have come to light previously,
as a result of there being relatively few examples
of empirically rich studies.

164

The need for complexity theory to be

informed by psychology and social
theory
This study of AYTAG shows that complexity
theory in its current form is only partially
successful as a device for describing organizational development and change. Our study has
highlighted limitations in using the concepts of
complexity theory to describe human systems.
We recognize there are many questions still to be
answered for the theory to be as useful as some of
its advocates would suggest. Unlike physical
systems human systems have histories that
cannot be ignored. They contain psychological
drivers and do not necessarily tend towards
chaos. The study of psychological drivers in
management writings on complexity-theory applications is underrepresented, with the exception
of the work of Stacey (1996, 2000) and those who
work closely with him (Streateld, 2001; Stacey,
Grin and Shaw 2000; Shaw, 1997). For complexity theory to be really useful to management
practice it has to move away from its reliance on
exemplars from natural-science systems and
embrace theories and principles from psychology
and social theory.

K. Houchin and D. MacLean

learning and defence routines and Menzies
(1960) study of social defences oer explanations
of how we attempt to limit change and remain
stable. This body of work and that of Hirschorn
(1990) and Kets de Vries and Miller (1994) on the
psychodynamics of organizations helps us gain
insight into why organizations stabilize. In the
strategy literature there are models and approaches which focus on a continuation or a
return to stability. Miller and Friesen (1984)
suggest that most organizations gravitate towards a design archetype and remain there for
a lengthy period of time. Greenwood and Hinings
(1998) propose that organizations use interpretive schemes to move along an organizational
track, which can help explain the absence of
change. Johnson (1988) writes about the persistence of cultural paradigms that bring about
resistance to change. Our single case study is
insucient, and what we would suggest is further
empirical study on stabilization and novelty in
organizations to allow direct comparisons to be
made between what can be revealed through the
lens of complexity theory and through other
approaches to strategy. Whittingtons (1993)
framework with its four conceptions of strategy,
which we briey drew attention to at the beginning of this article, may be a good place to start.

Complexity theory and strategic change

Conclusions
Earlier in this paper we suggested that complexity
theory could oer a dierent conceptual framework for the study of strategic change. As a result
of this study we argue that organizations may not
be naturally-occurring complex adaptive systems.
We also argue that a behavioural-sciences dimension has to be incorporated into complexity
theory for it to be of greater use. The theory
has provided us with a dierent perspective on
how order emerges at the interface between the
shadow and legitimate systems. This has not been
done previously with such empirical detail. We
have suggested that organizations stabilize over
time, as stabilization is one of the primary
defences against anxiety.
Defensive behaviours, stabilization and inertia
are recurrent themes in the strategy and organizational-behaviour literature, but less attention is
given to them than strategic change (Greenwood
and Hinings, 1988; Weick, 1979). Concepts
developed by Argyris (1992) such as single-loop

Complexity theory as it is being used is inadequately sensitive to the dynamics of individual

and group behaviour, which are the key to
understanding the detailed phenomena of strategic change. When it is used to describe the processes of strategic change, its specic usefulness is
still unclear. As a metaphor, it oers the
possibility of a rich set of concepts to explore
the phenomenon of emergence in organizational
systems, particularly at a macro level. However,
more empirical research is needed in organizations, as without this complexity theory is in
danger of becoming a short-lived linguistic
fashion statement. This might then deprive us
of the promise it shows as an alternative and
integrative set of ideas and insights on the
dynamics of pattern development.
Complexity theory applied to organizations
has to be more seriously informed by our
understanding of the dynamics of human beha-

Complexity Theory and Strategic Change

viour in order to take account of a range of
familiar issues such as socially constructed rules,
anxiety and other forms of embodied expression.
The role of such phenomena has to be incorporated into complexity-theory concepts to help
explain the creation and evolution of patterns of
interaction. This will enhance the attractions of
complexity theory as an integrative framework
for understanding strategic change. In this regard,
an increased level of empirical inquiry is much
needed; until such time as it materializes and yields
fruit, our experience would suggest that normative
statements on management based on complexity
theory would be better framed as conjecture.

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Kate Houchin is responsible for the curriculum in management, human resource management, trade
union studies, training and development at Stevenson College Edinburgh. Before joining the College
her career was in public sector organizational development and training. She has worked for local
authorities and for the Scottish Environment Protection Agency. She holds a masters degree in
Human Resource Development and a PhD from the University of Glasgow.
Donald MacLean received his PhD from the University of Cambridge and spent ten years
working in the optoelectronics industry before joining the University of Glasgow in 1993. A senior
lecturer in strategic management, his research interests lie in the development of novel theories and
methods of/for organization, strategic management and transformation. He co-founded SCOT, the
Scottish Centre for Organization and Transformation, which conducts collaborative research with a
broad range of public and private sector organizations.