An Introduction to Fractal Dynamics*

Fractal Dynamics is a new systems-based approach of looking at and thinking about organizations. In this view the organization is viewed as part of a pervasive organizational-fractal. Many astounding properties such as fractal-completion, fractal-influence, and fractal-universality emerge in fractal-space. These offer powerful insight into the fundamental dynamics animating all organizations. Routine management tasks such as strategy formulation, cost cutting, process redesign, new product formulation, management of change, and leadership development can be conducted anew with powerful new insights, unavailable when management is approached traditionally through a linear and sequential thinking approach. This article focuses primarily on the rationale for employing fractal dynamics, and on the search for the pervasive organizational-fractal which it will be found animates all organization. This article thus, stands as the required basis in more fully understanding this unique new area, which promises to grow in applicability and importance.

Fractal Dynamics has an increasing and even a compelling significance in today's world. As we look around us we find that regardless of the practical field, obstacles and problems of even an insurmountable nature seem to be surfacing and challenging us in many ways. Thus, at one end of the spectrum we have incidents like the destruction of the New York City-based World Trade Center, the Iraq War, and the endless conflict between India and Pakistan which challenge our notions of macro-policy be it in business or politics. At the micro-level we have challenging problems in fields like medicine, where the administered drug or 'therapy' often has side-effects that are even more devastating than the initial symptoms that were being treated.

Albert Einstein has remarked - "The world we have created is a product of our thinking; it cannot be changed without changing our thinking." Perhaps this insight gets at the crux of the myriad issues we are faced with, whether in the field of medicine, business, politics, or sociology. In all cases the insurmountable issues are perhaps the result of the application of linear and sequential thinking in a world which is in its reality a system. The need of the hour is to alter our thinking from a linear and sequential base to a whole-body or systems base.

The situation can best be summarized by the following "iceberg" analogy. When a ship approaches an iceberg, if all it perceives are the outlines of the structure that stands above the surface of the water, it will navigate its way incorrectly and collide, often fatally, with the massive structure that lies submerged below. It is perhaps fair to say that in today's world we are beginning to collide with the massive 'submerged' system that we have so far ignored in our maneuverings, and thus regardless of the field we are in, are beginning to experience insurmountable problems. The insurmountable problems highlight the fact that something important we have assumed about the world must be incorrect. The time has come to begin to embrace whole-body or system thinking in earnest. Only so will we likely emerge victorious from the many ills that plague us in many fields of life.

Defining the Dream-System

There are myriad ways to begin to think about a system. Paradigms such as Game Theory, Systems Thinking, and Scenario Planning are starting points, but paradoxically contain a linear-thinking bias in their conceptualization and execution. Specifically, the elements that are manipulated in these approaches are viewed as distinct, isolated entities, rather than as systems. No doubt there is validity in these existing approaches. Here, however, we will start with base elements that are fundamentally systems-based. There is perhaps, no better place to turn to than to Nature, for some clues in defining base elements of this kind.

For, Nature stands as the ultimate designer. She has existed for millennia and has experimented with endless prototypes in her search for perfection. Simple instances of Nature's brilliance and need for design-efficiency abound in the most insignificant of things [1]. The question is, therefore, does Nature have an instance of a compelling base system that could be the starting-point in beginning to address the many issues we are faced with on a practical level? If we could co-design with Nature, we in fact, may come up with some characteristics for such an ideal system. Let us dream for a moment.

Perhaps what we would want, as already stated, is a dream-system which depicts or understands every event, element, force, action, or entity as a system, rather than as an isolated happening in time. This would perhaps necessitate that the event, element, force, action, or entity is viewed as something naturally unfolding through the process or pressure of time, to finally reveal something that it had always stood for in potentiality. At the same time the dream-system must be universal, so that any and every event, element, force, action or entity can naturally be described by it. In other words, the same pattern of unfoldment must reveal itself no matter what the event, element, force, action, or entity is. Further, in making this system as efficient as possible, we may wish that the system holds true at any level of granularity. Thus, if we were studying a corporation, for instance, the dream-system should be able to be applied at the myriad levels that comprise an organization, from the individual to the market within which the corporation exists.

Let us emphasize that being a system, as opposed to a series of random and inexplicable events, it will be subject to a certain rigor, a certain mathematics, a certain predictability of the laws that apply to it. Clearly then, greater shaping power would be made available to those who begin to see and leverage this kind of system in things.

The basis of such a system does in fact already exist in Nature, under the guise of a fractal. Scientifically, a fractal is defined as a pattern that repeats itself on different scale [2] . Hence, broccoli, cauliflower, and clouds are common examples of a fractal, where the smallest shape repeats itself on different scale to in fact define the final shape of the structure in question. In other words, and in expectation with Nature's ultimate design efficiency, the broccoli is a highly efficient system where information contained in the smallest floret is sufficient to create the whole broccoli, as it gets repeated on larger and larger scale.

With a little modification to the notion of fractal, the 'pattern' can by replaced by 'system' or 'dynamic behavior', to arrive at the definition of the modified-fractal as being a dynamic behavior that repeats itself on different scale. Being even more specific, we can define 'scale', especially as it applies to a corporation, as being the different levels that exist in a corporation - the individual, the team, the corporation itself, the market within which the corporation exists, to thereby arrive at a further modified definition of an organizational-fractal. The organizational-fractal, hence, would comprise of a universal dynamic behavior that existed in the individual and repeated itself at the level of the team, at the level of the corporation itself, and again, at the level of the market or system within which the corporation exists or plays.

We have hypothetically arrived at the notion of a dream-system that, if it exists, would naturally facilitate the use of whole-body or system thinking, by virtue of defining every event, element, force, action, or entity as a system, which in itself is part of a pervasive system we are calling the organizational-fractal. These developments would probably deliver us from the shackles and shortcomings of linear and sequential thinking. Now all that is left to do is to see if we can find such a system in practical existence.

The Organizational-Fractal

In searching for the organizational-fractal, the best place to start would be the 'system' itself, that is, the space where all organizations play, since this is most visible being the object of myriad analyses [3].

First let us look at the change in the global economy. Broadly speaking, there has been a shift from an agricultural economy to an industrial economy to the beginnings of a digital economy. In the agricultural economy focus is on the material aspects of life. People are working with the land, using physical implements and devices, and creating products from the land. It is therefore primarily a physical activity. We shall refer to this level as the 'physical' level. In the industrial economy the focus has shifted to facilitating 'flows' of various kinds. Thus we see the creation of flows of communication, flows of transportation, with the attendant flows of large amounts of resources, funds, peoples to support the industrial economy. We shall refer to this level as the 'vital' level. In the digital economy the focus shifts to the realm of ideas, of concepts. It is new ideas that refashion organizations, that refashion industry, and these new ideas are released in ever greater measure. We shall refer to the play with idea and concept as the 'mental' level. Thus, we see that the focus has shifted from a physical level to a vital level to a mental level [4] . Let us keep this in mind, for this seems to be the recurrent theme, the recurrent 'dynamic behavior'.

This can be depicted by the following diagram:



Let us consider the development of the digital economy itself. To begin with organizations engaged in the creation of what is commonly known as 'brochureware'. That is, they simply created digital representations of physical brochures. Simple, non-interactive, informational web-sites were the result of this. In other words, they simply mapped or copied information from one medium to another. This is nothing more than physical activity. Next, organizations began to develop and engage in what is known as eCommerce. That is, they began to alter at least the customer ordering process so that customers could execute complete orders online, and perhaps do some additional follow-on activities and checking. This is a substantial shift from a purely physical focus. Actual business flows have begun to be changed, and in this respect the activity is vital in nature. Some of the really forward thinkers began to actually reorganize the way they conducted operations, changing entire business or organizational processes to leverage the principles provided by the Internet. And let us recall that these principles are many, of which some of the better known are perhaps immediacy, globalization, digitization and virtualization. That is they began to reconceptualize their businesses based on the advantages provided by the Internet. This is at the mental level. Here too hence, we see the same shift from physical to vital to mental.

While we could continue this analysis in a number of different areas ranging from the development of the theory of physics, to organizational design, to global power politics, in the interest of space we shall restrict ourselves to one more example, and then continue with the examination of other levels of the organizational-fractal.

Hence, consider the politics of global power in the 20th century. In the first half of the 20th century politics had to do with gaining power through physical confrontation and conquest as manifest by World War I and II. Focus was therefore at the physical level. This yielded to the politics of the Cold War in which fear was the primary lever of power. Fear, threats, anxiety are emotions, or self-referencing flows, to do with the vital aspect of being. Focus had therefore shifted to the vital level. More recently politics has become a game of promotion of globalization. Multinational corporations plan out global product and service strategies often under the aegis of their respective governments. This is a far more sophisticated way of seizing global power, which involves levels of planning before and after hand. The focus is therefore more at the mental or conceptual level. Here too, hence, we see the same shift from the physical to the vital to the mental level.

Thus, regardless of field, we see many instances of this similar trend revealing itself when viewed in this manner. It is almost as though some fundamental pattern of existence, some great clue were revealing itself.

Even in our daily lives, we find a similar journey repeating itself. Thus, for some time of the day we may be under the influence of inertia or boredom (physical level), at other times under the influence of longings and passions (vital level), and at yet other times reading or contemplating intently the thoughts of some seer (mental level). Even over the years there seems to be a similar shift in the way we function. Hence, in our earlier years we may be primarily focused on assuring our physical security, growth, and well-being (physical level), in our middle years we may be primarily focused on fulfilling our desires and needs, and need for self-assertion (vital level), and in our later years, turn to thoughts and contemplation of distant or even often unseen realities (mental level).

We thus see a similar pattern occurring both within and without. What's more, if we expand our view back through the millennia we see that from a physical basis of inanimate matter - variety of rocks, gems, crystals, soil, water, and so on, life shifts to a vital principle with vast experimentation of living forms - single-celled organisms, multi-celled organisms, plants, flowers, to a simple mental basis with the emergence of animals, and on to a more complex mental form with the birth of the human being.

This larger journey through the millennia seems to be of a similar nature to the journeys being repeated now on the scale of a century, as evidenced by the various journeys just talked about, and even on the scale of a day, as evidenced by the journey each of us goes through day after day. This journey thus, seems to be fractal in nature. Let us recall that a fractal can be thought of as a base pattern repeating itself in the same configuration on a larger and larger scale.

The question is, how does this journey show itself at the level of the corporation?

Organizational-Fractal Insight Applied to the Corporation

Broadly speaking, there are several levels that an organization may operate at [5]. These are depicted in the following diagram. Please note, that while examples of organizations at these levels are included in the diagram, in the interest of space, there is no specific discussion with respect to these particular organizations here. For a more elaborate discussion, please contact the author, or refer to the Business Line articles referenced.



If an organization operates at a 'physical' or 'material' level, then it is tied in to the past, and to what may have once made it successful. Its world consists of known customers, known products, known markets, known processes & structure, and known strategies. Innovation is about 'tweaking' and about moving within the boundaries that have already established what it is. An organization centered at this level has a limited number of options to choose from when confronted with change. Change itself is engineered as though the world is fixed, and therefore any efforts are only incremental, within the confines of the described world. To the degree that an organization centered at this level can call on attitudes and strategies that are centered at the higher levels, it will likely be able to function far more successfully than an organization that perceives and acts in the world solely from a material perspective.

An organization operating at the 'vital' or 'financial' level has more degrees of freedom. Being centered in financial results, whether ROI, sales, or market share, it is not necessarily bound to the world that has made it successful. It is not necessarily bound by past markets, customers, products, processes, structures or strategies. It has the added flexibility of changing any of these to ensure that it meets its specified financial goals. Yet, if it were required to go through a quantum change, as is being required by many organizations today, it runs the risk of becoming extinct so long as it remains insistently focused on meeting its imposed financial goals. It is to be noted that organizations operating at this level do embody all the positive capacities of the previous, material, level. At the same time, to the degree that an organization centered at this level can call on attitudes and strategies that are centered at the conceptual level, it will likely be able to function far more successfully than an organization that perceives and acts in the world solely from a financial or a financial-material perspective.


An organization operating at the 'mental' or 'conceptual' level is not bound by its past. It has more degrees of freedom, and is in essence more fluid and adaptive than any form that precedes it. It seizes on ideas and will change its customers, products, markets, processes, structures and/or strategies to ensure that these ideas can be fulfilled. It too, has the know-how and capability of all the previous levels embedded into it. Thus, material and financial capabilities are deeply embedded or easily available to it.

Here, also, it can be observed that fulfillment for an organization, as in the numerous other fractal journeys described previously, lies in moving from the physical to the vital to the mental level. This property can be termed as fractal-completion

In fact, there is an interesting case of a financial institution, Charles Schwab, which went through an iteration of fractal-completion in a matter of a few years, to thus become the world's largest discount broker. Today Charles Schwab serves 8 million individual and institutional clients from 400 offices all over the USA. Traders can access its services via telephone, wireless device, and the Internet.

It is to be noted that in 1995 Charles Schwab had already integrated many of the positive characteristics of a corporation at the physical and vital level. The Internet was beginning to become of importance, and Charles Schwab decided to launch e.Schwab as a spin-off. This act was in itself an indication of its vital wherewithal. The value proposition of e.Schwab, which itself was at the conceptual or mental level, was to redefine investing by giving people more ways to invest, more avenues by which to communicate and transact business, and more resources to help them become enlightened, empowered investors.

So in essence, Charles Schwab now consisted of two entities, a physical-vital Charles Schwab, and a conceptual e.Schwab. In a masterful act in 1997, e.Schwab was reintegrated into Charles Schwab to make it the first truly click-and-mortar company in history. By virtue of the effort to make this integration a true success, whereby Charles Schwab had to step up to the cost of adopting the Internet as a channel - adjusting salespeople compensation, integrating web-sites with production and fulfillment systems, and giving customers the choice of how they interacted with the company - Charles Schwab moved to being a company at the mental level. Its revenues and its customer base, and its becoming the world's largest discount broker, reflected the success that follows fractal-completion.

There are a vast number of other properties, such as fractal-influence, multiple fractal mastery, fractal universality, stuck-point fractal, amongst many other that arise in the fractal world. Each gives its insight into how to view and operate organizations in this newly defined system-based world. The following table, from an Aurosoorya workshop on Fractal Dynamics, introduces some key fractal implications.



Further, it is noted that these and other implications provide insight into a new set of dynamics that animates organizations. Many management tasks, such as strategy-formulation, management of change, cost-cutting, process-redesign, or even new product development can be performed differently and more effectively by virtue of these fractal insights. As a simple illustration, we can see from the following illustration that in the case of managing change, different techniques must be appropriately applied depending on where an organization is in its fractal journey.



Also, in accordance with the idea of fractal dynamics, any event, element, force, action, or entity is to be viewed as a system in itself, rather than as an isolated happening. Thus, whatever may be the current concern of the change management agenda, whether, a change in performance measurements, or product portfolio, or company strategy, for example, will have to be looked at from the fractal lens to determine its corresponding system characteristics and behaviors, in terms of the physical, vital, or mental patterns and realities it or its subject does or does not exhibit. Its or it's subjects place in its own fractal-journey will thereby be established, and in coordination with other key fractal-journeys, such as the fractal-journey of the organization itself, will allow a more relevant set of corresponding actions to be taken.

Conclusion

The fractal view alters the notion of the fundamental dynamics that animate an organization. An understanding of these dynamics creates a new, robust foundation with which to manage organizations. Every field of management, whether strategy-formulation, management of change, cost-cutting, process-redesign, or new product development can be conducted anew, and with powerful new insights that will be unavailable when management is approached from the traditional linear and sequential thinking, or even the linearly-based systems-thinking approach.

For in reality, adopting a fractal view of organizations is like using a telescope to observe the night-sky. In the absence of a telescope one may observe the night sky through the bare eyes to gain insight into the movement of celestial bodies. In using a telescope however, new insights, new connections, a new nature to stars and planets is revealed that brings into emergence a new body of knowledge, with a new and more detailed understanding of why objects move the way they do, and how some of these objects relate to others, and how and why they differ. Similarly, adopting a fractal view of organizations brings into focus a new and powerful body of organizational knowledge. A level of organizational dynamics is revealed that is unavailable with the use of conventional organizational seeing and thinking. In our rapidly changing world, such insight could spell the difference between business failure and business success.

About the Author

Pravir Malik is founder of Aurosoorya, a firm specializing in creativity and innovation. He has consulted with prominent organizations from all parts of the world. Pravir Malik can be reached through the Aurosoorya web-site at www.aurosoorya.com.

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*A copy of this article will be available on-line at www.fractalkey.com

[1] Please refer to the works of Buckminster Fuller for a more complete treatment of this.

[2] Please refer to the works of Benoit Mandelbrot for a complete treatment of fractals as they apply at the physical level.

[3] Please refer to “Fractals and the future of organizations”, Pravir Malik, Hindu Business Line, September 10, 2003, for a more complete treatment of the organizational-fractal.

[4] Please refer to the works of Sri Aurobindo for a more complete treatment of the terms ‘physical’, ‘vital’, ‘mental’.

[5] Please refer to “The imperative fractal journey”, Pravir Malik, Hindu Business Line, October 27, 2003, for a more complete treatment of the fractal as it applies to business organizations.