Your last law says that to act in a biological way, leaders should disturb, but not direct, their organizations. How does that law work?

Disturb, don't direct means that we must rethink our old notions of social engineering inside of companies. Old-fashioned leaders work under the preconception that their job is to make the hierarchy perform. They think that if they can figure out the best course of action, communicate it down to the troops, and then measure the results, then they'll have a high-performance organization. The result is that you end up with a lot of leaders who have a tendency to overreach their authority and oversuppress their people. They end up optimizing their performance within smaller and smaller parameters -- which means that when the world changes, they have less and less diversity and creativity with which to respond. These leaders think that they're producing tough organizations. But they're really producing organizations that are less adaptable to change -- and that may cause a cataclysmic failure. Leaders have to remember that in living systems, things happen that you can't predict, and once they do, those events can set off avalanches with consequences that you could never imagine.

So if leaders accept the notion that business doesn't unfold in a predictable, linear fashion, then which principles should they use?

There are three guidelines that work together for businesspeople to consider: Design, don't engineer. Discover, don't dictate. And decipher, don't presuppose. Here's a simple example of how these rules work. Take any airport. In the lounge areas at each gate, you won't see any signs that say, "Don't talk too loudly," "Don't move the chairs," "Don't occupy more than one seat." But through the invisible hand of design, those things happen: The seats are arranged so that people talk to those who are close, and they don't shout across the room. The armrests are fixed, so you don't see people sprawling across a couple of chairs. The seats are heavy and bolted together, so you can't pick them up and rearrange them. It looks like it just happens -- but the architect has evolved design principles that disturb, but don't direct, the living system. Now, if you go to airports in Russia, you'll see the opposite: waiting areas where the chairs are movable, where there are signs directing people about how to behave, and where the police come and scold people for their bad behavior. What happens: People move the chairs, lie down on them, kids make houses out of them, and it's a shambles. They were relying on social engineering to create and enforce the rules. Instead of designing, they dictated. That leads to the second rule: Discover, don't dictate. As events unfold, you have to figure out the second- and third-order effects -- things that you could never have predicted, but that need to be considered. You begin to realize that you can't dictate an outcome. And just as important, once outcomes start to emerge, you can't dictate the fastest solution everywhere. Decipher, don't presuppose tells you that there is wisdom in each community, whether it's a team, a division, a department, or a factory. The trick is to create a design that allows a community to learn from itself, to come up with its own solutions to its problems. And then to have the restraint not to try to impose those solutions on every other community in the name of efficiency.

Alan M. Webber is a Fast Company founding editor. Visit Richard Pascale on the Web (www.surfingchaos.com).

Sidebar: The Four Principles of Life -- and Business

1. Equilibrium is a precursor to death. When a living system is in a state of equilibrium, it is less responsive to the changes that are occurring around it. It is most at risk when it feels most secure.
2. When threatened or when galvanized by a compelling opportunity, living things move toward the edge of chaos. This condition evokes higher levels of mutation and experimentation and is more likely to result in fresh new solutions.
3. As living things move closer to the edge of chaos, they have a tendency to self-organize, and new forms emerge from the turmoil. This property of life, called "self-organization and emergence," is a major source of innovation, creativity, and evolution.
4. Living systems cannot be directed along a linear path. Unforeseen consequences are inevitable. The challenge is to learn how to disturb them in a manner that approximates the desired outcome and then to correct the course as the outcome unfolds.

Sidebar: Navigating the Edge of Chaos

Here are tools that function as the compass, propulsion system, and charts for business leaders who want to move toward the edge of chaos without falling into the abyss.