Jackie Zach
August 20, 2024
Tune in as Jackie Zach and Mike McKay explore the natural law of entropy and how it might be affecting your business. Mike explains that entropy is the tendency of systems to move towards disorder over time, using the metaphor of a drop of food coloring dispersing in water to illustrate how processes, if not regularly maintained, can lose their effectiveness. He shares an example from his past where neglecting daily review meetings led to significant inefficiencies, emphasizing that even well-established processes can degrade if not consistently monitored and managed. The discussion highlights how entropy can subtly convince business owners that everything is fine when, in reality, processes are deteriorating.
The conversation also extends the concept of entropy to managing people. Jackie and Mike stress the importance of regular check-ins and mentoring to prevent team members from becoming ineffective or “C players.” Mike points out that ineffective management often leads to underperformance, as small businesses tend to mimic large corporations’ flat structures, resulting in employees not receiving the necessary guidance. The hosts encourage listeners to reflect on their own businesses, identify areas where entropy is creeping in, and take proactive steps to maintain the practices that initially led to success. By staying vigilant and addressing issues before they escalate, business owners can prevent entropy from undermining their operations.
Want to know more about navigating entropy in your business? Take advantage of a complimentary business strategy session to discover the opportunities in your business! https://actioncoachwi.com/podcast-ask-a-question-complimentary-session/
Podcast Transcript
Jackie Zach: Welcome back to the Tough Love for Business podcast. I’m Jackie Zach, and I’m here with my wonderful host, Mike McKay. What’s our topic today, Mike?
Mike McKay: Today’s topic is the natural law of entropy.
Jackie: So, what is entropy?
Mike: Entropy refers to the tendency of all systems and processes to move towards disorder. Imagine dropping a drop of food coloring into a bucket of water. The food coloring doesn’t stay as a single drop; it spreads out immediately. This represents disorder, from a single drop to coloring the entire bucket. In your business, your process is like the drop. When you set it up and run it correctly, it works well. But if you stop paying attention, it spreads out and loses effectiveness. People might skip steps, results become inconsistent, and entropy, being a natural law, is unavoidable. You can’t put something in place and expect it to stay perfect forever.
Here’s an example from my past: We used to have a meeting called the “outboard meeting,” which reviewed every order for items that were out of stock and needed to ship within the next three days. As a Walmart supplier, we were expected to ship 99.5% of our products on time and correctly. A well-run outboard meeting, after a few weeks, would take just 5 to 15 minutes. But initially, these meetings could last 6 to 7 hours. We got used to running short meetings, and twice, I was convinced we didn’t need daily meetings. Unfortunately, within a week, things went awry, and we had to restart the meetings, which then took 2 to 3 hours to fix everything. The goal isn’t to never review the process but to keep it efficient, investing only a small amount of time to prevent or address issues. Ignoring entropy for too long results in a bigger fix and more effort.
Every business faces entropy. I’ve seen it in sales processes recently. Purpose statements became wobbly, and conversion rates dropped because key questions were neglected. The process wasn’t updated, so they were stuck with an outdated method. Entropy subtly convinces you that everything is fine when it isn’t.
Jackie: This concept also applies to managing people. If you don’t regularly manage, mentor, and discuss progress with your team, you might find yourself only able to recall the last few weeks during performance reviews. Regular check-ins help catch issues early. If you skip this, entropy will also affect your management.
Mike: I had a conversation about C-level salespeople with an executive. They had a mix of A, B, and C performers. My question was whether they hired C players, and the answer was no. So, how did they end up with C players? They had to be created through the process. Even with a small team, if you have C players, it’s often due to ineffective management. Many small businesses mimic big companies’ practices, like flat organizations, which can lead to poor performance because employees don’t get enough guidance. If you manage 26 direct reports and only have one-on-one meetings every six to eight weeks, it’s likely that many will become C players. The issue isn’t the employees but the lack of effective management.
If you’re creating C players, you need to reflect on your management. No one wakes up aiming to be ineffective. If you consistently find your employees lacking, you need to take responsibility and improve your approach. The successful use of coaching involves long-term commitment. I’ve had the same coach for 14 years, not because I don’t know what he’s telling me, but because I need accountability and reminders of the basics.
Jackie: Exactly. Reflect on your business and identify where entropy is creeping in. If you’re not continuing the practices that made you successful, it’s time to restart them. Look at every area—production, sales, management—and address any entropy now before it becomes too late.
Mike: Entropy is like gravity—inevitable. If you ever think, “I need to get back to basics,” that’s a sign entropy is affecting your business. It’s a clear indicator that things are not working as they used to, and entropy is the cause.
Jackie: Right. To avoid reaching a point where you have to say, “I need to get back to basics,” stay on top of your processes and address entropy before it becomes overwhelming.
Mike: Exactly. Stay proactive to prevent entropy from taking hold.
Jackie: That’s the lesson for today. Join us next time for another exciting topic on owning a business.