Does Organizational Scalability Matter to You?
See What the Entropy Survey Can Do for Your Company
Imagine two competing businesses targeting the same market space with effectively the same strategy and business model. Both companies have raised gobs of venture capital, near-equal technical capabilities and market timing, and what appears to be a team of seasoned execs. The primary difference between them is the approach of their respective CEOs. Which company do you think will come out on top?
The CEO at Company Z is all about winning deals and aggressively achieving top-line revenue growth. They spend a lot of time tweaking the sales commission plan. They are constantly on the hunt for new deals and merger or acquisition opportunities. Basically, everything is geared towards driving monthly recurring revenue and achieving a high valuation toward an IPO or strategic sale. Their vision is to scale rapidly and exit.
The CEO at Company A is taking a different approach. Their focus is on building a healthy company that lasts. They realize that growth is a combination of pursuing the right opportunities and ensuring organizational scalability. A key factor in their approach is to identify internal friction points that are emerging within the organization and root them out. They understand that internal friction has a deleterious impact on driving external results sales and growth.
So which CEO do you think will come out on top?
Well, if market timing is good, Company Z may hit IPO or exit faster and achieve a great return for early investors. But if the market turns against Company Z, all the cracks in its foundation will quickly reveal themselves. We see this happen all the time—it only takes a recession, a turn in investor sentiment, or a wave of negative customer reviews. When it happens, it happens fast, and we can all see who was skinny dipping when the tide rolls out!
You may be asking how I know that the foundation at Company Z is weak. Every company has finite energy at any given point of time. If the strategy is predominantly focused on customer acquisition, other areas will suffer. I see this happen all the time. Companies like Company Z scramble for customer acquisitions and don’t put the necessary attention, time, or energy into building and sustaining a scalable company. It’s all a bunch of duct tape, sleight of hand, and fire-fighting under the pressure to win the next deal.
The CEO at Company A, on the other hand, has a strategy that works in good times and bad. If the market turns, Company A has built a scalable and resilient operating model and culture that will allow it to keep growing and even steal share from weaker competitors like Company Z. I’ve seen this time and again too.
If you believe like we do that the CEO at Company A is taking the right strategic approach because achieving and sustaining organizational scalability is just as critical as the sales strategy, then there’s a powerful new tool that you should know about. It’s called the Organizational Physics Entropy Survey and it makes the challenge of identifying and resolving internal friction points — as a team — much faster, easier, and more systematic than ever before.
What is the Entropy Survey?
The Entropy Survey is an innovative root-cause diagnostic tool to help your business achieve sustained scale. It allows you to survey a cross-functional team to accurately identify the organization’s internal friction points and to address them in a systematic way. It will then allow you to measure and compare progress over time.
The process begins with the Entropy Survey sent to a cross-functional team. The survey scans across 12 cross-functional areas of the business. Users give a 0 to 5 score and identify the top few things that are working well and those that need improvement from their perspective in each category. For example, below is a screen-shot of one such category, Brand Awareness/Market Clout:
Once the team survey is completed, the system automatically generates a PDF report with user entries and a series of charts or maps. This data is then used by the team and a facilitator (usually a third-party coach or a designated member of the team) during an Entropy Map Review Workshop. The workshop process helps the team to quickly hone in on the root cause of the company’s scalability problems and identify high-leverage improvement points to fix them. The result is greater organizational capacity and velocity.
That’s what’s happening on the surface. Beneath the surface, there’s a lot more happening…
How the Entropy Survey Drives Organizational Scalability
Achieving and sustaining a high degree of scalability is a requirement of every great business, but there are three major, ongoing challenges to overcome.The first challenge lies in managing the tension between Effectiveness and Activity. In other words, in the face of changing conditions, are we still acting purposefully and producing results (effectiveness), or are we just spinning our wheels (activity)?
The second challenge lies in distinguishing the Signal from the Noise. In other words, what is the right environmental data (signals) to pay attention to and what is irrelevant or non-essential (noise) that needs to be ignored? It’s not always easy to tell.
The third challenge lies in harnessing Diversity without falling into Dissonance. In other words, how do we gather and reconcile the many perspectives available (diversity) for good decision-making, without allowing them to produce tension, conflict, and fragmentation (dissonance).
The greater the rate of growth and change, the faster the increase in complexity, and the harder and more time consuming it can be to overcome these three core organizational challenges.
So on the surface, the Entropy Survey appears to be just another survey, underneath the surface it was designed specifically to address these three perennial challenges. It was borne out of Lex Sisney’s own experience helping several hundred global leadership teams to navigate these same challenges and achieve operational scale while growing like gangbusters. With a little bit of training and support (included in your paid subscription), you too can learn to use the Entropy Survey to catalyze sustained and measurable performance gains over time.
The Entropy Survey program allows you to systematically scan for internal improvement points in a way that ignores the non-essential (Effectiveness vs. Activity), cuts through the noise (Signal vs. Noise), and reduces dissonance (Diversity vs. Dissonance). The process is meant to be clear and systematic. However, because it is not a typical approach to change management, you will need to gain a deeper understanding of the principles behind it. Let me set the stage by explaining entropy.
What Is Entropy Anyway?
“… if your theory is found to be against the Second Law of Thermodynamics I can give you no hope; there is nothing for it but to collapse in deepest humiliation.”
– Sir Arthur Eddington
The most fundamental truth in the universe is that every organization has finite energy at any given point in time. Period. This is why you need to breathe and eat. It is why you need connections with family and friends and stimulation from Netflix and social media. It is why your business needs new sales and capital. If no new energy is coming in, the system is going to fail. Every isolated system fails.
The reason why an organization needs new energy from outside itself is because entropy, the universal force that causes things to fall apart, is always present. The greater the entropy within a system, the more internal problems it has and the harder it is to grow, evolve, and make progress.
In case this concept is not fully clear yet, I’ll share a metaphor for entropy that may help in understanding. If your organization was a ship instead of a business, entropy would be akin to having a hole in the hull. The bigger the hole, the more problems this causes along the journey. It’s hard to sail fast and far when you are constantly taking on water, right?
Wise captains understand that a leaky vessel doesn’t repair itself. It gets more leaky over time. Therefore, they have protocols to sniff out the leaks within all areas of their ship, operations, and crew. If they notice an issue starting to emerge, they are fierce at rooting it out. If they are successful, that frees up more energy and capacity to drive external gains. Why? Because they are no longer wasting energy dealing with sub-optimal operations, environment, or crew.
The ship is a metaphor but the same principle holds true across every business. Every system has finite energy at any given point in time (what I call in shorthand, “finite energy in time”). If an organization has to spend too much of its finite time and energy dealing with entropy, or if it misses the early signs of key problems emerging, it is not going to be successful. In fact, the boat will soon sink.
Who Should Take the Survey
To start this process, you will want to target an initial survey group of 12 to 18 leaders, managers, and other key organizational influencers. The reason why the survey is not sent to the whole company is that this is not a “fire and forget” or an anonymous pulse survey. This is an in-depth survey that is designed to catalyze a powerful discussion with the survey team afterward. This process leads to deep strategic and tactical insights and alignment on a plan to address the biggest sources of entropy harming the organization. About 12 to 18 people is a large enough survey group to provide the necessary inputs, but not so large that it is unwieldy to manage. If there is a need to scan deeper or wider, multiple survey groups can be created.
When to Run a Survey
Send the Initial Entropy Survey at least 3 weeks prior to your annual or bi-annual strategic planning session or before any major change initiative such as an organizational redesign. The reason why the Entropy Survey should be based around strategic planning and/or major change initiatives is that the insights from the survey are priceless inputs to have going into the strategic planning and change initiatives. Without this data, there is a real risk of missing the right key strategic imperative, misreading the root cause of internal challenges, not building enough shared consciousness on the real focus areas across the team, and overlooking high-entropy areas of the organization that are about to cost the organization big time.
The reason you don’t need to run an Entropy Survey on a shorter cadence is that the biggest sources of entropy—the biggest problem areas and potential improvement points that the survey uncovers—will require assigning a project leader and cross-functional support team to resolve them. It usually takes two to three quarters to show meaningful progress on these initiatives, so there is not much need to survey faster than this cadence.
The program includes everything a facilitator could need to run the survey and conduct a post-survey workshop. Because it is fully automated, it actually saves several days of labor compared to trying to run a survey manually. Included in your program is:
- Initial Entropy Surveys
- Unlimited Comparison Surveys
- Online and PDF results
- Secure forms
- Email support
- Your name as sponsor
- Facilitator guides
- BONUS: Includes PSIU Assessment Credits
How to Quickly Take a Team from Noise, to Signal, to Insight
The results of the Initial Survey are presented in such a way as to take the team through a series of deeper and deeper insights. Basically, they see the responses as a series of charts or maps that go from Noise (Noise Map) to Signal (Signal Map) to Insight (Insight Map).
Noise Map: Individual Scores
The first map is “noisy” by design. It reflects individual assessments of entropy across twelve functional areas of the business and displays the team’s un-patterned individual scores. It is not obvious to the team, seeing this data for the first time, what is causing what and why team members have such seemingly diverse views. “0” in the center means no entropy, no problems, no room for improvement and “5” on the perimeter means high entropy, big problems, and big opportunity for improvement.
Guided by the facilitator (there is a facilitator’s guide and training and support included in your paid subscription), the team briefly discusses their initial reactions to seeing their responses laid out this way. Common responses are, “Huh? We’re really that far apart?” Or, “I definitely see a close grouping in some areas but a wide divergence in other areas. I wonder what’s going on?” Any type of reaction is perfect at this stage because we are not finding solutions yet.
Signal Map: Average Scores
The next map is the Signal Map. This map shows the average scores for each category. Now, armed with a deeper shared understanding of the issues revealed in the prior map, the Signal map starts to reveal which functional areas of the business are having the most issues or friction.
The biggest sources of entropy are occurring in the biggest peaks. In this instance, the biggest sources of entropy for this company are the categories of Strategic Clarity/Priorities and Quality/Efficiency, followed by Processes/Systems, Structure/Accountability, Communication/Teamwork, Metrics/Insight, and Throughput/Production.
The facilitator assigns each of the categories to an individual, pair, or triad, asking each to silently read and summarize the team’s written responses in their assigned category, including what seems to be working well and what seems to need improvement. Each summary is presented back to the whole group. This summary is the catalyst for a powerful discussion that starts to illuminate for the team how others are perceiving different variations of the same internal challenges.
The combination of the category summaries created by the team and the Signal Map prompts another discussion and debate. We want the debate! What is causing what? Where should we focus our finite time and energy first? This is a very critical discussion.
For instance, one area where this organization is showing high entropy is within Communication/Teamwork. That is a very worrisome sign. What is causing that? Is it from a lack of a clear Strategy or Priorities? Is it a breakdown in Structure or Accountability? A breakdown in Processes or Systems? Do we need to do some trust falls together at a backwoods retreat? (Probably not!) What is causing what?
It’s a million-dollar question. Notice that the team doesn’t yet have shared insight about what is causing what. And we definitely do not want them running off prematurely trying to cure the patient without knowing the root cause of his symptoms. This would result in a lot of activity but no meaningful progress, or even worse, a failed change initiative. We want the discussions to occur but not to allow the team to get into solutions until they are presented with the next map, the Insight Map.
Insight Map: Adding PSIU
The Insight Map provides some much-needed—well, you guessed it—insight! If you are already familiar with the principles of Organizational Physics and PSIU, this map will instantly bring tremendous clarity and insight into what is causing what. PSIU stands for the Producing, Stabilizing, Innovating, and Unifying forces. It is an approach to understanding systems dynamics that show up in individuals, teams, organizational structure, and strategy. In other words, it is a language and lens that can be applied to all levels of a system. When we overlay PSIU onto the Signal Map, the light bulbs start to turn on for the team.
How to Tie Personal Development and Organizational Development Together
If the survey group members have already completed a PSIU Individual Assessment (recommended), they are already very familiar with the PSIU matrix and its implications in relation to communication, work styles, and teamwork. The benefit is that PSIU uniquely ties together personal development with organizational development on multiple levels.
We already see the biggest sources of entropy for this company by highlighting the biggest peaks. That was already clear. But now we can also discern which force or quadrant is having the biggest breakdowns. In this case, the Stabilizing and Innovating quadrants are the most out of alignment. This will prompt additional insights as the team starts to identify cross-connections across the categories. What is causing what?
For instance, what is causing the breakdown in the Innovating quadrant? Does this company need to innovate more, less, or differently? Does it lack a system and a process for innovation? Is it lacking clear strategic priorities with which to align innovation? Your answers are found in the data collected in the survey. At this point, your team should have already started to build shared consciousness from summarizing the data together and they can start to see the underlying patterns emerging.
Looking at the company’s potential improvement points in this light starts to reveal all of the interconnections across the organization. Maybe you can already start to discern the interconnections within and across all four quadrants? These interconnections and their implications become more clear in the facilitator’s training and guide. Approaching the challenge in this way will also uplevel the team’s awareness that they don’t exist in isolation. They exist in interconnection with their peers. Now solving problems is no longer a question of who is to blame, but a question of where are the quick wins and high-leverage points that will reduce entropy and increase capacity and momentum.
What Happens When an Organization Doesn’t Track Entropy
It seems pretty obvious that every company needs to take a holistic approach to organizational transformation. Each survey participant was seeing the same problems but coming at them from their own vantage point. Operations sees them from an ops perspective, Marketing from a marketing perspective, Sales from a sales perspective, and so on.
Without the insights that you can derive from the Entropy Survey process, this cross-functional team might have the impression that they are not closely aligned when they actually are! What’s been missing is a catalyst to get the team on the same page, speaking the same language, and building shared energy and commitment to solve their biggest problems in the right sequence.
Without the insights provided by the survey data, the maps, and the team discussion, it is very likely that the status quo will continue or deteriorate, with this team lamenting how frustrating it is to work here and with legacy problems persisting. A leaky vessel gets more leaky, so plug the holes that are creating the biggest drains first. Then track progress and optimize over time.
Tracking Progress Over Time: The Comparison Survey
Nine to twelve months after the initial survey is a good time to run a Comparative Survey. This gathers data on the company’s present state and compares it against the prior survey’s potential improvement points, as well as identifying new potential improvement points. This is a way to measure your progress and next steps. The reward for a job well done is to be able to work on a higher class of problems.
The Comparison Survey looks like this:
What has happened in this company over the past nine months? Notice the gap between the old areas that were causing the most entropy before (in turquoise) and the current sources of entropy (in blue). This company has made rapid progress in clarifying its strategic priorities and in bringing some Stabilizing force into play. This allowed them to increase throughput and quality, improve communication and teamwork through a new structure and approach, and streamline its metrics and decision-making. Life is better for almost everyone working in this business compared to nine months before.
But what should the new focus be? Notice that entropy has not decreased—and it has even increased a bit—in Innovation/Disruption? Did the company fail in this area? No! Every organization has finite energy at any given point in time. If the company had tried to engage in aggressive innovation before, it would have failed at that and much more because it wasn’t set up to innovate well. It had too many pressing priorities to address in its strategy and internal environment. The entropy in these areas has now been brought down and the company finally has the capacity to aggressively innovate once again. This company will run another comparison survey prior to the next strategic planning session to continue to track its progress and to highlight where it needs to focus next.
The Entropy Map Review Workshop
The process I have outlined above takes place during a facilitator-led session called the Entropy Map Review Workshop. This workshop is essential in helping the survey group to digest its collective survey answers, generate insights, and align on the right course of action together as a team. This workshop is so important for entropy reduction that if you’re not going to run this workshop, you should not bother running the survey. Included in your members area is the Entropy Map Review Facilitator Guide, sample agendas, training videos, and more.
What Other Early Adopters Are Saying
“The Entropy Survey is a revolutionary change. Not simply an incremental move but a massive transformative change over the traditional SWOT Analysis. I found significant and compelling value to me as a coach and to my clients using the platform. Automated reporting provides a comprehensive, professional record of each individual and team response by area. This is accompanied by easy to read and compelling graphics. The number of hours saved (due to automation), the professional presentation, and the ability to facilitate a compelling and impactful workshop toward proper priorities is fantastic. I recommend it to every facilitator and coach seeking to assist their client(s) through clear, concise and impactful planning. The Entropy Survey is like the smartphone. How did we ever get along without it?”
– Paul Cronin, Managing Director, Cornerstone3 Inc.
The Bottom Line
Entropy is inherent in every organization, and as an organization grows and gets more complex, entropy will naturally increase and harm scalability. One of the most important jobs of a leader is to find ways to reduce entropy, but this is always an ongoing battle.
The purpose of the Entropy Survey is to equip you with an easy way to assess and reduce entropy in your organization. It allows you to identify where entropy is emerging early and to fix it so that the business can execute fast on the right things. It also allows for this process to be repeated over time to make operational excellence sustainable. The bottom line is that the more you can reduce the internal drains, the more your business can maximize its gains!
Register for a 14-day Free Trial
Since this is a new tool, you’ll need to take it for a test drive to really understand it and see if it’s right for your organization. You can register for the 14-day free trial below. After you register, we recommend that you create a dummy survey, enter some sample data, and then close the survey to view the reporting. Thanks and we look forward to connecting with you in the members area!