“Now, more than ever, management is a balancing act — the juggling of contradictions to try to get the best of attractive but opposing alternatives. Order is a temporary illusion, strategy a moving target. Leaders cannot impose authority on a world of constant motion; they can only hope to steer some of that action toward productive ends.” — Rosabeth Moss Kanter, Harvard Business School professor, consultant, and author

Today’s leading organizations are knowledge-creating companies that thrive on continuous innovation. It’s a big competitive edge. New products and services can be “knocked off” or copied. But it’s much harder for competitors to duplicate a management system and corporate culture that produces a continuous stream of successful product and service improvements, innovations, adaptations, and extensions.

That continuous innovation stream comes from controlled chaos. It’s a tricky process that has four main stages. The first two stages are dependent on people or leadership skills. Stages three and four, lean heavily on disciplined management systems and processes.

1. Exploration — a broad, open search for strategic partnerships, unresolved problems, latent or unmet needs, new markets and customer segments that potentially fit the organization’s Context and Focus (vision, values, and purpose) as well as core competencies.

2. Experimentation — pilots, clumsy tries, and “mucking around” to test the potential opportunity for viability and to learn what would be needed to make it successful.

3. Development — major resources are now committed to fully developing or refining the few new products, services, or businesses that are clearly ready to be capitalized on.

4. Integration — the new product, service, or business enters the organization’s mainstream.

Of course, these four innovation stages aren’t always so neat and orderly. They run in parallel, overlap each other, and sometimes clash. For example, stage two often involves field and development people. That means that stage three work may already be proceeding while the project is still in stage two. In smaller or centralized companies, the close involvement of field people in stages two and three, mean that many of them are already trained by the time the company is in stage four.

An organization’s emphasis on the unstable, chaotic first two leadership stages, or the last two stable and more controllable management stages, tends to pulse. At some point, there may be many exploration and experimentation activities underway. That entrepreneurial environment is both exciting and unstable. Too much can be dangerous to the health of ongoing business and the people who are trying to hold core operating processes together.

As all those experiments and pilots become developed, the organization may go through a “settling down” period. That can be comforting, but dangerously stable. Spend too much time here and the company won’t have enough exploring and experimenting going on to ensure future innovations. The challenge is to find a rough balance between exploring and experimenting while developing and integrating — and keeping the core business operating everyday. That’s the unsolvable paradox of controlled chaos. It’s about as easy as changing the tires on a moving car.

The first two innovation stages are broad and fairly inclusive. The wider a company’s scope of focus and people, the higher their chances of “lucking out” on significant breakthroughs that will soar. But without some limits and controls, an organization can lose its way exploring every interesting path and side road.

That’s where a strong and clear Context and Focus (vision, values, and purpose) is very helpful. It will help everyone more easily assess whether a potential opportunity should be pursued further or dropped now. Strong vision, values, and purpose will also “magnetize” and draw “lucky” opportunities, relationships, or people to the team or organization.

The cost and determination to never turn back rises steeply in stages three and four.

That underscores the importance of intense learning from high levels of exploration and experimentation.