Strategic Planning: Harnessing Chaos – Part 4

The Edge of Chaos

When Dee Hock, a small-time banker from Washington, took over Visa in the late 1970s, it suffered under restrictive management—which Hock hated. His vision for the company emphasized decentralization, not consolidation; freedom, not restriction. Ownership of individual Visa franchises now lies largely in the hands of individuals, and these individuals are constantly encouraged toward creative decisions—even (especially) decisions that pose competition for their fellow owners. Hock calls his system “chaotic”—a synthesis of chaos and order—and it seems to work: since 1970 Visa has grown by approximately 10,000% and still grows at an average of 20% per year, serving half a billion clients.[i] The level of cooperation among the company’s elements lends Visa just enough conformity to remain unified; this is the “order” in “chaotic.” The chaos lies in Visa’s creative, no-boundaries decentralization.

Biologists call this fine line between structure and mayhem “the edge of chaos.” On this edge species experience their greatest fitness, fastest evolution, and most fluid adaptability. At the edge of chaos, interactions among individuals are high-energy. Necessity actually does breed invention. New ideas are both steadied by order and driven by pandemonium. The creative solutions found at this line are the emergent properties so crucial to the survival of any species; they’re jackpots of new information and industry-leading ideas. 

Most companies’ business strategies never take the plunge into chaos. Their corporate strategies cause them to lie safely in their market niches, content with miniscule annual growth and an age-old customer base. Their employees use time-tested business strategies and refrain from launching anything new. But these rigid companies crack and shatter under the weight of an economic climate that changes massively at whim. Your market readily adapts to a constant influx and outflow of companies and innovations; in order to outperform the market, you must match or exceed its flexibility. Before rigor mortis sets in, limber up and dive toward the edge of chaos.

[i] M. Mitchell Waldrop, “The Trillion-Dollar Vision of Dee Hock,” Fast Company Online 5 (1996). www.fastcompany.com/27333/trillion-dollar-vision-dee-hock