Every time I take a walk around a company that I’m working with and talk to employees I hardly know, I discover something interesting about the business. As often as not, that something is a problem.

Some of the problems are small. Some are serious. Many of them are years old. What’s shocking is that they almost always come as a surprise to the CEO.

On a recent walk around, for example, I discovered that there was a glitch in the way orders were processed. (And we’re talking thousands of orders every day.) Not only was it causing week-long fulfillment delays, a shocking number of orders were simply dropping out of the system.

Since the problem had developed over a long period of time, the decrease in revenues looked like a gradual decline in sales that upper management was attributing to a weak market.

After alerting the CEO to the problem, it was solved in less than a month. But during the investigation, it was discovered that at least half a dozen line workers had tried to contact management about it. Somehow, their concerns never reached anyone that paid any attention. I would estimate that the total loss in revenues had been millions and millions of dollars.

I discovered a less-dramatic example earlier this week. When the receptionist in one of the company’s buildings has to leave her desk, she asks the people in the mail room to back her up. But the people in the mail room can’t always hear the doorbell ring. So if you ring the bell when the receptionist is gone (as I did), you are likely to stand there for a very long time.

This isn’t the sort of problem that can (usually) stop your business cold or whose cost can be calculated in dollars. But it can damage your business in small but significant degrees. (In this case, if you consider the fact that it was going on in the building that houses the company’s top brass, you can imagine the impression it was having on VIPs that came by for appointments or meetings.)

Many senior executives I know pride themselves on being “big picture” people. They rely on subordinates to identify problems and solve them. Or at least bring them to their attention if an easy solution isn’t available. That only increases the risk that such problems will arise all over the place and go unnoticed for who knows how long.

When you’re at the top, it may feel like everything is going smoothly. But down below, there could be dozens or even hundreds of flawed processes and protocols that are eating away at your business like termites in a wooden building.

This should not be a new idea to anyone with even limited experience in management. Experts call it “incremental degradation.” It’s a term that’s usually used to describe the process of gradually degrading product quality by chipping away at production costs. However, entropy operates at every level and in every part of every business: customer service, production, fulfillment. Even sales and marketing.

Business termites are a fact of life. And unfortunately, there is no sure-fire, one-step way to identify and exterminate them. But there are several things you can do to keep them to a minimum.

1. Begin by believing that problems are almost certainly popping up all over the place.
2. Don’t take anyone’s word for it that “everything is under control.”
3. Walk around and talk to people, especially the rank and file. They will welcome the chance to tell you what is wrong.
4. Set high standards for every department. Responsiveness to customer queries and complaints. Quality control in marketing and sales. Written objectives, guidelines, and measurements in every operational division, including order taking, data storage and processing, accounting, and product fulfillment.
5. Continuously raise standards and expect your senior people to rise to the challenge. Anyone that is not willing to demand and produce more as time passes should be sacked and replaced.
6. Adopt a corporate policy of something I call “incremental augmentation” – the opposite of incremental degradation and (in my opinion) the single most important way to defeat it. Every one of your employees should understand that good is never enough. Better and better is the only way to keep the business from being eaten away from the inside, one bite at a time.