An Exploration of Future Collaboration Forms in the Age of AGI and DAO

Prologue: Why We Must Rethink “Organization” Now

It is 11:00 PM. The neon lights of the city sketch a silent yet bustling sea of light through the floor-to-ceiling windows behind you. You, the CEO of a listed company, have just concluded a four-hour online strategic meeting. The theme: next quarter’s growth targets and how to respond to the ubiquitous specter haunting the market—Artificial General Intelligence (AGI).

The charts and data from the presentation still linger in your vision. Those growth curves, drawn by top consulting firms, served as your most trusted navigational charts for the past two decades. Yet, at this moment, they appear fragile, as if they could be snapped in half by a new force from a dimension you cannot fully comprehend.

You rise and walk to the window, overlooking this steel forest composed of countless organizations and individuals. You feel a profound sense of fragmentation, mixed with awe and unease. On one hand, the organization you lead is like an industrial-era leviathan made of tens of thousands of precision parts. It has distinct hierarchies, rigorous processes, and unparalleled execution and scale advantages within the existing commercial orbit. You are proud of this; it is the crystallization of decades of effort by you and your team.

On the other hand, you faintly sense that the foundation of this seemingly impregnable “pyramid” is being quietly eroded. Your brightest young employees no longer seem satisfied with climbing pre-set ladders. In digital communities known as DAOs (Decentralized Autonomous Organizations), they discuss a method of collaboration entirely alien to you—one without bosses. Meanwhile, the new species named AGI learns and evolves at a speed that makes you question whether your company’s core survival competence—the experience and knowledge accumulated by countless highly educated employees—will become worthless overnight.

You turn back to face the empty conference room. An ultimate question, like the chill of the late night, rises uncontrollably in your mind: Will the “organization” I know, the cornerstone of our modern commercial civilization for which I have fought all my life, become obsolete? Is it becoming a magnificent monument rather than an ark capable of sailing into the future?

This anxiety is not yours alone. It permeates every office where lights burn late into the night, lingers in every traditional enterprise struggling with the pains of transformation, and spirals in the heart of every individual confused about the future. We stand on a historic fault line. The organizational paradigm that has driven industrial civilization for two hundred years—that magnificent “pyramid” built on the foundation of Max Weber’s rationality, reinforced by Frederick Taylor’s scientific management, and blueprinted by Peter Drucker’s management by objectives—is encountering an unprecedented “Singularity Double-Tap.”

The first impact comes from AGI. It is no longer the “weak AI” of the past that could only perform specific tasks, but a “general” intelligence capable of learning, reasoning, and even creating. When a company’s core knowledge work—from contract drafting and coding to market analysis—can be completed by AI at a lower cost and higher efficiency, we are forced to re-examine the value of “humans” in an organization. Is the complex bureaucracy we spent a century building, with “management” at its core, becoming an expensive and unnecessary “management cost”?

The second impact comes from DAO. If AGI is the subversion of organizational “productivity,” then the DAO is the revolution of organizational “production relations.” Leveraging blockchain and smart contracts, it attempts to build a trust machine where “code is law.” Here, there are no traditional employment relationships, no top-down chains of command, only consensus-based decision-making, contribution-based incentives, and a collaboration network owned and governed by members of “digital tribes” worldwide. This sounds like fantasy, yet the imagination it holds for future forms of collaboration is like a powerful magnetic field, attracting the most rebellious and creative minds of this era.

When the solidity of the “Pyramid” encounters the vastness of the “Cosmos,” none of us can avoid the core proposition of this era: In what form will future organizations exist?

This book is born to respond to this question of the times. We have no intention of providing a perishable manual of business trend predictions. Instead, we hope to attempt something more ambitious: to draw a clear, profound “navigational chart” for this magnificent revolution of organizational paradigms.

To this end, we will delve into the depths of history, starting from when humans first formed tribes to hunt beasts, to explore the “First Principles” of organization. We will uniquely introduce the “Four Forces Analysis Framework,” deconstructing a complex history of organizational evolution into a process of eternal game theory involving Expansion Force, Contraction Force, Balance Force, and Evolution Force.

We will revisit the corridor of thought from Weber, Taylor, and Fayol to Drucker, to understand the glory and the shackles of the “Pyramid.” We will also cast our gaze toward the pulse of Silicon Valley and the wisdom of the East, to explore the reconstruction and transcendence of traditional organizations in the information age.

Finally, we will project all historical insights onto a future dominated by AGI and DAO. We will boldly yet rigorously deduce five possible forms of future organizations, from the AI-driven “Centralized Super Brain” to the DAO-based “Decentralized Digital Tribe.”

More importantly, we will anchor this grand narrative in reality. Whether you are an anxious leader in the dead of night or an ordinary individual eager to find your place in the future world, this book will provide you with a concrete compass for thinking and a guide for action.

Our journey is toward the Cosmos. But the starting point of this voyage must be a thorough, merciless examination of the land beneath our feet—the “organization,” an entity both familiar and strange to us.

Now, let us embark together.

The Financial Veteran

James Lee

Part I The Cornerstone: The Essence of Organization and the Eternal Game of the “Four Forces”

Before we begin our exploration of future organizations, we must first complete an intellectual “geological survey.” Any bold vision of the “future” that is not built on a solid foundation of profound understanding of the “past” and “present” will be nothing more than a castle in the air—magnificent but illusory.

The “organization” we discuss daily has been wrapped in too many layers of management terminology, business success stories, and the personal halos of entrepreneurs. KPIs, OKRs, Divisional Structure, Amoeba Management, Agile Development… these terms are like lush vegetation on the surface. We are familiar with their forms and understand their functions. But a more fundamental question remains: Beneath this vegetation, what are the “rock layers” and “water sources” that support their growth and truly determine whether this land is barren or fertile?

The core mission of this part is an “intellectual archaeology.” We will temporarily set aside familiar management tools and business models to dig down, deep down, to explore the “First Principles” of organizational existence.

Together, we will return to the dawn of human civilization to witness how the first “organization” was born out of the fear of death and the desire for survival. We will define the four underlying forces driving organizational evolution, rise, decline, and replacement just as physicists define “force”: Expansion Force, Contraction Force, Balance Force, and Evolution Force. This “Four Forces Model” will be the scalpel we use to dissect all organizational phenomena throughout this book.

Finally, we will use this scalpel to conduct a thorough dissection of the greatest organizational invention of the industrial age—the “Pyramid” or “Bureaucracy.” We will see how, in a specific historical period, it created unparalleled efficiency and glory through its powerful “Balance Force”; we will also see how, today, it has become a “shackle” to innovation due to its suppression of “Evolution Force.”

This section is the theoretical cornerstone of the entire book. It offers no shortcuts or instant answers; it provides only a solid, reliable compass for thinking. Only by holding this compass can we traverse the organizational reconstruction of the information age in subsequent chapters and finally clearly understand the route to the “Cosmos” in the era of AGI and DAO.

Now, let the drilling begin.

Chapter 1 Universal Gravitation: The First Principles of Organization

Before we formally step into this intellectual journey regarding organizations, allow me to pose a question that seems unrelated to management: Did universal gravitation exist before Newton discovered it?

The answer is self-evident. The apple that struck Newton followed the same law as the millions of apples that had fallen to the earth over millennia. Newton’s greatness lay not in “inventing” gravity, but in being the first to profoundly reveal and define this universal law that had long governed the operation of the cosmos. He gave us a new perspective, a key, allowing us to understand the trajectory of stars, the ebb and flow of tides, and why we can stand firmly on this rotating planet.

This book’s exploration of “organization” upholds this humility of “discovery, not invention.” We must first liberate the word “organization” from business school case libraries, management toolboxes, and the anecdotes of entrepreneurs. We cannot merely view it as a “corporate form” or “management technique” but must possess the ambition and vision of a physicist to restore it to a social phenomenon as fundamental and universal as gravity.

It is a mysterious force that condenses discrete, fragile individuals into a stronger entity with a survival advantage. It existed in primitive tribes hunting mammoths tens of thousands of years ago, in the phalanxes of Roman legions, in the craft guilds of medieval Europe, and it exists today in Wall Street investment banks and Silicon Valley garage startups. Its forms vary endlessly, but the “mechanical principles” of its core remain unchanged.

The mission of this chapter is to attempt to be the “Newton” of organizational studies, to discover and define the “Universal Gravitation” that drives the birth, growth, decline, and evolution of organizations. We will drill down to the bedrock of human nature and commerce to find and construct the “First Principles” sufficient to explain all organizational phenomena. We will formally introduce the core analysis framework that runs through the book—the organizational “Four Forces Model.” This model will be our theoretical cornerstone for understanding all subsequent organizational changes, from the Pyramid to the Cosmos, and our most trusted compass on this intellectual expedition.

Now, let us start from the source of chaos and trace the primal force that condensed humans from lonely atoms into brilliant galaxies.

Section 1 The Birth of Organization: A Collective Contract Against Chaos

In the brilliant galaxy of human civilization history, the birth of the organization was not a precise blueprint designed by a prophet in a flash of inspiration. On the contrary, it was more like a primitive and profound “collective contract” groped for and established with blood and tears by countless lonely, terrified individuals struggling to survive in a vast, uncertain dark forest.

The terms of this contract were not carved on clay tablets or stone steles but were branded directly into the genes of each of us. It stemmed from cold, rational calculations, an instinctual trade-off between cost and benefit. The price of signing this contract was the surrender of part of individual freedom; the promised return was the most luxurious and tempting thing at the time: security, and a “tomorrow” with a higher probability.

To truly understand the heavy weight of this contract, we must use all our imagination to immerse ourselves in that primeval era without organization, without order, where only naked individuals struggled for survival. There, we will confront the true driving force of organizational birth—the fear originating from the depths of human nature, and the desire to transcend that fear.

I. Why Need Organization: Transcending the Limits of Individual Power

Before we discuss “how to organize,” a more fundamental question is “why we need organization.” The answer is simple and cruel: because a lonely individual is as insignificant as dust in the face of ruthless natural laws. His strength, wisdom, and life all have an insurmountable, extremely fragile limit. The primary and most fundamental mission of an organization’s existence is to break this limit.

A. The Fear of Origin: Individual Fragility in the Face of Nature

Let us name that lonely individual of that era. Let’s call him “Tooth.” This name, like the sharp flint in his hand, is the only thing about him that could be called a “weapon.”

When Tooth woke up, the sky was not yet light. He curled up in the deepest corner of the cave. The wind blowing from the entrance carried a biting chill and the smell of damp earth. He dared not sleep too soundly; any rustle, like the howl of an unknown beast in the distance or a drop of water falling from the cave roof, could wake him instantly, heart pounding, instinctively gripping the cold flint beside him.

Fear was the background color of Tooth’s life. It was not a sudden emotion, but a constant state permeating the air, like this endless cold and darkness.

His first fear came from hunger. A familiar pain, like burning fire, came from his stomach. Yesterday, his only harvest was a handful of sour berries and a few large insects. This pitiful amount of food could not fill the huge energy he consumed daily searching for food. He had seen a herd of bison from afar; their fat bodies, to Tooth, were like moving mountains of food. But he dared not approach. He knew very well that his thin body was vulnerable before the iron hooves and horns of that behemoth. A lonely hunter, in front of powerful prey, is often the fragile party. This is the first limit of individual power: the spirit is willing, but the flesh is weak when acquiring high-value resources.

His second fear came from predators. The sun rose, dispersing part of the cold, but Tooth knew that light also meant the arrival of danger. This land did not belong to him entirely, or rather, it did not belong to him at all. When he walked out of the cave to find water, he had to remain vigilant, like a frightened rabbit. His eyes scanned every bush that might hide danger, and his ears captured every unusual sound in the air. What he feared most was the saber-toothed tiger lurking in the forest shadows. He had seen the horror of that creature with his own eyes; its two dagger-like fangs could easily pierce the thick hide of a bison. Tooth understood that if he met such a top predator on a narrow path, his only choice was to run, and pray he ran fast enough. This is the second limit of individual power: total helplessness in the face of lethal threats.

His third fear came from the unpredictability of the environment. At noon, the sky was clear, but in the blink of an eye, dark clouds rolled in from the horizon, and a sudden rainstorm soaked Tooth to the bone. The chill instantly penetrated his body, and he could only run back to that cold cave in distress. He had no fire and did not know how to make or preserve fire seeds. Every long rainy night, he shivered under the invasion of cold and dampness. He did not know how long the rain would last, or if it would trigger flash floods. He feared lightning, thunder, and all the mighty forces between heaven and earth that he could not understand or control. This is the third limit of individual power: passive endurance in the face of immense natural forces.

His fourth fear came from his own fragility. A few days ago, while climbing a rock face to find bird eggs, his calf was cut deep by a sharp rock. Now, the wound had begun to swell and burn, sending piercing pain with every step. He had no medicine, only licking the wound with his tongue, the only “treatment” he learned from animals. He feared the wound would worsen, leaving him unable to walk, and finally, silently turning into a cold corpse in this wilderness. Disease, aging, accidents—these Swords of Damocles hanging over every life—were almost equivalent to death sentences for a lonely individual. This is the fourth limit of individual power: the lack of basic safety redundancy in maintaining one’s own life.

Night fell again. Tooth lay on the cold stone floor, submerged by hunger, cold, pain, and fear like a tide. He closed his eyes, but another image emerged in his mind. It was a glimpse of another “group.” It was a team of a dozen people working together. Some held long spears, driving a huge wild boar into a trap they had dug; others were in the camp, surrounding a roaring bonfire, butchering and roasting the captured prey, the air filled with the smell of meat he had never smelled; there were also women taking care of children and storing collected fruits.

That scene impacted him like never before. He saw that a group of people together could catch prey he dared not imagine (solving the fear of hunger); their spears and bonfires were enough to keep any beast away (solving the fear of predators); that fire brought not only warmth and cooked food but also light to dispel darkness (solving the fear of the environment); when one of them was injured, others would treat his wound and share food, allowing him to rest in peace (solving the fear of personal fragility).

At that moment, an incredibly clear thought rose in Tooth’s mind: I need them.

This thought is the “Genesis Sound” of organizational birth. It stems from the most profound and painful recognition of individual limits. All the fears Tooth faced were essentially a powerful “Contraction Force.” This force constantly compressed his living space, limited his actions, and pushed him toward the final outcome of entropy increase—death. That “group,” however, displayed a vigorous “Expansion Force” contending with it. Through collaboration, they systematically reduced survival risks and improved the efficiency of resource acquisition, thereby gaining a survival advantage far beyond the individual.

Therefore, we can draw the first conclusion: Organization, in its most primitive form, is not a tool for “development,” but a fortress for “survival.” It is the first and greatest “Balance Force” system created by humans to counter the ubiquitous “Contraction Force” pushing individuals toward extinction. Only by understanding this “fear of origin” deeply rooted in our genes can we truly understand why “security” and “order” will always be the unshakable foundation hidden beneath the surface of any modern organization. It is the first reason for the existence of an organization, and the most solid one.

B. The Collaboration Bonus: The Collective Wisdom of 1+1 > 2

If the “fear” originating from individual limits is the harsh whip that drove humans out of the lonely wilderness to gather together, then the immense “bonus” burst forth from collective collaboration is the light of hope illuminating the road ahead, making humans willing to conclude organizational contracts.

The birth of an organization is never wishful thinking. It is a cold and shrewd two-way rush. Individuals seek shelter because of fear, and groups possess the qualification to accept and maintain individuals because they can create and share huge incremental value. This “incremental value” is the collaboration bonus. It is not a simple linear superposition, not ten hunters equaling ten times the power of one hunter, but a wondrous, non-linear “chemical reaction,” an emergence of collective wisdom where “one plus one is far greater than two.”

Our protagonist “Tooth,” when he made up his mind to walk toward that bonfire-lit group, his most primitive impulse was merely to obtain shelter and a share of leftovers. What he sought was the “baseline” of survival. But he would soon discover that what he received would far exceed his expectations. He would witness with his own eyes and personally participate in a great epic directed by collaboration that would completely change his cognitive universe.

Tooth’s approach was full of probing and awe. He did not rush into the group’s camp but placed a wild hare he had caught with difficulty at a safe distance, then slowly retreated to show he had no hostility. An older elder with a piercing gaze walked out of the camp, scrutinizing Tooth and the small gift. This was an ancient, silent interview. The elder finally nodded, signaling he could approach the bonfire.

Tooth felt the temperature of the “organization” for the first time. It was not just the physical warmth brought by the flame, but a psychological security of being accepted and sheltered. He was given a piece of roasted wild boar meat he had never tasted. The rich aroma instantly filled his taste buds and his long-empty stomach. He chewed greedily, tears even welling in his eyes. Here, for the first time, he was free from the constant anxiety about his next meal.

However, this was just the “appetizer” of the collaboration bonus. What truly shook his soul was the collective hunt that took place a few days later.

On that day, the atmosphere in the camp was markedly different. Men were sharpening the spearheads in their hands, binding sharp flints firmly to long wooden poles with animal sinews. Women were preparing ropes and torches. The elder, as the leader of this tribe, stood on high ground, listening to reports from two young men who had just run back from afar. They were communicating intensely in a language mixed with gestures and tones that Tooth did not understand. Tooth could feel that a major event was about to happen.

The elder quickly summoned all adult males. His voice was not loud but full of unquestionable authority. He began to arrange the formation, dividing more than twenty hunters into three groups. The first group, composed of the five strongest and most experienced men, held the sharpest spears and were the main attackers; the second group, composed of ten younger and more agile hunters, was tasked with driving and flanking; the third group, including Tooth and several novices and the elderly, was tasked with setting traps at a pre-selected cliff edge, creating noise and firelight to block the prey’s retreat.

For the first time in a collective, Tooth was assigned a clear role. He felt an unprecedented novelty and tension. Their target was a solitary, adult mammoth. When Tooth heard this word, his heart was seized by immense fear. In his past cognition, the mammoth was a god-like existence, the undisputed king of this land. A lonely individual did not even have the courage to look up at it. But at this moment, looking at these calm and determined companions beside him, his fear seemed to be diluted by a stronger force named “collective.”

The hunt began. This was no longer an encounter battle, but a meticulously planned “campaign.”

The “drivers” of the second group moved first. Like a wolf pack, they quietly spread out from downwind, forming a huge, loose encirclement around the mammoth drinking by the river. Then, at the elder’s command, they shouted simultaneously, threw stones, and lit the torches in their hands. The behemoth, enraged by this sudden harassment, let out a thunderous roar and instinctively ran toward the direction with the least interference—the direction of the cliff where Tooth was stationed.

The earth shook like a beating drum. Tooth’s heart was in his throat. He saw the moving mountain of flesh rushing toward them with the force of a thunderbolt. The old hunter beside him, however, was unusually calm. He grabbed Tooth’s shoulder, signaling him not to panic and to act according to the plan.

When the mammoth rushed into the ambush circle, Tooth and his companions, following the command, lit the huge torches soaked in animal fat they had prepared, forming a wall of fire. At the same time, they beat stones hard, making a loud noise. The mammoth had a natural fear of fire. Facing this sudden obstacle, it was forced to turn and rush toward the only “gap”—the huge trap covered by camouflaged branches and loose soil that looked flat.

With a sorrowful neigh, half of the giant beast’s body fell into the deep trap, unable to move.

At this moment, the “main attackers” of the first group, those strongest warriors, truly took the stage. Like experienced surgeons, they were calm and precise. Instead of attacking the giant beast’s wildly dancing tusks from the front, they thrust sharp spears from the side into its softest abdomen and ribs with all their might. Blood gushed out, staining the earth red. After a final, futile struggle, the arrogant giant beast finally crashed down.

The cheers of victory resounded through the valley.

Tooth stood there, dumbstruck, trembling all over. This trembling was half due to lingering fear and half due to unprecedented, huge shock and ecstasy. He looked at the fallen mountain of meat, then at the companions beside him who were exhausted but brimming with pride. His brain felt as if it had been struck by lightning; a whole new world crashed open before him.

He finally profoundly understood: The power of one person is addition; the power of a group is multiplication.

The victory of this hunt perfectly interpreted what the “collaboration bonus” actually is:

First, it achieved “Goal Escalation.” From catching a wild hare to hunting a mammoth, the organization allowed the goal achievable by the collective to undergo a leap in magnitude. This is a great feat that no individual, however strong, could accomplish independently.

Second, it achieved “Risk Control.” Facing a giant beast like a mammoth, the individual death rate is one hundred percent. But in an organization with a clear division of labor, the risk was greatly dispersed. The main attackers bore the greatest risk, but they also received the best protection; while supporters like Tooth participated in and shared the fruits of victory with almost zero risk. The organization, like an actuarially precise “insurance contract,” transformed fatal risks into manageable costs.

Third, it created “Massive Redundancy.” The food provided by this single mammoth was enough for the dozens of people in the tribe to not worry about food for the entire coming winter. This huge “survival redundancy” liberated the entire tribe from the daily struggle on the survival line of running around for a full stomach.

The bonfire party that night was the grandest festival of Tooth’s life. Everyone in the tribe, men and women, old and young, whether they directly participated in the hunt or not, received large chunks of sizzling roast meat. People danced around the bonfire to celebrate the victory. The elder chanted, weaving this great hunt into a new story to tell the children. This is the inheritance of knowledge and experience. Some used this precious time free from foraging to repair tools and sew animal skins, preparing for a longer-term future. This is the bud of specialized division of labor.

Tooth sat in the crowd, gnawing on the elephant meat in his hand, feeling a satiety and peace he had never felt before. He finally understood that what he had joined was not just a “meal group,” but a great “system.” Through exquisite collaboration, this system could not only let him survive but also let him live better, with more dignity and hope.

Therefore, we can draw the second and more important conclusion: The collaboration bonus is the most powerful “gravitational pull” for the existence of an organization. If “fear” is the starting point of an organization, then the common pursuit and sharing of this “1+1 > 2” incremental value is the fundamental reason for the maintenance, development, and growth of the organization. It perfectly responds to the insatiable “greed” in human nature and transforms it from a reckless impulse that might lead to individual destruction into a powerful “Expansion Force” driving the collective toward prosperity. From this moment on, the logical loop of the organization is truly formed. It is both a harbor of safety and an amplifier of desire.

II. The Essence of Organization: A Dynamic “Mechanical System”

If the story of “Tooth” allowed us to intuitively feel the dual driving forces of organizational birth emotionally—the avoidance of “fear” and the pursuit of “bonus”—now we need to temporarily withdraw from that ancient scene full of blood and fire. Like a calm physicist, we must examine and define the deeper internal structure that allows an organization to exist and operate.

A seemingly complex organization, whether it is a hunting tribe, a Roman legion, or a modern multinational corporation, can essentially be deconstructed into a dynamic “mechanical system.” It follows an underlying logic surprisingly similar to the solar system above our heads. In this system, countless independent “planets” (i.e., organization members) do not float randomly in chaos but are constrained by an invisible force, revolving around a common center in a relatively stable, predictable trajectory.

The stability of this system does not depend on the will of any single planet but on three most basic and critical “cosmological constants”: a sufficiently powerful “Center of Gravity,” a clear and definite “Orbit,” and a fair and reasonable “Energy Exchange” mechanism. In the language of organizational studies, these three constants translate to: Goal Consistency, Power Distribution, and Benefit Sharing.

Together, they constitute the three core pillars of the precise edifice of an organization. Lacking any one of them, the entire system will inevitably become unbalanced and eventually move toward dispersion and collapse. Next, we will dissect the profound connotations of these three pillars one by one.

A. Goal Consistency: The Cornerstone of Organizational Existence

Let us first focus on the core of this “mechanical system”—the existence that provides light, heat, and the source of gravity for the entire system like the sun: the Organization’s Goal.

In the field of management, literature on the importance of “goals” is voluminous. Peter Drucker, the father of modern management, clearly pointed out in his classic works that “There is only one valid definition of business purpose: to create a customer.” [1] He emphasized that if an organization cannot clearly define its “purpose,” then all its efforts will be ineffective and divergent. However, in our exploration of “First Principles,” we need to go a step further than Drucker and ask a more essential question: Why does a “goal” possess such powerful force, like “gravity”?

The answer lies in the fact that the “goal” is the only tool for an organization to counter the “centrifugal force of human nature.”

We must first acknowledge a cruel, counter-intuitive fact: Human nature itself, in its underlying logic, is “anti-organizational.” As we explored deeply in another manuscript *Humanity Endures, Commerce Persists*, the primal force driving the individual is “selfishness”—the genetic instruction to “prioritize and maximize one’s own interests.” This instinct acts like an eternal “centrifugal force,” constantly trying to make every individual break away from the existing orbit to pursue the direction most beneficial to themselves. An employee thinks about how to exchange less work for more pay; a manager thinks about how to consolidate their power and territory; a shareholder thinks about how to make the stock price rise as quickly as possible.

If an organization were merely a simple collection of countless “selfish” individuals, it would inevitably shatter instantly under the pull of these countless “centrifugal forces” of different directions and magnitudes. This is like a galaxy without a sun; all planets would fly into the random, cold depths of space according to their own inertia.

A clear, grand “common goal” that transcends any individual self-interest functions to create a “centripetal force” powerful enough to counter all “centrifugal forces.” Like a star, its massive mass warps the surrounding space-time, compelling all planets within its gravitational field to surrender a part of their “freedom” and revolve around it in an orderly manner.

This “goal” must possess three core characteristics to truly generate this “gravitational effect”:

1.  **It must be “Transcendental.”** A truly great organizational goal is never about the organization itself, but about the world outside the organization. It must answer an ultimate question: “If our organization ceased to exist, what would the world lose?” Drucker’s “create a customer” essentially means creating a unique, indispensable value for the customer. When Steve Jobs persuaded John Sculley to join Apple, his famous line, “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” [2] was the ultimate interpretation of this “transcendence.” “Selling sugar water” is an “internal goal” regarding corporate profit; “changing the world” is an “external goal” that can ignite others’ dreams and attract the best minds.

2.  **It must be “Consensus-based.”** This goal cannot merely be the wishful thinking of the founder or the supreme leader; it must be understood and accepted by the majority of the members within the organization and internalized as the meaning of their work. Just as the sun’s gravity is not only effective for the Earth but treats all planets, satellites, and asteroids in the solar system equally. A goal that cannot form a broad consensus internally has a defective “gravitational field.” It will inevitably lose some members, allowing them to drift away under the action of “centrifugal force” or even become “destructive forces” within the organization. In my thirty-year career in bank risk management, I have seen too many failed cases. The head office proposed an ambitious “digital transformation” strategic goal, but in some frontline branches, this goal was simply understood as “another new system to learn,” completely unrelated to the “monthly performance” they cared about most. Consequently, passive resistance and perfunctory compliance became inevitable. This lack of “goal consensus” is the most dangerous “cancer cell” in the organizational body.

3.  **It must be “Navigational.”** An effective goal must not only tell the organization “Where” to go but also provide clear “standards of judgment” (How) for the organization at every crossroads. It is a ruler that allows the organization to quickly judge “what to do” and “what not to do” when facing complex choices. In the late 1990s, after Jobs returned to Apple, the company was on the verge of bankruptcy. The first thing Jobs did was to drastically cut more than seventy percent of the company’s product lines, including printers, servers, and even the Newton PDA, which had been pinned with high hopes. He left only four quadrants: Consumer Desktop, Consumer Laptop, Pro Desktop, Pro Laptop. Supporting this seemingly crazy decision was the incredibly clear goal in his mind: “To build tools that amplify human ability.” Measured by this goal ruler, products that were not focused enough, not extreme enough, or unable to bring an experience of “insanely great” became “noise” that had to be discarded.

Therefore, we can see that “Goal Consistency” is by no means an empty management slogan. It is the “Singularity” that allows an organization to be born, the source of “Negative Entropy” that counters entropy increase and maintains its existence. By providing a transcendental vision, it attracts and condenses individuals with “centrifugal force”; by establishing a broad consensus internally, it unifies the direction of all members’ efforts; by serving as a clear navigational ruler, it ensures that the organization does not deviate from its course on the road ahead.

A group without a common goal can only be called a “mob” [3]. They may gather briefly due to momentary emotions or interests, but once the external environment changes, they will immediately scatter. Only a group with a clear, consistent goal can be called a true “organization.” Like a well-trained symphony orchestra, although every musician plays different instruments and parts, they all read the same score, follow the beat of the same conductor, and finally play a harmonious, magnificent movement.

That score is the goal of the organization. That conductor is the leader who carries and interprets this goal. And that mysterious force that gathers all the notes into a torrent is the powerful gravity generated by “Goal Consistency.” It is the first cornerstone of an organization’s existence and the first touchstone distinguishing great organizations from mediocre ones.

B. Power Distribution: Who Decides, and How

If “Goal Consistency” sets the destination for the giant ship of the organization, then “Power Distribution” determines who is the captain, who is the first mate, and who are the sailors; who has the right to issue the “hard a-port” command, and who makes the difficult choice that may determine the life and death of everyone on board when the ship encounters a storm.

Power, a concept often associated with conspiracy, control, and struggle in daily contexts, must be stripped of its moral color in our “First Principles” of organization. We need to understand it like a calm system architect: as a configuration scheme and execution mechanism for “decision-making rights” within an organization. It is an organization’s “Operating System,” responsible for processing information, allocating resources, issuing instructions, and ensuring the coordinated operation of the entire system.

Whether an organization’s “operating system” is advanced or backward, efficient or redundant, fundamentally determines its response speed and survival ability when facing changes in the external environment. The kernel of this system concerns two core questions about “power”: First, where does power come from? (The legitimacy of power); Second, how is power exercised? (The mode of power operation).

Let us return once again to that prehistoric tribe that successfully hunted the mammoth to face the first and most primitive crossroads of power birth.

After the carnival bonfire party, a severe, unavoidable question was placed before all tribe members: How to distribute this huge prey?

This mammoth was the great result of collective collaboration, but the contribution of each member in it was vastly different. Those “main attackers” holding long spears and facing the giant beast’s fangs bore the highest risk and showed the greatest courage and strength; those “drivers” responsible for driving and flanking, their running and wisdom were equally indispensable; and “supporters” like Tooth, responsible for setting traps and making noise, their contribution, though seemingly small, was a link in the entire campaign chain. In addition, there were women and the elderly guarding the home, caring for children, and preparing food in the camp; they did not participate directly in the hunt, but they were the stable rear that allowed the tribe to go out to battle.

So, how should this mammoth, symbolizing huge wealth, be cut?

A seemingly fairest scheme is “Equal Distribution.” That is, simply dividing the prey into equal shares per head. This scheme might have been a prevailing rule in the early days of the tribe. It was simple, intuitive, and satisfied the simplest view of fairness. However, as collaboration became increasingly complex, the inherent drawbacks of this “equality of outcome” would be quickly exposed.

The “main attackers” who bore the highest risk would feel a sense of injustice: Why should the fruits we exchanged with our lives be shared equally with those who took almost no risk? If we only get the same share as everyone else next time, will we still be willing to take such risks? Their “Expansion Force” was inhibited.

Conversely, members with smaller contributions would develop a laziness of “free-riding”: Since I can get a share whether I work hard or not, why should I try my best? Their “Contraction Force” (stemming from laziness) was amplified.

“Egalitarianism,” this seemingly sweet medicine, while killing efficiency and punishing elites, was also quietly dismantling the foundation of the next successful collaboration. Over time, the tribe’s hunting ability would inevitably decline continuously, eventually retreating to the edge of starvation.

Another scheme is “Distribution according to Work” or “Distribution according to Contribution.” That is, distributing the prey differentially according to the size of each member’s contribution in the hunting process. The “main attackers” get the largest, fattest parts; the “drivers” come second; the “supporters” come third; and the rear personnel who did not participate in the hunt get the smallest part to guarantee their basic survival.

From the perspective of incentives, this is undoubtedly a superior scheme. It rewards bravery and effort, punishes cowardice and laziness, and maximizes the “Expansion Force” of every member. However, a new, more fatal problem follows: Who is qualified to define and adjudicate everyone’s “contribution”?

The warrior who thinks he has the most credit and the hunter who thinks he ran the longest distance will inevitably have a dispute. When a dispute occurs, who makes the final ruling that everyone must obey? If every member insists on their own standard, then this distribution meeting will instantly turn into a chaotic, free-for-all scramble, or even a bloody internal strife. Ultimately, the fruits of collaboration will be swallowed by internal friction.

Here, the birth of power is imminent.

To avoid the inefficiency of “Egalitarianism” and the internal friction of “Disordered Distribution,” a role above all individuals, possessing the final “Right of Adjudication,” must be established. This role is the tribe leader.

In its most primitive form, this power almost always comes from the most direct, irrefutable source—overwhelming “Violence.” Whoever is the strongest, possesses the highest combat skills, and has proven to have the strongest survival ability in past hunts and tribal conflicts naturally possesses this power. His ruling is obeyed not because his distribution scheme is necessarily the “fairest,” but because anyone attempting to challenge his ruling will be physically subdued by him easily. This power based on violence is the coarsest, most primitive embodiment of “Balance Force.” It temporarily suppresses the “selfish” demands of all other individuals through the coercive force of a “strongest individual,” thereby maintaining the basic order of the organization.

This leader is the tribe’s first “Operating System Kernel.” He is responsible for making decisions (when to hunt, which target to attack, how to distribute) and uses his prestige and violence as backing to ensure the execution of decisions.

However, power relying solely on violence is extremely unstable and costly. The leader will age, get injured, and may face a “violent revolution” from younger, stronger challengers at any time. Every change of power could bring a violent turmoil or even split to the tribe. Therefore, the first great attempt of organizational “Evolution Force” was to find a more stable, more “legitimate” source for power, thereby reducing its operating cost.

Thus, the source of power began to evolve from pure “violence” to higher forms:

The first form is “Interpretative Power” or “Narrative Power.” The leader no longer merely claims to be the strongest but is dedicated to monopolizing the “Right of Interpretation” of major unknown phenomena vital to the tribe’s fate. He might be the only person in the tribe who can “predict” the weather by observing the changes of stars and clouds; perhaps the only “Knowledge Holder” who knows which plants can heal wounds and which contain deadly poison. By attributing every hunting success to his correct “interpretation” of the hunting route and every disaster as a “consequence” of violating some natural law, he builds his power on the common “fear” and dependence of all members regarding the unknown world. His ruling is no longer merely the manifestation of personal will but the exclusive mastery of “law” and “wisdom.” To challenge him is to challenge the survival wisdom of the entire tribe. This power is far more stable than pure violence.

The second form is “Bloodline.” When the leader ages, to avoid internal strife caused by a power vacuum, a succession scheme conforming to the “minimum cost” principle was invented: passing power to his son. Bloodline became a new, predictable source of “legitimacy.” It transformed power succession from an uncertain “open bid” into a relatively stable “family inheritance” system. The entire tribe’s power structure began to be built around a specific family, forming the earliest distinction between nobility and commoners. The core advantage of this blood-based power lies in “stability” and “predictability.”

The third form is “Contract.” With the development of commercial activities, especially when the organization transcended the scope of blood tribes, such as an expedition caravan composed of merchants from different city-states, violence, interpretative power, or bloodline could not become the legitimate source of its internal power. Thus, a completely new form of power was born. Before setting off, all caravan members would jointly conclude a “Contract.” This contract would clearly stipulate the candidate for leader (usually the person with the most experience and capital contribution), define the scope of the leader’s power (e.g., he has the right to decide the route but no right to confiscate personal property at will), and clarify the profit distribution scheme. Here, the source of power is no longer violence, wisdom monopoly, or bloodline, but the “Joint Authorization” of all members based on rational calculation and free will. The leader’s power comes from the contract and is limited by the contract. This is an earth-shattering leap in human organizational history; it marks the transition from “Rule of Man” to “Rule of Law,” laying the oldest foreshadowing for the modern company’s “Board Authorization” and “Professional Manager” systems.

Therefore, we can see that the seemingly cold mechanism of “Power Distribution” is backed by an evolutionary history full of gaming and wisdom. It is an institutional creation that an organization is forced to undertake to solve the endless conflicts generated by internal “selfishness.” From pure violence to interpretative power, to bloodline, and then to contract, the “Operating System” of power is constantly upgrading. The fundamental purpose of every upgrade is to find a more efficient, stable, and lower-cost “Balance Force” to harness the restless “Expansion Force” and “Contraction Force” within the organization.

The way an organization distributes power fundamentally defines its “personality.” An organization where power is highly concentrated in a “charismatic leader” is often efficient and keen but also extremely fragile—rising and falling with the individual. An organization where power is based on strict bureaucracy and processes is stable and reliable but also prone to becoming rigid and sluggish. An organization where power is based on dynamic contracts and community consensus is full of vitality and innovation but must also face the challenges of low efficiency and unclear direction.

Understanding this, we can profoundly perceive in subsequent chapters why the “Pyramid” of the industrial age chose that specific power structure, and why, under the impact of AGI and DAO, a completely new paradigm of power distribution, unseen before, is bound to arrive.

C. Benefit Sharing: The Fuel Driving Individual Contribution

Now, we arrive at the last of the three core pillars of the organizational “mechanical system,” which is also the hottest and most directly touching upon the core of human nature: Benefit Sharing.

If “Goal Consistency” is the star defining the gravitational field, and “Power Distribution” is the operating system planning the orbit, then “Benefit Sharing” is the “Nuclear Fusion Fuel” that drives every independent planet in the system to burn itself, release energy, and finally converge into brilliant starlight. It answers the most fundamental, simple, yet unavoidable ultimate question in an organization: I, as an independent individual, why should I try my best for this collective? What is “in it for me?”

An organization, no matter how grand its vision or how exquisite its power structure, if it cannot provide its members with a clear, credible, and sufficiently attractive return on interest, then all its goals will be a mirage hanging in the air, and all power will be an idling machine. Because we must never forget that cruel starting point: Human nature is “selfish” at the underlying logic. The primitive motive for an individual to join an organization, give up part of their freedom, and obey collective authority is to leverage collaboration to pry a “greater benefit” far beyond their personal reach.

Therefore, an organization’s benefit-sharing mechanism is by no means just a payroll calculation table for the finance department; it is the organization’s core “Economic Engine.” Its design fundamentally reflects the depth of the organization’s understanding of human nature and determines how far the organization can go. An excellent benefit distribution system can miraculously gather and guide the “selfish” power of countless individuals in the same direction, forming an unrivaled “Expansion Force”; while a clumsy system amplifies suspicion, breeds internal friction, encourages “free-riding” behavior, and finally lets the organization slowly bleed to death in endless “Contraction Force.”

The eternal difficulty of this precise design regarding “benefit” lies in seeking a dynamic balance between two seemingly contradictory goals: Extreme “Incentive” and Universal “Fairness.”

Let us return once again to that prehistoric tribe. That fallen mammoth not only catalyzed the birth of power but also became the first open seminar on “Compensation Design” in human history.

The tribe leader, as the “Chief Executive Officer” with the final right of adjudication, faced a dilemma no different from any CEO today. He needed to design a distribution scheme that must simultaneously achieve two objectives.

First, “Incentive.” The scheme must clearly reward those warriors who performed most prominently and contributed most in the hunt. They must get the largest and best part of the prey. This is a signal declaring to the entire tribe: Bravery, wisdom, and effort are the qualities most cherished by this collective. This differentiated, tilted distribution is the spark igniting the organization’s “Expansion Force.” It ensures that someone is still willing to step forward and rush to the front line the next time they face a similarly dangerous challenge. Without this “excess return” for excellent contribution, the elite class of the organization will drain away, and the combat effectiveness of the entire organization will inevitably move toward mediocrity.

Second, “Fairness.” However, this differentiated distribution must be controlled within a subtle limit. This limit is the invisible scale in the hearts of all tribe members named “Sense of Fairness.” “Fairness” here does not equal “Equality.” Psychologist John Stacey Adams’ “Equity Theory” [4] has long profoundly revealed that what people pursue is not the absolute equality of “what they get,” but the relative equilibrium of the “input-output ratio.”

A member will subconsciously compare their own “input” (such as risk taken, physical strength exerted, time spent) with the “output” they receive (the share of prey allocated). Simultaneously, they will compare their own “input-output ratio” with the “input-output ratio” of other members they observe laterally.

When a member responsible for logistics with almost no risk sees the “main attacker” getting a piece of meat ten times larger than theirs, they might be jealous, but they will likely accept it. Because they understand that the other person’s “input” (risking their life) was also ten times greater. This difference, in their mental account, is “fair.” But if they see another companion who performed the same logistics work and put in the same labor getting twice as much prey simply because of a better personal relationship with the leader, then a strong “sense of unfairness” will arise spontaneously.

This “sense of unfairness” is the most terrible “corrosive agent” within an organization. It directly leads to a sharp increase in the individual’s “Contraction Force.” They may choose to reduce their input (“Since it’s the same whether I do well or badly, I’ll put in less effort next time”) or even take destructive actions (spreading dissatisfaction, deliberately not cooperating). When this emotion spreads within the organization, the trust foundation and willingness to collaborate of the entire system will be thoroughly shaken.

Therefore, the leader’s distribution scheme must be a superb “Art of Balance.” It must encourage “Expansion Force” through significant differentiation and maintain overall “fairness” and inhibit “Contraction Force” through a convincing, transparent logic based on contribution.

This evolutionary history of “Benefit Sharing” is the history of human organizations constantly searching for a better “Balance Point.” Its core thread is how the carrier of benefit moves from the most primitive and concrete to more abstract and long-term forms step by step:

In hunting tribes, the benefit was “A Piece of Meat.” It was direct, concrete, satisfying the most basic survival needs.

In agricultural empires, the core of benefit became “A Piece of Land.” Land brought future returns (grain) more stable and sustainable than meat. Meanwhile, the emergence of bureaucracy made “official rank” and “salary” new forms of benefit. This was a more stable distribution mode based on “position” rather than single “contribution.”

Entering the industrial age, “Wages” became the mainstream form of benefit. This was a standardized, predictable way of purchasing labor in units of “time.” It greatly simplified the complexity of distribution and adapted to the needs of mass production. But its drawbacks were also obvious: it largely severed the direct link between individual effort and the final result of the organization. A worker on the assembly line tightening screws faster could hardly directly affect the company’s total profit. To solve this “incentive disconnection,” more complex benefit tools were invented, such as “bonuses,” “commissions,” and “performance pay,” attempting to re-establish this link.

When the wheel of history rolled into the knowledge economy era, a fundamental change occurred. When the core assets of an organization changed from machines to the brains of “Knowledge Workers,” the form of benefit had to evolve accordingly. Because the creativity of knowledge workers cannot be measured by “working hours.” Thus, “Equity” and “Stock Options,” as a completely new carrier of benefit, stepped onto the stage of history.

This marked an epoch-making cognitive leap: Organization members were no longer merely laborers “employed” by the organization requiring “cost payment”; they began to be viewed as “partners” creating the future together with shareholders. What they shared was no longer just a part of the organization’s current income (wages and bonuses), but a “part of the rights” to the organization’s future value growth. This is a genius design that ultimately binds the individual’s “selfish” profit-seeking motive with the organization’s long-term development “common goal.” It ignited the innovation engine of Silicon Valley and spawned countless great companies that changed the world.

In my years working in banking, I personally led the design of performance incentive schemes for branches several times. That experience gave me a visceral understanding of the complexity and difficulty of the words “Benefit Sharing.”

I remember once, to promote retail business, we designed a seemingly “scientific” KPI system that greatly increased the reward coefficients for selling intermediate business products like funds and insurance. The intention was good; we hoped to guide account managers to shift from traditional deposit and loan businesses to higher value-added wealth management services.

In the first quarter of the scheme’s execution, the reports were dazzling. Intermediate business income skyrocketed, and the quarterly bonuses of several star account managers even exceeded their salaries for half a year. I gave them high-profile commendations at the branch summary meeting.

However, disastrous consequences gradually emerged over the next six months.

First, the customer complaint rate soared. Some account managers, to hit high rewards, began to over-promote high-risk fund products to customers with mismatched risk tolerance (especially elderly customers) and even conducted misleading sales by exaggerating returns and concealing risks. When the market fluctuated and customers incurred losses, conflicts erupted centrally. The reputation of the branch suffered great damage.

Second, “division” and “zero-sum games” within the team. Those star employees good at sales took away the vast majority of the bonuses, while employees responsible for back-office operations, risk auditing, and customer service—silently ensuring the normal operation of the business—received almost no extra income. I saw with my own eyes an excellent operations supervisor resign in anger because the account manager she supported got a 300,000 bonus while she only got a 500-yuan salary increase. The team’s collaboration atmosphere changed from “Us” to “Me” and “Them.”

Finally, the “Darkness under the Lamp” phenomenon. Since everyone’s energy was focused on high-reward intermediate businesses, the most basic and core work like deposits, loans, and risk control began to be seriously neglected. A quarter later, we found that the branch’s non-performing loan ratio showed signs of an abnormal rise. Some account managers, to maintain “big clients” who could buy large amounts of wealth management products, relaxed standards in loan approval, burying huge risk hazards.

That failed reform was a management lesson worth a thousand pieces of gold to me. It made me profoundly realize that a “benefit distribution” scheme is by no means just a set of mathematical formulas; it is a set of “Behavioral Batons.” It directs organization members on where to invest their most precious resources—time, energy, and talent. If the direction of this baton deviates even a hair’s breadth from the “common goal” of the organization’s true long-term, healthy development, then the powerful force converged by countless “selfish” individuals will lead the giant ship of the organization toward an incredibly dangerous reef zone that none of us want to see.

A healthy, sustainable benefit-sharing mechanism must be like a precise “ecosystem.” It needs towering trees (star employees), shrubs and grass (support teams), and fertile soil and sufficient water (inclusive benefits and security) to ensure underlying nourishment. It must stimulate “individual heroism” while triggering the chemical reaction of “collective collaboration.”

This is the ultimate wisdom of “Benefit Sharing.” It is the most subtle, complex, and decisive balance wheel in the organizational “mechanical system.” Understanding it allows us to understand why some organizations are full of vitality with everyone striving forward, while others are lifeless with severe internal friction. Because ultimately, an organization is not an abstract collection of wills; it is composed of living, breathing individuals with vital interests. Only when every individual’s interests can find a clear, fair, and hope-filled path to realization within this collective can the entire organization possess a truly endless vitality.

Section 2 The “Four Forces Model”: An Internal History of Game Theory

Having demystified the concept of “organization” in the first section, reducing it to a “collective contract” born of fundamental human needs, we now require a sharper, more explanatory “scalpel” to dissect the internal operating mechanisms of this precise machine. We need a dynamic analytical framework capable of explaining why organizations grow, why they decay, and why they transform.

This framework is the core intellectual tool that will run through this entire book: the organizational “Four Forces Model.”

The inspiration for this model comes from fundamental physics. Just as the motion of all matter in the universe can be attributed to the complex interactions of four fundamental forces—gravity, electromagnetism, the strong nuclear force, and the weak nuclear force—we believe that the complex history of organizational development is, behind the scenes, determined by the eternal game and interplay of four more fundamental “basic forces” rooted in human nature and commercial laws.

These four forces are:

Expansion Force: The primal impulse driving the organization to expand outward and seek growth.

Contraction Force: The inevitable trend leading to internal entropy increase, efficiency decay, and rigidity.

Balancing Force: The rules and systems established by the organization to counter the Contraction Force and maintain internal order and stability.

Evolutionary Force: The ultimate ability of an organization to revolutionize itself, break through existing patterns, and achieve leapfrog development when encountering drastic changes in the internal and external environments.

Understanding the definitions, origins, and interactions of these four forces is the “key” to comprehending all organizational phenomena, from the rise and fall of ancient tribes to the success and failure of modern corporations, and finally to the morphological changes of future organizations. In the following pages, we will delve into the core of these four forces one by one.

I. Expansion Force: Growth, Innovation, and Endless Ambition

Let us first focus on the most vital, primal, and easily perceptible of these four forces: the Expansion Force.

The Expansion Force is the “throttle” of the organizational machine. It is the sum of all internal forces driving the organization’s scale expansion, profit improvement, and boundary extension. It stems from two of the deepest genetic codes in human nature: “Greed” and “Hope.” It manifests as an insatiable desire for growth and an endless exploration of innovation and unknown territories. An organization that has lost its Expansion Force is like a living organism that has lost its engine; no matter how exquisite its structure, it will inevitably move toward stillness and eventually be eliminated by more dynamic species in a cruel competitive environment.

A. The Impulse for Growth: The Instinctive Pursuit of Market Share, Profit, and Scale

Why do almost all organizations, from a corner mom-and-pop shop to a multinational corporation with wealth rivaling nations, hold a near-religious fanaticism and obsession with the word “growth”? Why has “grow or die” become an unbreakable iron law in the business world?

To answer this question, we must acknowledge that the organization’s “growth impulse” is not a rational “commercial choice,” but a profound “biological instinct.”

Let us consider a basic unit of life—a cell. Under suitable environmental conditions and sufficient nutrients, what is the “default setting” of a healthy cell? It is division, it is replication, it is occupying larger spaces to acquire more resources through continuous proliferation. This instinct for expansion is written into the double helix structure of DNA; it is the underlying code for the continuation and reproduction of life. For life, stillness is often the prelude to aging and death.

Organization, as a “super-organism” composed of countless “living bodies” (humans), perfectly inherits this instinct for expansion. At the inception of an organization, its primary goal might simply be to “survive.” But once it solves the basic survival problem, the “Expansion Force” deeply rooted in the genes of its founders and core members is immediately activated.

In the business world, this Expansion Force typically manifests as an obsession with three core indicators:

1. Greed for “Market Share”

Market share is not just a cold percentage figure; in the organization’s subconscious, it equates to the “territory” fought over by ancient tribes. Larger territory means richer prey, safer water sources, and a more secure living space. In modern commercial competition, a higher market share implies stronger bargaining power (whether with upstream suppliers or downstream customers), lower unit customer acquisition costs, a more significant brand effect, and, most importantly, the squeezing of competitors’ living spaces. When an organization in an industry occupies an absolute dominant market share, it is like the lion king on the savanna, possessing priority rights to resources and the power to define rules.

2. Thirst for “Profit”

If market share is “territory,” then profit is the sweetest “fruit” on this land; it is the “energy source” driving the continuous operation of the entire organization. Profit is the ultimate physical examination report of the organization’s health; it is the most intuitive quantitative reflection of the value created for society after deducting all costs. Continuous, growing profit allows the organization to have sufficient “ammunition” to invest in R&D (stimulating Evolutionary Force), to attract better talent (enhancing Expansion Force), to build more robust systems (strengthening Balancing Force), and to resist unknown risks (countering Contraction Force). Conversely, an organization that loses money for a long time, no matter how beautiful its story is, is like a patient constantly losing blood; its final outcome is foredoomed.

3. Obsession with “Scale”

Scale, in many cases, is itself the most powerful “moat.” Jack Welch, the legendary CEO of General Electric (GE), proposed the famous “Number 1 or Number 2” strategy [1], which is the ultimate embodiment of this “scale worship.” He required all GE businesses to be first or second in market share in their respective industries; otherwise, they faced the fate of being “fixed, closed, or sold.”

Welch’s logic was cold and extremely effective in the industrial age. In many industries, scale advantage brings significant “network effects” or “cost advantages.” For example, a social platform with more users is more attractive to new users; a manufacturing factory with larger output has lower unit production costs. Once scale forms a positive cycle, it grows like a snowball, eventually creating a winner-takes-all situation that makes it difficult for latecomers to catch up.

This instinctive pursuit of market share, profit, and scale constitutes the trinity of the organization’s “growth impulse.” It is like a loop program built into the bottom layer of the organization’s operating system: “To get more profit, we must expand scale; to expand scale, we must seize more market share; and seizing market share requires us to reinvest more profit…”

It is this seemingly endless “growth flywheel” that drives the wheels of the business world forward. It explains why companies are constantly launching new products, opening new markets, and conducting mergers and acquisitions. Because in the fierce jungle competition, any form of “stagnation” is tantamount to “retreat.” Your stagnation means your opponent is advancing, eroding your territory, and seizing your fruits. On the marathon track of business, you cannot choose to rest because there are always countless hungry eyes behind you, staring at the position you occupy.

Therefore, we can conclude that the “growth impulse” is the most basic and core manifestation of the organization’s “Expansion Force.” It does not stem from the personal ambition of an entrepreneur but from the biological instinct of life for expansion and the profound mapping of the cruel environmental law of “survival of the fittest” in commercial competition. It is the direct embodiment of organizational vitality and the logical starting point for understanding all commercial expansion behaviors.

B. The Desire for Innovation: Exploration of New Technologies, New Models, and New Boundaries

If the instinctive pursuit of market share, profit, and scale constitutes the “muscle and bone” of the organization’s “Expansion Force”—a quantitative linear growth in physical space—then the “desire for innovation” is the “brain and nerve” of this force, a non-linear leap in the cognitive dimension. It represents the organization’s longing for “more” on a higher level: longing to discover new continents, longing to master new rules, and longing to define a new future.

When an organization maximizes its “growth impulse” in an existing market (territory) through continuous optimization of operations and squeezing of competitors, it inevitably hits an invisible wall—the ceiling of growth. This may be because the market is saturated and all potential users have been developed; it may be because the technological path has reached its end and costs cannot be lowered further; or it may be because the counterattack of competitors causes the marginal cost of further expansion to far exceed the marginal benefit.

At this moment, the organization, this giant growth machine, is like a racing car that has reached the end of the highway. No matter how powerful its engine is, it cannot move forward an inch. If the organization wants to continue to “expand,” it has only one choice left: to fly off this road, to find, or even to open up a completely new route.

This action of “flying off” is “innovation.”

Austrian economist Joseph Schumpeter, in his immortal work *The Theory of Economic Development*, described this innovation as a magnificent, ceaseless “Creative Destruction” [2]. In his view, the essence of economic development is not the gradual improvement of the existing economic structure but a revolutionary process of constantly destroying the old structure from within and creating a new one. The carriage industry did not evolve into the automobile industry by constantly manufacturing more luxurious and comfortable carriages; the appearance of the automobile was a complete, subversive “destruction” of the entire carriage industry—from horse breeding and carriage manufacturing to the employment of coachmen.

Driving this “destruction” is precisely the insatiable “desire for innovation” of the entrepreneur (or the organization driven by entrepreneurship). Schumpeter defined innovation as the establishment of a “new production function,” that is, introducing a “new combination of production factors” never seen before. He summarized it into five cases:

1. Introducing a new product or a new quality of a product.

2. Introducing a new production method.

3. Opening a new market.

4. Obtaining a new source of supply of raw materials or half-manufactured goods.

5. Carrying out the new organization of any industry.

These five cases are essentially the manifestation of the organization’s “Expansion Force” in different dimensions. Introducing new products is to create new “fruits of profit”; introducing new production methods is to reduce costs and obtain stronger “scale advantages”; opening new markets is the most direct “territorial expansion.”

Therefore, we can see that “innovation” is not an ethereal artistic behavior detached from reality; it has the most direct and utilitarian kinship with “growth.” Innovation serves growth; or rather, innovation is the “wall-breaking” tool that growth inevitably chooses after encountering a bottleneck.

Harvard Business School Professor Clayton M. Christensen gave more operational insight into this relationship in his classic *The Innovator’s Dilemma*. He further divided innovation into two types: Sustaining Innovation and Disruptive Innovation [3].

Sustaining innovation is to continuously improve products within the existing technological trajectory and value network, making them better, faster, and stronger. For example, increasing a phone camera from 10 megapixels to 20 megapixels, or reducing a car’s acceleration time from five seconds to four seconds. This is innovation serving existing mainstream customers and aiming to consolidate existing market status. Essentially, it is the natural extension of the organization’s “growth impulse,” the “intensive cultivation” of the “Expansion Force” within the original territory.

However, what truly drives the drastic changes in the industrial landscape is “Disruptive Innovation.” This kind of innovation often appears “worse” at its inception. Its performance is completely unacceptable to existing consumers in the mainstream market. For instance, early digital cameras, with their low pixels, poor image quality, and high prices, were simply ridiculous “toys” in the eyes of professional film photographers. However, they possessed new, unique value attributes—such as instant viewing of results and zero consumable costs for film processing.

These new value attributes happened to satisfy a niche, “marginal market” or “low-end market” ignored by the mainstream. It is this humble marginal market that provides a “sanctuary” for disruptive innovation to take root and sprout, avoiding the crushing of mainstream giants. In this sanctuary, disruptive technology iterates and matures continuously, its performance curve climbing rapidly at a steeper slope than mainstream technology. Until one day, when its performance finally reaches the minimum threshold acceptable to the mainstream market, a “Creative Destruction” inevitably occurs.

The collapse of Kodak is the most classic footnote to this business tragedy. In fact, the world’s first digital camera was invented by a Kodak engineer in 1975. But Kodak’s management was bound by the huge success achieved in the film business—their “cash cow.” They could not imagine a world without film. In their view, investing resources to develop that grainy, profitless digital business was a “betrayal” of the existing core business. Their “growth impulse” was firmly locked on the sustaining track, completely losing the “desire” and courage to launch disruptive innovation. In the end, when the wave of digital technology swept in, this century-old empire, along with its huge film production lines, developing networks, and profit models, was ruthlessly “destroyed.”

Kodak’s story profoundly reveals how important and difficult the “desire for innovation” is for an organization. It requires organizations, especially those that have already achieved great success, to maintain an insatiable hunger deep in their hearts, a spirit of “self-doubt” regarding existing success models. It requires organizational leaders to possess a rare cognitive ability to “ambidexterity”: using one hand to tightly grasp the “cash cow” business that brings profit today (sustaining innovation), and using the other hand to bravely embrace those “seed” businesses that are full of uncertainty and may even erode existing businesses (disruptive innovation).

This internal, profound contradiction is the highest embodiment of the organization’s “Expansion Force.” An organization satisfied only with intensive cultivation on existing territory may become an excellent “farmer,” but it will never become a “navigator” discovering new continents. A great organization’s “Expansion Force” must be dual-core driven: it has both greed for current growth and desire for future innovation. It understands that in this changing world, the only constant is change itself. The greatest risk is not trying those new things full of uncertainty, but standing still in the familiar, seemingly safe old world, waiting for death.

Therefore, we must view the “desire for innovation” as the soul of the organization’s “Expansion Force.” It elevates the organization’s pursuit of “more” from the material level to the cognitive level. It is no longer just asking “How can we sell more?” but starting to ask more fundamental, subversive questions: “Can we meet user needs in a completely new way?” “Is there a new market we haven’t seen yet?” “Can the underlying game rules of our industry be changed?”

It is these questions, ignited by the “desire for innovation,” that become the brightest lighthouse driving the giant ship of the organization through the fog of cycles toward the unknown blue ocean.

C. Case Studies: Huawei in Savage Growth and the Early Internet Era

The charm of theory lies in its explanatory power; the value of cases lies in their vivid, tangible reality. Having dissected the “growth impulse” and “innovation desire” as the two cores of “Expansion Force,” we now turn our gaze to the real battlefield of commerce to observe how an organization completely dominated by “Expansion Force” behaves in its early stages of life, presenting a state of “savage growth” that is both fascinating and terrifying.

We select two typical samples with strong imprints of their times: Huawei, born in the early days of China’s reform and opening up, representing tenacious expansion in physical space driven by extreme struggle and market acumen in an environment scarce in technology and capital; and the “.com” companies that exploded in Silicon Valley in the late 1990s, representing the feverish enclosure of future commercial territories ignited by the “desire for innovation” against a backdrop of extreme capital abundance and flying technological concepts.

These two samples have different backgrounds and endings, but their organizational forms and behavioral characteristics under the dominance of “Expansion Force” show striking consistency. Together, they depict a vivid sketch of the “Expansionary Organization.”

1. Huawei’s “Wolf Culture”: Surviving in Hunger, Developing in Battle

Dialing the clock back to China in the 1990s. The communication equipment market was firmly controlled by seven multinational giants from developed countries, including Alcatel, Lucent, and Nokia, known as the “Seven Nations and Eight Systems.” For Huawei, starting in a dilapidated residential house in Shenzhen, this was undoubtedly a hell-level opening. It had no technological advantage, no capital support, and no brand reputation. In the eyes of these industry giants, it was not even a worthy opponent.

Under such extreme survival pressure, Huawei’s only choice was to stimulate the organization’s “Expansion Force” to the extreme. This extreme Expansion Force was later summarized by its founder, Ren Zhengfei, into a cultural label that is both awe-inspiring and admirable—”Wolf Culture.”

The core of “Wolf Culture” can be deconstructed into three levels, which are perfect embodiments of organizational behavior dominated by “Expansion Force”:

First, is a keen sense of smell and extreme greed for opportunities. Wolves in the wilderness have an innate, uncontrollable sensitivity to the smell of blood. Early Huawei had a similarly paranoid sense of smell for the “blood scent” of the market—customer needs and competitors’ weaknesses. When Western giants focused on the “fat meat” markets of big cities and big customers, Huawei, this hungry “wolf,” plunged into the vast rural markets despised and ignored by the giants.

In the most remote townships with the harshest conditions, Huawei’s sales staff trudged through muddy roads carrying heavy equipment. They built the most grassroots and solid client relationships with county telecommunications bureau directors over greasy dinner tables and glasses of white spirit (Baijiu). They slept in computer rooms, slept on floors, and endured countless slights. They used a near “masochistic” struggle to forcibly snatch the first piece of “meat” for survival from the cracks of bones that the giants disdained to fight for. This greed for going all out for any tiny opportunity regardless of cost is the typical manifestation of “Expansion Force” when resources are scarce.

Second, is the fearless spirit of attack. Once a wolf pack locks onto a target, it launches a continuous, relentless attack until the prey is thoroughly brought down. Huawei showed this terrifying aggression in market competition. To snatch food from powerful opponents, Huawei adopted the simplest and most effective “local wolf” tactic: price wars. With equal performance, Huawei’s equipment prices could be thirty percent or even fifty percent lower than competitors. At the same time, it promised to provide “nanny-style” services far exceeding opponents. If a customer’s equipment failed in the middle of the night, a Western company’s engineer might still be sleeping, but a Huawei engineer would appear in the computer room on a bicycle within half an hour.

This “saturation attack” of sparing no cost to win orders made multinational giants accustomed to high profits and slow rhythms suffer unspeakably. Huawei used a “do-or-die” style to forcibly pull the lofty technological barriers into a close-quarters combat splashing with mud. This is the asymmetric competitive strategy chosen by “Expansion Force” when facing powerful opponents.

Third, is internal “horse racing” and generous rewards for victors. The position of the Wolf King is never hereditary but won by the strongest and most cunning alpha wolf through cruel battles. Huawei’s interior was filled with this Darwinian competitive atmosphere. Ren Zhengfei has a famous saying: “Huawei has no academicians, only ‘academic soil.’ If you want to be an academician, don’t come to Huawei.” What he advocated was a value orientation that discarded all vanity and judged heroes solely by “war merits.”

At Huawei, a fresh graduate, as long as he could bring back orders and conquer technical difficulties, could receive exceptional promotions and staggeringly generous bonuses and dividends in a very short time. Those “old meritorious officials” who once made great contributions, once they could not keep up with the company’s development pace and became so-called “sunk costs,” would be ruthlessly marginalized or even eliminated. This fierce internal “horse-racing” mechanism acted like a high-pressure boiler, transforming every individual’s “selfish” profit-seeking motive into fuel driving the company forward, pushing the organization’s “Expansion Force” to the extreme.

2. The Internet Bubble Fever: Betting on a Future with Imagination and Capital

Switching our gaze from China’s muddy roads to the sunny avenues of Silicon Valley in the late 1990s, we see another, more manic form of “Expansion Force.”

With the popularization of personal computers and the birth of the World Wide Web, an unprecedented “New World” made of bits was revealed. A completely new commercial logic began to subvert traditional cognition: in this new world, what mattered most seemed not to be current “profit,” but future “users”; not steady operation, but the seizure of “tracks.”

Swept up in this wave, countless “.com” companies sprung up like mushrooms after rain. Their names varied from selling pets (Pets.com) to delivering groceries (Webvan.com), covering almost every field of human commercial activity. Most of these companies had no clear profit model; their financial statements showed only huge, expanding losses. However, this did not affect their madness in the capital market at all. As long as a company had a “.com” suffix in its name and could depict a grand narrative about “network effects” and “winner-takes-all,” it could easily obtain tens or hundreds of millions of dollars in investment from venture capitalists and then ring the opening bell at NASDAQ.

This phenomenon is precisely the extreme state presented by the organization’s “Expansion Force” after the “desire for innovation” is infinitely amplified by capital.

First, their expansion was an expansion of the “business model” itself. They were no longer satisfied with selling a product or providing a service in the real world but attempted to use the Internet to “reshape” and “subvert” the value chain of entire industries. Webvan dreamed of replacing traditional supermarket chains with a massive, automated central warehouse and an efficient delivery fleet. Its concept, viewed today, is almost the “ancestor” of all fresh food e-commerce. This fanatical exploration of completely new business models is the boldest leap of “Expansion Force” in the cognitive dimension.

Second, their growth was an extreme thirst for “eyeballs.” In that era where “traffic was king,” almost all Internet companies followed a simple and crude logic: burn money for users. They unhesitatingly poured huge amounts of raised funds into overwhelming advertisements, most notably the chaotic brand bombardment during the “Super Bowl,” the most expensive advertising slot in the US. They firmly believed that as long as they could accumulate a sufficiently large user base and form a network effect in the shortest time, profitability would be a natural outcome in the future. This pursuit of “user scale” regardless of cost is the most direct manifestation of the “growth impulse” in the digital age.

Finally, their organizational culture was a mixture of freedom, flatness, chaos, and high salaries. In these startups, you saw no strict bureaucracy. Offices were filled with beanbag chairs and free snacks. Engineers wore T-shirts and flip-flops and could challenge the CEO at any time. Companies attracted the brightest minds in America with high salaries and the myth of overnight riches through “stock options.” The entire organization was immersed in a collective excitement of “changing the world.” This seemingly disordered atmosphere, highly dependent on individual creativity, was designed to maximize the “desire for innovation” of every member. It was a deliberate dissolution of traditional organizational “Balance Force” (rules and order) under the dominance of “Expansion Force.”

Of course, we all know the ending of this story. When the bell of the year 2000 rang, the bubble burst. The vast majority of “.com” companies, because their business models could not be proven and their profit prospects were indefinitely remote, eventually disappeared into the dust of history after burning their last penny. Only a few survivors like Amazon and Google, who possessed not only grand narratives but also built their own core technology and operational barriers in the silence amidst the noise, eventually became the kings of the new era.

These two cases, like two sides of a coin, reveal the essence of “Expansion Force.” Huawei’s “wolf nature” was a force forced out by survival pressure; while the fever of Internet companies was a gamble on the future infinitely amplified by capital. They both showed common characteristics of organizations dominated by “Expansion Force”: extremely focused goals (market or users), strong action capability, worship of individual heroism, disregard for rules and processes, and high tolerance for risk.

Expansion Force is a powerful, fascinating, but also extremely dangerous force. It can allow an organization to create incredible growth miracles in a short time. But without the restraint of “Balance Force” and the guidance of “Evolutionary Force,” this uncontrolled expansion can easily cause the organization to hit a wall in its wild run, or even fall into an abyss of no return.

II. Contraction Force: The Inevitable Trend of Entropy, Rigidity, and Decay

If “Expansion Force” is the “throttle” driving the organizational machine forward to explore new worlds, we must now face a more disturbing and universal question: Why do almost all organizations, no matter how glorious or powerful they once were, ultimately seem unable to escape the fate of rigidity, decay, and even extinction?

The answer lies hidden in a force that is completely opposite in direction to “Expansion Force” but equally powerful and persistent. We name it—Contraction Force.

Contraction Force is the “brake” and “rust” of the organizational machine. It is the sum of internal forces hindering growth, corroding efficiency, breeding internal friction, and ultimately dragging the organization toward decline. Unlike the passionate and dramatic “Expansion Force,” its mode of action is often silent, cumulative, and imperceptible. Like wrinkles of time or rust on metal, it is a slow and irreversible process of “aging.”

To understand the essence of “Contraction Force,” we cannot stop at the surface of management studies listing symptoms of “Big Company Disease.” We must again use the weapon of “First Principles” to find a more fundamental, universally applicable law. This law is one of the supreme laws of the universe—the Second Law of Thermodynamics, or the “Law of Entropy.”

A. Organizational Entropy: The Natural Tendency from Order to Disorder

In the 19th century, German physicist Rudolf Clausius proposed the concept of “Entropy” to measure the degree of “chaos” or “disorder” in a system. The Law of Entropy states that in an isolated system without energy and matter exchange with the outside, the total amount of entropy always increases. In other words, any isolated system will spontaneously and irreversibly move from a relatively “ordered” state to a more “chaotic” and “disordered” state.

This law sounds abstract, but it is ubiquitous in our daily lives.

Imagine your study room, just cleaned spotless with everything in perfect order. At this moment, this room is in a “low entropy” ordered state. However, as long as you start living and working in it and stop “managing” (cleaning and organizing) it, an inevitable process will occur: books will move from shelves to tables and sofas; pens will scatter in corners; dust will slowly accumulate; empty coffee cups will remain on desk corners. A few days later, this study room will automatically, effortlessly turn into a “high entropy” chaotic state.

Crucially, this process is “spontaneous.” You don’t need to spend any effort to mess up the room; it messes itself up. Conversely, if you want this already chaotic room to return to that tidy “low entropy” state, you must input huge, extra “energy”—you must spend an afternoon wiping tables, sweeping floors, and putting books back. This process of “inputting energy to restore the system from disorder to order” is called “Negative Entropy.”

Now, let us apply this profound physical law to the understanding of the “organization.”

An organization, especially in its early startup stage, is like that newly cleaned study room. It is usually in a miraculous state of “low entropy.”

First, goals are highly focused. All members are like a group of ants marching toward the same food source (a clear market opportunity) without any superfluous movements or directions.

Second, communication is extremely efficient. A few people or a dozen people squeeze into an office; any problem can be responded to and solved immediately just by turning around and shouting. Information propagates within the organization almost at light speed with zero loss and zero delay.

Third, action is exceptionally agile. No long meetings, no tedious approval processes. An idea proposed in the morning is discussed at noon and development might start in the afternoon. The entire organization is like a highly coordinated special forces unit, full of vitality and elasticity.

This is the “Golden Age” of an organization, a “low entropy,” idyllic state of order.

However, with the expansion of the organization, as the “growth impulse” continuously sucks more people, more businesses, and more hierarchies into this system, the “Law of Entropy,” ubiquitous like cosmic background radiation, begins to quietly exert its powerful, irresistible effect. The once-precise machine of the organization begins to inevitably, spontaneously move toward “rust” and “chaos.”

First, the “loss of focus” on goals. With the expansion of organizational scale, the initial single, clear goal begins to be decomposed into countless sub-goals and sub-sub-goals assigned to different departments, teams, and individuals. In this process of layer-by-layer decomposition, “entropy” begins to increase. Every department starts to prioritize “departmental interests” over “company overall interests.” The sales department, to meet performance targets, makes promises to customers beyond product capabilities, leaving the problem to the delivery department; the R&D department, pursuing technological perfection, disregards market time windows, causing product delays. The powerful combined force initially pointing to the same North Star is disintegrated by countless “departmental self-interests” pointing in different directions. The entire organization starts moving from the order of “unity” to the disorder of “disunity.”

Second, “communication noise.” Organization members grow from a dozen to hundreds, thousands, or even hundreds of thousands. They are placed on different floors, in different cities, or even on different continents. Information can no longer be transmitted by “shouting.” It must traverse a long communication chain composed of countless “nodes” (hierarchies) and “barriers” (departments). On this chain, every time it passes a node, “entropy” increases once. Information gets misunderstood, forgotten, distorted, or even deliberately “filtered” and “concealed” out of departmental interest considerations. A piece of life-or-death intelligence from the market frontline might take weeks to “travel” to the ears of headquarters decision-makers; when it finally arrives, it may be unrecognizable, or the market opportunity may have long been missed.

Third, “process solidification.” To manage the increasingly huge organization and ensure operational stability, “Balance Force” begins to intervene, establishing various rules and approval processes. This is necessary initially. But over time, “entropy” begins to accumulate in these processes. Processes start to alienate from tools helping the organization run efficiently into “bureaucratic monsters” existing for the sake of existence. A simple reimbursement might require passing through eight departments and ten signatures; a promising innovation project might be ruthlessly killed in the first round of approval because it cannot fill a fifty-page “feasibility report” designed for mature businesses. The process itself becomes the organization’s biggest “cost” and the “natural enemy” of innovation.

It is this loss of focus, communication noise, and process solidification that constitute the concrete manifestations of organizational “entropy.” They are like invisible “dark matter” in the universe. Although unseen and untouchable, they are generating a powerful “gravity” every moment, dragging the organization from that vibrant, ordered “low entropy” state toward a bloated, slow, “high entropy” state of heavy internal friction.

This is the most essential source of “Contraction Force.” It does not stem from anyone’s malice or any department’s dereliction of duty; it is an objective, universal natural law like “gravity.”

Therefore, we can draw a profound, even somewhat pessimistic conclusion: For any organization, “chaos” is natural, “order” comes at a price; “decline” is spontaneous, “growth” requires all-out effort. “Contraction Force” is like Earth’s gravity; it always exists, always pulling us down. “Expansion Force” and “Evolutionary Force” are like rocket engines; they must continuously consume huge amounts of energy to allow us to temporarily break free from gravity’s constraints and fly to higher skies.

The entire dignity and value of the art of “management” essentially lies in a ceaseless fight to the death against the natural law of “Organizational Entropy.” An excellent manager is a tireless “entropy reducer.” He must continuously inject new “negative entropy” into this system—unifying thoughts by repeatedly emphasizing goals, reducing noise by optimizing communication channels, breaking bureaucracy by simplifying processes—to delay or even locally reverse the destiny of the organization sliding into the abyss of chaos.

Understanding the organization’s “Law of Entropy” gives us the first and most fundamental key to dissecting the complex corpse of “Big Company Disease.” Because all the symptoms we will analyze next, whether soaring communication costs or the loss of innovation ability, are merely different “flowers of evil” blooming from this same root.

B. The Cost of Communication: The Tower of Babel Within

We have attributed organizational decline to a profound physical law—”entropy.” Now, we must visualize this abstract law as a specific, destructive process within an organization: the spiraling cost of communication.

In the biblical story of the Tower of Babel, humanity united by one language could achieve the impossible. But let us conduct a reverse thought experiment: what if, during the construction of a great wonder—like the Great Pyramids—the builders stopped coordinating? Imagine the excavation team dumping rubble onto the paths needed by the transport team; the transport team dumping stones halfway to save effort; and the logistics team hoarding the best food for their kin. A great endeavor, once united by a common rhythm, would grind to a halt amidst internal friction. The monument would become a curse.

This is a profound metaphor for organizations. It reveals that smooth communication is key to focusing collective power on a common goal. Yet, as organizational scale expands—bringing “Expansion Force”—it inevitably and exponentially spawns communication barriers, turning a unified “labor chant” into a cacophony of isolated murmurs.

Let’s start with a simple mathematical model. In an organization of two people (e.g., a startup couple), there is one communication channel. In a team of five, there are ten. But in an organization of one hundred people, the number of potential two-way communication channels skyrockets to a staggering 4,950!

And this is merely theoretical. In real organizations, communication is never simple “information transfer”; it is a process of signal decay rife with “entropy” increase, loss, and distortion.

In my thirty-year career in banking, I have moved from the lowest teller position to heading core departments at the head office, and later parachuting into frontline branches as a senior executive. This experience allowed me, like a geologist, to touch and dissect the hard, cold “geological faults” formed by communication barriers within a massive organization—what we commonly call “Departmental Walls.”

When an organization is small, like a branch with a dozen people, there are no “walls.” A relationship manager facing a tricky issue turns around to ask the operations supervisor, and the problem is solved in sentences. The bank president sits nearby with an open door. The organization is a transparent “glass house” where information flows freely—a “low entropy” paradise with near-zero communication costs.

However, when this organization evolves into a massive banking group with tens of thousands of employees, dozens of head office departments, hundreds of branches, and thousands of sub-branches, the curse of communication descends. Invisible but solid “Departmental Walls” are quietly built, brick by brick.

The first brick is the “Physical Wall.” People are distributed across different floors, buildings, and cities. A trader in the head office market department in Beijing and an SME loan manager in a Guangzhou branch are separated by two thousand kilometers. They never meet in the pantry or share a table in the cafeteria. This physical isolation is the starting point of all communication barriers.

The second brick is the “Linguistic Wall.” “Language” here refers not to English or Chinese, but to the “jargon” or “slang” exclusive to each department. IT colleagues speak of “Agile,” “Iterations,” and “APIs”; Risk Management colleagues live in a world of “Basel Accords,” “VaR models,” and “Stress Tests”; Marketing colleagues discuss “User Personas,” “Private Traffic,” and “Conversion Rates.” When these people speak different “languages” sit in a conference room trying to discuss the same project, a modern organizational tragedy ensues. Business complains IT doesn’t understand business; IT complains business logic is chaotic; Risk thinks both are reckless. Everyone is talking, but no one understands anyone else.

The third and most lethal brick is the “Interest Wall.” Every department has its own independent KPIs and its own “calculation.” This wall is not about “cannot hear,” but “will not listen.” It alienates communication from simple information exchange into a silent “game of departmental interests.”

I once experienced a situation where our Credit Approval Department detected rapidly accumulating systemic risk in a specific industry (e.g., downstream components in photovoltaics), with default rates rising. We drafted a risk warning report suggesting immediate tightening. However, this report was sent to the Retail Banking and Corporate Banking departments—the “frontline” units responsible for expansion. It fell on deaf ears. Why? Because a significant portion of their annual performance targets relied on loans to this industry. Tightening credit meant missing profit goals and losing bonuses.

Thus, a silent “Departmental War” began. Frontline colleagues selectively submitted information, highlighting client strengths while concealing risk signals like lengthening accounts receivable cycles. We in the Approval Department were forced into a “presumption of guilt” mode, doubling our diligence on every report.

The result? Both sides incurred massive extra “communication costs” and “internal friction.” The bank was like a person fighting their own left hand with their right. Worse, due to blocked communication and delayed decision-making, by the time the head office enforced the tightening, the risk had exploded. We paid the price in hundreds of millions in non-performing loans.

Physical walls, linguistic walls, and interest walls—these three walls construct the communication blockade of modern organizations. They cause severe “embolisms” in the organization’s “nervous system.” Information cannot flow from “nerve endings” (frontline) to the “brain” (decision-makers); commands from the “brain” cannot be executed accurately by the “limbs” (execution).

The result is a sharp increase in “entropy.” The organization becomes dull and numb to environmental changes. It becomes a sluggish dinosaur, seeing the incoming meteorite (disruptive tech or competitors) but unable to dodge in time because the nerve signals travel too slowly.

This is the fatality of “Communication Cost” as a powerful “Contraction Force.” It doesn’t destroy the organization frontally like a powerful enemy; it acts like chronic “arthritis,” eroding every joint, making every movement painful and slow, until the organization loses mobility and collapses in a changing environment.

C. The Innovator’s Dilemma: When Process Kills Vitality

If uncontrolled “communication cost” is an embolism of the organization’s “nervous system,” then what we explore next is the alienation of the “immune system.” A healthy immune system protects the body from external viruses. But when disordered, it fails to distinguish friend from foe and attacks the body’s own most active, new, healthy cells.

In organizations, this “immune system attack” manifests as a profound and universal paradox: organizations that achieved great success through disruptive innovation often become the coldest executioners of the next generation of disruptive innovation once they mature.

This phenomenon was classically described by Harvard Business School Professor Clayton Christensen in his deafening work *The Innovator’s Dilemma* [3]. Christensen pointed out that many excellent companies fail not because they did something “wrong,” but because they did everything “right.” They listened to mainstream customers, invested in high-margin product lines, and conducted rigorous market research. It was these “best practices,” enshrined in business schools, that led them to the cliff of being disrupted.

In the previous section on “Expansion Force,” we introduced Christensen’s distinction between “Sustaining Innovation” and “Disruptive Innovation.” Now, we must view this model from the perspective of “Contraction Force” to find the invisible internal killer.

The killer is not a person or a department, but the powerful “Balance Force” system established to counter “entropy”—specifically, the rational decision-making mechanism centered on “Process” and “Financial Indicators.” This mechanism is a booster for sustaining innovation but a cold “shredder” for disruptive innovation.

Let’s construct a thought experiment: “The Chief Risk Officer’s Nightmare.”

Imagine you are the Chief Risk Officer (CRO) of a mature smartphone giant with ten billion dollars in profit. Your core duty is to use your expertise to defend the company’s profit and status, avoiding risks. Your career is a war against “uncertainty.”

One day, an internal innovation team submits a plan. They are passionate young graduates. They don’t want to make a better $1000 phone with a faster chip. They want to make a “crude” product: a small, screen-less “conversational badge” powered by AI. It has limited functions and targets “lazy people” or the elderly.

As a rational CRO, your brain triggers the mature “risk assessment process”:

First, market size. You ask, “How big is the market?” The team says, “Unknown. It’s a new category.” For you, used to “billion-dollar tracks,” “Unknown” equals “Non-existent.” Warning light one.

Second, customer validation. You ask, “Will our mainstream premium customers buy this?” They say, “Likely not. It’s too simple.” Warning light two. It might even damage the premium brand.

Third, financial model. You ask, “What’s the margin?” The team presents a forecast of huge losses for three to five years with margins a fraction of the phone business.

The nightmare descends. As a rational executive responsible to shareholders, your conclusion is inevitable: This is a “Three-No” project (No known market, No clear target, No profit). It is high risk and low return. Investing in it is irresponsible. It must be “killed.”

This is the cruel reality of “The Innovator’s Dilemma.”

The “Balance Force” system—rational analysis, strict financial requirements, mainstream customer focus—acts as a fine “sieve.” It filters out 99% of bad ideas efficiently, but it also filters out the 1% of disruptive seeds wrapped in rough shells that could grow into towering trees.

Organizational “entropy” here manifests as “Cognitive Laziness” and “Process Inertia.” Evaluating a sustaining innovation (e.g., 10% more battery) is comfortable and data-rich. Evaluating disruption is painful and requires imagination, not calculators. Facing the powerful inertia of certainty, individual “innovation vitality” is fragile. The passionate young innovators, after rounds of skepticism and reports, have their flame extinguished by cold numbers. They have two choices: conform and become a screw in the machine, or leave to start a new company that might one day become the “meteorite” that destroys their former employer.

This is the mechanism by which “Contraction Force” strangles “Evolutionary Force.” It is not a murder, but an “institutional strangulation” carried out in the name of “rationality” and “process.” It explains why great enterprises are often not defeated by stronger opponents, but trapped to death by their own “systems of success.” Organizational “entropy” ultimately manifests as cognitive entropy, losing the ability to understand and embrace the new, slowly waiting to be eliminated by history in its self-made comfort zone.

D. Case Studies: Symptoms of Big Company Disease and the Twilight of Nokia

In systemically dissecting the internal mechanisms of “Organizational Entropy,” “Communication Costs,” and “The Innovator’s Dilemma”—the three pillars of “Contraction Force”—we, like well-trained doctors, have mastered the theoretical tools for diagnosing organizational decline. Now, we need to walk into the “ward” to observe how these theories manifest as specific, observable “clinical symptoms” in the real business world.

These symptoms are collectively known as “Big Company Disease.” It is a “pandemic” that almost no organization of a certain scale can escape. It acts like a chronic, wasting disease, constantly eroding the organization’s vitality, acuity, and combat effectiveness.

1. The Clinical Diagnostic Manual of Big Company Disease

We can summarize the typical symptoms of “Big Company Disease” into the following aspects. This serves as both a diagnostic manual and a mirror for every manager and employee in a large organization to examine themselves.

Symptom 1: Meeting-Driven rather than Mission-Driven. The operation of the organization no longer revolves around the core mission of “creating value for customers,” but around endless internal meetings. Cross-departmental meetings, weekly meetings, monthly meetings, quarterly reviews, annual planning… Meetings become the organization’s only “political correctness.” People spend huge amounts of time creating exquisite presentations for reporting, yet rarely have time to actually contact customers or solve problems. In meetings, real decisions rarely happen; instead, there is repetitive transmission of information, mutual shifting of responsibility, and guessing of superiors’ intentions. The organization alienates from an “Action Field” into a “Performance Stage.”

Symptom 2: Process over Output. The organization’s evaluation system no longer focuses on the quality of the final “output,” but becomes obsessed with the perfect control of the “process.” Whether a task is “done well” is no longer judged by “whether the customer is satisfied,” but by “whether company process regulations were strictly followed.” To avoid any potential risk, processes are designed to be increasingly complex with more approval nodes. This drastically weakens the organization’s ability to act. A sharp employee discovers a fleeting market opportunity, but by the time he navigates the company’s two-month project initiation process, the market wind has long shifted. The pursuit of “Procedural Correctness” ultimately leads to “Result Error.”

Symptom 3: The “Jargonization” of Internal Language. Within the organization, a set of “jargon” or “black talk” develops that only “insiders” can understand, detached from frontline business reality. People are keen to talk about “top-level design,” “underlying logic,” “ecological synergy,” “combo blows,” and “empowerment,” using these seemingly advanced but actually hollow words to package mediocre thoughts. The prevalence of this “jargon” intensifies communication barriers between departments and causes the organization to gradually lose the ability to speak “human language” and dialogue with the real world.

Symptom 4: Zero Tolerance for Failure. With the organization’s success, a “too big to lose” mentality begins to spread. Any innovation project is required to prove its “inevitable success” with a perfect financial model before it even starts. This leads the organization to dare only to repeat those “sustaining” tasks that have been verified and have high certainty, while avoiding “disruptive” explorations that are full of uncertainty and have high failure rates. The organization’s risk appetite approaches zero. Ultimately, while the organization avoids all small failures, it plants the seeds for the biggest and final failure—being eliminated by the times.

Symptom 5: The “Cog-ification” of Talent. Under strict bureaucracy and fine division of labor, individuals in the organization increasingly become replaceable “cogs.” They only know the small piece of work they are responsible for like the back of their hand, but know nothing about the organization’s overall strategy or the global logic of the business. While this ensures the stable operation of the organization, it greatly suppresses individual growth space and creative potential. Excellent talents, seeing no hope of growth and feeling like insignificant parts in a huge machine, choose to leave one after another.

These five symptoms, like five fatal ropes, strangle the vitality of an organization together. All their tragic consequences were concentratedly and most lamentably embodied in a once incomparably glorious name—Nokia.

2. The Twilight of Nokia: A Pathological Sample of “Contraction Force” Victory

To many young people today, Nokia might just be a somewhat unfamiliar historical noun. But in the early years of this century, it was a god-like existence, an undisputed emperor.

In 2007, the year Apple’s first iPhone was released, Nokia’s share of the global mobile phone market was a staggering 40%. This figure meant that for every ten phones sold on Earth, four were Nokias. Its market value once exceeded 110 billion euros. Its slogan “Connecting People” resounded globally. In Finland, this company even contributed 4% of the national GDP and 23% of exports.

However, such a seemingly impregnable empire collapsed with avalanche speed in just a few years. By 2013, its market share had fallen to less than 3%, and eventually, its mobile phone business was sold to Microsoft for a price that seemed “humiliating” at the time—7.2 billion dollars.

Nokia’s defeat is one of the most complex and worthy cases for repeated study in business history. Countless scholars and experts have analyzed it from perspectives of strategy, technology, and market. But if we re-examine its interior with the microscope of the “Four Forces Model,” we will find that Nokia’s death was not due to a single cause, but to a comprehensive, systemic outbreak of “Contraction Force” within its body. It is the most perfect pathological sample of a collective attack of all “Big Company Disease” symptoms.

First, “The Tower of Babel” and total loss of goal focus. At the peak of the empire, Nokia’s interior was no longer a monolithic block. It split into at least three main, warring “fiefdoms”: the “Old Aristocracy” department centered on the Symbian operating system, which controlled the company’s main profit source at the time; the “New Sharp” department centered on the Maemo/MeeGo operating system, representing the company’s exploration of future smartphones; and the “Cash Cow” department responsible for feature phones.

These three departments spoke completely different “languages” and had completely different “interest demands.” The Symbian department, immersed in past glory, only wanted to carry out patch-like improvements on this aging system; the MeeGo department was ambitious, trying to build a completely new future to rival iOS and Android; while the feature phone department only cared about how to obtain more shipment volume in emerging markets like Asia, Africa, and Latin America with lower costs.

A former Nokia executive painfully described in his memoirs that internal meetings were less about discussing the future and more like playing “Game of Thrones.” The head of every department was trying their best to defend their territory and budget while disparaging other departments’ projects. An operating system strategy vital to the company’s future fate was delayed again and again in this endless internal friction and wrangling, wavering indecisively.

Second, “The Innovator’s Dilemma” and the strangulation of vitality by process. A widely known yet extremely ironic fact is: Nokia was actually the “prophet” who first perceived everything about the smartphone future on this planet. As early as 2004, three years before the birth of the iPhone, Nokia’s internal research team had already developed a smartphone prototype with a large color touch screen, a concept similar to the App Store, and even support for internet video calls. It was almost an iPhone that had “traveled” back to the past.

However, this visionary project was ruthlessly killed within Nokia’s rigid, hardware-centric approval process. The reason was laughably simple: under the financial model calculations of the time, the hardware cost of this prototype was too high to achieve scaled profitability in the short term; moreover, its radical design centered on software and internet services completely subverted Nokia’s mature business model based on hardware sales.

This is the most realistic reproduction of “The Chief Risk Officer’s Nightmare.” Nokia’s powerful “Balance Force” system, born to optimize feature phones, successfully played the role of the “immune system,” accurately identifying this subversive “alien” and eliminating it thoroughly to protect the “health” of the existing body.

Finally, the collective “numbness” to market changes generated under huge success. When the first iPhone was released, Nokia executives generally held an attitude of contempt and mockery. They ridiculed the iPhone for not having a replaceable battery, for poor signal, and for being fragile enough to break on impact. Starting from a mature, feature-phone era “hardware” mindset, they were completely unable to understand what the seemingly rough “software” ecosystem of the iPhone and the revolution in “user experience” it brought actually meant.

Their senses had been paralyzed by past huge successes. Their organizational “nervous system,” due to internal embolism, could no longer receive fresh signals from the real world. They still lived in the old world of “competing on call quality, standby time, and drop resistance,” turning a blind eye and a deaf ear to a new world centered on “Apps” and the “Internet.”

When an organization’s internal communication costs are so high that consensus cannot be formed even on fundamental strategic issues like “to be or not to be”; when the decision-making process is so rigid that the “lifeline” concerning the future is strangled by its own hands; when the mind of the entire organization is so closed that it feels no chill even from the tsunami-like change close at hand, then no matter how great it once was, its fate is singular.

Nokia’s twilight is not a story of technological failure, nor a story of strategic error. It is an inevitable tragedy of organizational “Contraction Force” totally defeating “Expansion Force” and “Evolutionary Force.” It is like a cold mirror reflecting the darkest destiny that all large organizations may face.

III. Balance Force: The Maintaining Hand of Order, Rules, and Stability

Having deeply dissected the “Expansion Force” driving the organization to charge forward and the “Contraction Force” leading the organization toward decay, we, like two commentators watching a fierce ball game, have witnessed a tragicomedy full of passion, greed, entropy, and decay that seems almost fated.

A natural question arises before us: If “Contraction Force” is an irresistible natural law like gravity, are all organizations destined to inevitably slide into the abyss of chaos, inefficiency, and death after expanding in scale? Is human reason and wisdom truly powerless in this war against “entropy”?

The answer is no. Because in the organizational “mechanical system,” there exists a third crucial force. Its sole purpose is to counter “Contraction Force,” delay the process of entropy, and provide a solid “chassis” for the organization’s stability and sustainable development. We name it—Balance Force.

Balance Force is the “chassis” and “control system” of the organizational machine. It is the sum of institutional and cultural forces aimed at establishing order, clarifying rules, regulating behavior, and ensuring the stable operation of the organization. If “Expansion Force” pursues “Faster, Higher, Stronger,” and the essence of “Contraction Force” is “Messier, Slower, Weaker,” then “Balance Force” pursues “More Stable, More Accurate, More Predictable.”

It stems from the deepest human desire for “security” and “certainty.” Unlike “Expansion Force” which radiates brilliance, or “Contraction Force” which is gloomy and depressive, its character is calm, rational, and restrained. Its mode of work is to constrain the behavior of every member within the organization by designing precise “Game Rules,” incorporating countless individual “human natures” full of uncertainty into a relatively certain, controllable “system.”

A history of organizational management, in a sense, is a history of “Balance Force” being constantly invented, optimized, and iterated. In this magnificent history, there is a monument that we cannot bypass, no matter how we evaluate it today. It marks the first great victory of “Balance Force,” the first human attempt to use pure “Reason” to build a massive, efficient, and fair organizational system.

This great invention is what we usually call the “Pyramid” structure, scientifically known as “Bureaucracy” [1].

A. The Birth of Bureaucracy: Max Weber’s Light of Rationality

Today, the word “Bureaucracy” often reminds us of rigidity, inefficiency, mountains of documents, and overstaffing. However, if we want to truly understand the essence of “Balance Force,” we must conduct an “intellectual archaeology,” returning to the Europe of the late 19th and early 20th centuries where Max Weber lived, to feel how chaotic and unfair the world ruled by “pre-modern” organizations was before the birth of the modern hierarchical management system.

In Weber’s time, whether in government agencies or newly emerging corporate organizations, internal operations largely continued the “Rule of Man” tradition of the medieval feudal era. Organizational power was mainly in the hands of monarchs, nobles, or hereditary families. A person’s promotion depended not on their ability and talent, but on their origin, bloodline, or “personal relationship” with those at the center of power.

Organizational decision-making was full of arbitrariness and uncertainty. Leaders could reward or punish subordinates at will based on momentary whims. Organizational rules changed day and night and varied from person to person. For the same mistake, someone with connections might be safe, while someone without background might suffer severe punishment. The entire organization was shrouded in the shadow of “unwritten rules”; nepotism, personal grievances, and emotional likes and dislikes profoundly affected daily operations.

This was a typical organizational form lacking the constraint of “Balance Force.” It relied heavily on the personal authority of a “charismatic leader,” full of uncertainty, unfairness, and unpredictability. Such organizations might be maintained by the leader’s personal charm when small. But with the deepening of the Industrial Revolution, the scale and complexity of social and economic activities grew exponentially. Facing factories and companies with thousands or even tens of thousands of people, this “Rule of Man” traditional model full of “entropy” was completely unable to adapt to the needs of the new era.

It was against this historical backdrop that Weber, a thinker with profound insight into social structures, began to conceive a completely new, ideal organizational form. He named it “Ideal Bureaucracy” [2]. Weber’s greatness lies in that he was not describing an existing organization in reality, but constructing a pure theoretical model based on “Rationality.” He attempted to thoroughly and ruthlessly purge all “human factors”—emotions, preferences, personal relationships—from organizational management, replacing them with a set of cold, precise, impersonal “Rules.”

In Weber’s conception, this “Ideal Hierarchical Management System” possessed the following core characteristics, each a sharp sword aimed at cutting off “chaos” and “injustice”:

1. Clear Power Hierarchy and Chain of Command. The organization is built as a clear “Pyramid.” Every position has a definite place in this hierarchy. Subordinates strictly obey superiors’ orders, and superiors are responsible for subordinates’ actions. This structure of “each performing their own functions and being responsible at each level” ensured clear sources of power and smooth transmission of instructions, completely changing the chaotic situation of unclear responsibilities and multi-headed leadership of the past.

2. Impersonal Management Based on Regulations. This is the most core and revolutionary point of Weber’s thought. He emphasized that organizational management should not rely on any individual’s authority or charm but must be based on a set of public, written “regulations” and “procedures” that treat all members equally. The operation of the organization is like the execution of a law. “Focus on the matter, not the person” became the highest standard. This is like implanting a “ruthless algorithm” into the system, excluding all “uncertain” human factors, ensuring that organizational decisions and behaviors have a high degree of “predictability” and “fairness.”

3. Division of Labor Based on Professional Ability and Merit-Based Hiring. In Weber’s utopia, obtaining a position no longer relied on blood or wealth but strictly on the candidate’s professional knowledge, technical qualifications, and past experience. Selecting the most suitable talent through public exams or strict assessments. “Meritocracy” replaced “Nepotism.” This ensured that every “part” of the organization was professional and qualified.

4. Professional Management Class and Lifelong Employment. Weber believed that management itself is a professional “craft,” and managers should be a “profession.” They receive a fixed salary rather than owning the means of production. They treat managing the organization as their lifelong career. The organization provides them with a stable career path and retirement security. This “lifelong employment” vision aimed to cultivate managers’ loyalty to the organization and enable them to think and plan the organization’s development from a longer-term perspective, avoiding short-term behavior.

When we look back at Weber’s concepts today, we might find them rigid and inflexible. But we must pull ourselves back into the historical context of over a hundred years ago. In that “Rule of Man” world filled with privilege, corruption, and nepotism, the rational administrative organization advocated by Weber was tantamount to a “Light of Rationality” piercing the darkness.

For the first time, it unified “Fairness” and “Efficiency”—two seemingly contradictory values—within an organizational framework so systematically. Through “impersonal” rules, it guaranteed equality of opportunity and justice of results to the greatest extent, thus greatly stimulating individual enthusiasm for struggle. Through professional division of labor and a clear chain of command, it enabled a huge organization to operate synergistically like a precise German clock, thereby releasing unprecedented productivity.

Bureaucracy is the first great victory of “Balance Force” in human organizational history. It used a rational, replicable, powerful “system” to successfully counter the trend of “entropy increase” inevitable after organizational scale expansion. It provided the most solid and reliable organizational “chassis” for the industrial age giant ship to roll forward. It can be said that without this theoretical cornerstone laid by Weber, we could not imagine the birth of great companies like General Motors, IBM, and Toyota that created modern commercial civilization.

Of course, Weber himself, this deeply thinking “pessimist,” did not fail to foresee the potential danger of his “Iron Cage of Rationality.” He worried that when this impersonal system developed to the extreme, humans would completely degenerate into soulless “small cogs” on this huge machine, losing their freedom of creation and spiritual vitality.

And this worry precisely lights up our path for the next stage of exploration. When “Balance Force” is pushed to the extreme, when organizations become increasingly rigid and bloated in pursuit of stability and order, how does it conversely become a “shackle” strangling “Expansion Force” and “Evolutionary Force”? This is the “fate” innate behind the “glory” of the pyramid.

B. Process and Systems: Turning Organizations into Precision Machines

If Max Weber’s bureaucratic thought drew the “rational” architectural blueprint for the magnificent edifice of modern organizations, then “Process and Systems” are every steel bar poured and every brick laid according to this blueprint. They are the most concrete, microscopic, and ubiquitous manifestation of “Balance Force” within an organization.

The essence of processes and systems is a weapon for an organization to fight against “Amnesia” and “Randomness”—two major forces of “entropy.” It attempts to detach those experiences proven to be “successful,” methods proven “efficient,” and paths proven “safe” from the “personal ability” of a few genius employees and transform them into “organizational capability” that can be replicated on a large scale and mastered by all ordinary employees.

During my years as a bank branch vice president, I repeatedly emphasized a point to newly recruited credit managers: A bank, as an institution managing risk, does not rely on how powerful a star loan officer’s market development ability is for its survival foundation, but on whether it possesses a powerful risk management process where “even if a mediocre credit manager replaces the star, no subversive errors will be committed.”

This process is the “collective wisdom” and “muscle memory” precipitated by the bank as an organization over hundreds of years, using the painful “tuition” of countless bad loans. It is a heavy “Operating Manual” written in real gold and silver.

Let us use a basic corporate loan approval process as an example to dissect how this precise machine of “Process and Systems” operates:

First, the process is a “Firewall for Risk.” When a relationship manager excitedly returns to the branch with a loan project he thinks has “limitless prospects,” he cannot decide to issue the loan based solely on his passion and judgment. He must start a long and rigorous process.

He needs to write a detailed “Due Diligence Report.” This report is not an essay for free expression, but a “standardized questionnaire” with a strict format and dozens of mandatory fields. He must clearly answer a series of questions: What is the equity structure of this enterprise? What is its history? What are its main products? What is the landscape of its upstream and downstream supply chains? How have its financial statements (Balance Sheet, Income Statement, Cash Flow Statement) performed over the past three years?

Every mandatory field in this report corresponds to a bloody risk event that happened in the past. For example, the requirement to verify the equity structure is because we encountered cases where enterprises concealed actual controllers through complex holding relationships to conduct related-party transactions and hollow out the company; the requirement to analyze the cash flow statement is because we were deceived by “puffy” enterprises with high income statements but continuously negative cash flow, eventually suffering huge losses due to their broken capital chains.

This report is the first “Firewall” set up by the process. It mandatorily requires frontline business personnel to switch from “Expansion Force” thinking of “making the deal” to “Balance Force” thinking of “controlling risk,” to scrutinize the full picture of a business systematically and without blind spots.

Second, the process is a “Power Decomposer.” After the relationship manager completes the report, he does not have the power to approve. The report enters a check-and-balance process of “Separation of Loan Initiation and Approval.” It is submitted to an independent “Risk Management Department” or “Credit Approval Department” that bears no performance targets.

The approval officers in this department are like cold “judges.” Their only duty is to nitpick every detail in the report with a skeptical, critical eye. They will ask sharper, deeper questions: “You say this enterprise has large accounts receivable because downstream customers are strong; please provide the list and credit records of these customers.” “You say the inventory value is high; do we need to hire a third-party valuation agency for on-site inventory and valuation?”

If the approval officer approves the loan, it might still need to be reported to the branch’s “Credit Approval Committee” for collective decision-making. This committee is composed of the branch president, risk department head, finance department head, legal compliance head, etc. Everyone conducts a final “consultation” on this business from their professional perspective.

This seemingly tedious “Three-Hall Trial” process is essentially the exquisite decomposition and check-and-balance of “Power.” It prevents power from being too concentrated in one link or one person, avoiding huge disasters for the entire organization due to personal moral hazard or cognitive bias. It uses “Collective Rationality” to replace “Individual Judgment.” This is the core wisdom of “Balance Force” in organizational architecture design.

Third, the process is a “Knowledge Sedimenter.” After a loan is issued, the process does not end. The post-loan management department takes over. They need to track the enterprise’s operating status regularly (e.g., quarterly, monthly), check financial statements, and monitor cash flow in bank accounts. If any abnormal risk signal is found (e.g., a huge sum of funds suddenly transferred to a strange related company), the system will automatically alarm and trigger a higher-level risk warning process.

And when a loan unfortunately turns into a “Non-Performing Loan” (NPL), the entire process of disposing of this NPL—from collection, negotiation, litigation to asset write-off—every step, every lesson learned, will be recorded in detail and stored in the organization’s “Case Library.”

This “Case Library” is the organization’s “Collective Brain.” through reviewing countless success and failure cases, it constantly learns and evolves. These new experiences and lessons will be absorbed and digested by our process design experts and eventually transformed into an “update” or “patch” for a certain clause in the existing approval process.

For example, after experiencing a painful collective default event of steel trading enterprises, the entire bank’s credit policy and process might add a new, targeted regulation: “For all loan applications from steel trading enterprises, the authenticity of warehouse receipts must be strictly verified, and cross-validation from multiple warehouse supervision companies must be introduced.”

Through such a closed loop of “Practice => Feedback => Learning => Iteration,” processes and systems become no longer unchanging rigid dogmas. They turn into a “living organism” capable of self-learning, self-repair, and continuous evolution. They precipitate and sublimate the scattered “personal knowledge” of countless individual loan officers, which might be lost with their resignation, into “organizational wisdom” shared, inheritable, and replicable by the entire organization.

Therefore, we can see that a well-designed set of processes and systems is invaluable for a scaled organization. It is like installing the most advanced “Braking System” and “Electronic Stability Control” for a high-speed racing car. It might sacrifice a bit of extreme speed (Expansion Force) at times, but what it exchanges for is the safety, stability, and controllability of the entire driving journey. It ensures that this racing car will not crash and kill everyone due to a hasty turn or an accidental tire blowout.

Process and Systems are the most majestic and solid main theme in the symphony of “Balance Force.” They are the “Secret Weapon” for modern organizations to escape the arbitrariness of “Rule of Man,” move toward the certainty of “Rule of Law,” and finally achieve “scaled” expansion. Understanding their huge contribution in fighting “entropy” and maintaining organizational order allows us to more fairly and profoundly criticize in the next chapter how they alienate from efficient “tools” into suffocating “shackles” when pushed to the extreme, when the excessive expansion of “Balance Force” begins to devour “Expansion Force” and “Evolutionary Force.”

C. Culture and Values: The Invisible Behavior Manual

If “Process and Systems” are the hard, cold, clearly visible “metal skeleton” of the organizational machine, then what we are about to explore is the “warm blood” flowing within this skeleton, injecting soul and character into it—Organizational Culture and Values.

This is the highest form of “Balance Force.” Unlike processes and systems printed in black and white in employee handbooks, it is more like an “aura” permeating the organizational air—invisible, untouchable, yet ubiquitous. Through deeply rooted stories, repeatedly praised heroes, and a set of universally accepted “codes of conduct,” it tells everyone in the organization: Here, what do we advocate? What do we oppose? What kind of people get respect and rewards? What kind of people get despised and eliminated?

Peter Drucker, the father of modern management, once had a classic saying: “Culture eats strategy for breakfast” [3]. This sentence reveals the powerful force of culture in an extremely sharp way. No matter how grand an organization’s strategic plan (Expansion Force) is, or how rigorous its processes and systems (Balance Force) are, if its culture contradicts them, then all strategies and systems will be easily dissolved and hollowed out by this powerful “Soft Power” derived from group consensus, eventually becoming mere scraps of paper.

Why does culture possess such huge power? Because it solves a fundamental problem that processes and systems, no matter how complete, can never solve: the management of “Grey Zones.”

Any set of written processes and systems cannot foresee and cover all situations an organization might encounter during operation. In the rapidly changing market environment, various “accidents” outside processes, “ambiguities” under systems, and “conflicts” between rules will always appear.

For example, a salesperson, at a critical moment in negotiating with a customer, encounters a small personalized request from the customer outside the contract terms. If he strictly follows the company’s rigid process, he should report layer by layer and wait for approval, but this will likely lead to the loss of the business opportunity. At this moment, how should he choose?

Or, when two departments cooperate on a project, they push back and forth on a task in a “no-man’s-land” where responsibility boundaries are unclear. The system does not explicitly stipulate who should be responsible for this matter. At this moment, how should they collaborate?

In these countless “Grey Zones” where processes and systems fail, what truly determines employee behavior is no longer that thick “Employee Handbook,” but the “algorithm” of “Organizational Culture” deep in his heart. He will subconsciously think: In our company, if I “break” a little routine for customer satisfaction, will I be encouraged or punished? In our company, when responsibility is unclear, is the person who proactively steps forward to take responsibility more respected, or the one who plays it safe and passes the buck more likely to “survive long”?

The answers to these questions are hidden in an organization’s culture and values. It acts like an invisible “Behavior Manual,” providing final “navigation” for employee behavior at every critical crossroad where the system cannot give a clear answer.

An organization’s culture is usually composed of three levels, deepening from the surface to the inside:

Level 1 is the “Behavior Level.” That is, the daily behaviors displayed and observable by organization members, especially its leaders. For example, at Amazon, Jeff Bezos always leaves an “empty chair” in the conference room to represent the “most important person in the room”—the customer. This seemingly ritualistic behavior constantly transmits a core value to all employees: “Customer Obsession.” When employees encounter any conflict with customer interests in daily work, they will naturally use this highest standard to make judgments and trade-offs.

Level 2 is the “Values Level.” That is, the “core creeds” publicly advocated by the organization to judge right and wrong. For example, Google’s once-famous “Don’t be evil” principle. This principle provided a clear moral bottom line for all Google engineers when facing conflicts between commercial interests and user value. It meant that even if a feature could bring huge advertising revenue to the company, if it would damage user privacy or mislead users through deceptive means, it should be rejected without hesitation. Values are the “Moral Brake” used by the organization to constrain its own “greed” when facing interest temptations.

Level 3, the core level, is the “Basic Assumption Level.” These are the underlying, self-evident beliefs about “how the world works” established by the founder and accepted by all members in their subconscious. For example, in the banking industry I am familiar with, a deep-rooted basic assumption is: “Risk is everywhere and must be strictly controlled.” This assumption determines that banks will inevitably develop a culture centered on “prudence,” “conservatism,” and “compliance.” Conversely, in a Silicon Valley venture capital firm, its most basic assumption might be: “High risk brings high return; the risk of missing a great idea is far greater than the risk of investing in ten failed projects.” This assumption inevitably spawns a culture that encourages risk-taking, tolerates failure, and embraces uncertainty.

These three levels together constitute the organization’s cultural compass. The needle of this compass is ultimately calibrated by the organization’s highest leader through their own words and deeds, and the “Reward and Punishment Mechanism” they establish. No matter how hoarsely a leader emphasizes “Customer First” at meetings, if during year-end evaluations, the only thing they care about is everyone’s “sales numbers,” and they ignore or even punish employees who lost some short-term orders to protect customer interests, then the real “cultural signal” they transmit is: So-called “Customer First” is just a pretty slogan; “Performance is King” is the true, cruel survival law of this company.

Haidilao, a famous Chinese catering enterprise, is an excellent case for understanding how “culture” acts as a powerful “Balance Force.” Haidilao’s processes and systems are actually not particularly rigorous compared to standardized giants like McDonald’s. But it created an ultimate customer service experience recognized by the industry and difficult to imitate. The secret lies in its unique “Empowerment Culture.”

Haidilao grants frontline waiters a power deemed incredible by traditional catering enterprises: the Right to Waive the Bill. A common waiter, as long as they believe that the customer’s dissatisfaction during the service is indeed due to Haidilao’s own reasons, has the power to give a discount or even waive the bill for that table directly without any superior approval.

Behind this small “authorization” lies a profound cultural construction. It transmits several extremely strong “cultural signals” to all employees:

First, the company trusts you unconditionally. The company believes that you, as an adult, can make the decision most beneficial to the company based on your conscience and professional judgment. This trust itself is the greatest respect and incentive for employees.

Second, your primary duty is “Customer Satisfaction,” not “Obeying Rigid Processes.” When customer satisfaction conflicts with the company’s short-term profit (the cost of a meal), the company authorizes you to put “Customer Satisfaction” first. This makes the “Customer First” value truly land from a slogan to reality.

Third, the company is willing to pay for your “Responsibility.” Even if you make a wrong waiver decision, the company is willing to bear the loss to protect your enthusiasm for daring to take responsibility and make decisions. This tolerance for “small failures” conversely avoids the “big failure” of permanent customer loss due to poor service to the greatest extent.

It is this powerful culture centered on “Trust” and “Empowerment” that enables Haidilao’s tens of thousands of employees to consciously and creatively practice the common goal of “Service Supreme” like a “collective” even in the “Grey Zones” without strict process monitoring. Culture, here, plays a more effective “Balance Force” role than any operating manual. It is like an advanced “social algorithm” implanted in every employee’s brain, guiding them to always calculate and output the “optimal solution” most in line with the organization’s long-term interests when facing complex and changeable customer needs.

Therefore, we can conclude this unit: “Culture and Values” are the soul of the organization’s “Balance Force.” It is the organization’s “Immune System,” responsible for identifying and clearing those “cancer cell” behaviors contrary to the organization’s core values at the micro level. It is also the organization’s “Adaptive System,” responsible for providing flexible, principle-based guidance for individual behavior when macro processes and systems fail.

An organization without processes and systems is a heap of loose sand unable to form combat effectiveness. But an organization with only processes and systems but no vivid culture and firm values is a machine without a soul; it might operate efficiently, but it is indifferent, rigid, and lacks the flexibility and creativity to cope with unknown challenges. Only by combining the solid “System Skeleton” with the warm “Cultural Blood” can an organization’s “Balance Force” be truly complete. Only then can it leave the most precious space for future “Change” while pursuing “Stability” and “Accuracy.”

D. Case Studies: McDonald’s Standardization and Japanese Lean Management

Theoretical discussions ultimately need to be implemented in business practice to show their true value. Having systemically dissected “Bureaucracy,” “Process and Systems,” and “Culture and Values” as the three elements constituting “Balance Force,” we now need to use two landmark cases in business history to intuitively feel what astonishing, replicable commercial power can be unleashed when “Balance Force” is implemented by an organization into every pore of its operation with a near-paranoid spirit of pursuing the ultimate.

These two cases are McDonald’s, the creator of the fast-food empire from the US, and the manufacturing giants represented by Toyota from Japan. One represents the ultimate standardization of “Results,” and the other represents the ultimate lean optimization of “Process.” Like two sides of the coin of “Balance Force,” they jointly composed a magnificent movement about “Order” and “Efficiency.”

1. McDonald’s Hamburger Empire: An Epic of “Standardization” Victory

When you walk into a McDonald’s restaurant in any corner of the world, whether in Times Square, New York, or a highway service area in a third-tier city in China, you get a highly consistent, predictable experience: familiar red and yellow decor, uniformed staff, and that portion of fries and Big Mac with exactly the same taste—not a grain of salt more, not a drop of oil less.

This astonishing consistency on a global scale is itself a great miracle in business history. Supporting this miracle is an unparalleled “Standardization” system to which McDonald’s founder Ray Kroc devoted his life’s energy.

Before Kroc took over McDonald’s, it was just a booming fast-food stand in California run by the McDonald brothers. The brothers had invented the efficient “Speedee Service System,” but their “small wealth is safe” mentality limited their ambition to carry this model forward. Kroc, a former milkshake mixer salesman, saw the huge potential for infinite replication contained behind this system with his keen business sense.

What Kroc did was not product innovation, but “Organizational Innovation.” He thoroughly and ruthlessly “codified” and “processed” the genius operations of the McDonald brothers that still remained at the “experience” level. He used the scalpel of “Balance Force” to precisely cut into every detail of fast-food operation:

First, the ultimate standardization of products. For a McDonald’s burger, from the weight (precise to the ounce), thickness, and diameter of the beef patty, to the frying time (precise to the second) and temperature, to how many sesame seeds should be on the bun, how two slices of pickles should be placed, and how much ketchup and mustard to squeeze—everything was explicitly and non-negotiably stipulated in an “Operations Manual” hundreds of pages thick. This manual is hailed as McDonald’s “Bible” and is the “Highest Law” that its tens of thousands of stores worldwide must strictly abide by.

Second, the ultimate standardization of processes. The time from a customer entering McDonald’s to ordering and picking up food is strictly controlled within dozens of seconds. To achieve this goal, the entire kitchen was designed as an efficient “Hamburger Production Line” like Ford’s automobile assembly line. Frying fries, grilling patties, making milkshakes, packaging—every position has only one extremely simple, clear task. Employees do not need any profound cooking skills; they only need to repeat the actions prescribed in the manual precisely and tirelessly like robots.

Third, the ultimate standardization of personnel training. To ensure that all employees worldwide can accurately execute this complex standardization system, Kroc founded “Hamburger University.” This unique “university” does not teach literature or history; its only course is how to operate a perfect McDonald’s restaurant. From how to smile to how to mop the floor, to how to manage inventory, every detail has clear instructional videos and assessment standards. In this way, McDonald’s minimized “human uncertainty.” It no longer relies on the personal ability of a genius store manager but on a powerful, replicable “Talent Training” assembly line.

McDonald’s success is a model of “Balance Force” defeating the “chaos” aspect of “Expansion Force.” It profoundly understood that for a chain fast-food empire, the most important thing is not to create stunning, unique “cuisine” in one store, but to provide an error-free, safe, and reliable “food” in all stores worldwide. “Predictability,” here, became a core commercial value more important than “deliciousness.”

This powerful standardization system made McDonald’s expansion as simple and efficient as cell division. Any franchisee, as long as they strictly follow this system, can almost one hundred percent replicate a successful McDonald’s restaurant. This is precisely the unparalleled power displayed by “Balance Force” in achieving “scaled” expansion.

2. Japanese Lean Management: An Endless Revolution of “Process”

If McDonald’s standardization pursues the consistency of “Results,” then Japanese management represented by Toyota aims the focus of “Balance Force” at the infinite optimization of “Process.” Like a skilled watchmaker with obsessive-compulsive disorder, it attempts to thoroughly eliminate every superfluous gear, every trace of unnecessary friction, and every second of wasted time within the organizational machine.

This management philosophy was later summarized by scholars into a more well-known term—”Lean Production.” Its core philosophy is “Thorough Elimination of Waste.”

In the eyes of Toyota founder Kiichiro Toyoda and Taiichi Ohno, “Waste” is the root of all evil. They defined all activities in the production process that do not directly create value as “waste.” This includes: waste of overproduction, waste of waiting, waste of unnecessary transport, waste of processing itself, waste of inventory, waste of unnecessary motion, and waste of making defective products.

To wage an endless war against these “Seven Wastes,” Toyota developed a series of “Balance Force” tools that can be called art:

First, “Just-in-Time” (JIT). This is one of the two pillars of the Toyota Production System. Its ideal state is to achieve “Zero Inventory.” That is, produce the needed products in the needed quantity at the needed time. Upstream parts are delivered to the station exactly at the moment the downstream assembly line needs them; and produced products are manufactured exactly at the moment the customer needs them. This model minimizes huge wastes such as capital occupation, warehousing costs, and product obsolescence caused by inventory.

To achieve JIT, Toyota invented the famous “Kanban” system. Kanban is an information transmission tool, usually a card. Like a “waiter” on the production line, it clearly records “what parts the downstream process needs, how many, and when.” When the parts of the downstream process are about to run out, the worker passes the Kanban to the upstream process, and the upstream process produces the required number of parts exactly according to the instructions on the Kanban—no more, no less. The entire production flow is no longer “pushed” from upstream to downstream like traditional mass production, but “pulled” upstream by downstream actual demand.

Second, “Jidoka” (Automation with a human touch). This is the other pillar of the Toyota Production System. Notably, the character for “do” here contains the radical for “human.” It emphasizes not simple “automation,” but “endowing machines with human wisdom.” Every machine and every production line at Toyota is installed with a system called “Andon.” Any ordinary worker on the assembly line, as long as he discovers any tiny quality problem—such as a screw not tightened or a scratch—has the power, and is encouraged, to immediately pull the cord beside his station.

Once the cord is pulled, the entire production line stops immediately. All relevant technical and management personnel will immediately gather at this “problem point” to analyze the cause together, find the root solution, and only then resume production.

This practice seems unreasonable to Western factory managers who view “output” as the highest pursuit. In their view, stopping the entire line for a trivial flaw is a huge waste. But Toyota managers have deeper wisdom. They believe that the cost of solving a “small problem” at the source is far lower than the huge loss caused by letting this “semi-finished product” with flaws flow into the next process and eventually turn into a “problem car” that needs to be recalled.

“Jidoka” is essentially a profound “Empowerment.” It delegates the power of discovering and solving problems to the most frontline personnel closest to the problem. It transforms quality control from an “inspection” conducted by a specialized “Quality Inspection Department” afterwards into a “Built-in” process conducted by all employees every second of the production process.

McDonald’s standardization and Toyota’s lean production reached the peak of “Balance Force” from different paths. McDonald’s ensured the “Consistency” of global operating results through a set of all-encompassing, top-down “Hard Systems.” Toyota achieved the “Optimization” of production process efficiency through a set of “Soft Mechanisms” encouraging full participation and continuous improvement.

Their common success proves to us that “Balance Force” is by no means passively and negatively “maintaining the status quo.” When pushed to the extreme, it is itself the most powerful “Expansion Force.” An organization with high standardization and high lean level minimizes its internal “entropy,” has extremely low operating costs, and extremely high product quality. This powerful “Internal Kung Fu” gives it an unrivaled, overwhelming cost and quality advantage when fighting in the market against competitors with extensive management and severe internal friction.

This is the Power of Order. It is the Power of Rules. It is the most colorful passage achievable by the calm and rational movement of “Balance Force.”

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References:

[1] Max Weber, *Economy and Society*.

[2] Max Weber, *The Theory of Social and Economic Organization*.

[3] Often attributed to Peter Drucker.