Thermodynamics & Organizational Assessment

The Constructal Law, as described by Adrian Bejan in Design in Nature, is really about answering three key questions about living systems:

1. Where are the flows?
2. Where are the waves?
3. Where is the resistance?

The premise is this: answer these questions and you are closer to understanding the design of living systems. What if the system in question is a business? Can we use these same questions to help understand how a company works?

As a consultant, when I start work with a company there is a period early in the engagement where I’m working furiously to understand as much about the company and their business as I can. This activity typically goes by different names: Assessment, Discovery, Research. The point is that in order to provide useful advice, I need to understand the customer and the business domain well. There are some very conventional tools that are often used when doing an assessment: surveys, interviews, observation, to just name a few. But after reading Bejan’s book, I’m wondering if I could use his three questions about thermodynamics to help me understand organizations better?

Let’s start with the first question: where are the flows in a business? Well, all sorts of things flow through organizations such as money, emotions, product, and information. Starting with money, understanding how money comes into an organization is very relevant to understanding how the business works. This includes everything from basic flows into and out of the company to how the money is translated into product orders within the company. Is funding allocated annually or more frequently? Any limitations in the funding process (i.e. when we can obtain funding for new work) can create resistance within the organization that make it hard for money to flow smoothly to critical products or initiatives therein. If you are responsible for improving the flow of work, you can’t do that without corresponding improvements in the flow of money or funding.

Next, have a look at the flow of product through the organization. How frequently can product be delivered? Once a year? Quarterly? Monthly? Daily? Hourly? Again, often we will find that the flow of product is held up because a company is incapable of releasing more frequently than once every 6 months. Impeded product flow is going to have all sorts of ripple effects on your ability to get other work flowing in the organization.

How about information flow? How long do requirements sit in a queue prior to ever being worked on by a team? How large is that queue and what is the throughput for something in that queue? All of this can have a profound impact on the ability to improve flow within a company.

Lastly, can we identify the flow of emotion through a company? I’m not sure about this. Those other examples were easy to find nice clean objective measures for. How would we observe emotions flowing within a company? Well, I know passion and energy when I see it. I also know when passion and energy are absent. I’ve tried using a rating system based on criteria like are people sitting forward in their seats or leaning back. Frankly these kinds of ratings didn’t lead to any startling insights (except perhaps that the chairs are exceedingly uncomfortable). However, there may be one place where I have seen energy obviously flowing through an organization: in large collaborative meetings like big room planning. I’ve seen teams come to these collaborative planning sessions with some anxiety and trepidation and I’ve seen them afterwards, virtually spinning with energy, as they leave with a coherent plan that they all believe in.

Perhaps the mention of this pulse of emotional energy is a good place to also ask about waves in an organization. After all, emotional energy is certainly not a steady state. Emotions ebb and flow and definitely come in waves. We may not understand the composition of the wave (is it anger, joy, etc.) but we can often detect the change in energy. The company that I work for is being acquired and it is no simple cliche to say that the news of the acquisition has sent emotional shockwaves through the organization. These waves are often preceded by rumors and gossip, so perhaps that’s a clue to where to look for the flow of emotion in an organization?

There are corresponding waves of work, product and information that flow through an organization. You can see that flow or rhythm in organizations that have adopted scaling frameworks like SAFe or LeSS or Nexus. Everything rolls through on a quarterly basis. Work builds up in queues prior to the quarter and work is released after the quarter. This is a manifestation of quarterly waves flowing through the organization. Of course, this applies to the examples of funding and other flows that I’ve already mentioned.

Finally, what does resistance to a flow look like for each of the attributes we have been examining? Is there somewhere in the organization where there is resistance to money flowing? Curiously, I have encountered organizations with really poor billing and collections processes that have made the flow of money into and out of the organization excruciatingly painful. Often you see people within organizations like this doing all they can to go around or circumvent the afflicting process or system. If you are wondering where resistance lies, I’d recommend looking at what tools they use first. Tools are a common manifestation of organizational resistance. Then I’d take a look at documented policies. There are other undocumented kinds of resistance including emotional resistance too (again, gossip and rumors).

When you take a minute to step back and think about it, using these perspectives reveals the typical organization to be a very dynamic creature. It is constantly ebbing and flowing with information, money and product. There are waves of various kinds of change pulsing through it. There are places where the smooth flow of information encounters resistance and blockages. When you use this language, it starts to sound very much like a living system. It surges and heaves, ripples and flows, and struggles in ways that are almost peristaltic in nature. As we deal with these systems, we are diagnosing a large and quite complex living system.

To wrap up, we have explored how we can use questions used to evaluate physical systems in thermodynamics:

1. Where are the flows?
2. Where are the waves?
3. Where is the resistance?

And we have applied them to the evaluation and assessment of organizations. It seems that using these questions has a great deal to offer us in terms of understanding the mechanics and underlying issues that a company may face. So, the next time that you are assessing an organization, try using these questions to understand the thermodynamics of the organization.