Why Your Strategy Falls Apart Without Anyone Noticing

Horst Schulze, co-founder of The Ritz-Carlton, argued that "service cultures are subject to the laws of thermodynamics."

They drift toward disorder unless actively counteracted. Strategy sessions create alignment. But alignment doesn't hold on its own. Six months later, marketing is pushing benefits sales never mentions. Product is building toward a vision that no longer matches the messaging.

Nobody went rogue. The organization simply drifted.

Think of a clean room. There's no force creating dust. But there are far more ways for a room to be dirty than clean.

Given enough time, disorder wins.

Organizations work the same way. Your strategy is a single, ordered state. But the millions of small decisions made daily can combine in countless disordered ways.

Without constant effort, organizations drift toward entropy.

How Organizations Drift

This drift happens at two levels: individual and organizational. A third mechanism ensures no one remembers the original standard.

Driver I: Individual Drift

The first mechanism is personal: micro-divergence.

Small daily decisions that stray slightly from the strategy add up over time.

Herbert Simon won a Nobel Prize for showing that humans don't optimize. We "satisfice": we pick what's good enough given our limits.

The brain uses 20% of the body's energy. To save resources, we default to what's right in front of us.

This is where organizations get into trouble.

Every day, each person makes dozens of small choices. Marketing picks which benefit to highlight. Sales decides how to frame a discount. Customer service finds shortcuts for common complaints.

An employee facing an angry customer will focus on what's immediate: ending the conflict fast. Not what's strategic.

A marketer under deadline will reuse what worked last time instead of following the new positioning.

A sales rep will say whatever closes today's deal.

None of these are bad choices on their own. They're practical responses to real pressure.

But each one is shaped by what's in front of the person right now. Not by the strategy document from six months ago.

After six months of micro-decisions, teams that started aligned end up pointed in different directions.

Not because anyone chose to stray. But because everyone optimized for their immediate context.

Driver II: Organizational Divergence

The second mechanism is structural. Departments adapt to different environments and lose sync with each other.

Ashby's Law of Requisite Variety explains why. It's a core idea in cybernetics: "Only variety can destroy variety."

In other words, an organization's internal complexity must match the complexity outside it to survive.

As your company grows, the outside world throws more at you: markets, competitors, regulations, technology. No single person or team can handle it all.

So the organization splits up.

Sales absorbs customer complexity. Engineering absorbs technology complexity. Marketing absorbs competitive complexity.

Silos are adaptations to complexity.

But context changes faster than teams can communicate.

By the time Product shares a technical limit, Sales has already adjusted their pitch for an objection that no longer exists. By the time Marketing updates the messaging, Customer Service has built workarounds that contradict it.

Everyone is responding rationally to their piece of reality. But those pieces have diverged.

Teams don't sync up constantly because of cognitive switching costs. Moving from focused work to coordination work has a real cost: slower thinking, more errors, more effort. Stopping to update another team means losing your train of thought. Multiply that across a dozen people, several times a day, and the cost adds up fast.

Inside a silo, teams build efficient shorthand. To talk across silos, they have to translate. And that's cognitively expensive.

Organizations drift into silos because it's the path of least resistance.

The problem is that internal divergence creates external fragmentation.

Think of it as Brand Entropy: as a message passes through layers of an organization, it gets diluted and distorted—like a game of Telephone.

Without a way to correct errors, the signal degrades. Eventually, frontline behavior has nothing to do with the CEO's vision.

Driver III: The Compound Effect

The third mechanism locks in the other two: memory decay.

This happens at both the personal and organizational level.

Memory isn't a recording. When employees recall the strategy session from a year ago, their brains don't replay a video. They pull fragments and rebuild the scene based on current pressures.

If the sales team is under pressure to discount, they'll reshape their memory of the strategy to stress "flexibility."

They're not lying. Their brains are rewriting the past to fit the present.

At the organizational level, memory fades through turnover.

New hires join without context. Veterans leave and take knowledge with them.

Organizations develop what researchers call Transactive Memory Systems. Those systems are the webs of "who knows what." And when key people leave, the whole system's performance drops.

Collective memory decays in a predictable way.

"Communicative Memory," kept alive by conversation, fades fast once the topic changes. "Cultural Memory," kept alive by artifacts, rituals, and systems, lasts.

Most organizations rely on talk. "We discussed this."

Without moving strategy into rituals and systems, collective memory drops to near zero within months.

This is where individual drift and organizational divergence become permanent.

Safety scientists call this Normalization of Deviance.

Here's how it works: an employee takes a shortcut. Nothing bad happens. They save time. The brain tags this as a win. The behavior sticks.

As this repeats, the baseline shifts. The shortcut becomes the standard.

And because memory has faded, no one remembers what the original standard was.

Diane Vaughan studied the NASA Challenger disaster and found something chilling: the agency drifted into launching an unsafe shuttle.

For years, they accepted "minor" O-ring damage as "within limits." Each time nothing went wrong, the behavior was reinforced. The safety margin was eaten away bit by bit.

By the day of the fatal launch, no one remembered why the margin existed. The rule felt like red tape, not survival.

Your brand promise works the same way.

There's only so much drift between what you say and what you deliver before customers notice. Every micro-divergence eats a piece of that margin.

Each time no one complains, the behavior sticks—until a competitor with a clearer promise shows up and you find there's no margin left.

The Cost of Institutionalized Entropy: Sears

Most companies drift into entropy gradually. Sears structured itself for maximum chaos.

At its peak, Sears was the Amazon of its era.

It accounted for 1% of the entire U.S. GDP. Two-thirds of Americans shopped there each quarter. It ran 3,500 stores. Half of American homes had a Kenmore appliance.

Then they institutionalized entropy.

In 2008, CEO Edward Lampert broke Sears into about 30 separate business units.

Kenmore, Craftsman, DieHard, Apparel, and Appliances became their own companies. Even IT and HR became profit centers that other units had to pay to use.

Bonuses were tied to each unit's P&L alone.

The enemy was no longer Walmart or Amazon. It was the VP down the hall.

Individual drift became policy.

The Appliance division found it could make more money selling LG or Samsung than Sears' own Kenmore brand. So they gave competitors the best shelf space.

Kenmore's market share collapsed. All to hit a quarterly target.

Local optimization was rewarded. Global coherence was impossible.

Organizational divergence was engineered.

Craftsman wanted to launch a flashlight with DieHard batteries. But DieHard demanded such high royalties that Craftsman killed the product.

Because units ran independently, they built separate IT systems: 30 different supply chains. There was no single view of the customer.

Memory had nowhere to anchor.

The weekly ad circular became an auction. For Mother's Day 2011, the "Outdoor Living" unit outbid apparel and jewelry.

The cover showed a "Doodle Bug" minibike, a product for young boys. No one owned the whole.

Meanwhile, stores rotted.

Sears spent $0.91 per square foot on updates. Best Buy spent $15.36.

By 2016, American women preferred Goodwill, a thrift store, over Sears for clothing.

The brand had negative value.

On October 15, 2018, Sears filed for bankruptcy. Today, fewer than 20 stores remain.

The pressure from Amazon and Walmart was real, but it was context, not cause.

Best Buy faced the same pressure and thrived by investing in people and partnerships. Target put $7 billion into store upgrades.

Sears failed because Lampert took the natural pull toward entropy and made it official policy.

He built a system where alignment was impossible by design.

The Antidote to Entropy: Ritz-Carlton's Daily Lineup

Now consider an organization that faces entropy every day and built a system to beat it.

The hospitality industry averages 70-100% turnover per year. Knowledge is constantly lost. Service standards slip as new people cycle through faster than culture can spread.

In this chaos, The Ritz-Carlton keeps turnover in the low 20% range.

They've won the Malcolm Baldrige National Quality Award twice. No other service company has matched that.

Their secret is better maintenance.

Schulze built the Daily Lineup because he knew human behavior drifts daily.

So realignment must be daily.

Each shift begins with a 15 to 20-minute standing meeting. This happens in every department and at every property around the world.

The content is synced globally. Corporate sets the focus for each day. If today is "Service Value #3," staff in Tokyo, Berlin, and New York discuss that same value on the same day.

35,000 people. 115+ properties. Dozens of countries. Same conversation.

The agenda is clear: company news keeps everyone in the loop, property updates cover today's arrivals and their preferences, and the Gold Standard focus includes reading a Service Value, sharing a "Wow Story," and asking, "How can we apply this today?"

The Wow Stories make abstract values real.

One example: a family arrived at the Ritz-Carlton Bali with a son who had severe food allergies. They'd brought special eggs and milk, but the food spoiled in transit.

These items weren't available locally.

The Executive Chef remembered a store in Singapore, over 1,000 miles away, that carried them. He called his mother-in-law in Singapore, asked her to buy them, and had them flown to Bali.

The child was fed safely.

The Lineup lesson: "No" is not an answer. Resources extend beyond the building.

This is backed by the $2,000 Rule: every employee can spend up to $2,000 per guest, per incident, to fix problems without asking a manager.

The logic: the lifetime value of a loyal guest dwarfs a $2,000 fix. Losing the relationship costs far more than solving the problem.

But the money matters less than removing friction.

In most hotels, an employee says "I have to check with my manager"—and by the time approval comes, the guest is lost.

The $2,000 Rule gives instant ownership.

The results prove the investment.

In the 2024 J.D. Power rankings, Ritz-Carlton scored highest in the luxury segment. "Staff service" was the key driver.

Competitors can buy the same furniture. They can't copy the consistency that comes from 35,000 people discussing the same values on the same day.

The 15-minute Lineup counters each level of entropy:

It surfaces individual drift early. When employees share how they applied yesterday's value, shortcuts become visible. Before they turn into complaints.

It creates shared language across departments. When housekeeping and front desk both discussed "anticipating unexpressed needs" that morning, they work together when they spot a chance. Silos don't form because everyone starts the day aligned.

It resets memory every 24 hours. Values are reinforced daily, in context, with real examples. Culture doesn't fade because it's constantly renewed. The drift never has time to become the new normal.

The Contrast That Matters

Sears and Ritz-Carlton faced the same challenge: keeping a large, spread-out organization coherent.

Sears chose fragmentation. 30 divisions. 30 strategies. 30 definitions of success. Built for maximum disorder.

Ritz-Carlton chose synchronization. One conversation. One set of values. One daily reset. Built for constant realignment.

The difference isn't resources or talent. Both had plenty.

The difference is whether leaders treat alignment as something you achieve once, or something you maintain every day.

How to Counteract Entropy in Your Organization

1. What daily or weekly ritual resets your team's alignment?

If the answer is "our quarterly all-hands," entropy is winning. Every day without a reset is a day when drift compounds unchecked.

2. Are your teams using the same language?

If marketing calls it "brand positioning" and sales calls it "our value prop" and product calls it "the north star," you don't have alignment. You have three versions slowly drifting apart.

3. Who owns the coherence of the whole?

At Sears, no one did. At Ritz-Carlton, the Daily Lineup makes coherence everyone's job. If no one owns the integrity of the full experience, each department will define it differently.

The companies that stay aligned haven't gotten lucky.

They've built systems to counteract the natural pull toward drift.

Strategic entropy is constant. The only question is whether you're counteracting it, or pretending it doesn't exist.

Onward,

Aaron Shields

P.S. Is your organization showing signs of strategic drift? Messaging that varies by department? Inconsistent customer experiences? Teams pulling in different directions? Reply to this email, and I'll set up a free 15-minute call to help you determine where to focus to fix it.