BY ROBIN GHOSH
( FORMER CHIEF ECONOMIST, BENGAL CHAMBER OF COMMERCE AND INDUSTRY)
KOLKATA, 23 OCTOBER 2023:
What is entropy in business?
Not many of us know.
It is not a common business term.
But every business owner or entrepreneur will gain immensely if they understand the concept while strategising business operations. If you look into the dictionary the word entropy is defined as: measure of a system’s thermal energy per unit of temperature that is unavailable for doing useful work
Let me try to explain the concept.
1. Generally things trend towards disorder.
2. If you don’t pay attention, this disorder escalates over time.
3. Energy evaporates and the system degenerates into chaos.
4. This is a statistical reality.
5. Here, individual events are of less consequence.
6. Entropy takes birth from the aggregate behaviour of a large number of events rather than a specific or a single event.
7. Things generally happen randomly, and more and more events happen and this tends towards disorder than order.
In managing business, this lesson is of great importance. If you don’t plan, monitor and act, – you are likely to get into a path of disarray and disasters.
This trend towards disorder has to be fought with trends towards order. Positive molecules have to be created to fight negative molecules.
How can this happen? Well this requires re-arrangement of molecules – redesigning of business systems and structures.
The inherent nature of business is that it is embedded with uncertainty and volatility.
So many factors are involved: change in the industry, change in technology, management mishaps, global business shifts and so on. On the one hand – energy flow gravitates towards disorder rather than order – only judicious intervention can turn the flow into order.
Business management essentially is producing positive molecules by effective interventions, mastering order against disorder.
Dear friends, if you are in business, keep your eyes and ears open and play the ball.
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