Chaos theory began as a field of physics and mathematics dealing with the structures of turbulence and the selfsimilar forms of fractal geometry.This is not very descriptive. As it is popularly understood, chaos deals with unpredictable complex systems.In chaos theory, "The Butterfly Effect" refers to the discovery that in a chaotic system such as the global weather, tiny perturbations in the system may sometimes lead to major changes in the overall system.
The application of chaos theory to management depicts organizations as complex and unpredictable because of the relations among constituents of a systeThe theory is concerned with natural processes expressed in terms of mathematical formulas, calculations that were virtually impossible without computers. In differential calculus, chaotic systems are represented by nonlinear differential equations, which deal with natural phenomena such as water turbulence, friction, or financial markets.
Understanding chaos theory is important because of its significant implications for world systems design, organization design and administrative behaviour, and public policy analysis and implementation
Importance
Organisations operate in turbulant and dynamic environments.
This means uncertainty, unease and feelings of powerlessness with people in and around organisations.
This is unfortunate as it often is on the outskirts of chaos that creativity flourishes.

Sensitivity to Initial Conditions. As in the case of Lorenz's work, a complex system reacts to different variables at the outset in unpredictable ways. Even starting with the same, exact or slightly different variables in a model will not result in the same outcomes, if the system is complex.
Time Irreversibility. In a complex system, there is never the same context twice. Thus, a college, business, or team with essentially identical personnel and similar characteristics will never perform exactly the same as another (or itself). .
Strange Attractors. Attractors in chaos theory are like the influence of gravity, sets of values in the "phase space" to which a system migrates over time, also called islands of stability (possible states of a dynamical system). In a formula an attractor can be a single fixed point, a collection of points, a complex orbit, or an infinite number of points. While it is less clear how these are represented in a social organization.
Fractal Forms. A fractal is any curve or surface that is independent of scale. Any segment, if magnified in scale, appears identical to the whole curve. In the management analogy, it is assumed that different levels of organization resemble others, like a fractal in the managerial hierarchy.
Bifurcation. Bifurcation is the sudden appearance of qualitatively different solutions to the equations for a nonlinear system as a parameter is varied. In an organization, two different patterns (groups) can emerge to address an issue differently, as complexity increases. This is often recommended as a source of creativity.
