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How familiar are you with Porter’s Five Forces? It’s an excellent model for analyzing your companies market position and strategy.

It helps you understand:

📉 New Competitors: How easily can new players join your game?
📉 Supplier Power: Can your suppliers dictate terms, or are you in control?
📉 Customer Power: Are your customers loyal, or always looking for a better deal?
📉 Substitute Threats: Could a new product make yours obsolete?
📉 Competitive Rivalry: How cutthroat is your industry?

Let me give you an example to make this easier 👇🏻

Netflix uses this framework to stay ahead:

✅ They make it hard for newcomers by investing big in original content (Battling New Competitors)

✅ They balance power with content creators (Battling Supplier Power)

✅ They keep subscriptions affordable to maintain customer loyalty (Battling Customer Power)

✅ They innovate constantly to combat other entertainment options (Battling Substitute threats)

✅ They differentiate themselves in a crowded streaming market (Battling Competitive Rivalry)

By understanding these forces, you can:

>> Spot industry trends before they hit
>> Identify hidden opportunities and threats
>> Make smarter business decisions

On LinkedIn, a military officer asked me how Porter’s Five Forces might be applied to the military. It’s usually a sign of a strong mental model if you can cross disciplines with it, so I thought it was an interesting thought exercise. Here are some ways that it applies:

📉 New Competitors: If this conflict gets out of hand, will neighboring territories or factions get involved?
📉 Supplier Power: Where are the resources to fight this conflict coming from? Do we have logistics integrity? What do we need to do to ensure that we do?
📉 Customer Power: Are we winning hearts and minds? If not, what is our strategy?
📉 Substitute Threats: What are the alternative ways to resolve this […]

This may be the most important speech of this decade. Tony Seba hammers home that we are now in simultaneous PHASE SHIFTS across five sectors of society: Food, Energy, Transport, AI, and Materials (specifically Precision Fermentation, which was a new one for me). “Cost curves are like gravity. There’s no escaping.” His conclusion? The world is going to super abundance and near zero costs.

If you need to lead your family into the future, then I can’t recommend watching this video enough. But if you need to lead your company into this future, then I would also read my book Organizational Physics which is all about structuring and executing phase shifts. Finally, if you want to be on the winning side of these phase shifts, contact me to explore coaching. We are living in interesting times. Cheers, Lex

Organizational Physics is a way to understand and leverage systems principles to create more effective, efficient, and resilient human-based organizations. I usually write about entrepreneurial organizations. In this post, I am going to shift gears and create a mental map for how to think about what we can do as citizens to restore and improve the United States government.

My approach is to put the US government in its proper context using systems thinking, then show where it’s gone terrifyingly off the rails, and finally to highlight the highest leverage points we can focus on to restore and improve it. To be clear, I’m not writing from a political ideology, Republican or Democrat, but rather from a systems view.

Also, nothing in this article will help us navigate through the current political crisis. This article provides useful concepts to consider in a post-crisis period of rebuilding. God Bless America.

What is the Purpose of Government?

“Government” is a loaded term, holding different meanings for each of us. Ask a Communist and a Libertarian the meaning and purpose of “government” and you’ll get very different answers. From a systems perspective, however, the answer is clear: The purpose of government is to maintain high integration and low entropy for a critical mass of its stakeholders, now and over time. A good government accomplishes this objective efficiently. A bad government does not.

To clarify how I use these terms:

Integration measures how well a system is connected to its surrounding environment. High integration means there’s ample flow of energy, resources, and opportunities available to stakeholders. Low integration indicates a scarcity of these flows. In order to get a sense of the importance of integration, imagine a race car without gas. Despite its potential, it’s not going anywhere. […]

Gareth Dickens, ConvenientMD Chairman and CEO, and I did a masterclass on lifecycle strategy.

Here’s the link to the working doc we used during the class.

Thanks to Gareth and to all the participants. I hope you find these concepts useful in your own company. Cheers, Lex

I don’t know who might need to hear this today, but as a founder, are you spending some time each day thinking like a business designer rather than a doer?

Here are some significant differences between a doer and a designer:

❌ Doer: Focusing on day-to-day tasks
✅ Designer: Envisioning the future of your organization and developing strategies that align with long-term goals

❌ Doer: Managing operations reactively
✅ Designer: Proactively building scalable systems and processes

❌ Doer: Working in the business
✅ Designer: Working on the business to foster innovation and growth

❌ Doer: Handling every detail personally
✅ Designer: Delegating smartly and pushing ownership deep

❌ Doer: Resisting change to maintain control
✅ Designer: Embracing agility and adapting to market dynamics

❌ Doer: Overwhelmed by daily firefighting
✅ Designer: Prioritizing strategic initiatives and long-term planning

❌ Doer: Focused on short-term gains
✅ Designer: Investing in unique capabilities that capture growing opportunities

❌ Doer: Limited by personal capacity
✅ Designer: Scaling your impact through your strategic execution team

Making this shift requires stepping back from the operational pressures and dedicating time to envisioning and designing where your organization can go.

It’s about setting clear goals, designing systems that support those goals, and building the best team to execute.

By adopting a designer mindset, you not only position your business for scalable growth but also free yourself to focus on steering its strategic direction of your company. .

Adopt this phrase as your personal rallying cry: “I design the game for others to play.” :-)

I’ve been reading two books this summer, one on Comanche Indians and the other on Pirates! Talk about fun summer reading-what’s more captivating in history than the true stories about the dashing pirate and the fierce Comanche warrior? Interestingly enough, both came to prominence around the same time – the 17th and 18th centuries. Both groups wielded enough power to shake the foundations of empires. What’s truly fascinating, though, is their strikingly similar organizational structures—structures that offer surprising lessons for modern business strategy.

Why Pirates and Comanches Have Similar Management Tactics

Both groups, pirates and Comanches, were built for plundering targets and then escaping into the vastness… the sea or the southwest plains. By necessity and pragmatism, both developed very meritocratic and egalitarian societies. This wasn’t due to some altruistic motivation.. It just happens to be the best culture to support their similar strategies.

For example, the leadership composition and compensation strategies for a pirate ship were incredibly flat. Pirate ships made decisions by consensus and every full-fledged member of the crew received no less than one full share of the booty. And no one received more than two shares, which was the highest paid role of war captain. Specialist roles like the carpenter, cook, and ship’s doctor, received slightly more than regular crew members of 1.25 to 1.5 shares total. That’s incredibly flat!

Why is this? Well, it ensures that when battle comes, all pirates are in it to win it. Afterall, if you were a regular pirate, why would you jump into the enemy ship and engage in close quarters combat if the captain was going to pull 10X or 100X of your share? You wouldn’t.

The same spirit held true for the Comanche. Not even the war chief could order a […]

When it comes to identifying problems and crafting solutions, “Get to Ground Truth” is non-negotiable. It’s the difference between mediocrity and mastery.

Picture this: a hiccup on the manufacturing line. The poor engineer? They bury their nose in the plans, hunting for deviations. They think, “The plan is the reality.” But here’s the kicker – plans are just maps, and maps are never the territory.

Now, the great engineer? They head straight to the shop floor. They talk to the operators, inspect the machinery, and immerse themselves in the chaos. They know that the real insights, the ground truth, come from seeing things as they are, not as they’re supposed to be.

Getting to ground truth means stripping away assumptions and confronting reality head-on. It’s about recognizing that the shop floor holds the secrets to what’s really happening. This approach exposes hidden variables and reveals the actual constraints – the stuff that plans can never fully capture.

In leadership and engineering, those who master ground truth turn problems into opportunities. They understand that real-world complexities demand real-world engagement. They prioritize direct observation and foster a culture where ground truth is sacred.

So, let’s get real. Great engineers and leaders don’t just solve problems – they live them, breathe them, and experience them. They step out of the office and into the field, knowing that true understanding comes from the ground up. This shift isn’t just powerful; it’s transformative. The difference between good and great lies in this simple truth: get to ground truth, and the rest will follow.

What would you say is the hardest thing about being a product manager?

It’s communication.

Think about it.

You sit in the middle of infinite competing needs and finite resources.

The sales team needs this feature. The marketing team wants that one. The ops team just wants to know what’s coming out next, by when, and why. The CEO is griping about when they can see the new prototype. The engineering team missed their last sprint goals and wants more resources.

Your job is all about synthesizing and communicating what actually is happening versus what should be happening. You must then try to close any gap by aligning with key stakeholders and communicating those changes.

If the definition of stress is being accountable for something that you have no direct control over, well, then your role as product manager can be very stressful indeed.

So here’s the next question…

If communication is one of the most demanding jobs of a product manager, then what’s the secret to effective communication?

It’s context.

Think about it. If a team has first built shared consciousness together about why, when, and how product decisions are being made, effective communication becomes possible. Without shared context, each individual usually sees things only from their vantage point, leading to noise, ambiguity, and dissatisfaction with the product, the roadmap, and the overall business direction.

And the next question…

If a product manager’s success depends on effective communication, and context is the key to effective communication, then how can you build shared context across your team as quickly as possible?

Use a picture.

You already know the adage about pictures and a thousand words. It’s true!

In this article, I’m going to propose that you add your products, or groups of products, to the Organizational Physics Strategy Map below to show your team where each product […]

Here’s the link to the working doc we used in class.

Thanks everyone for your participation!

In nature, phase shifts are dramatic. Think of water: ice is solid and rigid, water is fluid and adaptable, steam is expansive and high-energy. You can’t manage ice like water or steam. Each phase has very different characteristics which require different management models, insights, and skill sets.

The same applies to your business. As it grows, it too goes through predictable phase shifts, and the management models, insights, and skill sets that brought you to the current stage aren’t applicable to the next.

So how can you use this insight to your advantage?

The most important thing is to be able to recognize the shift between one phase and another.
The Organizational Physics Strategy Map is my favorite tool for doing this. It lays out where your business, markets, and products are at in their development now. In addition, it indicates if you are in step with your current phase or not.

Here’s the map. Can you use it to identify your business’ current stage and next phase shift?

Phase shifts are like the transformation of water. Each stage—Pilot It, Nail It, Scale It, Milk It—requires a different mindset, skill set, and approach. Recognize these shifts and adapt. Remember, you can’t manage water like you manage steam or ice. Each phase demands its own strategy.

To learn more about navigating business phase shifts, here are two good places to start:

1. Read the Mastering Lifecycle Strategy white paper
2. Complete a Top-Level OKRs Strategy Survey with your leadership team

When it comes to building a high-performing team, there are two prevalent camps of thought. One believes the secret lies in hiring qualified people, offering competitive compensation, career development opportunities, and a slew of “free” perks like vacation days, ping-pong tables, work-from-home options, and free snacks. However, this approach often leads to a sense of entitlement rather than true engagement and performance.

The key to genuine high performance lies in a very different environment. It starts with a crystal-clear purpose and strategy for the business. Each team member must have a defined role that aligns with their intrinsic motivations, skills, and style. Total compensation should feel fair and equitable, and individuals need a high degree of autonomy over how they achieve their work.

The real kicker? The design of the system itself determines how people show up and perform. A well-designed organization attracts the right talent who thrive in that environment and naturally weeds out those who don’t fit. You don’t need free food and ping-pong tables to motivate people. Instead, create a workplace where talented individuals are excited to bring their best selves to the table.

Great companies don’t mimic others; they create unique environments that demand high performance. The right people will be drawn to such an environment, while the wrong ones will opt out. Focus on what truly matters: clear purpose, aligned roles, healthy compensation, and autonomy. This is the formula for building a high-performing team.

It’s time I made entropy my friend instead of treating it as my enemy.

For much of my career as a coach and author, I’ve preached the gospel of integration over entropy. Drawing on the first and second laws of thermodynamics, I’ve often illustrated entropy as the villain and integration with the environment as the hero. In my book, Organizational Physics: The Science of Growing a Business and the Universal Success Formula, I show how Integration over Entropy is the ultimate barometer of success and happiness. My intention was clear: to teach leaders how to identify energy drains—symptoms of entropy—so they could plug those drains, creating more capacity for integration, innovation, and positive outcomes.

However, upon deeper reflection, I realize I’ve been caught in a dualistic trap. I’ve categorized energy gains like Love, Flow, Success, Harmony, Growth, and Development as positive, and energy drains like Fear, Discord, Inefficiency, Corruption, and Disintegration as negative. As a systems thinker, I pride myself on recognizing that most situations involve managing polarities and trade-offs, rather than solving black-and-white problems. Yet, in this instance, I missed the mark.

Embracing Entropy as a Positive Force

It’s time for me to put entropy in its proper place as a positive force for change. In the physical world, all systems eventually succumb to entropy. Death, decay, and disintegration are natural parts of the lifecycle. Without death, there would be no room for new life to emerge. Old systems give way to the new, creating opportunities for progress and renewal.
Consider the natural world: a forest fire, while destructive, clears the way for new growth. Similarly, in our lives and organizations, entropy points the way to “problems,” which in turn are opportunities for improvement. Everything is interconnected. When we view destruction as inherently bad, we […]

Have you ever found yourself seething with anger or feeling deeply upset over a situation, only to realize later that the intensity of your emotions far outweighed the actual circumstances? This is a common experience, and it serves as a powerful reminder: if you’re hot, the problem is you.

At first glance, this might sound like an oversimplification, or even an accusation. But it’s neither. It’s a profound truth that speaks to the heart of our personal growth and evolution. Our experiences in life are deeply intertwined with our consciousness. What one person perceives as a source of happiness, another might see as a reason for sorrow. This divergence in perception highlights a crucial point: life is fundamentally lived from the inside out.

The Lens of Consciousness

Our consciousness acts as the lens through which we interpret and interact with the world. When we encounter a situation that makes us angry, upset, or self-righteous—when we are “hot”—this often points to an inner state that is ready for transformation. These intense emotional reactions are signals from our consciousness, indicating areas where we need to grow and evolve.

For example, consider a situation where a colleague receives praise for a project you worked on together. If you find yourself feeling resentful or indignant, it’s worth examining why this reaction occurred. Is it because you feel unappreciated or overlooked? Or perhaps there’s an underlying insecurity about your own value and contribution? The specific trigger matters less than the inner state it reveals.

Progress Through Transformation

Recognizing that the problem lies within us is not about denying that wrongs and rights exist in the world. Of course, injustices and ethical violations occur, and they deserve to be addressed. However, it is important to observe […]

Free Resources and Helpful Links Doc shown near the end of the video in case you want them.

I hope you found this helpful. Thanks again to Vijay Sondhi, CEO of NMI for participating and sharing his perspective. Cheers, Lex

If you have a hurt shoulder, where should you focus your energy and attention to help create permanent pain relief?

Do you rely on aspirin, ice, shoulder band resistance training, or even surgery?

Or, do you consider the connective tissue that surrounds the shoulder in your neck, torso, and even all the way down to your feet?

While it might seem strange that the pain in your shoulder could be caused by an imbalance all the way down in your feet, the reality is that foot pain can cause you to lean forward or hunch over, leading to a forward head posture that strains your neck, shoulders, and back.

Everything is connected.

What about your business? If there’s pain in your business, such as friction, inefficiency, infighting, poor velocity, or substandard quality, where should you focus your energy and attention to create relief?

Do you address the pain point directly, or do you examine the interconnections that surround it?

This is why I created the Entropy Survey. It’s a root cause diagnostic tool that scans your business for internal pain points and identifies the connective tissue causing the pain.

It allows you to see the inner workings of your business through a systems view.

For example, is the breakdown in our sales function due to a poor customer onboarding process, inadequate product management, or because we are targeting the wrong types of customers?

If you don’t look holistically at the entire business, then you’ll attempt to cure the symptom but miss the underlying root cause.

Everything is connected. Look to the interconnection points and put your energy and focus there.

If operational excellence is important to you, I highly recommend taking this tool, the Entropy Survey, for a free test drive and discovering what you can uncover.