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Executive Overview
Navigating major transitions is never easy, but complexity science offers insights into the transformations of three new ventures on the verge of a critical transition. The outcomes of change were unpredictable, but the process of change was extremely similar across the three firms. Moreover, the successful transitions incorporated three qualities: high self-reference, increased capacity, and interdependent organizing. In-depth case studies from an intensive research project on these themes reveal this pattern amid the chaos of entrepreneurial change, offer a new method of control in dynamic systems, and help managers leverage transformation in new ventures.
Successful development is often punctuated by intense change. Managing these transformative changes is critically important in new and small ventures, whose existence depends on making it through uncertain and often chaotic transitions.1 Similarly, in order to regain competitive advantage, corporations may periodically reinvent themselves through large-scale transformations that refresh their vision, strategy, or operations.2 In other cases, ventures downsize while moving forward in their development.3 Successful navigation through these important transitions-managing fundamental change in an effective way-can make the difference between survival and failure for businesses of all kinds.
However, few practitioners and management theorists understand how to successfully direct fundamental change processes. Traditional change models that advocate a carefully planned intervention strategy often fall far short of the goal of radical transformation. More radical approaches such as reengineering and TQM, focusing on a top-down recreation of essential operational architectures, seem to fail more often than they succeed.4 Emerging applications of chaos theory, which argue that change is inherently unpredictable, have not been carefully tested in organizational settings.5 The question remains: how can executive managers direct their organizations through critical transitions during the development journey?
This article offers one solution to this problem, based on the integration of two sources of insight about transformative change. The first source is a set of metaphors from nonlinear dynamic systems theories that helps explain the dynamics of new and small organizations undergoing major change. Some researchers argue that complex system theories, which are gaining relevancy in the field of management, more accurately describe the "dynamism and complexity of real organizations creating and adapting to change."6 In their study of adaptation and transformation, complex systems theorists have identified a consistent pattern...