Then they watched the teacher lead an actual recess. As kids poured out onto the playground, there was chaos. And then order emerged, as the children basically organized themselves into teams. The exact order that resulted was unpredictable -- but it was entirely predictable that some form of order would emerge.

"I asked them to rate recess," Snook recalls. "Well, they said that everyone had fun, and no one got hurt. So I asked them to tell me about the leader. 'Well, the teacher just stood there,' they said. So, is leading that easy? Is it totally hands-off? No. The way you influence complex, chaotic systems is by setting the starting conditions. You set the starting conditions, the left and right boundaries, and the minimum specifications. The teacher had a fence around the playground, and she established four or five rules. After that, her job was managing by exception."

Meanwhile, the leadership of West Point is thinking about the institution's exceptional past -- and challenging future. The academy exists on a razor's edge. To stay effective, it must retain much of what makes it different -- yet it also must continuously accommodate changing external demands. "We can't be so different that the notion of being the Army of a democracy fails," says Lieutenant General Daniel W. Christman, the academy's well-regarded superintendent. "We have to reflect what society demands of us."

The 1965 graduate believes that in order to fortify its relevance in the post-Cold War era, the academy must adjust its mission. It must reflect the new ambivalence with which America regards its armed services. That means equipping its graduates less for combat leadership than for "officership" -- a vague notion that encompasses any number of the roles that the Army may fill. "We need to educate cadets in a way that doesn't constitute a military straitjacket," Christman says.

That may be so. West Point produces young officers who have been encouraged to act as entrepreneurs, to act quickly and decisively, to operate effectively amid chaos. These are traits that clash with the reality of military service in peacetime. So here's the irony: If the academy's education has become less applicable in the Army, it has grown more relevant in business. "Running a company, especially a startup, is not unlike a battle," says Mark Hoffman, a 1969 graduate and now chairman and CEO of online-exchange giant Commerce One. "Bombs are going off all around you. The market and the competition are changing constantly. Your stock price is falling. You have to stay calm in the face of strife."

West Point dedicates itself to producing graduates who will, as its mission statement avers, "dedicate a lifetime of selfless service to the nation." The vague wording concerns those who believe that such service should be strictly military. But as a nation, we are short of great leadership in every sector. We may lament West Pointers' abandonment of the military. But guess what? Business has become the new national defense. Service to economy, selfless or not, constitutes service to the nation.

Keith H. Hammonds (khammonds@fastcompany.com), a Fast Company senior editor, is based in New York. Visit West Point on the Web (www.usma.edu), or contact Lieutenant Colonel Scott Snook by email (ns0775@exmail.usma.army.mil).

Sidebar: The Grassroots-Leadership Agenda

Who: West Point alumni
Who: Leadership lessons for business
Why: In an era of great change, business feels a lot like war

What are the leadership qualities that give West Point grads an edge in business? Academy graduates reflect on what they learned.

Responsibility: "This is the underlying theory," says Mark Stabile, '90, a senior partner at Greencastle Associates Consulting. "If you give people responsibility early, give them the opportunity to go out and do things, they'll go out and do them."

Trust: "Your ability to get people to follow you up the hill into gunfire or into the next Net meltdown is based on your ability to convince them that you have their interests at heart," says Dave McCormick, '87, a senior VP at FreeMarkets Inc.

Flexibility: Structure is important, and predictability of behavior is critical. But in chaotic situations, leaders must be able to decide on the fly. "When you go into battle, order quickly disintegrates, and you have to take action with limited information," says Mark Hoffman, '69, chairman and CEO of Commerce One. "You have to make decisions about what to do. You need individuals who can decide in the heat of battle."

Failure: "At some point, everyone fails," says entrepreneur Donald A. Hicks, '90. "West Point makes you deal with the fact that you're capable of doing far more than you think - and that at some point, you can't do any more."

Planning: Cadets plan everything - all the time. They imagine the consequences, and they devise contingency solutions. "It's an internalization that forces you to start thinking ahead," says AOL founding CEO James Kimsey, '62. "It causes some degree of paranoia, because you try to think of every outcome so that you will achieve success."