The Life-Cycle of Organizations
In this article, we will get to know more about the different phases that organizations go through. The life cycle model characterises phases or stages during the organization's development in which there are distinct organizational characteristics, including strategy, structure, leadership styles, and decision-making.
Therefore, having awareness of which phase they exist in and which phase they’re getting into will always get the organizations ahead in their progress and enhance their vision for the future.
The start-up phase is the first stage in the life cycle of an organization. During this phase, management of the organization is carried out by the founder(s), who concentrate on making decisions and refrain from using a specialist staff. An intuitive style of decision-making prevails in place of an analytical model. Projects are not detailed or alternatives considered, and few opinions are taken into account when making important decisions.
In addition, there is a high rate of expenditures connected with entering the market and product development; expenditures usually exceed inflows.There are few formal controls and information systems. At this stage, there are no strict responsibilities assigned to each employee.
The growth phase is the second stage in the life cycle of an organization. During this phase, greater effort is spent collecting and processing information about the competitive environment (monitoring), controlling the financial performance of various products, and facilitating communication and coordination between various departments.
In terms of management style, there are different types of management styles that can be used during this phase, such as autocratic, consultative, persuasive, democratic, laissez-faire, and management by walking around (MBWA).
领英推荐
The maturity phase is characterized by the stabilization of sales levels as the product reaches widespread acceptance and competition is fierce. In addition, there is a decrease in innovation level and the establishment of a more bureaucratic organisational structure. In this phase, targets are pursued to maintain environment stability, and the goal is to become functionally homogeneous and improve operations efficiency and profitability.
In this phase, companies spend fewer resources on expansion and more on safeguarding their interests and maintaining existing growth and development strategies and plans. Companies can also generate a good level of profit if they have a properly balanced product portfolio.
Entering the Revival stage is optional and can occur during a Mature or Decline stage for a firm that recognizes and initiates drastic changes to alter current problems..Firms pursue rapid growth through innovation, acquisition, and diversification which involves a good deal of risk taking. New top-level leadership is often required to initiate or effectively implement this stage. It is also a period of necessarily increased investment. The structure is more decentralized for divisional decisions but highly centralized for overall strategy, where most commonly structures pursed by organizations are divisional or matrix structures depending on number of products or services offered, markets the organizations operates in and market conditions.
Some of the organizations pass through a decline phase after the revival phase due to weak communication between areas and hierarchical levels, reducing their capacity to respond to challenges. Decision-making is characterized by a high level of conservatism and centralization. Crisis management leaves little time for the board to perform analysis. The organization regresses to simple solutions for the serious problems it faces.
To overcome the decline phase, there are strategies that can be employed. According to Eleken, some of these strategies include prolonging the product's life, Changing the direction during the decline phase of the product life cycle, redesigning your solution during the product life cycle decline stage, and starting to build a new value proposition during the decline stage of the product life cycle
In addition, external experts have focused on the importance of organizational development and leadership to prevent decay or reduce its effects. If you're in a decline phase, your strategic plan could focus on innovation and a strategy to transition your organization into the renewal phase without triggering a crisis.