Growth and Entropy

Cash Flows

Our governments want their cash pipelines to flow into many trickling streams. First, it seems the major flows are overfilling cash reservoirs and holding tanks. But now the great trickle streams are meandering through our economies. Everything seems to be popping.

If you’re in a mid- or large-sized company, get ready for what’s ahead. Topline revenue is about to jump. It won’t be equal for everyone, but on average it’ll be big. And that’s excellent news. But before you get your surfboard out to ride the cash tsunami, a few warnings are in order.

Growth Mistakes

So why should you be concerned? It’s because a cash tsunami can mask many issues. The wave will make most management teams look brilliant, no matter what they do. Growth forgives mistakes.

Growth allows entropy to build throughout organizations. The more growth a company experiences, the greater its store of entropy.

Entropy is an energy that’s disorderly and unavailable to drive a system’s output or results. When energy is orderly, you can guide it to your advantage. When it’s chaotic, you can’t use it. The big problem is that this unusable energy can build up and cause a mess.

Entropy Build-up

Growth-induced entropy has two characteristics that managers should understand. First, it can work against your goals. Because it’s chaotic, it’s not likely to push in the direction you want. And second, when left alone, entropy always grows. You need to spot and tame entropy if you wish to avoid bad outcomes.

In product line systems, market growth is a powerful entropy battery charger. Unfortunately, an entropy battery can release its disorderly power in a flash.

The pent-up chaos eventually needs to be tamed. If you wait too long, the stored entropy may wipe out all the cash tsunami gains. It may not be until growth returns to normal levels, but all entropy must be dealt with or experienced.

The Product View

Product developers and product managers will have a front-row seat to the growth sea-change. If you’re working on a project or two, top management will repeatedly send you the same message: do more and do it faster. The race will be on.

There’s nothing new with that; we’ve heard the more-faster mantra for years. Now, the difference is the omnipresent growth. There’ll be enormous pressure to get all you can while you can. No one wants to be left behind. Yet, that’s precisely what forces entropy into storage. It builds the chaos in waiting.

The get-it-while-you-can philosophy pushes short-term gains over long-term plans. Just when you think you have the time to focus on meaningful long-term innovations, the sales force reveals many opportunities. You’ll hear, “tweak this product,” “change that design,” or “merge these components.” These become the critical projects that must get done and get done fast. The message will be clear. Here’s what customers want, and we need these projects completed right away if we wish to win our slice of the pie.

Leaders and Entropy

There will be many kudos and accolades for those delivering these critical customer-centric gems. Yet, there won’t be a peep of praise that recognizes tough decisions that mitigate entropy. This is the hard part of trying to do the right thing. If you’re successful in purging a product line of entropy-induced chaos, no one will know. The chaos never happens. How could that be a success?

That’s why managing entropy is a leadership task. It’s not an in-the-trenches, nose-to-the-grindstone job. It’s impossible to carry out if you can’t influence work away from short-term scrambles. Plus, managing entropy is meaningless without a clear vision of how you wish to advance your products.

The big deal is that it’s near impossible to sense entropy at a microscopic level, yet it’s easy to spot from a macro view. In product line’s you’ll notice the same. At the local level of a single project over a month or two, you’re not likely to sense entropy. But at the global level of an entire product line system over a year, you’ll feel this chaotic energy build week after week. It’s an unease about the chaos that may happen.

This insight suggests project teams won’t notice entropy. But those overseeing product lines will see the build up of chaos that’s pushing in the wrong direction.

Figuring Entropy

So how do you know if work on a single project might create uncomfortable levels of entropy for a product line? The job takes experience and knowledge. You can, though, build specific skills to speed up entropy mitigation.

You’ll find bad outcomes from entropy fall into three groups, each linked to a critical product line strategy element. Any change to these elements will affect a product line’s performance. Unfortunately, entropy-induced change most often leads to adverse results.

These key strategy elements are:

1. Platform-Leverage,
2. Chain-Link Alignment, and
3. Attribute-Positioning.

Some companies also experience a cascading effect, where a negative change to one area spills over to the others. This cascade can make a complete mess of a product line.

Mitigating Entropy

Most product line teams want to mitigate entropy. To do so, they must focus on the three strategy elements. The job is to examine every decision and action related to each element.

The idea isn’t to squash entropy. That’s impossible. Instead, the job is to monitor and mitigate the chaotic energy as it builds up. This is a critical part of overseeing a product line. And it takes place throughout a process called Responsive Roadmapping.

The practice requires teams to use methods or techniques called strategy lenses. In this case, teams must create lenses that foster insights into how entropy may affect the three critical strategy elements.

Entropy Lenses

There’s no standard template to help form the entropy lenses. The approach is to explore possibilities by asking questions and playing through “what-if” scenarios. This activity must be specific to the product line, its markets, and its technologies.

When teams start, they don’t need perfect knowledge of the three strategy elements. Nor do they need to be experts in entropy’s cause and effect. But to tame the entropy monster, they must track and build awareness about the interplay between their strategy and the chaotic energy.

The three tables below share examples and what you should know about entropy related to the product line strategy elements. The lists are not exhaustive explorations, but they highlight how entropy may play out. You may use the lists as starting points to form strategy lens reviews of product line actions and decisions.

The three questions each lens must answer are

1. Is chaotic energy building up?
2. How might the entropy play out in the future?
3. Should we do anything about the entropy, and if so, what?

Table 1: Platform-Leverage & Entropy

Table 2: Chain-Link Alignment & Entropy

Table 3: Attribute-Positioning & Entropy