An architect friend of mine, Wayne Smith, told me one day that communities must have something of value to export to remain vital. Years later, after reading about Ilya Prigogine’s proposition that living systems remain far-from-equilibrium because they discharge entropy to permit the inflow of restorative energy, I had a better understanding of what Wayne meant: the process of freely and openly interacting with the external world facilitates a community’s export of entropy.
Take blighted neighborhoods. They suffer a paucity of things of value to export. Entropy builds up like streetside detritus. Everyone sees the accumulating rubbish, but ignores it because they know trash removed today will be replaced by new trash; so why bother? The slum desperately needs revitalizing energy, but it cannot efficiently absorb it because of the efficiency-robbing effects of ever-mounting entropy. Its inner-directed perspective, focused on raw survival, consumes the community.
Many companies suffer from an inner-directed perspective that impedes the exporting of entropy. They operate as “closed systems.” Closed systems are incapable of self-renewal. Only by entering the bidirectional stream of exporting (entropy) and importing (energy) can a system remain in a far-from-equilibrium state.
A closed system company typically sees operations through a shareholder lens. This restricts the exportation of entropy. (Remember Milton Friedman’s famous take on corporate social responsibility: The only social responsibility a company has is to lawfully make profits for its owners. He was in essence championing the closed system approach to company organization. )
The structure of closed system companies promotes information constipation. Employees are strewn along channels of information with the power to block the free flow of information. Employees at all levels use information as a strategic tool for their own survival. Wanting credit for newly found information, an employee may keep it from upper management as he or she waits for the most propitious time to release the information.
With similar self-interest at play, an employee may withhold bad-news information to protect his or her position. This happens with daily regularity in hierarchical organizations. The result? Entropy builds and compromises the well being of the company.
Hierarchically organized companies also experience mighty, mindless defense of the status quo at all levels regardless of changing conditions that call for change. Mindless defense of the status quo contributes to entropy build-up and blocks the flow of self-renewing energy.
Firms of endearment are outer-directed systems. Their commitment to addressing the needs of all stakeholders gives them continuous access to catalysts that trigger continuous exportation of entropy.
Southwest 93-member culture committee fights against status-quoism that impedes the export of entropy. Honda’s waigaya ensures the outward flow of entropy and influx of self-renewing energy. The car company also helps suppliers export entropy, thus making them healthier participants in Honda’s economic ecosystem, thus making the ecosystem healthier for all.
Operating with a transparency not customary with closed-system companies, FoEs are immune to information constipation. They are able to get early indications about problems from every stakeholder group.
For example, when a Wisconsin Whole Foods store voted for union certification, John Mackey personally investigated the situation to find out where management had failed employees. He corrected the alleged deficiencies, after which employees voted to decertify. A more typical C&C approach would have been to send a swat team into the region (which Wal-Mart does) to figure out how they could pull the teeth of the union or at least minimize its influence on employees.
The open-system structure of FoEs permits more rapid responses to situational change that require quick responses than closed system structures. In the latter, people’s first responses tend to be along the lines of “How will this affect me?” FoE employees are likelier to ask, “How will this affect the company? Or the customer? Or the supplier? Or the community? Therein lies the existential difference between the open-system SRM business model and the closed system C&C business model.
DBW
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