I recently took a class where a central theme of the class was the idea of entropy. Entropy is the second law of thermodynamics which helps explain how things like pans cool down and how companies die. Energy disperses throughout the proverbial system as time goes on.
Think of DNA. The DNA in your body is being copied over and over. Mistakes are made from time to time so, over time, the quality of the copy deteriorates. Think of a hot pan fresh off the stove. The heat is generated from the vibrations of the atoms. That vibrating is not perfectly transferred to other atoms through so eventually, the vibrating dies down and the pan slowly cools.
Companies experience a similar phenomenon. Think of what the Dow Jones Industrial Average looked like 50 years ago. This was some of the largest companies in the world at the time and contained massive companies like Boeing, McDonald’s, American Express, Exxon Corporation, Goodyear, and Merek. Also included in this list are companies that no longer exist because they failed to change- Woolworth, Minnesota Mining and Manufacturing Company, American Can Company, and Kodak.
Entropy shares many things with the law of diminishing return. Kodak famously invented the digital camera but because they had a near monopoly on the sales of film and they didn’t see a reason why people would ‘want to look at pictures on a television set’. What blows my mind is this took place in 1975. The creator of the digital camera, Steve Sasson worked for Kodak and continued to develop the idea. In 1989, he invented the first DSLR camera but Kodak still refused to sell his camera because they were worried it would cannibalize film sales.
It wasn’t until the late 1990s that Kodak started to feel the financial pain of people making the transition from film to digital photography. They had 20-25 years to make an adjustment and to embrace change but they did not. Finally, in 2012, Kodak filed bankruptcy and while some parts of the company are still trying to survive, the company is definitely not what it once was (or could have been).
Change is incredibly challenging and we will look at ways to make that change easier but learning how to learn, learning how to recognize what is coming, and how to lead in uncertain times or in changing times are all going to be important skills. Being a great leader not only involves leading when things are going well but leading when things are having to change.
Change is not new. The pre-socratic Greek philosopher Heraclitus was famous for saying “the only thing that is constant is change”.
Where have you recognized the need for change? Was it too late or were you able to get everyone on board? Let me know in the comments below!