Entropy & Ecosystems

Henry Adams said, "Chaos often breeds life, when order breeds habit".

The chaos within organizational leadership circles right now is how much should they value (and thus pay) for human input and where should they stop paying and automate? This has been true in blue collar work for the past few decades but it's finally impacting white collar workers and AI will accelerate this change.

It's not just white collar jobs.

Things that felt stable & comfortable, like a person taking an order at the drive thru, a creative marketing career, or a beach condo in Miami that will be passed down to your kids, are no longer predictable.

It feels like the world is in chaos.

For revenue organizations we used to be able to 5x cover to hit our desired target, hire our team based on CAC ratios, and profit $$$. It's not working anymore.

We've had order in sales for decades which has bred habits that are hard to break. As the quote goes, “The chains of habit are?too light to be felt until they are too heavy to be broken”.

The revenue system is in chaos. But from that chaos, there is new life being born.

Entropy: What is it?

Entropy is perhaps one of the most important concepts to understand for making decisions while also being one of the most difficult to explain.

Entropy is often simplified to just mean "chaos" or "disorder". The author Steve Pinkerton famously described entropy as the effects that cause a sand castle made in the evening to be collapsed back into the beach by the morning.

However, we all would predict a sand castle to be washed away over night. A better example of entropy would be going to the grocery store and coming back to find your house burned down. Entropy is not just chaos - but the unpredictable nature of events.

How often do highly unlikely events happen in our life that we attribute to luck or if we're religious - God?

My life story as told through Entropy:

• I went to a D1 Football camp my junior year of High School in California. There was a first year D3 coach who didn't know he shouldn't be there from Carleton College in Minnesota. I went to Carleton.
• I applied and was rejected from a study abroad group to the UK as I wasn't an Econ Major. The head of the Econ department made an exception.
• I met the CEO of BarCap while on my study abroad trip and ended up getting an internship in London that turned into a full job.
• My fourth year in London I signed up to a free trial of match.com (which was horrible) that I forget to cancel. I met my now wife that second month.

As a kid that grew up in Eugene Oregon, the odds of meeting my wife from Hersham, UK were so unlikely you would never have predicted it. There were so many things that had to happen to even create the chance that we might meet.

Entropy is not just chaos, but the state of disorder that leads to unpredictable events.

Ecosystems & Entropy

The above map of an ecosystem looks like a visual representation of organized disorder. If somebody asked us to describe the details of the map we would struggle to do so behind it's a web. If we were asked to predict what these relationships would look like in 5 years, we would have even less idea of what to say.

Entropy in ecosystems is closely related to the idea that natural systems tend to move towards states of higher disorder and complexity over time.

When we talk about revenue ecosystems, part of the reason many people turn off is because we're asking them to visualize the web.

Revenue ecosystems have high entropy. High entropy indicates a higher level of diversity and complexity. When multiple solutions coexist in an ecosystem, with various interactions and niches, the ecosystem has more potential ways for solutions to be arranged and interact.

The biggest dilemma facing buyers today is not one of pain points but one of entropy - there are more ways to arrange solutions than they can possibly understand.

The goal of ecosystem teams is to reduce entropy for buyers.

The Big Picture

Imagine if every budget decision in your country was a democratic vote. How would you allocate the money? How would you know if prioritizing F16 maintenance over affordable housing is the right thing to do? While I would personally think housing is more important that jets that argument might look silly if we ended up in a war we couldn't win.

Instead, we elect officials based on campaigns that, in theory, signal what their behavior will be that. When political systems function they significantly reduce entropy by creating predictability in voting outcomes for us while reducing the complexity we have to be educated about.

While it could be it's own book, the biggest issue in democracy today is the rise of entropy. The climate, healthcare, education, housing, social support - it feels like the events in our life are less predictable and therefore like the system itself is trending towards chaos.

The individuals making decisions about those facing high entropy environments often exist in low entropy environments due to wealth. Entropy tells us how these political sand castles will stand the test of time.

The Takeaways

So what does this mean for us in revenue orgs?

• Our habits built around predictable revenue targets are no longer stable.
• From this chaos there is a new opportunity to breathe life into our businesses and our buyers through embracing ecosystems.
• The challenge with ecosystems is they overwhelm buyers
• The goal of ecosystem led sales is to reduce entropy - i.e. unpredictable events due to complexity - for our buyers
• The role of software - and AI within software - is no longer feature development but data connection.
• This data connection allows us to move from direct to connect sales by simplifying predictive data to drive low entropy buyer lifecycles