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Friday, August 11, 2006

Small Business Organizational Entropy

Webster's Dictionary defines entropy as "a measure of the degree of disorder in a system."

When a small business makes plans, the chaos of everything changing around it gradually erodes those plans -causing unchecked organizational entropy or "decay."

Small businesses must have a systematic and ongoing way to to offset these forces or it will eventually become ineffective to the point that its survival will be at stake.

Here are some organizational entropy warning signs:

  • A lot of red tape is required to get things done (GTD) - it takes too long or costs too much
  • Inadequate tome is alloted for planning
  • People don't know what is expected of them
  • People aren't held accountable for their responsibilities
  • Results aren't measured, so decay goes unnoticed or unchallenged - and learning is inhibited
  • Inadequate resources are allocated to keep systems/processes working properly

BOTTOMLINE: Unchecked organizational entropy is one of the barriers to lasting excellence. The others are:

  1. Poorly understood strategy
  2. Weak strategy execution
  3. Lack of a systematic approach
  4. Impractical execution methods
  5. People are not engaged

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