The purpose of this document is to outline some principles and tactics to help leaders fight organizational entropy across the organization. As our organization gets larger, it will become increasingly important for leaders in the company to understand how to manage complexity.
We should start with definitions. What do we mean by “organizational entropy”?
For those not familiar with the physic definition of entropy, you can think of it as the measurement of disorder in a system. The higher the entropy, the more the disorder. In the context of an organization, high entropy (disorder) is bad and low entropy (order) is good.
Disorder can also be thought of as the ground state of a system, which is the lowest energy state. It’s like when you put cream in coffee. Given enough time, the cream will fully diffuse throughout the cup. To prevent that natural progression requires energy — typically a lot more energy than it took to start the process.
It’s what happens to a garden when there’s no gardener keeping the plants contained. Fighting entropy takes active effort, which can be done through active management (i.e. a human), better systems and processes, and software.
Low entropy, ordered garden (good)
High entropy, disordered garden (bad)
And as an organization grows in headcount, complexity increases (more on this in Levels Organizational Design Principles - June 2021), and with that complexity comes the possibility of disorder. This disorder comes in many shapes and sizes, from simple things like failing to update an onboarding process or other documentation with new information, to big things like losing track of company priorities and spending your resources on the wrong projects.
<aside> ⭐ Organizational Entropy is the unrelenting force that pushes companies towards disorder (the lowest energy state) over time, especially as they increase in size and complexity. Countering organizational entropy requires the intentional, consistent addition of energy to keep the system operating.
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In this memo, we’ll walk through a few examples of the “high entropy states” that many companies fall into and why, and we’ll go over some specific tactics that we can use to fight against them.
Another important point to recognize about organizational entropy:
<aside> ⭐ Fighting entropy requires energy to be put into the system. All systems degrade with time, and preventing that degradation requires effort. When creating any new system, one should consider the resources required for implementation and maintenance.
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Without actively and intentionally managing organizational entropy, there are a number of end states that most companies will trend towards. Once a company is in one of these high entropy states, it can be hard (and at a certain scale, impossible) to fix them. We’ll go over a few examples to further explain this concept.
Most people who work at large companies complain about how many meetings they have. It’s often the case that the only time people can get real work done is outside of business hours because they’re stuck on zoom calls all day.
There are a lot of reasons why almost every company ends up in this high entropy state, and we discuss this in more detail in Principles of Effective Communication, Part 2 if you’re curious.
One of the biggest reasons why meetings have a bad habit of proliferating is that it’s low friction to schedule meeting time and it’s an easy way to defer work, because at most companies, joining the meeting is the first time anyone present has given thought to the subject at hand. This is bad.
We’ve all experienced this, and it’s especially common at large companies. No matter what you send them in advance, they won’t read it and they’ll come into the meeting totally unprepared. For them, the meeting is the work. This is wrong. I’ve personally experienced this countless times with lazy venture capitalists (VCs) who don’t do any background research before our meeting, in spite of the fact that I sent them the material. I usually end these calls within the first 10 minutes.
There’s also the issue of stakeholder proliferation. At large companies, it’s often the case that you need buy-in from dozens of people in order to get a project started, so you need to figure out how to get all those people on a call at the same time in order to kick something off. And you need to include all of those people “just in case” they have something to say.
Stakeholder proliferation is also its own kind of high entropy state, which extends beyond meeting culture. Having Directly Responsible Individuals (DRIs) and clarifying who is responsible for decision-making helps with this. Note from @Tom Griffin on this point:
Something I've found at other companies (which can be a bit excruciating) is when every decision, or even just individual communication, within a particular project needs to involve a ton of stakeholders... there's a subtlety to all of this. E.g. there is a difference between writing FYSA and tagging stakeholders with no action needed "for visibility" (a Levels best practice) and requesting input from any/everyone who is somewhat relevant before you move forward with a task. I think for some people in some companies, stakeholder management can feel good, i.e. that you're being a great worker if you're constantly moving between teams and individuals, getting input and providing updates, but man oh man does it slow things down 😬