Managing ‘Entropy’ in Business: A Demon That Slowly– Erodes, Disrupts, Destroys Organizations…

Murphy’s Law is well-known and it states; anything that can go wrong will go wrong, and a corollary version claims: left to themselves, things tend to go from bad to worse…

Entropy’ is the phenomena that makes all things go from bad to worse, if left unattended… Unless new energy is constantly inserted in a structure, a business, an organization…  it will eventually, and inevitably fail…

According to Walter E. Requadt; entropy is the ultimate natural law and it’s the reason, e.g.; paint peels, hot coffee turns cold, hot pans cool down, gasoline explodes, tires blow out, cream mixes in coffee… If an organization is to survive in an increasingly competitive marketplace, the organization must continuously adapt its environment– this requires continuous renewal… which means managing its ‘entropy’…

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All ‘things’ follow downward trends governed by nature’s law– to disorder, to erosion, to chaos… and that includes organizations… For organizations to be successful, managers must have the foresight, willingness to anticipate the effects of change by periodically reviewing and revising their strategic positioning, i.e.; mission, markets, competitions… or they will  fail…

This means the mitigating factors that impacts performance, such as; rigidity, control,  bureaucracy, confusion… or, factors that cause friction, such as; bullying, manipulation, intimidation… or, factors that prevent workers from being productive, such as; micro-managing, short-term focus, job-insecurity, risk-aversion, silos… Entropy, if left uncheck, will destroy an organization…

In the article Leadership Must Overcome Entropy by Wallace Henley writes: Entropy is ‘state of sustained decay’…  According to Stephen G. Haines; all business problems conform to laws of inertia– the longer you wait, the harder the problem is to correct… Organizational entropy is tendency for any system to run down and eventually become inert… Think about an organization you’ve either been part of or known about that began with a flash, grew with speed of the expanding universe, reached dizzying heights and even stayed up there awhile, then declined and are now inert… They fell into ‘state of entropy’ because they did not correct ‘decay’, and then failed to overcome entropy that followed, inevitably… When an organization is in entropy they are just one step away from free-fall failure…

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In the article Organization Entropy by Grant Goddess writes: Organizations are like a pendulum– apply ‘energy’, i.e.; investment, management, accountability, governance… and the pendulum begins to swing, gears start to turn and work gets done… And as long as ‘energy’ is continuously applied the pendulum will continue to do work, but when you stop applying energy to it, it will slowly expend all of its existing energy and come to full stop… The key for successful organization is to understand that to keep the pendulum swinging it takes continual application of ‘energy’, or the motion will stop…

Some entropy are unavoidable, e.g.; inefficiencies, shrinkage… but these are usually shrugged off as ‘cost of doing business’. While some entropy  are avoidable, e.g.; incompetence, bad management… Hence, the challenge for an organization is to find areas of decay, and reduce or eliminate them… And by doing so, less energy is needed to keep the pendulum swinging– longer, stronger…

In the article Entropy In Organizations by Ari-Pekka Skarp writes: Entropy is found in all situations, it’s a law of nature and it says; that all things have a tendency towards a ‘state of disorder’ from a ‘state of order’… In other words, all things deteriorate over time if left unattended… Hence, if you think about a ‘working process’ you should not make the mistake of thinking that a ‘process’ can actually govern people’s behavior…

Processes don’t use people, people use processes. This means that a working process is subject to change by actual behavior of workers. No matter how specific, measurable, actionable, rational, time-bound… a process is, workers will always try to adapt a process to their behavior, which may negatively impact the organization’s desired outcome… In practice this means that organizations must be in continual development…

In the article What Is Entropy in Business? by Kathryn McDowall writes: Organizations are either organic or bureaucratic in nature… Organic organizations invite innovation and creativity while seeking continuous open engagement with the environment in order to thrive… Whereas, bureaucratic organizations operate in a mechanistic closed style that is subject to entropy… Entropy occurs in organizations when the mechanical works of the bureaucracy break down as a result of– specialization, apathy, carelessness, lack of pride…

A major cause of entropy in the bureaucratic environment involves expectations that individuals will follow routine orders and adhere to an organization’s rigid structure. This means that workers initiatives are discouraged, and workers should only do what is expected of them, and no more…

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Eventually workers in bureaucratic organization become mindless and unquestioning because they depend upon the structure of the system to justify their actions… Entropy in the mechanistic organization eventually causes workers to become rigid in work and behavior and resistant to change… Entropy in an organization is reduced by workers’ greater participation in developing process and their involvement in decision-making… Workers are the front line; they deal with– customers, suppliers, partners… and are better able to determine their changing needs… and workers’ involvement develops a sense of ownership in the organization and it helps to develop greater job satisfaction…

In the article Managing Complexity and Entropy by Julian Birkinshaw write: It goes without saying that companies are often very complex organizations… Although complexity is a natural outgrowth for many successful companies, it’s also difficult struggle to avoid negative side-effects of ‘unintended consequences’ of complex organizational structures. Often these complexities manifest themselves in very tangible ways that can seriously impacts the very survival of an organization, e.g.; from inefficient systems, unclear accountability, to alienated and confused workers, to incompetent and unethical leadership… The result is that an organization is running very fast just to stand still… while entropy is slowly eroding at its core to eventual failure…

Leadership must be proactive with sharpen-focus to keep ‘entropy’ at bay… This involves continual organizational renewal and revision, e.g.; periodically eliminating layers of management, getting rid of old bureaucratic process that are no longer fit purpose… It means– providing workers with a clear, compelling reason to achieve an organization’s objectives. It means– refreshing the management team, engaging workers, making entire team explicitly accountable for outcomes, collaborate with suppliers, engage partners, and open dialogue for new ideas, innovation. Organizations are their own worst enemy, they are by design– ‘entropic’…

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Much of the activities that organization take is about simplifying things, e.g.; delayering, decentralizing, streamlining, creating stronger processes for ensuring alignment… in simple language: as organizations grow and prosper they typically become– insular, complacent…  Management is more often focused on avoid mistakes, securing their own position than worrying about organization’s health, well-being… and the signature brand of the organization becomes one of– inefficiencies, under-performance, lack of direction… also, workers become– detached, disengaged, uninterested… and the organization becomes aimless, inert…

According to Peter Drucker; 3-things occur in most organizations: Under-performance, Friction, Confusion… then that is a 4th; ‘Entropic’…