During one of the episodes of the Wonders of The Universe series on BBC One, Professor Brian Cox introduced us to the concept of entropy. Entropy is a term used by physicists to explain the way in which things move inexorably from an organised to less organised state. As Professor Cox explained, this is the natural law of the universe. For example, when we build a car we take raw materials such as metal, leather, plastic and glass and arrange them in a highly organised way to make a car. But if we then leave that car for long enough the metal will rust, the glass will become brittle and break and the leather will dry out and turn to dust. If the car is left for a very long time it will eventually disappear altogether. This thought left me wondering about the nature of organisations. If a progression from order to chaos is the natural order of the universe, then is this same pressure present in organisations and, perhaps more importantly, what is the optimum position for an organisation between the extremes of rigid inflexibility (low entropy) and complete chaos (high entropy)? This question is not as crazy as it might at first appear. Take as an example of an organisation with a low entropy value the last company in Britain to produce hard toilet paper. For those of you lucky enough to not know what this is, hard toilet paper was shiny on one side and formed painfully sharp edges when scrunched up. It was however what people used to wipe their bottoms until the introduction of soft toilet tissues in the 1950s. However, the hard paper was cheaper and it was not until the 1990s that the last UK company making hard toilet paper went out of business. Clearly, that organisation was so set in its ways and so resistant to change that the introduction of soft tissue, quilted tissue or even moisturised and scented tissue completely passed it by. Perhaps the reason for this seemingly blinkered approach can be found in the history of organisations and in particular in the philosophy and practice of management. Developed in the late seventeenth and early nineteenth centuries, the purpose of management was to enable the business-founders who led the industrial revolution to coordinate the activities of the huge workforces they employed. Prior to that, most businesses were small cottage industries where a formal management process was not needed. Because the workers in those early organisations were the means of production, their activities needed to be coordinated and closely supervised. So, when Henry Ford said he wanted all his Model T cars to be black, he used his managers to ensure that his orders were carried out and that each and every car was indeed black. Provided that either nothing changes or that the pace of change is slow enough for the business founder or chief executive to anticipate and direct all the necessary changes, this low entropy organisational model works well. Indeed, the massive growth in prosperity of the Western economies during the last 150 years or so stands as testament to just how well it has served us. More recently though the pace of change has accelerated to unprecedented levels. The combined effects of mechanisation and globalisation mean that a new innovation launched on one side of the world today can be copied and become a commodity product within a matter of weeks. For example, did you know that the Disney Corporation releases, on average, a new product every 3 minutes, or that most consumer goods companies will today be selling products that did not exist 6 months ago and that will no longer exist in 6 months time? In this fast-moving world where the number of decisions an organisation needs to take every day vastly exceeds the capacity of a single person, the traditional role of management in enforcing blind obedience to directions from above has changed. Today's managers need to be leaders of change as well as supervisors of the process. And in this environment, too much stability is a bad thing! So to be more agile and more receptive to change, an organisation needs to be less stable and therefore more chaotic. To illustrate the benefits of this higher entropy model, take the case of the Typhoon Eurofighter. This aeroplane was deliberately designed to be the least stable aircraft in the world. It is in fact so unstable that if it were not for the numerous computer systems that monitor and control its every movement, it would be impossible to fly. Yet it is this instability that also makes it the most manoeuvrable aircraft in the world. In the Typhoon the pilot is therefore not really piloting the aircraft at all, that is done by computer. They are instead acting as a leader – setting direction and initiating changes. The challenge in building the Typhoon was therefore to find the right balance between chaos and organisation. Too much chaos and the aircraft would be un-flyable, too little and it would not be sufficient manoeuvrable. In organisational life this same dilemma is represented by the balance between management and leadership skills. The discipline of management is all about stability while the discipline of leadership is all about change. John Kotter, the legendary Professor of Leadership at Harvard University famously summed it up in his book "Leading Change" when he said that in times of stability a balance of 80% management 20% leadership is appropriate, but that in times of change these percentages should be reversed. Since no one would dispute that in organisational life the pace of change is greater today than at any time in the past, the question we should all be asking ourselves is whether we have got the balance between management and leadership right, or whether our organisational entropy score is too low?
About the Author Alistair Schofield is Managing Director of Extensor Limited.