ABSTRACT
Chaos theory has only very recently been applied to organizations. Many
of the traditional statistical methods of study cannot or should not be used
in nonlinear situations. A chaos theory methodology has been
established for exploring organizational dynamics using chaos theory tools
and techniques. Heretofore, nonlinear dynamics have been explored over
time. Priesmeyer suggested that time does not have to be the modulating
entity. Data from the 1993 Employee Opinion Survey of a large
government service agency are examined using modulating variables
other than time. Employees' overall rating of agency performance is used
as a modulating variable. The vast majority of 74 survey items exhibit
period 1 trajectories indicating that they may be measuring essentially the
same phenomena. A few survey items exhibit relationships that are of
higher levels of complexity. Interesting examples of these are provided.
An example of complete chaos among survey items is presented.
Introduction
This paper will explore an exciting new technique developed to explore nonlinear
dynamics in organizations. H. Richard Priesmeyer (1992) has described a methodology
for empirically studying organizations using chaos theory techniques. He has also
authored the tool The Chaos System Software©(1) which manipulates the data and
creates graphs and reports to easily display results. The software generates phase
plane trajectories, marginal history charts, and provides built-in interpretation for many
common business ratios. Moreover, the software provides a significance test on the
goodness of fit measure (an F-test and a coefficient of determination) for the nonlinear
equations it develops.
Priesmeyer suggests that marginal history charts can provide the same type of information that an EKG does for a physician. Traditional business analysis tools are
the equivalent of blood pressure and pulse readings. Marginal history charts provide all
of the dynamic, rich information of an EKG. These charts can be used to establish
normal organizational rhythms, and then provide insights if the organization begins
dysfunctional rhythms. These comparisons are made over time. This paper, as you will
see below, explores the use of other chaos techniques that can be applied to a
snapshot of data.
The Shortcomings of Traditional Statistical Approaches for Nonlinear Systems
The tools of chaos theory differ from other traditional methods. Linear
regression, for example, cannot be used when nonlinear relationships exist. Although
transformations can be made in linear regression by, for example, taking the logarithm
of a given variable, all of these transformations still assume a continuous function with a
slope that can be calculated at each point. This assumption is also at the core of
calculus, another traditional tool for understanding and predicting phenomena. Since
nonlinear phenomena may have discontinuities and other oscillations among values,
the tools of calculus and linear regression often cannot be used in the real world.
Another traditional statistical tool is chi square, a test of statistical significance for
relationships between nominal and ordinal variables. In order to use chi square, each
of the data points must be independent. In nonlinear systems, however, feedback from
earlier values affect later values. Nonlinear systems are of the form: Xi+1 = CXi(1-Xi).
For values of C between 1 and 3, X always settles down to a steady value, the attractor. Chaos theorists have discovered that when nonlinear systems are
in the chaotic zone, however, they are highly dependent on initial conditions. The
chaotic zone begins when C exceeds 3.56. Moreover, "in a nonlinear equation a small
change in one variable can have a disproportional, even catastrophic impact on other
variables" (Briggs and Peat, 1989, p. 24). An apparently insignificant change in initial
weather conditions has been shown to significantly alter the path of major weather
systems. The equation above is iterated thousands or millions of times in weather
prediction so that insignificant amounts become amplified into significant ones.
Thus far, we have eliminated traditional methods by showing how nonlinear
systems do not conform to the assumptions required by these methods. Chaos theory
also avoids certain methods on philosophical grounds. For example, because of the
importance chaos theorists have found in what appeared to be meaningless data, they
are loathe to dispense with any observations or data points as unimportant.
Consequently, they associate little importance with such traditional statistical pillars as
the mean and other measurements of central tendency which strip away variation.
Priesmeyer wonders, "with our number-crunching prowess today, why not consider
every observation?" (Priesmeyer, 1992, p. 185). Measures of central tendency are
useful in stability-seeking situations or when compensating (negative) feedback is
present. Nonlinear systems are often marked by the presence of amplifying (positive)
feedback. Chaos theorists also disavow ratios and other statistical methods which
cause the loss of magnitude and proportionality.
Chaos Theory Methodology
In place of these traditional methods, chaos theory holds out the promise of "a
much richer picture of organizational dynamics than that provided by conventional
statistics - even the more advanced statistics of multiple regression, analysis of
variance, or factor analysis" (Ibid., p. 166). Few places are as dynamic and changing
as organizations. Yet most data collected - inventory counts, turnover ratios, employee
satisfaction measures - present organizations as static and two-dimensional. Static
measures are becoming increasingly less useful in representing the dynamics of
organizations. The developing field of non-linear analysis is providing tools to better
capture the dynamics of organizations.
The first step in representing the dynamism is to use marginal rather than
absolute values. According to Clemson (1982) "it is more useful to know that
something is changing and to have some idea of how it's changing than to have a
detailed but static picture" (p. 189). In other words, if sales are $1 million one year, and
$1.1 million the next, these are absolute values and the marginal value is a positive
$100,000. Moreover, in nonlinear systems subsequent values are affected by the
feedback from earlier values, so the marginal values reflect the direction and flow of the
variable of interest. "Because marginal values reflect the dynamic evolution of a
process, they provide a wealth of insight not available in" (Priesmeyer, 1992, p. 27)
static values such as totals.
These marginal values are then plotted on a phase plane which is a set of
traditional Cartesian coordinates. The phase plane is an important tool because it
allows for visual identification of the attractor in the relationship between the variables
under study. An attractor is an underlying pattern of behavior that exists because of
inherent structural characteristics. The path of a pendulum is an attractor for a
grandfather clock, for example. Wheatley (1992) has speculated that meaning is an
attractor in organizations because when employees share the same sense of meaning,
although their behaviors will vary significantly, they will not vary outside of the bounds
created by their common understanding of meaning. Figure 1. shows an example
phase plane plot.
The data points are plotted and a line connects points in chronological order. In
this example, the data points are the annual investment returns of the common stock
and small stock index for the years 1950-59. This plot has a very distinctive shape,
made by points which are either in quadrant 1 or quadrant 3. Reading this graph
suggests that when the common stocks have an increasing return, so do the small
stocks. When the common stocks have a decreasing return, so do small stocks.
These chaos tools do not offer any insight into cause and effect between the two
variables, however. One could not conclude that common stock increases will result in
small stock increases, or vice versa. Also, recall that since marginal values are plotted,
a decreasing return does not necessarily mean a negative investment return. A
decreasing marginal return occurs any time the next data value is lower than the
previous.
Since this plot visits only two quadrants, it traces a Period 2 limit cycle. Period 1
trajectories visit only one quadrant and period 4 limit cycles visit the four different
quadrants before repeating a visit to a quadrant. All other sequences of quadrant visits
are referred to as Period 8, which for all practical purposes in organizations, represents
chaos (for a more precise discussion of determining the period of a limit cycle, see
Priesmeyer, pp 39-40).
The period of a limit cycle is important because it gives us a measure of the
complexity, or "amount" of chaos or order between certain variables. Period 1
trajectories represent the least degree of chaos. Both variables always move together
in one direction. Period 2 limit cycles represent an increasing level of volatility. The
variables do not always move in the same direction, but they both move together in the
typical quadrant 1, quadrant 3 Period 2 limit cycle. The traditional relationship between
revenue and earnings is a Period 2 limit cycle. When revenues increase, earnings
increase; when revenues decrease, earnings decrease. One classification scheme is to
consider that any trajectory which visits only two quadrants during four observations is
Period 2.
An increase in period level is known as period doubling, and it takes place after a
bifurcation, or branching causes a different level of complexity. At bifurcation points,
the system has a "choice" of level of complexity. Many organizations have lately
experienced an additional level of complexity in the traditional relationship between
revenue and earnings. Recently, some organizations have had years of increased
revenues, but decreased earnings. Or, because of downsizing, some organizations
have decreased revenues and increased earnings. To date, most experts have
considered these experiences to be anomalies because they haven't had the tools to
identify the patterns of which they are an integral part.
Organizations with a dramatic seasonal impact often exhibit a Period 4 limit cycle. The extra level of complexity occurs because an inventory buildup may occur in a quarter in advance of when actual sales will occur. The inventory buildup will not help revenue in the earlier quarter, but it will depress earnings. For example consider the quarterly revenue and profit marginal vectors for a surf apparel store in a northern beach town.
Quarter Rev. Profit
I. Jan-Mar - +
II. Apr-Jun + -
III. Jul-Sep + +
IV. Oct-Dec - -
This store traces a Period 4 limit cycle as it visits quadrants 2, 4, 1, and 3 year after
year.
Chaos theory has not yet developed tools to adequately explain Period 8 limit
cycles. Period 8 limit cycles contain all of the relationships that are more complex than
Period 4. Researchers who are deterministic believe that even though these
trajectories cannot be understood today, some day they will be understood. They do
not believe these apparently haphazard trajectories are random; merely, too complex to
comprehend.
Capra (1982, p. 101) has suggested that all theories are only approximations
which are valid within a certain range. Priesmeyer (1992, p. 30) has speculated that
traditional statistical methods remain useful for data with a period 1 trajectory. These
musings create the possibility that the chaos theory methodology is simply an extension
of traditional methods that become more useful in situations in which a phenomenon
exhibits a relationship on a higher level of complexity than period 1.
Replacing Time as the System Modulator
Priesmeyer suggests in his Proposition 25 that "limit cycles typically report the
evolving dynamic response of a system over time. However, they are not limited to
using time as their third dimension; any other variable may be substituted to provide a
descriptive image of a system's response to the chosen variable" (Ibid., p. 166). Rather
than using time as the third dimension, we tried as the other dimension several survey
items that themselves seemed to encompass, or at least be affected by other survey
items. Therefore, rather than examining survey values from different chronological
periods, all of the data is taken from a single survey.
The Government Service Agency Data
The database used for this analysis was the 1993 Employee Opinion Survey of
a large government service agency. The agency Employee Opinion Survey process
identifies employee issues and concerns in a wide range of areas important to
sustaining a productive workforce. The survey was developed by the agency
headquarters employee relations department with the assistance of two contractors
who are recognized in this field. An extensive series of focus groups were held to
determine the appropriate content areas of the survey. The focus groups were
conducted with both bargaining and non-bargaining employees in ten cities in the
summer of 1991. The survey was pilot-tested in five divisions and four departments at
headquarters in November 1991 and was first administered to all career employees in
April of 1992.
The survey was administered to 657,112 career employees in 1993.
Questionnaires were mailed to employees at their work address. Completion of the 78-item, forced-choice questionnaire takes 20-30 minutes, is on-the-clock, and is voluntary.
All responses are kept completely confidential. Seventy-eight percent of the employees
returned the questionnaire for a total of 512,818 responses. For this analysis, we used
a subset of the database consisting of the non-bargaining employees of the processing
centers of three major cities. These employees were in the categories of
clerical/administrative, professional staff, or management. The subset respondents for
each city were 285, 106, and 106, respectively. Total response rates for each city were
73%, 85%, and 84%, respectively; the response rates for this sample of non-bargaining
employees were unavailable.
Most of the survey items were on a five-point scale ranging from Very Good to
Very Poor, or ranging from Strongly Agree to Strongly Disagree. We were provided
with a total of 74 items, which excluded items having to do with sexual discrimination,
for example. Of the 74 items, 18 were posed so that Strongly Agree, for example, was
a "bad" response. A sample of such an item is, "Too many changes of supervisors
have caused problems in my work group." In these eighteen cases, the ends of the
scale were reversed. Discussion of survey items below with such reversions are noted.
The first step was to conduct a one-dimensional analysis of each contributing
factor against the overall rating. We divided all of the surveys into seven categories
according to the participant's rating of the agency's overall performance. All who gave
an overall rating of 1 are in one category, all who gave an overall rating of 2 are
together in a category, etc. up to 7 (a Likert scale from poor to excellent, then reversed).
Next, we created an average score for each survey item in each category. The results
for the survey item, "I like the kind of work I do" appear in Figure 2. This graph
represents the opinion of seven groups of people.
This information is then plotted as follows: Overall performance is on the x axis and a point is created for each of the seven points with the corresponding y (like the kind of work I do) values. Figure 2. contains such a plot.
Figure 2 suggests that employees who rate the overall performance of the
agency higher agree that they like their work (1=strongly agree, 5=strongly disagree)
These calculations were made for each survey item using the seven overall variables
listed in Table 1.
Period 1 Trajectories
Table 1. presents perhaps the most interesting findings in the agency data.
Column A shows the percentage of the 73 survey items that would be plotted exactly as
Figure 2. above. The seven items listed in Table 1. were each, in turn, used as the X
axis variable. Column B shows the percentage of the 73 survey items that would be
plotted exactly as Figure 2. above if one data point were adjusted by 0.1 or less. In
other words, there is one very small kink in an otherwise continual downward slope.
Column C contains the percentage of the 73 survey items that had one kink caused by
a data point increasing by more than 0.1. Column D is the summation of columns A, B,
and C.
Whenever two variables with a constant increasing pattern are combined in a phase plane, the result is a Period 1 trajectory as shown in Figure 3.
The agency data suggest that approximately 90% of the survey items trace approximately Period 1 trajectories. The conclusion is perhaps surprising because of the breadth of the survey questions. For example, the survey item, "I am given the opportunity to see agency-produced videos on the clock" is in column C above for overall performance item 13-1. The data suggest a direct relationship between whether employees are given the opportunity to see work videos and how they rate the overall performance of the agency. Another example is the survey item, "Rate your employee benefits." This item is in column B above for modulating item 13-1. The data suggest a direct relationship between how employees rate their employee benefits and how they rate the overall performance of the agency. Further study should be conducted to determine whether approximately 90% of the survey items are measuring essentially a single dynamic.
Managerial Implication: There is tremendous leverage present in these Period 1
trajectories. If managers can make improvements, it is likely that these improvements
will be reflected throughout the employee opinion survey. Managers need not worry
about focusing improvement on one or a few survey items. They can be confident that
if they achieve general improvements, the survey item they want to improve likely will.
We tried nine different survey items as the replacement for time as the modulating variable. Two items have very little variation in response. The other seven survey items are listed in Table 1. The survey item, "Please rate the agency on its overall performance" was selected for use for the rest of this article. It captures a global concept and has a seven-point scale from 1=Poor to 7=Excellent. This item is one of the 18 which was reversed. The seven-point scale allows for six marginal data points (the other items tested were all on five-point scales yielding four marginal data points). The number of responses for each scale item are as follows:
n rating description
5 1 poor
10 2
24 3 fair
125 4 good
103 5 very good
88 6
28 7 excellent
Total 383
Period 1 Bifurcating to Period 2
The first increase in complexity occurs as a Period 1 trajectory bifurcates and becomes a Period 2 limit cycle. When "The agency is serious about quality work" is plotted with "How would you rate your job security?" the relationship is Period 1 in the low and mid ranges of overall performance. Then, in the upper range, the relationship becomes more complex as there is no longer a simple relationship of both variables continually increasing. "Serious about quality" continues to increase, but "job security" decreases. Therefore, the last two points are in quadrant 4. This graph is portrayed in Figure 4. In the range where the Period 1 trajectory persists, as an employees' views of the overall performance of the agency increased, so did their beliefs about quality work and job security.
Managerial Implication: Employees who report high ratings of overall performance
also report increasing beliefs about the seriousness of quality work, but decreasing
confidence in job security. Proposition: Perhaps employees who rate the agency highly
and have increasing beliefs about the seriousness of quality work suspect that the
agency will have to downsize over time.
Velocity
Figures 3. and 4. reveal additional interesting information. Notice how both
trajectories begin near the origin, and then increase in distance away from the origin.
These cases both indicate an increasing velocity in these relationships. The velocity is
obtained by multiplying the two marginal values of the axis variables. If one or both of
the variables is changing slightly, the velocity will be small. Major changes in velocity
occur when both variables are experiencing significant change. Velocity can be viewed
as a measure of the combined energy of the relationship between the variables.
Velocity changes, because they measure the intensity of a limit cycle, can signal a
bifurcation point. In the same manner that cardiologists determine pathologies from
EKGs, for example, a bifurcation is imminent in quarterly data "if velocity becomes more
negative during quarters 2 and 3 relative to positive velocity measures during quarters 1
and 4" (Priesmeyer, 1992, p. 39). Figures 3. and 4. both suggest a major increase in
energy and intensity between the respective variables at the high end of the scale.
Period 2 Limit Cycles
Figure 5. portrays the graph of a Period 2 limit cycle. It cycles between quadrants 1 and 3. The variables are "The amount of stress in my job is a problem" (reversed) plotted with "I have enough authority to carry out my job effectively." Lack of adequate authority is often linked with the amount of stress that an individual experiences on the job. The agency data suggest that the relationship is not of the simplest variety. The two variables do move in the same directions as evidenced by the quadrant 1 (+,+) and 3 (-,-) visits but as employees' overall performance rating increases, there is not always a corresponding increase in stress relief and adequate authority. At certain points as performance rating increases, the values of both variables decreases. Consequently, stress on the job is a more complicated phenomenon than simply having enough job authority.
Managerial Implication: Since level of problematic stress always moves together with
adequate authority, it seems that employees experience stress because of the
authority.
Period 2 Dissolving into Chaos
Another factor often linked with the amount of stress that an individual
experiences on the job is the individual's perceived job security. The agency data
suggest that this relationship is also not of the simplest variety. Figure 6. shows "The
amount of stress in my job is a problem" (reversed) plotted with "How would you rate
your job security?" The relationship starts off as Period 2 with visits to quadrants 1 and
2. As employees' overall agency performance rating increases, they basically report
less stress and greater job security. However, as the overall rating increases in the
"very good" range, the relationship between stress and job security becomes chaotic.
Quadrant 3 is visited for the first time followed by a visit to quadrant 4.
It is perhaps more interesting to consider these survey items with the modulating variable of an employee's own performance, which is not a survey item, rather than rating of agency. This substitution of modulating variable can be made without changing the resulting trajectories if both agency overall performance and employee performance are part of the single dynamic that seems to be captured by 90% of the survey items. Under this assumption, these results suggest that in the low ranges of employee performance, as performance increases, feelings of job security increase and stress decreases. However, in the higher ranges of employee performance, at least three bifurcations occur so that while some employees will report greater job security and less stress as performance increases, just as many others may report less job security and more stress as performance increases.
Managerial Implication: Job security and stress relief peak in employees who perform
at above average, but not the highest, levels.
Chaos in the Middle of Period 2 Limit Cycles
A few combinations of survey items exhibit low levels of complexity at the lowest
and highest levels of overall performance but have a chaotic zone in between. For
example, to see if employees felt that competitors were a threat to their jobs, we plotted
"Competition presents a serious threat to the agency" (reversed) with "How would you
rate your job security?" This graph is depicted in Figure 7.
The graph can be interpreted as follows:
agency performance competitor threat job security complexity
low range increasing increasing period 2
mid range decreasing increasing period 8
high range increasing decreasing period 2
At low levels of overall performance the relationship between competitor threat and job security is relatively orderly. As performance increases, competitors are increasingly seen as a threat but jobs are perceived to be increasingly secure. In the mid range, job security continues to increase while competitors are decreasingly seen as a threat. Finally, in the high range, competitors are increasingly seen as a threat and jobs feel less secure.
Managerial Implication: Those who view the agency's performance as above average
are the least worried about competitors and most secure in their jobs. That range is
chaotic because it represents a decision point for both variables and a wide range of
opinions by employees.
Chaos evolving into Period 2
Chaos theory is most often used to explore orderly situations that for some
reason become chaotic. Catastrophe theory, a subset of chaos theory, for example,
focuses exactly on this situation. However, chaos theory can also be used to examine
chaotic situations which become less complex. For example, prolonged applause at
events such as concerts begins as a chaotic roar of noise, but often develops into a
synchronized rhythm as people clap, hoping for an encore performance. Another
example of orderliness coming from chaos is that "women living in close groups such as
prisons, hospitals, and student residences tend to synchronize their menstrual cycles"
(Briggs and Peat, 1991, p. 184).
The agency data contain a few instances of relationships that are initially chaotic, but then settle down to a lower level of complexity. Figure 8 illustrates such an example.
The graph depicts "The amount of stress in my job is a problem" (reversed) plotted with "Pay should be based more on performance than it is at present" (reversed). The relationship between stress level and pay for performance is initially chaotic as evidenced by the consecutive quadrant 2, 4, 1, 1 visits. It remains chaotic through the next visit, to quadrant 3. Then the relationship settles down into a period 2 limit cycle with oscillation between quadrants 1 and 3. At the low and mid ranges of overall performance, there is no discernible relationship between problematic stress and pay for performance. As performance increases, the two variables tend to move together in positive or negative directions.
Managerial Implication: For employees who rate agency performance highly, stress
level is directly related to satisfaction with performance-based pay.
Complete Chaos
With agency overall performance as the modulating variable, we were able to
find two sets of survey item relationships that are completely chaotic across the range
of the modulating variable. They are "Pay should be based more on performance than
it is at present" (reversed) plotted with "Decisions currently made at a high level could
be better made at lower levels" (reversed), and "Employees are reluctant to reveal
problems or errors to management" (reversed) plotted with "Many supervisors have
given up trying to discipline employees" (reversed). The latter is depicted in Figure 9.
Several factors come into consideration in the first variable alone (an employee's decision of whether or not to reveal problems to management). Recent press coverage has highlighted the harsh treatment that employees in government who reveal problems have received from managers in the organization. One could speculate that a number of factors may be dominant when an employee decides whether to be the one to reveal problems: integrity, assuming responsibility for being the message bearer, perceived implications in rewards, advancement, or job security, or duty to customers and taxpayers. Given these dynamics, it is not surprising that no discernible relationship exists among the three variables of revealing problems, supervisors who have given up, and agency overall performance.
Managerial Implication: Even though the relationship is chaotic, the trajectory still may
contain important information. For example, the final move is a dramatic one from
quadrant 2 to 4. Why such a huge increase in supervisors having given up, and at the
same time a sizeable decrease in reluctance to reveal problems?
Summary
Heretofore, most researchers have explored organizational dynamics primarily
by using static techniques, such as traditional statistical analysis of an employee
opinion survey. Chaos theory, to this point, has been used almost exclusively to
examine the complexity in relationships over time. It has been suggested that chaos
theory offers an approach to revealing dynamic relationships from static data.
We have examined agency employee opinion survey data using that approach
and have discovered varying levels of complexity among survey items. We have seen,
for example, that stress level and discretionary job authority are related in a way that
linear techniques cannot reveal. We have also seen that job security and stress relief
peak in employees who perform at above average, but not the highest levels. The
relationship starts out as Period 2 and then dissolves into chaos.
When chaos theorists use time as the modulating variable, they are often able to
get several, if not thousands of data points. When scale values of a survey item is
used as the modulating variable, the number of data points is limited to the number of
gradients on the scale, minus one. A minimum of four data points are required to
determine the period of a limit cycle. Consequently, a Likert scale, for example, would
need at least five potential choices (i.e. strongly agree, agree, neutral, disagree,
strongly disagree). The more the choices, the greater the understanding of levels of
complexity and bifurcation points in a relationship.
Chaos theory researchers are finding more and more instances in which simple
models can explain what appeared to be complex phenomena. Organizational
dynamics are ripe for such models, because so far we understand very little about, for
example, how change occurs in organizations. Many people simply experience change
as permanent white water (Vaill, 1991) and have no more insight than that. This
seeming random chaos reminds me of an experience with my son when he was three
years old. When I first introduced him to the style of music which is in rounds, he
thought it was just a cacophony of noise. He did not yet have a framework for
understanding this style of music. As far as he was concerned, "Row, Row, Row Your
Boat" had just been turned into chaotic noise. Once one has a framework for
understanding musical rounds, what appeared to be chaos can actually be seen (or
heard) as something very simple.
Glossary
amplifying feedback: circular causality which actively seeks change by building in the
same direction as previous iterations; a vicious or virtuous cycle
attractor: an underlying pattern of behavior that exists because of inherent structural
characteristics.
bifurcation: a branch point causing a different level of complexity. At bifurcation
points, the system has a "choice" of level of complexity. The system may become more
or less complex.
chaos theory: the study of phenomena which exhibit more than one level of complexity
across the range of the phenomena.
compensating feedback: circular causality which actively seeks stability by
counteracting or cancelling out the effect of previous iterations.
feedback: all phenomena in which there is circular causality.
fractal: pattern characterized by infinite detail, infinite length, no slope or derivative,
fractional dimension, self-similarity, and that can be generated by iteration.
limit cycle: the plotting and connecting of sequential observations on a phase plane.
marginal value: a measure of the change in a value. Marginal value mi = oi+1 - oi,
where o = observation.
nonlinear systems theory: another name for chaos theory.
period: a measure of the complexity, or "amount" of chaos or order between certain
variables.
period doubling: an increase in period level which takes place after a bifurcation, or
branching.
Period 1 limit cycle: the least degree of chaos. Both variables always move together
in one direction.
Period 2 limit cycle: when only two quadrants are visited out of every four data points.
Period 4 limit cycle: when all four quadrants are cycled before a quadrant is revisited.
Appears in the financial figures of organizations with dramatic seasonal impacts.
Period 8 limit cycle: at our present level of understanding, chaos. Any limit cycle
which is more complex than Period 4.
phase plane: a set of traditional Cartesian coordinates. The phase plane is an
important tool because it allows for visual identification of the attractor in the
relationship between the variables under study.
velocity: the product of the two marginal values of the axis variables. Velocity is a
measure of the combined energy in the relationship between the variables.
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1. Priesmeyer, H. Richard. The Chaos System Software. Management Concepts, Inc., Fair Oaks Ranch, Texas 1994.