The Physics of Disruption

by Greg Satell

The Physics of Disruption

Jeremy England, a rising star in the world of physics, has made quite a stir with his ideas about the meaning of life. In a nutshell, England argues that while disorder in the universe tends to increase over time, living things harness energy around them to create order from randomness.

Or, more accurately, he argues that life is the universe’s way to dissipate energy more efficiently, meaning that what we see as order is really just nature’s way of spreading disorder more broadly.  It’s an intriguing theory, implying that life is not a cosmic historical accident, but the inevitable consequence of physics.

It is also the exact opposite of how we tend to see things.  We assume that the energy we employ to create order as constructive or “putting things aright,” when actually we are setting the stage for more disorder.  In other words, most people look at an ordered system as the natural way things should be.  That’s what opens up opportunities for successful disruption.

From Bureaucracy to Holacracy

In the early 20th century, the great sociologist Max Weber noted that the rise of mechanization and increase in scale would lead a more rational form of  organization.  Jobs would be broken down into small, specific tasks and be governed by a system of hierarchy, authority and responsibility.

In essence, bureaucracy was developed as a platform for accessing ecosystems of resources, like employees, suppliers and investors.  It created order by transforming a fairly randomized series of inputs and organized them for a specific purpose.  As the model was honed by Alfred Sloan at GM and others, organizations became highly optimized for specific tasks.

Yet as Brian Robertson argues in his new book Holacracy, bureaucracies are a relatively inefficient way to dissipate the creative energies generated by today’s marketplace.  In effect, by establishing a single focal point of organization at the top of a bureaucratic hierarchy, much of the creative tension of an organization is squandered.

So Robertson proposes a new form of organization, also called Holacracy, that is, in a sense, an amazingly multifaceted bureaucracy.  Rather than establishing a single focal point at the top, each person in the organization becomes effectively a CEO for a specific function (called a role), which accesses the ecosystem created by the other roles to fulfill its purpose.

The Computer as a Hub

In 1945, John von Neumann created an architecture for a digital computer, which quickly became adopted as a standard.  Before long, the new technology was put to use helping to run large bureaucracies, automating basic organizational functions like accounting, maintenance and human resources.  Computers enabled organizations to operate on a far greater scale.

Yet as information technology allowed organizations to grow, computers themselves shrunk, becoming smaller and smaller until they could fit on a desktop.  Soon, back office functions were no longer hidden in some mainframe in a computer room, but were visible to managers through applications on their own computers.

Steve Jobs, first with the Apple II and then with the Macintosh, was at the forefront of this revolution.  Yet when he returned to the company he founded in 1997, he saw that the existing order was no longer able to harness the forces that technology had unleashed.  He reimagined computers as a hub for external devices to connect to.

It was that insight that made Apple the world’s most valuable company.  Today, traditional computers make up only 16% of Apple’s revenues, while devices make up more than two thirds.  Much like in Jeremy England’s theory of life, the new order that Jobs created dissipated the energy technology had unleashed much more broadly than anyone had imagined.

The Cloud Disruption

Today, we’re in the midst of a new shift in order, from installed technology solutions to the cloud.  As I wrote in a previous article, the cloud may be the most disruptive technology ever, because it distributes creative energy much farther and faster than ever before.  Rather than having to install upgrades at each location, new forms of order can be transmitted nearly instantaneously.

Erik Brynjolfsson and Andrew McAfee, two economics professors at MIT, call this phenomenon scale without mass, because it enables sweeping change without “the degree of inertia historically associated with larger firms.”  Yet while the ability to adopt innovations more smoothly may help create order internally, they predict it creates more “turbulence” in the system as a whole.

In earlier times, the authors argue, when a new innovation arose it propagated slowly, allowing a successful model to result in a sustainable competitive advantage.  However, in a world where new ideas can be leveraged and replicated at blazing speeds, the shelf life of any advantage is bound to be more transient.

So, in effect, the ability to transmit order—in the form of new ideas, models and procedures—in an instant has resulted in a far more disruptive marketplace.

The Art of the Shift

Organizations, like the humans that create them, are driven by purpose.  They are effectively devices that take a set of diverse inputs and transform them into highly specific outputs, like cars or healthcare services or TV shows.  As organizations evolve, they become highly optimized and specific to their purpose.  In effect, mission drives strategy.

Yet success often breeds failure because as the internal order increases, disorder always increases externally and, as an enterprise becomes more optimized for a specific purpose, it becomes less able to adapt to others.  Once a model becomes hardwired, we begin to see it as the natural order of things rather than one which we have created ourselves.

And that’s why we must work to master the art of the shift, because revolutions are never created wholesale, but as an accumulation of anomalies—or “tensions” as Brian Robertson puts it—that don’t fit in our existing model.  Our first inclination is always to work around these, but eventually the existing order collapses, giving rise to a new one.

So, if Jeremy England is right and the purpose of life is to create order, then we find meaning not by remaining faithful to that which came before us, but by channeling our energies to adapt to that which is to come.

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Greg Satell is a US based business consultant. You can find his blog at Digital Tonto and you can follow him on Twitter.

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