Originally aired February 4, 2026 on Extropy On AIr.
Most digital transformations don’t fail because of bad technology. They fail because the organization slowly breaks down underneath it, a drift toward disorder we call organizational entropy. In the episode that kicked off our entropy series, Kevin Zirkle and Mike Jasper explain where entropy comes from, the warning signs leaders miss, and what to do differently before your next transformation.
Listen: Extropy On AIr podcast page | Spotify
Key takeaways
- Transformation failure isn’t random. It follows predictable patterns rooted in organizational entropy.
- Entropy grows when change outpaces what the business can absorb, when knowledge leaves with people, and when nobody owns the system after go-live.
- Buying better tools usually brings visibility, not order, and stacking more tools often adds more entropy.
- Warning signs include growing spreadsheets, green dashboards nobody trusts, hero employees, manual exceptions and change fatigue.
- Extropy is intentional order. Start with people, process, purpose and governance, then technology.
What is organizational entropy?
In science, entropy is the natural tendency of things to decay and become disorganized. Extropy is the opposite: bringing things together. Mike, who started out in science before moving into business and IT, says the idea translates well to organizations.
Every organization faces a steady stream of change: new compliance standards, acquisitions, new initiatives. Unless the business is rooted in change management and clear on the purpose behind those changes, complexity grows faster than people can absorb, understand and adopt it. You hear it in what people say after a project: “I didn’t think it would be this hard,” “We have all these tools but nothing feels simpler,” or “We’re live, but it doesn’t feel like we’re live.”
Why are leaders spending more but trusting outcomes less?
Kevin points to a tension right now. Companies are investing more than ever in digital transformation, AI, automation and analytics, but confidence in execution keeps dropping. Systems end up technically functional but operationally hostile.
The dangerous part is that entropy doesn’t announce itself. It looks like busyness. Dashboards are full and people are working hard, but the organization is losing coherence. Leaders assume scale equals maturity, and that something deployed globally is working globally.
What causes organizational entropy after a transformation?
Mike sees a few common causes. The first is unmanaged complexity, where changes are made without bringing other parts of the organization or new stakeholders along. The second is turnover. The people who lived through the project, the training, testing and hypercare, carry the deepest knowledge. Each time someone leaves, the next person gets a little less of it.
The third is ownership. Once the project ends, the team goes back to their day jobs and nobody owns the ongoing health of the system. That is when manual processes start appearing next to what should be automated. Mike notes that many change management programs are strong through go-live, but few include a sustainment plan. The best ones run a one to three year sustainment effort to embed the process in the culture, not just with specific users.
Kevin adds that buying better tools rarely fixes this. People expect order from new software, but what they usually get is visibility, and that can be uncomfortable. Stacking more dashboards, integrations and modules to patch symptoms tends to create more entropy, not less.
What are the warning signs of organizational entropy?
- Spreadsheets everywhere. The more Excel a team relies on, the less they are likely using the new process or technology.
- Green dashboards nobody trusts. KPIs improve, but the people doing the work don’t believe the numbers.
- Heroic individuals. The process only works when one specific person is involved, a sign the tribal knowledge is almost gone.
- Everything needs an exception. If automation only works on the happy path and everything else is manual, as Kevin puts it, you’ve automated a brochure.
- Change fatigue. When a new idea gets eye rolls, people have either seen too many changes without results or lived through one that was too painful.
We go deeper on these in 5 Signs Your System Is Breaking Down.
What is extropy, and how do you build it?
Extropy is intentional order, and it doesn’t happen on its own. It takes deliberate alignment. Mike reframes people, process, technology as people, process, purpose and the governance behind them. Why you are doing something matters as much as what you are doing and who you are doing it with, and all of it comes before the technology itself.
That means answering the questions most teams skip: Which decisions matter most? What are the success criteria, and is everyone aligned on them? Where should the process be standardized, and where does some flexibility actually help?
What should CFOs do differently next week?
Mike’s advice to CFOs and transformation leaders is to stop starting with tools. Start with the system you are trying to create, the process you want to improve and how you will define success. Then map that process end to end and find where decisions break down, not just tasks. Do it with your team, because one person rarely sees every blind spot.
Kevin’s addition is to invest in diagnostic thinking before design. Most system failures could have been predicted with the right diagnostic lens at the start. Entropy is subtle, cumulative and often invisible until it is everywhere. Once you can see it, you can design against it.
In their words
Most digital transformations don’t fail because somebody bought bad technology. They fail because the organization itself is slowly breaking down underneath that technology.
Kevin Zirkle, Extropy Advisors
Once you can see it, you can design against it.
Mike Jasper, Extropy Advisors
About the speakers
Kevin Zirkle is Director of Business Development at Extropy Advisors, where he works across Extropy’s partner ecosystem, matching organizations with the right technology and the right people to move transformation from the whiteboard into production.
Mike Jasper is VP of Finance Transformation at Extropy Advisors, where he leads digital transformation and client success, working hands-on with clients to set success criteria, optimize their people, process and technology, and measure the results.
FAQ
What is organizational entropy?
Organizational entropy, sometimes called corporate entropy, is the slow drift toward disorder inside a growing organization. It shows up as fragmentation, workarounds and inefficiency when systems and change grow faster than people’s understanding of them.
Why do digital transformations fail after go-live?
Most fail because the organization breaks down underneath the technology, not because the technology was wrong. Common causes include unmanaged complexity, turnover that erodes the original project knowledge, no clear owner after go-live, and change management that stops at launch instead of continuing through a one to three year sustainment period.
What should a CFO do differently to prevent transformation failure?
Start with the system you are trying to create and how you will measure success, not the tools. Map the process end to end with your team to find where decisions break down, and invest in diagnostic thinking before design, since most failures could have been predicted at the outset.
Keep exploring
- More episodes of Extropy On AIr
- Previous episode with show notes: Leading Digital Transformation with Confidence
- Next in the entropy series: Entropy vs. Extropy: Why Digital Transformations Fail
- Next episode with show notes: Leadership, Empathy, and the Future of Women in Finance
- More from the entropy series: 5 Signs Your System Is Breaking Down and The Digital Transformation Myth
- Why Extropy
Seeing signs of entropy in your own operation? Book a discovery call and let’s diagnose it together.
