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Organised chaos

An event of curious significance took place one glorious day earlier this summer. In the Cotswold village of Painswick, chartered surveyor Nick Matthews and fiancée Imy Portillo-Gonzalez were married.

Apart, of course, from being the most important day in either's lives, the significance of the event is far from obvious. But more of that later.

An oddly related incident occurred in the late 1970s, when a start-up surveying firm picked up the phone and won an instruction. Again, the significance is not immediately clear. More of that later too.

But then again, in the mid 1980s a search for a factory unit led to the most dramatic change to the geography of London for generations.

The three stories are completely unrelated except that they illustrate the three most important aspects of Chaos Theory: sensitive dependence on initial conditions, independence of scale and the ability of systems to learn.

The trouble with Chaos Theory is that it has a stupid name: it does not describe systems in terms of the intuitive meaning of the word chaos, indeed quite the contrary. Chaotic systems are very organised indeed. They just happen to be all but impossible to predict.

But Chaos Theory's more proper name - non-linear dynamic systems - doesn't exactly trip off the tongue and invites inordinately technical explanations of simple phenomena. So Chaos Theory it is.

The populist image used to illustrate the idea of sensitivity to initial conditions is the fluttering wings of a butterfly in China leading to storms in New York. It's elegant, but rather difficult to translate to everyday thinking. So try, first, the wedding.

The reason it took place was that two years earlier a bored Nick Matthews, in impulse, phoned a friend to see if he fancied a beer. The friend was, literally, half way out of his door when the phoned rang. Sure, he said, we're off to Bar Solona, in Soho, see you at about eight. You can probably work out the rest, but try considering the number of imponderables. Had you beyond a doubt that the friend would be there, would answer the phone and be in the mood for company, had you known that Imy would be in the bar, and that she and Nick would hit it off, then the wedding might have been predictable. But probably not.

Either way, without knowing all of the circumstances to an infinite degree it would have been impossible. And you cannot know to an infinite degree.

It is, of course, a small example, but step up the scale and a similar pattern emerges.

The City of London specialist firm Baker Harris Saunders - now part of Lambert Smith Hampton, via Herring Baker Harris - had a policy of staying open between Christmas and New Year at a time when many other firms shut up shop for the week.

The reason is that in its early days Baker and Harris were staffing the office as a prospective client was working his way down the phone book trying to place an instruction. There's was the first firm reached that was open.

It would, of course, be foolish to claim that this incident led directly to Baker Harris Saunders being the first surveying firm to float on the stock market.

But human systems learn for the very reason that they are human - and a simple lesson in professionalism can have profound implications. The incident shaped the way the firm presented itself to its clients in a way that may not have happened otherwise. And this despite another ready list of imponderables: they could have fluffed the presentation or simply taken an early lunch and missed the call.

For the property researcher these two examples should hammer home the importance of stepping back from the raw numbers and graphs to look at the property market as a human system, built on relationships and evolving experience.

The reason it is important is that the same processes can change the way you work forever.

In the mid 1980s the head of Credit Suisse was touring east London in the search for a site for a food processing plant for a client. It was hardly surprising - he would have been attracted by the enterprise zone incentives and doubtless aware that the Isle of Dogs was being developed as low density business space. Heron Quays and the Enterprise Business Park are hung over from these days.

But he was also becoming increasingly concerned at the space planning problems faced by the bank in the City - and could hardly fail to have noticed the ready supply of land in the redundant docks.

He contacted his opposite number at Morgan Stanley and floated the idea of an office development. The idea of 'critical mass' was born: Limehouse Studios would soon cease to be the largest occupier on Canary Wharf, as two hundred years of westward drift in the geography of London was given a huge yank in the other direction. The future of Docklands was not only changed, but changed irreversibly.

The sensitivity to initial conditions is evident. Imagine the things that could have led the search for a factory elsewhere. So this too is an independence of scale, since it is in concept no different to a chance meeting in a bar. And the system learnt. Sites that would have previously been beyond the pale for office development were brought into focus, from Paddington in London to Brindleyplace in Birmingham.

The crucial point for those using property research is to appreciate that models based on past behavior could never have anticipated the way Docklands developed. Indeed those trying to plot the future of the areas when the London Docklands Development Corporation and the enterprise zone were first set up expected something very different - low density industrial.

And these people were certainly not stupid, nor even short sighted - how can you be when trying to plan the future of eight square miles of derelict land?

None of this, however, means that research should be allowed to abandon examination if the future - clients would regret it and researchers would get very bored very quickly.

But the nature of forecasting may need to change somewhat.

Researchers will always seek to answer the questions that they are given. While the best will always seek to offer a fuller picture, ultimately they do whatever they are paid to do. To get the best out of them in a market which, outside occasional periods of stability, may be inherently unpredictable, some key questions need to be recast.

Instead of asking 'Will my project succeed?', try 'What will it take to give my project a realistic chance of success?'. Instead of asking 'How can this site be regenerated?', try 'What would it take to make this site a retail success? And office? And leisure?' Instead of asking 'What will investment performance be over the next year?', try 'What have I got to do the get the best investment performance?'

Of course, some of these questions are already being asked, which is for the good. After all, ask a more interesting question and intelligent researchers will respond enthusiastically - and give better results.

The most important initial condition in using research is to ask the right question.

For Nick Matthews it wasn't 'Will you marry me?', but 'Will you dance?' The rest flowed from there.

© 2001 Ian Cundell