Always remember the 2nd law of thermodynamics!

After 5 years of university education, you forget some things you have learned along the way, but the most important concepts, ideas and ways of thinking hopefully stick with you.

In my case, I have been fortunate to have several inspiring teachers and class mates along the way but the main lesson that has really stuck with me is something I learned in my second year: “Always remember the 2nd law of thermodynamics” The second law is described in detail here but the practical implications of it as well as entropy is what really stuck with me: When as system cannot get rid of its energy, entropy increases and increasing amounts of energy is no longer available to do work untill the system eventually overheats.

Taken to a business context this is very simple: closed system always die. This might seem like a simple observation when you observe failures after they have happened, however how do you make you that your system remains open and dynamic and also how can you defined what closed means?

The best answer to both questions is orientation. Orientation is the most important element in John Boyd’s OODA loops. For any firm, entrepreneur or investor for that matter orientation means to realign your self as quickly as possible with the contexts you are embedded in. This also solves the issue of defining closed systems, because open systems are those that constantly reshape their decisions and strategies based on what they see. So although Apple have chosen an integared approach to their products, they are clearly an open system since they are excellent at evolving with and defining their environments. This is in no way obvious to many people who are in the middle of an industry and are bound by all the traditional way of doing things but when firms repeatedly fail to re-orient to match the reality around them, the future catches up with them. Myspace is partly  trying to re-orient their strategy towards Gen Y and music, but they clearly missed the boat on e.g. people being ready to use their real names and information for social networks. An excellent example of a company that has been quick to implement changes based on their observations is Twitter, which based on usage patterns implemented the @ and # features.

I went one to write my bachelor thesis about OODA loops and although I am not an expert in the lean startup movement, they are clearly influenced by OODA loops as well. I will write more about OODA loops and the importance of agility, but if you are hungry for more about OODA loops Chet Richards have written the preeminent book on how to apply John Boyd’s concepts to business. It is hard to find a better business book and you can buy it here.

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Posted: oktober 28th, 2010
Categories: miscellaneous
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Comments: 1 Comment.