So many things are wrong in any business at any time and how ever well managed it may be, the phenomenon of ‘entropy’ sets in immediately.
(Entropy is sort of like Murphy’s Law applied to the entire universe. Put simply, it’s a measure of disorder. This fun article brings it to life https://science.howstuffworks.com/entropy.htm)
So, don’t beat yourself up when things don’t work as they should, but expect it, and build that into the way you work.
Entropy or its consequences hit your business daily, from the marketing that brought you great inquiries that didn’t turn into orders, to the reliable customer that left you without warning, the great IT system that collapsed, the app that stopped working, the people who didn’t show up, the cash flow that went into reverse and a promising investor who ghosted you.
And don’t tell me that none of that has ever happened to you! You couldn’t foresee any of these, so the best you can do is to plan for things going wrong. But that’s hard to do if you’re a start up with no resources, and irrelevant if you’re an established business that’s going well and thinks that will continue.
However, both businesses can be wiped out by an ‘entropic event’ from an unseen or disconnected source, like COVID19 wrecking world economies or the sudden demise of your big customer who got taken over and changed suppliers without warning.
So, to what extent can the expectation of entropy and its consequences be incorporated into the reasonable planning and management of any business?
It’s important to accept at the outset that things will go wrong every day, often invisibly at first, however well planned you are. And to accept that the role of management is to fix these as they occur. But if that’s all you are doing, it becomes firefighting instead of controlling events.
The best you can hope for is to anticipate what you can, plan to minimise the impacts, and hope to survive. But how does one do that when so much can go wrong and from so many unanticipated angles? I suggest…
The simple and well-established safeguard of SWOT analysis on a regular basis, assessing your business as follows:
- What strengths do I have compared to my competitors that I could build on more than I’m doing?
- What weaknesses do I have relative to my competitors that I could rectify? (entropy)
- What external opportunities are there that I could exploit?
- What external threats are there that I could defend against? (entropy)
For your meeting agenda, ask everyone to consider what is happening or coming at you right now under the PESTLE headings:
After you’ve written all their answers on the wall, vote for the priorities under each (1-2-3 is enough). This exercise takes 2 hours, every quarter and only costs you a sandwich lunch for the key people around you eg: 1 each of – staff, partner, supplier, customer. The outputs are always brilliant, provided you ban all judgements and criticisms of what anyone says during the meeting (otherwise you will kill creativity).
I guarantee one world beating idea each time you make this tiny investment.
By doing so quarterly you will stay on top of the waves that runs through the local and national economies that are the forecasters of entropic effects on your business.
Where do I begin?
If you are already firefighting you will feel you don’t have the time or energy to organise a SWOT session. If you are in a great place right now, you won’t feel the need. In both cases you are already affected by entropy. The process of decay has hit the firefighter and caused complacency in the ‘great business’
But do I need really need to bother?
Well, as a business advisor / consultant I’ve worked for over 1000 businesses and all of them called me in after something had gone wrong. I cannot think of one that said “give me a health check because I want to see if I’m OK or heading for ‘Not OK’”
Mostly, I was able to save or turn around those businesses, but the costs were dire because of the damage already done before I got there, plus my fees for having to put in so much time. I always ask the boss “why didn’t you call me a year ago?” and the ever-loving answer was “I thought I could work through it myself”
So, the culprit was entropy. The business was decaying and so was the owner’s resilience to fix it.
Is there a quick and easy way to entropy-check any business?
Yes. Technology can do it in 15 minutes. How? it’s a matter of identifying the key drivers for any business and comparing these to the performance benchmarks of the top third in its industry sector. The gaps identified can then expressed in terms of lost sales, profits, capacity and value as an incentive to take action. From these, the system will work out which areas are most suffering from entropy and suggest remedies.
Schedulde an appointment with Fortuous Limited to see that in action.
It doesn’t cost anything and brings you a comprehensive report that is yours to implement and overcome entropy.[ABTM id=218786]