Organizational Entropy and Declining Competitive Moat

When a company loses its market competitive advantage, it naturally transitions from a centralized, efficient decision-making structure toward decentralization, power dilution, and increased hierarchical layers. This organizational shift is not intentional design but rather a natural symptom of decline—where headquarters mask deterioration through reorganizations, and rising institutional complexity paradoxically accelerates the decline.

Read the daily articles behind this idea on the Chinese edition.