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Corporate Entropy

Back in college I had a novel assigned in a literature class that turned out to be a discourse on the strong forces of entropy that constantly surround us. I don’t recall the name of the book or author any longer, but I do recall that the conclusion was depressing – everything is bound to fall apart.

Now, just as a reminder, entropy is a physics concept best explained by the notion that once you take simple things and make them more complex (such as assembling raw materials in the construction of a house) these complex entities are destined to eventually be reduced to their original elements (rent a copy of The Money Pit for an illustration).

The only way you can beat entropy is to keep putting energy into the process – repaint, reshingle, rewire. But, once you ease up on the effort of adding energy, entropy takes over and everything crumbles, dust to dust.

Pretty much everything in the universe is subject to the laws of entropy. It appears, however, that contemporary organizations are, somehow, exempt – maybe it is Frederick Winslow Taylor’s fault. At some point, probably after the industrial revolution, organizations began to defy the laws of physics.

Having thought about this for a bit, it seems to me that once a company reaches a certain size and complexity, the dynamics of the organizational system take over. You don’t need to keep adding energy to maintain the complexity, it gets more complex through its own inertia. This is a lot like Arthur C. Clarke’s HAL, the system develops a will of its own.

A case in point, Phillips, the Dutch electronics conglomerate, recently came to the realization that it was suffering from this affliction. It had grown too big and complex and it was getting too hard to manage effectively. Ironically, it had to put significant energy into the process of simplifying the business. Entropy is supposed to take care of this for us, but Phillips grew into a state where entropy no longer applied. (It conjures up the Talking Heads song with the line, “Somewhere in South Carolina / Where gravity don’t mean a thing”). Phillips even went so far as to declare a simplification day when all 125,000 employees spent the day applying mental energy into the process of brainstorming means for simplifying their organizational existence.

Diablo Decay

Don’t worry - it gets worse - organizational sub-structures seem to have also evolved into this physics-defying ability as well. For example, we have all witnessed those committees that formed seemingly eons in the past, but still meet weekly. They may not actually have a purpose, but getting them to disband actually takes more effort than simply allowing them to continue, so they do.

CRM programs too can achieve anti-entropy status. They get so big and convoluted that they can’t be stopped. Crappy utilization and suspect data even fails to get in the way. Some CRM systems are like HAL on steroids mixed with HGH (although they have gone on record at congressional hearings vehemently denying their use).

I have multiple clients, who like Phillips, are putting significant energy into CRM simplification in an effort to make things more manageable. And many more have taken smaller steps, such as taking advantage of software upgrades as an opportunity to drive complexity out of their CRM programs. This need for simplification is a huge driver in the trend toward SaaS – hosted solutions are easier to unplug. But, who knows, maybe even these programs will evolve and start to take over as well.

So, a couple of conclusions:
First, if you feel that things are too complex, you are probably right. It may be time to cause some self-inflicted entropy. Look for ways to devolve. On the other hand, if you are just getting started, the best advice is to not do anything that will even remotely enable the creation of the next HAL (place a premium on simplicity).

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