Organizational Entropy

According to the second law of thermodynamics, during any process the change in entropy of a system and its surroundings is either zero or positive. In other words the entropy of a closed system tends toward a maximum. I was always wondering if this principle holds true in a business environment.

In its sociological application the concept of entropy is used as a metaphor for chaos, disorder or dissipation of energy. In a company - as a closed system - the energy is conserved. But it tends to degrade from useful forms to useless ones: everybody’s busy but value is not created.

The entropy of an organization is reflected in the amount of energy not converted into work during a process. The more uncertainty in vision, randomness in strategy, or indecision in action, the higher the entropy. Entropy is a measure of the inability of a system’s energy to do useful work; it becomes a measure of the business inefficiency.