The following is an excerpt from Organizational Physics – The Science of Growing a Business.
If you’re a growth-oriented CEO, entrepreneur, or department manager, then you’re naturally under pressure to lead your business to greater levels of performance. You also need to do this in a fast-moving, turbulent, evolving marketplace. A lot is riding on your judgment and leadership and there’s little room for error. There’s time pressure, money pressure, market pressure—not to mention work/life balance pressure—that can all add to the difficulty of achieving success.
Complicating matters is that there are never enough time and energy available to accomplish everything that needs to get done. Using limited resources, you must drive success, build powerhouse teams, set the right priorities, and execute fast. And because the right plan is only as good as your team’s commitment to implementing it, you have to ensure constant buy-in and continually lower any friction that gets in the way.
That’s a tall order. If you’re honest with yourself, you’ll admit there are countless times when you’re feeling stressed, doubtful, unclear, or simply stuck. Sometimes your job can feel so thrilling, you can’t imagine doing anything else. Other times it feels so frustrating that you want to quit, move to Tahiti, and take up painting. All in all, you’ve chosen a career path filled with adventure, danger, excitement, and the opportunity to manage one mini-crisis after another.
As a wise leader, you have learned to trust in your own experience. But you also keep an eye and ear open for valuable insights and perspectives. In this regard, there are countless management theories and organizational practices that you can choose from. There are top-down, bottom-up, agile-iterative, data-driven, design-first, customer-oriented, outcome-based, decentralized, centralized, democratic, autocratic, process-driven, lifecycle-stages, and X-Y-Z management theories. If you ask a dozen entrepreneurs, CEOs, and management experts which is the best model, you’ll hear as many different answers.
When you’re faced with a myriad of challenges, opportunities, constraints, and choices, how can you decisively lead your organization where you want it to go? When can you trust your past experience and when does it cast blinders on your ability to see clearly? What’s the right approach for your particular situation? How do you maximize your organization’s performance and your personal satisfaction, now and in the future?
The answer, as with all things, is to first understand what’s really going on. For example, a good doctor understands how the body really functions. Rather than focusing on symptoms, s/he will work to understand the systemic causes of a disease. Similarly, if you understand how your business and team really work beneath the surface, you can get at the underlying causes of what’s making them fail or succeed.
The purpose of Organizational Physics is to do just that—to explain how your business really works and to provide you with a complete system for improving its performance. What I’m proposing is a universal approach to solving any business problem or condition. You can use it to support your company’s overall success, boost the effectiveness of your teams, select and implement your chosen strategy, and even help yourself and others maximize their job satisfaction. It’s an all-encompassing approach to individual and organizational transformation.
But how is it that, without ever having met you, studied your business, or probably even worked in your industry (not to mention the fact that every business is unique), I could possibly tell you how your business really works and how to improve it? The reason is that I’m not relying on any context-specific business theory—but rather synthesizing certain principles of general management theory with a totally different discipline: the field of physics.
Physics is the study of matter and energy and their interactions. Its aim is to understand how nature at its most basic level really works. You can say that physics is the most fundamental of all sciences because physical laws can explain many observable facts in biology, medicine, chemistry, engineering, and other disciplines. It is so pervasive in its applications that it also applies to your situation, regardless of how unique it may seem.
At its core, physics provides us with a universal lens, language, and sequence to follow to understand nature’s underlying properties, patterns, and behaviors. For example, Einstein’s famous physics equation E=MC2 provides a lens, or a way of looking at the world, that is both elegant and enlightening. It also provides a language that translates beyond geographies, cultures, and culture-bound languages. A physicist in Beijing and one in Paris can communicate effectively using only the language of their discipline. Finally, physics provides a sequence to follow. If you repeat certain conditions in this way, then this will be your result, regardless of the time or place.
All systems—whether electrical, biological, or social—have common patterns, behaviors, and properties that can be understood and give us greater insight into their behavior. What if it were possible to apply the laws of physics to better understand the performance of your organization? Not only would we reveal the underlying patterns driving organizational performance, but we would also have a common lens, language, and sequence to use to improve that performance.
The premise of Organizational Physics is that it is both possible and extremely productive to do just that. There are indeed some basic laws of nature that determine the performance of any organization. Put another way, certain classic laws of physics apply not only to physical systems such as stars, toasters, and space ships, but also to complex adaptive systems such as individuals, families, companies, and countries. In a word, we call these complex adaptive systems “organizations.” If physics is the science of matter and energy and their interactions, and “management” refers to principles and methods used to lead organizations, then Organizational Physics is the translation, or the common ground, between the two.
In my work with high-tech companies, CEOs, entrepreneurs, and organizational leaders, I have found that this translation is not only interesting—it’s essential. Technological advance continues unremittingly, yet most of our existing management paradigms are lagging behind the times. To many, it seems that the world is at a dangerous tipping point—that we keep running faster and faster while heading in the wrong direction. Without a management system that takes this into account, organizations will have a harder time orchestrating positive outcomes. We’ll be stuck in the tower of Babel of conflicting management theories that just don’t decode quickly enough for our new era. This book argues that the models of physics offer answers to the question of how to keep up—in ways that are powerful, practical, and universally valid.
There are Six Laws of Organizational Physics. These laws determine an organization’s performance and can help you improve it. They can be found within core branches of physics, including systems theory, thermodynamics, and motion, as well as the most fundamental principle of evolution: adaptation. Think of it this way: If you want your organization to thrive rather than fail, move swiftly in a chosen direction, adapt successfully to change, and behave in a certain way, then the answers all reside within these laws.
Below is a brief explanation of each law and why—as an entrepreneur, manager, or leader—you should understand its implications.
1. An organization is a complex adaptive system.
Organizations are complex in that they have many interconnected and interdependent elements, subsystems, or parts. They are adaptive in that they shape and respond to changes in the surrounding environment. They are systems in that they respond as a whole organization, not just as a collection of parts. To understand how something really works, it’s not enough to break it down into its components. You must look at it in the context of the complete system. Viewing an organization as a complex adaptive system provides valuable insights into how it functions in its totality.
2. An organization is subject to the first law of thermodynamics.
The first law of thermodynamics states that, at any given point in time, a system has a finite amount of energy. If an organization is to get new energy, it must get it from its environment. For a business, energy is any usable source of power such as money, resources, and market clout. Its environment includes the surrounding system of customers, social norms, regulations, and economies in which it operates. If there’s high integration between an organization’s capabilities and the opportunities in the environment, then the organization can receive an abundance of new energy and be successful. If there’s no integration between them, then there’s no new energy created for the organization and—just as a man on a desert island without food and water—it will soon perish.
3. An organization is subject to the second law of thermodynamics.
The second law of thermodynamics indicates that everything falls apart over time. This is due to entropy, which is disorder or disintegration. All systems are subject to it; none can escape it. An organization’s available energy first flows to manage and counter the disintegrating force of entropy. If entropy in the system is high, then it costs the system a higher amount of its available energy to maintain itself and get work done. Therefore, it has less energy available to drive integration forward in its environment. To get an immediate, intuitive grasp of this principle, just imagine a business with a great market opportunity but which also suffers from high internal friction, politicking, and infighting. It takes a tremendous amount of energy to get any work done and the business can’t capture the external opportunity as a result. How an organization manages its available energy is what ultimately determines its failure or success. Learn how to work with Laws #1-3 to drive greater success and satisfaction.
4. An organization must shape and respond to its environment and do so as a whole system, including its parts and sub-parts.
In physics, a chaotic system is one that seems random in its behavior but is actually driven by some basic repeating patterns or forces that exist from the macro- to the micro-level. In this regard, an organization is like a chaotic system. It has patterns or forces that exist all throughout the organization, from the smallest tasks and behaviors to the largest enterprise. These forces can be mapped in many ways. One of the most effective I know is placing them along two basic parameters or axes: (1) how the organization shapes and responds to its environment; and (2) how the organization manages its individual parts and the whole.
Later you will learn how these parameters explain four primary forces within an organization and how these give rise to individual and collective behavior. They are called the Producing, Stabilizing, Innovating, and Unifying forces. Each of these expresses itself through a particular behavior pattern. If one or more of the forces are absent, the organization will perish. Understanding them allows you to work at the root causes of what’s happening in the system and use them to create desired change. Learn how to work with Law #4 to build and manage powerhouse teams.
5. An organization is subject to the conditions in its environment.
The driving principle of evolution shows that it is not the strongest or most intelligent that survive but those that are best adapted to their environment. Therefore, the greatest mistake an organization can make is to misread its environment. If it does so, it will cease to get new energy and it will fail. Because the environment is always changing, the organization must always be adapting to maintain integration. Successful adaptation requires a constant realignment among the organization’s capabilities to execute (Execution Lifecycle), its markets or customers (Market Lifecycle), and its products (Product Lifecycle). How an organization manages this alignment is the basis of its strategy. Learn how to work with Law #5 to choose the right strategy.
6. An organization is subject to the laws of motion.
Newton’s three laws of motion reveal the principles of movement for physical objects in the universe. The laws explain inertia, acceleration, and reaction. The laws also help us understand and work with the principles of organizational change and momentum. Namely, they explain why an organization will tend to behave the way it does unless a force of change causes it to do something differently. They explain how the mass of an organization naturally resists change and how every action performed in the business creates an equal and opposite reaction that must be managed. How an organization manages its mass determines the speed of its execution. Learn how to work with Law #6 to execute fast.
As you deepen your understanding of each law, you’ll be able to spot it everywhere around you—your family, your social circle, your community, your government, and beyond. In other words, you’ll find that these laws hold true regardless of the time, place, or type of organization. Too often, management theory presupposes that work and life are separate things. They’re not! Soon you’ll become skilled at quickly spotting the principles everywhere—and when you can do that, you’ll be able to see them at work in your business too.
You’ll also find that, in this process, you’re becoming a more astute and powerful leader. You can now be placed in any situation and instantly understand what caused it to get that way, as well as predict and prevent future problems. You’ll have deeper insight into why people and teams show up the way they do. Finally, you’ll better understand certain principles of strategy, finance, and product development to bring the entire organization together to execute fast and well.
I’d like to share a caveat about using physics as a management methodology. I’ve tried to align the laws of Organizational Physics as closely as possible to the laws of classic physics, but there are differences and interpretations. This is natural. Physics studies the nuts and bolts of the physical world—and human organizations are much more than that.
There’s an old joke about two physicists in a classroom. They’re at the chalkboard, on which one of them has written a complicated formula in three steps. Step 1 is a proven known. Step 3 is also a proven known. In between them, Step 2 reads: “Then a miracle occurs.” His partner looks at the board and says, “I think you need to be more specific here in Step 2.”
So let’s not forget that countless unknowns exist and that any framework, even one as authoritative as physics, is just that—a framework. Your own drive, skills, experience, capabilities, resources, and support systems are what make any theory come alive.
Although the laws of Organizational Physics apply to most situations and organizations of all sizes, our methodolgy was created for leaders, entrepreneurs, and managers working with start-up to expansion-stage technology-based companies. This is so for three reasons:
- My own background is in building expansion-stage technology businesses. I’ve done this successfully as an entrepreneur and as a coach to other successful entrepreneurs and management teams. This is an audience that I know well and I can speak firsthand to their challenges and opportunities. My work as a coach and consultant motivates me to share my methods with all those who can benefit and expand the reach and impact of Organizational Physics around the world.
- The speed and disruptive change of technology-based markets make this industry willing to try on new methods and require it to produce results quickly. This is a perfect proving ground filled with bright, passionate early adopters who appreciate cutting-edge thought leadership. It is this sector that drives forward innovations that are later adopted by other industries.
- The world is now struggling with complexity in profound ways. It’s not just “too much information” and noise, but an inability to integrate all the data in a cohesive way and to make wise decisions based on it. It’s becoming clear to many that government won’t save us, but rather a cadre of agile, innovative organizations woven together by a passion for technology, ecology, and creating better ways of living and working. I am passionate about building World 2.0 with this group.
That said, even if you’re not involved with a high-tech company, you will still gain powerful insights into how your organization functions, as well as clarity on the concrete steps you can take to be a better manager and leader. Just read it with a filter on and apply the lessons to your own organization.
Striving to find the underlying principles that govern how something performs is not a new quest. It’s been around since before the first man looked at fire and thought, “How does it work?” And ever since the advent of the scientific method and the printing press, our shared comprehension of how things actually work continues to increase at a staggering rate. As our collective knowledge grows, we continue to ask, “How does it really work?” and new discoveries are made.
So with that spirit of discovery in mind, I invite you to think of the organization you’d most like to improve and ask yourself, “Hmmm, I wonder, how it really works?” Then dive into the world of Organizational Physics for the answers.