business strategy

This Simple Law of Physics Will Change Your Business

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“The law that entropy always increases holds, I think, the supreme position among the laws of Nature.” —Arthur Eddington

Have you ever heard of the Second Law of Thermodynamics? Unless you were an engineering major probably not, but it’s a fundamental law of the universe which dramatically impacts your business every day.

The Second Law of Thermodynamics states that the entropy of a closed system will never decrease. Entropy is the natural tendency of things to lose order. 

Here's the important thing about entropy: it always increases over time, which means that left to its own devices, life will always become less structured, everything will decay, and disorder always increases.

The article Entropy: Why Life Always Seems to Get More Complicated, by James Clear, gives a great explanation of entropy and how it impacts our personal and business lives.

As James points out, “You can fight back against the pull of entropy. You can repair equipment. You can clean a messy office. You can organize individuals into a cohesive team.  But because the universe naturally slides toward disorder, you must expend energy to create stability, structure, and simplicity. Successful relationships require care and attention. Successful houses require cleaning and maintenance. Successful teams require communication and collaboration. Without effort, things will decay.

This insight—that disorder will increase over time and that we must exert effort to create order has dramatic implications to your business.

Think of all the systems you’ve created in your business and then ask yourself what structure you’ve put in place to counteract the pull of entropy? We wouldn’t think twice about the need for continuous improvement and maintenance for the machines in our companies, and yet our systems related to people and planning often limp along without an eye toward continuous improvement or even a yearly refresh.  

I see this in the way many organizations approach their business planning. Teams get together for an off-site retreat and a plan gets created that everyone feels good about. And then entropy takes over—the plan ‘sits on a shelf,’ and isn’t reviewed on a regular basis. There’s not consistent, on-going energy expended towards keeping the plan current, relevant and responsive to the day to day disorder that affects it.

So, consider reviewing your planning system like a scientist, and ask yourself how you’re fighting the forces of entropy. How often are you checking back in with your team to solicit their input? What about adjusting the key performance indicators to respond to changing variables in the marketplace. Are you getting the team back together on a consistent basis to review and refresh the plan at least monthly or at a minimum quarterly?

If there isn’t a system in place to keep your plans fresh, then they’re already out of date and sliding into a state of being irrelevant.  

Build Execution into Your Business Plan from the Start

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If you ask managers what frustrates them about the planning process, they will often tell you it’s the lack of execution on the plan. 

Managers see value in planning and committing the time to planning, but recognize the return on investment is often not realized. This frequently occurs because planning for the execution of the plan often comes at the back end of the process. 

At this point planning fatigue can set in and people may be anxious to move back into a state of action which can be much more satisfying than planning.  

To overcome this frustrating lack of outcomes, it’s important to budget time in your planning process for how the execution will get done. The key is to create timelines around each of the important initiatives that will be tracked and schedule a check-in for those initiatives on at least a monthly basis. 

It’s important to engage all the individuals who will be involved in getting the work done in the creation of the timelines. You must create a culture of involvement and commitment that motivates people to execute the agreed strategies and minimizes distrust, noncooperation, and even sabotage. 

Building execution into your business plan makes the process take a bit longer, but in the end it’s time well spent.

Vision Without Systems Leads to Chaos

Photo by  Daniil Kuželev  on  Unsplash

Photo by Daniil Kuželev on Unsplash

We’ve probably all been in that situation at one time or another.  We have a clear vision of where we’re headed in a particular situation whether it’s the direction we want to take our business or a vision for a new product or service.  In that flash of inspiration the outcome is so clear to us that it seems impossible not to accomplish.

Fast forward 60 days and how often is it the case that the initial vision and clarity around outcomes is looking blurry and feeling chaotic?  According to Peter Senge, “Vision without ‘systems thinking’ ends up painting lovely pictures of the future with no deep understanding of the forces that must be mastered to move from here to there.” 

The key to fulfilling any vision is being able to distill it into an actionable and measurable plan.  The challenge of course is that creating the vision is often the easy part—it’s creative, fun and intellectually stimulating.  Taking the next step though is where the rubber hits the road.  It’s what separates good ideas from viable and sustainable successes.  

The “Un-Strategic Plan”

Photo by  Med Badr Chemmaoui  on  Unsplash

Mention the words, ‘strategic’ and ‘plan’ in the same sentence, and many people conjure up the image of a high cost, low value exercise.  Often those plans have included the commensurate three-ring binder—the fatter the binder, the more expensive the plan. 

Many of us have also had the chance to suffer through a strategic planning ‘retreat’; a day-long exercise rich in brainstorming, flipcharts and sticky dots, but short on Objectives, Action Plans, and Follow Through. 

Hopefully those feel-good but unproductive planning experiences have not deterred you from tackling a planning exercise in your own business.  In every case, it’s not the concept of strategic planning that’s flawed, but rather the process used to conduct the exercise.  Actually those negative experiences can inform us on how to better conduct an effective planning exercise.

In reality, effective strategic planning is not a yearly event, but rather an on-going undertaking in your business.  It just makes common sense when you think about it…we need to be strategic every day of the year, and it’s the well designed plan that’s referred to on a weekly if not daily basis, that guides us in our decisions.  

How to Give Backbone to Your Business Objectives

Photo by  Ant Rozetsky  on  Unsplash

Photo by Ant Rozetsky on Unsplash

There’s no greater tool for improving the performance of an organization than setting well-thought out goals.  Goals give individuals working together on a team a common target to aim towards.  Well written and developed organizational goals provide the guiding structure that teams and individuals need to set objectives for the important outcomes in their respective areas.

The value of goals is diminished however, if a comprehensive Action Plan for “how to” accomplish the goal is not also created.  This is where you put the ‘meat on the bones’ of the goal setting process.  Action Plans break goals & objectives into bite-sized doable actions, which makes it easier to get started and helps avoid getting overwhelmed. 

The key to developing an Action Plan is to have clarity on the deliverable.  The deliverable is what you have when you are done.  It might be something like: “Create Board of Advisors by the end of the second quarter.”  Once the deliverable is clear, the Action Plan needs to indicate the specific steps that need to be taken, by whom and by when. 

For instance, before an Advisory Board is created, a business owner might want to first do research into best practices, talk with business owners who already have a board, and talk to her attorney to determine any legal ramifications.  Each of those steps needs to be defined, given a deadline and assigned to one individual.  Ideally, every major business objective has a corresponding Action Plan.  Well written objectives which are backed-up with detailed Action Plans provide the structure a leader needs to grow their business.