An organization tends towards stability when the variety it controls exceeds the variety required for:
- Controlling its external environment
- Managing its internal operations
- Pursuing its developmental ambitions
Stability here means the organization's progression remains under management control without experiencing discontinuities in its variety distributions or power structures or operations.
This creates a variety adequacy threshold: organizations operating above this threshold exhibit stability; those operating at or below it experience instability.
Example applications:
- Two manufacturing firms face similar market conditions. Firm A maintains diverse supplier networks, cross-trained staff, and flexible production systems (high variety). Firm B has optimized for efficiency with single suppliers, specialized roles, and rigid processes (low variety). When supply chains disrupt, Firm A adapts while Firm B destabilizes - not due to financial strength but variety adequacy.
- A rapidly growing startup initially thrives but becomes unstable despite strong revenue. The variety adequate for managing 50 people proves insufficient for coordinating 500 people. Instability emerges not from poor performance but from variety inadequacy relative to scale.
The axiom reveals:
- Organizational health depends on variety adequacy, not just financial or operational metrics
- Decline often appears first as variety erosion before manifesting in performance metrics
- Growth phases create predictable stability challenges as variety requirements expand faster than variety development
- Crisis resilience requires maintaining variety reserves above minimum operational requirements
Strategic implications: Organizations operating near variety adequacy thresholds remain vulnerable to destabilization from environmental changes or internal growth, regardless of current performance. Sustainable stability requires continuously developing variety reserves that exceed immediate control requirements.
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