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 conflict without force? Diplomacy? Sanctions? Other?
📉 Competitive Rivalry: If we engage in military conflict, do we have force supremacy? If not, how do we avoid a direct conflict?

Also, if you want to take this model to the next level, apply it to the lifecycle stage of your business.

I hope you found some food for thought in this short article. 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.

Integration with the surrounding environment is crucial because every action requires energy. A system cannot grow beyond the capacity of its environment because new energy must come from that environment. As the environment evolves, society and its government must adapt to these changes. Without adaptation, stakeholders suffer, integration diminishes, and that society and its government fail.

Entropy is a measure of disorder within the system. High entropy indicates rapid disintegration and chaos. In such a state, the system is vulnerable to both internal and external threats and is at risk of collapse. When internal entropy surpasses integration, the system will collapse much like a termite-infested building. Healthy, resilient systems sustain high integration and low entropy over time.

Stakeholders refers to the citizens or members within the government’s jurisdiction. Critical mass means having enough stakeholders who support the governance system to make it self-sustaining. Achieving an objective efficiently means doing so without wasting time, energy, or resources.

The phrase “critical mass of stakeholders” is key—not “all stakeholders,” because there is always a trade-off. A government aiming for […]

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

One of my biggest pet peeves is unproductive meetings. In fact, I dislike unproductive meetings so much that I began to study what it takes to facilitate great meetings—and meetings that matter.

Thinking through meeting design and facilitation has been my way of trying to lessen the burden and suffering that I and others experience when we’re stuck in a bad and unproductive meeting.

This list of Ten Rules for Highly Effective Meetings is born from experience and the principles of Organizational Physics. You can apply them to your own meetings and improve them by 30% or more.

Think about that figure for a moment. How much time and energy do you personally spend/waste in meetings each week? And how much does your entire company spend/waste each week? It’s likely a big and costly number.

A change in approach to how you organize and run meetings can have a dramatic impact on your bottom line. Meetings will take less time, consume less energy, and result in better decisions and faster organizational velocity.

Why Have Meetings at All

There’s a lot of noise on the internet right now telling you that the best solution to bad meetings is to get rid of meetings altogether. Slamming meetings isn’t a new trend. Here are two of history’s most prominent management gurus on meetings:

“Meetings are indispensable when you don’t want to do anything.” – John Kenneth Galbraith

“Either you meet or you work. You cannot do both at the same time.” – Peter F. Drucker

I used to be in this “get rid of meetings so we can work camp” too. But I came to a realization. Trying to get rid of meetings, or attempting to automate them away through the use of AI, is like trying to get rid of the nuclear family. Both families and meetings exist for a reason. Being part of a good family is one of the most valuable and satisfying things we can experience in life. On the other hand, a bad family experience can suck the very life force out of you and everyone involved.

Meetings are similar. You’re going to need to have them no matter what. You want good ones that serve a purpose, not bad ones that suck out your soul.

The Evolutionary Purpose of Meetings

If you want to truly improve something, you need to understand its evolutionary purpose. I’d like you to reflect for a moment about why we humans meet at all.

If you were to ask an anthropologist about why humans have engaged in meetings throughout history, from the cave to the boardroom, they’ll tell you that we meet to exchange information, to strengthen our social bonds, and to make collective decisions.

From a systems perspective, there is yet another important reason behind why we meet. We meet in an attempt to better manage the complexities of […]

Two past coaching clients just reached out to ask me about structuring AI into their companies this week. This tells me it’s time to write an article, so here we go.

One of the principles behind Organizational Physics is that you always want to manage appropriately for the lifecycle stage of the project, product, business, or business unit. First you pilot it, then you nail it, then you scale it. AI adoption is no different.

The Pilot It Stage of AI Adoption: Using GPTs

Most companies are already in the Pilot It stage of AI adoption. Employees, especially innovators and early adopters, are using AI tools to be more productive, but the work itself has not fundamentally changed. This means that your social media marketing manager uses a GPT plug-in to create more social media posts, but their job remains fundamentally the same. It’s the same for software engineers, salespeople, and really any knowledge worker using a GPT. Discovering what different AI tools are capable of is fascinating and a bit unnerving. On their own initiative, the leading edge is researching and deploying their own AI tools and often bringing their findings back to the company.

Of course these discoveries raise plenty of questions and concerns. “Wait… what about data security?” “Wait… what about privacy?” “Wait… does this mean won’t have jobs?” These concerns are valid, yet every thinking person can see that the world has changed. If your company is going to survive and thrive, then it must quickly figure out how to nail AI adoption.

The Nail It Stage of AI Adoption: Building an AI Brain

My coaching clients on the leading edge of AI adoption are all on the same mission right now: to create and leverage their own internal, centralized AI brain. There will be many ways in which this “AI brain” will take shape, but its fundamentally about having a secure, internal chatGPT that has all proprietary corporate data and market information available to it in real time. There are multiple LLMs (large language models) integrated into the AI brain too. This allows employees to ask the system questions, and the centralized AI brain selects the right LLM based on the prompt, which results in improved decision-making and productivity for the company as a whole.

That’s the vision. It’s still a tall order due to issues such as permissions management, privacy, and worker retraining. However, those companies that can build and leverage robust vertical AI brains for their industry and company first will likely be the ones dominating this decade.

The Scale It Stage of AI Adoption: Deploying AI Agents

It is conceivable that AI becomes so powerful that your company no longer needs to employ as many humans. Fundamentally, each business function like sales, marketing, or engineering may still have a human “leading” it but the AI […]

The purpose of this article is to talk about the launch and growth of your second business unit, which could be a new product line or a new geographic market that complements the core or original product line or market.

The main point I want you to take away from this article is this: If your company is having trouble launching and growing its second business unit, then you likely need to address a design flaw in the original or core business unit first.

My own experience as a CEO was that I struggled to lead the launch of the second business unit against the incessant demands of the core business because I didn’t understand this concept well enough.

A majority of my coaching clients are looking for help with launching their second unit, whether it’s a new product or new market, while thinking that things are going pretty well in their core unit. They just need some guidance on launching the second. But after diving into the situation, the client CEO quickly realizes that for the second unit to thrive, the core unit must first evolve.

Since this issue is not well understood, I hope to shed some light on it in this article and share my approach to solving it.

The Health of the Mother Determines the Growth of the Child

Fundamentally, what you’re trying to achieve with the launch of a second business unit is to have the “mass” of the core business executing swiftly and profitably against changing external and internal conditions and with enough capacity and wherewithal to simultaneously pilot, nail, and scale the second unit.

What I didn’t appreciate fully until I had been through it as a CEO myself is that despite all our attempts to free up the second unit to be autonomous from the mothership, it is the health and capacity of the mothership that still controls the destiny of the child.

The irony is that most of us don’t realize that we actually have a design flaw in the mothership until we attempt to launch the child.

Let me give you an analogy. If there’s a crack in the foundation of a building, is it a problem? If it’s a small one or two story building, it’s probably not a big deal. Patch it up. But if it’s a large multi-story building, a crack in the foundation can be a very big problem indeed. The whole thing risks collapsing.

Similarly, the design flaw in the main business has probably been present for years. But until the second unit was added to its foundation, it wasn’t known or if it was, it wasn’t seen as a big problem. However, this hidden design flaw is now causing problems for both units and the whole thing is at risk of collapsing, or at […]