Decomposing Commercial Entropy: Constraints, Drag, and Weight

Commercial entropy is the byproduct of growth. Leaders must decompose it into three distinct forces to intervene with precision.

Force 1: Constraints

Boundary conditions (capital, regulatory, VEC) defining the possibility space. Reference: North's Institutional Economics. Intervention: Read, Reposition, Reallocate. When growth stalls despite efficient operations, the corrective action is to read boundaries and reallocate resources.

Force 2: Organizational Drag

A relational force (friction) existing between interfaces. It compounds geometrically with velocity and surface area. Williamson identified three subtypes: Bounded Rationality (cognitive drag), Opportunism (jurisdictional drag), and Asset Specificity (lock-in). When adding resources doesn't increase output and cycle times rise, the intervention is Alignment Architecture — connect things.

Force 3: Operational Weight

A material property (mass) intrinsic to the system. It compounds linearly as accumulated tools and overhead. Reference: Penrose. When margins decline while tool and process counts grow regardless of results, the intervention is Composition Discipline — remove things.

The Critical Causal Law: Drag Produces Weight

Misalignment (Drag) forces departments to create redundant initiatives and governance layers (Weight) to compensate for friction. Addressing Weight through headcount cuts without fixing the upstream Drag is a strategic failure — it results in a "smaller organization that is equally slow" and leads to system destabilization. When a smaller organization remains equally slow after cuts, you must address Drag first to stop the mass-generation mechanism.