What Is Entropy in Business?

The American Heritage Science Dictionary defines entropy as a measure of disorder or randomness in a closed system. The definition claims that as a system becomes more disordered, its energy becomes more evenly distributed and less able to do work, leading to inefficiency. Business organizations are either organic or bureaucratic in nature. Organic organizations are open because they invite innovation and creativity while seeking continuous exchange with the environment in order to survive. Bureaucratic organizations are on the opposite end of the spectrum, as they operate in a mechanistic and closed style that is subject to entropy.

Bureaucratic or mechanistic organizations are highly dependent upon rules and regulations, defined job responsibilities, a centralized hierarchy of authority, a clear communication chain of command and centralized decision making. The book “Mintzberg on Management,” by management consultant Henry Mintzberg, specifies that the bureaucratic organization’s work requirements are very limited as they are simple, repetitive and standardized. This viewpoint of bureaucratic organizations indicates that the mechanistic organization must have a stable environment with standardized results to succeed. The mechanistic organization works well until there is a need for change or some type of upheaval enters the system.

Entropy occurs in organizations when the mechanical works of the bureaucracy break down as a result of specialization, apathy, carelessness and lack of pride. Mintzberg would agree that job specialization contributes to entropy because people often see only their immediate job within the organization, resulting in departmentalization and fragmented organizational goals. A major cause of entropy in the bureaucratic environment involves expectations that individuals will obey routine orders and adhere to the organizational structure, while initiative and responsibility are discouraged. Employees learn to do only what is expected of them and no more. Eventually, employees in the bureaucratic organization become mindless and unquestioning because they depend upon the structure of the system to justify their actions.

Entropy in the mechanistic organization eventually causes employees to become rigid in their jobs, which creates a situation in which the organization cannot make needed changes. In the book “Images of Organizations” by Gareth Morgan, it is evident that closed organizational systems have a tendency to become entropic because they have a tendency to deteriorate and become run down.

Morgan’s book suggests that the bureaucratic environment has its place in business because it creates a foundation for an organization’s effective operations, although employees often become so specialized in their departments that entropy occurs. Morgan suggests that organizations can remain competitive by encouraging employees to think past the needs of their immediate work areas by considering the goals and objectives of the entire organization while making decisions regarding their jobs. In turn, organizations must become organic systems by opening themselves up to continuous exchange of resources and information with the outside environment. This exchange helps ensure that the organization and its employees can remain creative and innovative by meeting its competitive needs while being socially responsible.

Business entropy can be prevented in organizations by ensuring that employees are involved in the entity’s decision making and that they understand their roles in the production process. Employees often are the front line; they deal with the customers and are able to determine their needs. Employee involvement helps them develop ownership of the organization and helps them become satisfied with their jobs because they can meet their personal goals and objectives in conjunction with organizational goals.