Organizational Entropy, the Problem of Choice, and the Effect of Organizational Structure on Performance (part 2 of 4)

In case you missed it, here is Part 1…

A key component of Janow’s Organizational Entropy is choice. Specifically, the greater the choice available for an individual member of an organization to carry out work, the higher the entropy of the organization. Entropy that is too high leads to a “stupid” organization. The question, then, is “how much entropy is too much? And how do you control it?”

I’m not sure of the answer to the first question (or if there even is an answer), but the I believe the answer to the second question is, as Janow states, the management of choice.

When choice is good

All choices are not equal. Some processes (such as knowledge creation) benefit from an abundance of choice. In these processes, the availability of choices and the process undertaken to select (or create) a specific choice are what add value to the outcome. This is the nature, the essence, of knowledge work. As such you don’t want to unnecessarily limit choice. At the same time, you don’t want to have unlimited choice or you will face the problem of diminishing returns.

In the context of Janow entropy, this type of choice is managed in large part by the size of the organization. You make a team only as big as it needs to be, but no bigger. You also need to arrange all the teams in such a way that the teams can share. This is where it starts to get tricky, because once you’ve added sharing with other teams you’ve added another layer of choice. (More on that later.)

When choice is bad

Just as there are situations where choice contributesto added value, there are many situations where choice not only doesn’t add value but actually decreases value (or, in other terms, reduces productivity). Many organizational processes fall into this category: HR, payroll, benefits, ordering office supplies, finding a phone number/e-mail address, etc ad nauseum. By identifying these processes and DEFINING them so there is NO CHOICE, you can remove a significant amount of entropy in the organization.

In essence, you are taking the potential entropy introduced by these processes and reducing it to effectively zero. Many of these processes are independent of the purpose of the teams themselves. By removing this entropy, you are in effect giving the team more “energy” to do what they are supposed to be doing.

The effect of experience on choice

Once you’ve redesigned non-value added processes to reduce choice (and therefore entropy), you must still make these processes known to the members of the organization and get them to use the processes. The first step, of course, is to get the current members of the organization on board, but this is a challenge in change management that I won’t go into here. Another key consideration is how to educate new members of the organization.

A new member of an organization immediately introduces additional entropy into a system. Whether the new member is replacing an existing member or is a new addition, the whole balance of choice is upset. Existing members of the organization now have a new possible, and unknown, source of choice. The new member has a lot of choice, again unknown at first, to contend with, both in terms of the value added and non-value added processes discussed above.

There are two primary ways to help reduce the entropy introduced by a new member: up-front socialization or learning from experience.

In terms of value added processes, up-front socialization can only go so far. This would consist of things like personal introductions of the team members, past successes and failures of the team (along with a couple of stories), and information about current projects – with no immediate benefit or impact. Beyond that, the new member must figure it out for themselves and become a full blown member of the team. (Of course, this will apply in the reverse as well, as the team as a whole must figure out how the new individual fits.) In other words, learning from experience.

On the other hand, up-front socialization of a new member of an organization in terms of non-value added processes will have an immediate and, I believe, dramatic impact in reducing organizational entropy. From the start, entropy is introduced only by the new member’s newness to the team, not because of any organizational overhead. Having a new member learn all the non-value added process by experience will, eventually, get you to the same point. But much slower, and at what cost to the team’s producitivity?

No one right answer

As with many things, the only right answer in this situation is the one that works best for you. Choosing (there’s that pesky choice again) between up-front socialization and learning by experience is a trade-off. Up-front socialization involves an investment of energy on the part of the organization to get the new member quickly up to speed so they can be productive. Learning by experience requires an investment as well, this time in the form of reduced productivity now in anticipation of improved productivity later.

Where do you want to make this investment: at the ORGANIZATIONAL (infrastructure) level; or at the TEAM (getting things done) level? It all probably depends on how big your organization is and what you believe is important.

Next time, thoughts on how organizational structure affects choice…

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