External environment in the sense, organisations’ strategies will be influenced by the parent or host country’s economy as well as by the world economy, in case of Multinational Corporations, and then it will also be influenced by its competitors’ strategies, by its consumers’ behaviours, by certain social issues, etc, etc. …
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Thus, it is clear that organisations cannot carry on with preset strategies, and instead has to keep tab of all the happenings in its external environment and accordingly come up with strategies and reorient its organizational processes. This form of strategic management, where the organisation will keep on initiating new strategies according to its external environment, only comes under the Complexity theory. This theory views organisation mainly as part of a collection of structures, in which the organization could share some or maximum properties with other composite and adaptive environmental systems or structures. As the organisations share properties with these environmental systems, they will be able to adapt to that environment, reorient its strategies accordingly and emerge successful. So, this paper will critically discuss the strategic management view that Complexity theory dominates the narrative in strategy today, by first providing the background of the Complexity theory. Then, the paper will analyse with case examples how the theory is practiced in an organization and how the strategist or leader or manager will play a role in that practice. The paper will also provide counter perspectives, before drawing to a conclusion.
When the Complexity theory is viewed from an overall perspective, or when one focuses on the science of complexity, it emerges that it is the study of an evolving and adapting order in an otherwise orderly systems. That is, certain action is carried out, or naturally carries out in a specific order, without changing of set patterns, for example, flocking and large scale migration of birds. However, even that set pattern have to be changed according to the constantly changing environment. So, the key is, the actions has to be operated at the vicinity of ‘edge’, without deeply getting involved in preset practices. That is, one has to be fully prepared for any changes that might occur in their action path, and so they should operate in that path of ‘prepared’ or ‘ready to adapt’ state. According to McElory (2000), the systems that operate in the vicinity of the edge or even chaos mainly exhibits strong bursts of creativity, thereby coming up with innovative behaviours and new patterns. These new patterns which enhances the ability of a system to “adapt successfully to its environment are stabilized and repeated” while those that performs below expectations and leads to failures “are rejected in favor of radically new ones, almost as if a cosmic game of trial-and-error were being played.” (McElory 2000, p.196). Many concepts of the Complexity theory got originated and were researched at the Sante Fe Institute, located in New Mexico, USA. The institute was found in 1984 by George A. Cowan as an independent research centre, where scientists from different disciplines including maths, physics, biology, information technology, psychology, physiology, etc, etc with their computing expertise, conducted “interdisciplinary work on the behaviour of complex adaptive systems”, coming up with various postulations of the Complexity theory. (Rosenhead 2008). The basic concept that resulted from this research under the Complexity theory is that, any collection of components as well as systems will evolve as well as organize itself, on the basis of changes in its external environment. The application of this concept in the field of business started
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