This article is absolutely about business strategy. It's just also a little bit about physics, specifically thermodynamics. More specifically about the Second Law of Thermodynamics. But it's definitely mainly about business.

Bear with me, I swear it's about to make sense.

First up, what is the Second Law of Thermodynamics and why should I care about it in my business strategy?

The Second Law of Thermodynamics is a fundamental principle in physics and engineering. Essentially, it states that any system of processes will naturally move from order towards disorder. All roads lead to chaos.

Not exactly what a painfully organised COO wants to hear, but also not surprising to me considering how many scaleups have brought me in because the company grew too fast and everything is broken.

Ok, but what is entropy?

Introduced as a concept into the world of physics in the late 1800s, entropy, named from the Greek word for ‘transformation’, is a measure of how much disorder there is in a system.

If, according to the Second Law of Thermodynamics, all systems move from order to disorder and entropy is disorder, then all systems will eventually move into a state of entropy.

Why do we care?

Because entropy is inefficient - think of the process of combustion in engines: fuel burns to produce energy, but some of the energy is lost as heat because it's fundamentally impossible for energy to be produced without heat being generated. What was an ordered grouping of molecules (fuel) becomes a disordered split between energy and heat. Yes, your vehicle is moving forward, but it's never going to do so at maximum efficiency because there will always be some entropy.

Even as electric vehicles become more and more prevalent, millions of pounds are spent each year on trying to improve combustion systems to make them more efficient. So too do millions of pounds get spent each year trying to improve business systems to make them more efficient.

In a business context, when maximising efficiency can be the difference between the growth and the death of your company, you really, really want to be avoiding entropy wherever possible.

If you're not careful, entropy can quickly become your enemy.

If entropy is an unavoidable consequence of a system, what can make it better or worse?

Systems with more elements in them are more likely to descend into entropy (disorder).

When there are more elements in a system, there are more opportunities for inefficiencies - there are more individual moves that can go wrong. The fewer elements in a system, the less space there is for inefficiencies to grow.

More complexity in a system will entropy worse; conversely, less complexity in a system will mean less scope for disorder.

How do I minimise entropy? (Spoiler alert: it's all about a simple business strategy)

There’s a design principle that you may be familiar with from a range of self-learning books: keep it simple, stupid. It’s frequently credited to the engineer Kelly Johnson and we’re going to take the first three words - keep it simple and lose the last one because there are enough barriers to your success as a founder without me calling you stupid when you’re very clearly not. 

So, if you want to minimise entropy and inefficiency, then keep it simple. If entropy is inefficient and the more complex something is the more likely it is to descend into entropy, then it follows that simplicity = efficiency. 

Reduce the number of elements in a system, reduce the chances of an element failing, reduce the potential for the whole system failing. In real terms: build a complex business strategy, have more chances of failure. Build a more simple business strategy, have fewer. 

The concept of entropy is particularly interesting in the earlier stages of your business.

As a founder or senior leader at the early stages of building a business, you’re often left feeling one step behind everyone. I’m sure you’ve read stories of successful people and seen their pithy tweets or liked their shiny instagram posts and been just a little bit jealous that they’ve already achieved success and you’re just starting.

But, if we follow the logic of the Second Law of Thermodynamics, you’re actually, right now, in a much better position than they can ever get back to being.

Once a very complex system has been created, it’s very hard to unpick it and make it more simple. This is a key contributor to why some businesses grow lots and then flatten out or fail - they simply become too inefficient.

Have you ever worked for an annoyingly complex company where it took five different systems just to ask for a day of holiday - so much entropy. Your productivity and output are destroyed because you’re taking so long to do something simple and there’s so many parts of the process that can break but it’s so hard to replace all the building blocks of those systems because the chaos just breeds other chaos. 

You, right now, have the chance to build a simple business strategy from scratch and every day that you start to work on it is another chance to keep it as simple as possible, to limit the entropy for another day and keep pushing towards the output you deserve.

You can’t avoid entropy entirely - in order to do that you’d have to take zero action and you can’t build a business with zero action - but you can limit it by insisting that your business be as simple as possible in order to move forward towards output.

If you're keen to live that sweet, sweet simple life as you grow your business, give me a shout - I built a ton of simple business strategies to minimise the chaos.

Pay As You Go COO Discovery Call

Book Now