The word “entropy”, from a physics perspective, is the corollary of the second law of thermodynamics, the way in which energy flows from a hotter object to a colder one – entropy goes up as the range of possibility and action goes down. An example of this can be found simply in cooking – once the element on the stove is turned off (no more heat energy being added), a pan will eventually cool down by ‘losing’ available energy to the air, to food in the pan and the metal of the surrounding stove. The energy “winds down” like a mechanical clock. When heated, the molecules that comprise the pan were moving energetically, chaotically perhaps. Eventually upon cooling, however, these same molecules move to stasis – hardly vibrating at all.

In business, where “entropy” scores are sometimes measured from a human resources and organisational culture perspective (applied to levels of trust, employee engagement, etc.), the definition of entropy is often seen as “moving from order to chaos”. The opposite is in fact true. In physics, a chaotic state for matter is the highest energy-level, not the lowest. The lowest energy-difference (the highest entropy-level) is actually the most ordered: a stasis where nothing moves, nothing changes, nothing happens. As we noted, the clockwork winds down from chaos to order, not the other way round. Usefully put another way, Tom Graves notes the following regarding energy: “… from chaos (maximum potential, maximum possibility), to useful order (maximum exploitable energy in constrained possibility), to non-useful order (low exploitable energy, misaligned possibility), to decrepitude (no apparent energy or alignment to possibility) and finally stasis (no energy)”.

Useful order will always decay into non-useful order – this is inevitable and applies to every system in business including processes, resources, facilities, structures, business models, etc. Everything decays, goes out of date, capability fades, people leave or die. This is inevitable and irreversible. At the same time, however, although entropy is a fact of life, there seems to be an “escape clause” for business – the business (its relationships, design, controls, structure, processes, etc.) can be bent and twisted in very interesting ways to instil new energy to counter the effects of entropy.

The above understanding of entropy is critical for business as it is at the core of all change towards growth. It is important for the following reasons:

  1. Rates of decay are unevenly distributed throughout the business – some areas will decay faster than other areas. In chemistry, different isotopes and elements have different rates of radioactive decay. Different alloys rust at faster/slower rates. The same is true in business, for example, where poor leadership can be replaced with engaging leadership to slow down entropy.
  2. An apparently self-sustaining business system is actually receiving energy from an outside source – a simple real-world example is the rainfall-cycle, as given by Tom Graves: “Water evaporates from the sea or land-surface to form clouds, from which rain falls, and returns to the sea via stream and rivers – but it relies on energy from the sun to power the evaporation that drives the seemingly counter-entropy ‘upward’ part of the cycle. In business, the refresh of a business-process comes in part from ‘investment’ from outside of the business-process itself”. Businesses that grow and sustain themselves well are typically investing in interventions that stimulate creativity, alignment, brand awareness, training, innovation, etc.
  3. Intervening in a system to impose “useful order” on that system inevitably alters the dynamics of the system towards a faster rate of decay – this particularly applies when the context itself is undergoing change. Bert Van Lamoen notes: “The most efficient system dies first”. It seems that with entropy, “the more we try to ‘control’ something, the faster it is likely to decay” (Graves). Business should not treat systems as sacrosanct, but free up the environment to generate new ideas, creativity from all and see the systems as necessarily ever-evolving.

Entropy in business is inevitable. Countering entropy in an ongoing fashion by recreating business culture, systems and processes is critical for growth and sustainability. This speaks to an environment of empowerment and trust, not one of unnecessary control. This is when you get maximum exploitable energy that can be focused on the achievement of strategy.

Leave a Reply