Knowledge creation can not be isolated, firms must interact with their environment. Wanted to create a framework so that firms could be more absorbative. Can similar today's environment as complex dynamic terrain. Network ties on relationships. Network outcomes are emergent, and its the links between them which produce them.
Interpretation leads to action, which then feeds back.
Observation, action, participation. Need to shift attention from controlling outcomes to influencing processes. Need self-organizing strategies Have to be at the edge of chaos, far from equilibrium, to fit to the new order. Also have an informal system, as a shadow system. To contain the system of instability, need knowledge about structure, patterns.