The following is another in a new series of columns that will provide answers to small business questions. The new question and answer column is written by Dr. Leonard Bertain, Ph.D., the president of The Bertain Consulting Group of Oakland, CA a consulting firm specializing in the improvement of business processes and business re-engineering. Dr. Bertain's book, "The New Turnaround", contains a fictionalized character known as "Dr. Elbie". Should you have a question regarding business management issues, write or fax them to Dr. Elbie, Bertain Consulting Group, 3758 Grand Ave., Suite 25, Oakland, CA 94611, phone (510) 653-6355 or lbertain@bertain.com Dear Dr. Elbie: You mentioned in a talk the other day that there are some very rich metaphors that can be drawn from the world of Physical Science and applied to Management Science. Care to elaborate? Signed. Manager of a Pharmaceutical Research Facility. Dear MPRF: A number of my associates who come from the Physical Science community and who have ventured into the Management Science world were intrigued by an article that I wrote some months ago. In that article, I advocated using "Energy" as an indicator of a corporation's health. As it played out, it was a bit of a stretch but it caused some interesting discussion. A number of people wrote to me saying that their managers have enough difficulty understanding simple income statements and that adding another obscure measurement would only complicate matters. I had to agree with that conclusion. What I do not agree with is that challenging managers to stretch their minds is out of the question. I believe that CEO's owe it to themselves to challenge their managers to think. Whether the ideas are simple or complex, the managers need to be challenged. Moreover, I believe that CEO's need to challenge the thinking of everyone in the company with new ideas, even the janitor. This brings me to the main thrust of this column: meta- phors from science which have applicability to management. I would like to take another shot at energy. All of us have seen organizations disintegrate into the chaos of disorganization. This disorganization can result from any number of events: lost business, downsizing, inattenttion from management, and so forth. Physics provides us a rich metaphor to help us with this. We learn in Physics that physical systems tend to states of increased entropy, greater chaos, if left to themselves. Entropy is an odd term which Physicists have given us to describe the order of physical systems. And thermo-dynamics is the branch of Physics that helps with this discussion. The Second Law of Thermodynamics and the Conservation of Energy principles tell us that entropy can be decreased by adding energy to a system. If you add energy you decrease entropy. If you decrease entropy, you increase order. If we wish to carry the analogy over to management science, what this tell us is that unless you add energy to an organization, it will dissipate to a disorganized state. We know that intuitively. We see it all the time. If we leave an organization alone with no direction, then the chaos mentioned earlier appears. Managers get confused about objectives, workers are given confusing directives because managers aren't clear about anything. So chaos appears. We see this entropy in another place as well, in the "Company Manual". It's fascinating how with time, obsolete and conflicting policies and procedures grow, roles become overlapping and confused, and many activities are performed that no longer add value. And much of this confusion is right there in the procedure manual. It is entropy running amuck. This leads us to the key question of this discussion: how do our businesses which have grown disorganized or inefficient get improved? Very simply, when energy is added. When the CEO decides that something needs to be done and action projects are funded, then that organization will feel an infusion of energy and amazingly, things get done. Action is the basis of measuring energy. Lots of action means lots of energy but it may be unfocused energy. Many of you may recall our earlier columns which talked of urgency. Urgent situations in business create focused activity. What we try to do in our consulting assignments is focus the organization to implement changes based on waste elimination. On this basis, the action, the energy of the company, is very focused. What does this tell us? Basically, this tells us is that organizations can be returned to order by adding energy in the form of change programs which drive to action. Action increases the energy of the organization. Our greatest testament to this process is from 26 companies that we worked with over a year and a half. We generated $28 Million in measured savings from client investments of $736,000. These savings were obtained from the work of 806 employees working on 371 projects. Each of these projects cost the companies an average of $1,984. We think that these number are phenomenal demonstrations of the power of action which leads to major energy input into each of the participating companies. The results were measured within 8 weeks of the beginning of our engagement. The final numbers were verified 90 days after our engagement ended. I believe that the metaphor obtained from the Second Law of Thermodynamics to be a very rich basis upon which to explain why action and energy are so important to the ongoing health of companies. Energy undoes disorder which undoes chaos. We'll continue this discussion next month when we will discuss energy from another physics discipline. We will borrow some ideas from Quantum Mechanics. Dr. Elbie's Corner is copyrighted by Leonard Bertain, 1995, 1996, 1997, 1998. Dr. Elbie's Corner is a monthly article published by the Bertain Consulting Group, in the CEO University Website @ Bertain.com or CEOU.com. This article is reprinted from July 1995.