Why mass doesn’t always equal energy

fm-blog-mce2Albert Einstein was born 135 years ago this coming Friday. He is the founder of modern physics and through the world’s most famous equation, e = mc2, forever linked mass and energy together.

In physics, the relationship between mass and energy is complicated, so I’ll happily refer you to Einstein’s 1905 work, Ist die Trägheit eines Körpers von seinem Energieinhalt abhängig?, for further explanation.

In business, sadly, it doesn’t seem complicated at all: More mass equals less energy and sadder customers. We will spend our business lives trying to figure this out fully, but here are three factors:

  1. Only 10% of companies grow sustainably or profitably. When you ask the 90% of companies that fail to grow what happened, in only 15% of cases do they blame the market—that is, external forces. The rest of the time, they blame internal issues, such as culture, complexity, inability to focus resources, missing capabilities and so on.
  2. It is no wonder then, that while 80% of companies believe they deliver a differentiated proposition to the market place, in only 8% of cases do their customers agree.
  3. And now the kicker: Our work on Founder’s Mentality SM shows that as many companies grow, their management spends less of its time with customers and customer advocacy scores go down.

So, as a company’s mass grows, it doesn’t liberate the energy of its people to focus on customers and build customer advocacy. Instead, just the opposite happens. Mass begins to pull people into internal meetings and suck energy out of the organization.

In celebration of Einstein’s birthday, let me suggest a new equation: M = C-E2.

Your growing mass (M) equals your customer promise (C) minus all the energy-zapping complexity you’ve created—squared (!)—that keeps you from delivering on that promise. As mass grows, your customer promise is reduced.

This is why we’re obsessed with the notion of Founder’s Mentality.

Happy birthday, Al.

This entry was posted in Net benefits of scale and scope, The complexity doom loop by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

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