Organizational Life Cycles

1. Organizational Life Cycles Prof. Stephen Block

2. Organizational Life Cycles • Griener’s Five Stages of Growth (From Harvard Business Review, July-August, 1972.)

3. Phase 1 • Evolutionary Stage: Growth Through Creativity • Revolutionary Stage: Crisis of Leadership

4. Phase 1 • Growth Through Creativity - This stage is dominated by the founders of the organization, and the emphasis is on creating both a market and product. These founders are usually technically or entrepreneurially oriented. Management activities are avoided. But as the organization grows, management problems cannot be handled through informal communication. This leads to: • Revolutionary Stage: Crisis of Leadership

5. Phase 1 • Revolutionary Stage: Crisis of Leadership The question of who is going to lead the organization out of its state of confusion and solve management problems? The solution is to find a strong manager. This crisis leads to the next evolutionary period: • Growth Through Direction

6. Phase 2 • Evolutionary Stage: Growth Through Direction • Revolutionary Stage: Crisis of Autonomy

7. Phase 2 • Evolutionary Stage: Growth Through Direction During this stage, the new manager and key staff take the responsibility for establishing direction, while lower level supervisors are treated as functional specialists than autonomous decision-makers. The demands of lower-level managers for more autonomy eventually leads to the next revolutionary period: • Revolutionary Stage: Crisis of Autonomy

8. Phase 2 • Revolutionary Stage: Crisis of Autonomy The solution to this crisis is usually greater delegation.

9. Phase 3 • Evolutionary Stage: Growth Through Delegation • Revolutionary Stage: Crisis of Control

10. Phase 3 • Evolutionary Stage: Growth Through Delegation When an organization gets to the growth stage of delegation, it usually begins to develop a decentralized organizational structure, which heightens motivation at lower levels of the organization. Eventually top managers sense they are losing control over a diversified field operation. This leads to: • Revolutionary Stage: Crisis of Control

11. Phase 3 • Revolutionary Stage: Crisis of Control The crisis of control leads to a return to centralization. This creates resentment among those individuals who feel that their organizational freedoms are being constrained. Searching for an alternative usually leads to: • Evolutionary Stage: Growth Through Coordination

12. Phase 4 • Evolutionary Stage: Growth Through Coordination • Revolutionary Stage: Crisis of Red Tape

13. Phase 4 • Evolutionary Stage: Growth Through Coordination This period is characterized by the use of formal systems for achieving greater coordination with top management as the organizational watchdogs. Most coordination systems get carried away and it leads to: • Revolutionary Stage: Crisis of Red Tape

14. Phase 4 • Revolutionary Stage: Crisis of Red Tape This crisis most often occurs when the organization has become too large and complex to be managed through formal programs and rigid systems. To overcome the Red Tape mentality, the organization moves to the next stage: • Evolutionary Stage: Growth Through Collaboration

15. Phase 5 • Evolutionary Stage: Growth Through Collaboration • Revolutionary Stage: Crisis of ?

16. Phase 5 • Evolutionary Stage: Growth Through Collaboration This stage emphasizes greater spontaneity in management action through teams and the skillful confrontation of interpersonal differences. Social control and self-discipline take over from formal control. The next “revolutionary stage” was not identified by Griener: • Revolutionary Stage: Crisis of ?

17. Phase 5 • Revolutionary Stage: Crisis of ? Griener suggests that the next crisis will center on the psychological saturation of employees who have grown emotionally and physically exhausted by the intensity of teamwork and the heavy pressure for innovative solutions.

18. Organizational Life Cycles Evolving Culture

19. Birth Stage • Size small • Bureaucratic nonbureaucratic • Division of Labor overlapping tasks • Centralization one-person rule • Formalization no written rules • Administrative intensity no professional staff • Internal Systems nonexistent • Lateral teams, task forces none for coordination

20. Youth Stage • Size medium • Bureaucratic prebureaucratic • Division of Labor some departments • Centralization two leaders rule • Formalization few rules • Administrative intensity increasing clerical & maintenance • Internal Systems crude budget & information • Lateral teams, task forces top leaders only for coordination

21. Midlife Stage • Size large • Bureaucratic bureaucratic • Division of Labor many departments • Centralization two department heads • Formalization policy & procedures • Administrative intensity increasing professional & staff support • Internal Systems control systems in place, budget, performance reports • Lateral teams, task forces some use of integrators and for coordination task forces

22. Maturity Stage • Size very large • Bureaucratic very bureaucratic • Division of Labor extensive, with small jobs and many descriptions • Centralization top management heavy • Formalization extensive • Administrative intensity large-multiple departments • Internal Systems extensive planning, financial and personnel added • Lateral teams, task forces frequent at lower levels to for coordination break down bureaucracy

23. Preventing Premature Organizational Death

24. Risk Factors • Board and staff stagnation • Reliance on a single funding source • Failure to pay attention to the external environment

25. Taking Action • Avoid the “we always did it this way” syndrome • Frequently ask: “Is there a better way to do this?” • Add new Board members

26. Taking Action • Pay attention to staff morale • Pay attention to financial trends revenues, expenses available fund raising dollars. • Have a strategic plan and monitor it daily.

27. Taking Action • Ask yourself whether you may be a problem for the organization. Are you challenged, are you having fun? Do you enjoy your co-workers? • Fight stress by exercising, taking vacations getting involved in non-work activities.