Organizational life cycle finalize (1)

DCE 5632 ORGANIZATIONAL CHANGE AND DEVELOPMENT

DCE 5632 ORGANIZATIONAL CHANGE AND DEVELOPMENT

FACULTY OF EDUCATIONAL STUDIESDEPARTMENT OF PROFESSIONAL ADVANCEMENT AND CONTINUING EDUCATION

FACULTY OF EDUCATIONAL STUDIESDEPARTMENT OF PROFESSIONAL ADVANCEMENT AND CONTINUING EDUCATION

INSTRUCTOR: Dr. Khairuddin Idris

INSTRUCTOR: Dr. Khairuddin Idris

PRESENTERS:Noor Ezam Bt Ashari

Nazhrah Hayati Bt. Mohd ZainMardhiah Bt Mat Jusoh

PRESENTERS:Noor Ezam Bt Ashari

Nazhrah Hayati Bt. Mohd ZainMardhiah Bt Mat Jusoh

ORGANIZATION LIFE-CYCLE :PHASES IN ORGANIZATIONAL DEVELOPMENT

PRACTICES

ORGANIZATION LIFE-CYCLE :PHASES IN ORGANIZATIONAL DEVELOPMENT

PRACTICES

22Organizational Life Cycle : Phases in Organizational Development Practices

Organizational Life Cycle : Phases in Organizational Development Practices

INTRODUCTION TO ORGANIZATIONAL LIFE-CYCLEINTRODUCTION TO ORGANIZATIONAL LIFE-CYCLE

Faculty of Educational StudyDepartment of Professional Advancement and Continuing EducationFaculty of Educational StudyDepartment of Professional Advancement and Continuing Education

Organizational Life CycleOrganizational Life Cycle

2

Human Life CycleHuman Life Cycle

Organization go through different life cycles just like people do. Organization go through different life cycles just like people do.



ORGANIZATIONAL LIFE-CYCLE (OLC)ORGANIZATIONAL LIFE-CYCLE (OLC)


The concept that organizations progress through a predictable life-cycle.

There are a variety of findings when it comes to the number of stages of the organizational life-cycle.

Some analysts have delineated as many as ten different stages of an organizational life cycle.

The concept that organizations progress through a predictable life-cycle.

There are a variety of findings when it comes to the number of stages of the organizational life-cycle.

Some analysts have delineated as many as ten different stages of an organizational life cycle.

Most models, however, stated that organizational life cycle as a period comprised of four or five stages that can be summarize as start-up (birth, conceptualize), growth (development), maturity, decline, and death (or revival).

Most models, however, stated that organizational life cycle as a period comprised of four or five stages that can be summarize as start-up (birth, conceptualize), growth (development), maturity, decline, and death (or revival).

Organizational Life Cycle : Phases in Organizational Development Practices 4 44Organizational Life Cycle : Phases in Organizational

Development PracticesOrganizational Life Cycle : Phases in Organizational

Development Practices

BIRTH (ENTREPRENEURIAL) STAGEBIRTH (ENTREPRENEURIAL) STAGE


It is the conceptual stage where the new product is defined, its market is identified and development plan is executed.

It is the conceptual stage where the new product is defined, its market is identified and development plan is executed.

Figure 1: Organizational birth rate over time




BIRTH (ENTREPRENEURIAL) STAGE – cont.BIRTH (ENTREPRENEURIAL) STAGE – cont.


Leadership Focus is on successful development of prototype or marketable product, while able to manage the necessary finance.

Requires a strong visionary leader.

Leader be more hands-on and maintain control

Organization size is small, its reporting structure is flat and non-bureaucratic, and founder bears the responsibility of managing all aspects of the organization.

Minimal and informal

Few policies, system and limited budgets

The culture is informal, promotes innovation and risk-taking, the decision making is centralized and mostly lies with the founder, long working hours are expected.

Change are easy and quick to make

Leadership Focus is on successful development of prototype or marketable product, while able to manage the necessary finance.

Requires a strong visionary leader.

Leader be more hands-on and maintain control

Organization size is small, its reporting structure is flat and non-bureaucratic, and founder bears the responsibility of managing all aspects of the organization.

Minimal and informal

Few policies, system and limited budgets

The culture is informal, promotes innovation and risk-taking, the decision making is centralized and mostly lies with the founder, long working hours are expected.

Change are easy and quick to make




BIRTH (ENTREPRENEURIAL) STAGE – cont.BIRTH (ENTREPRENEURIAL) STAGE – cont.


The specialization and growth are limited to the core functionalities like R&D, manufacturing or service. The staff is usually highly skilled with relevant experience in the core functions and the supporting staff is minimal.

Individual effectiveness is most important at this stage.

Members are independent, totally involved and willing to work together.

The specialization and growth are limited to the core functionalities like R&D, manufacturing or service. The staff is usually highly skilled with relevant experience in the core functions and the supporting staff is minimal.

Individual effectiveness is most important at this stage.

Members are independent, totally involved and willing to work together.



OLC – CHART/DIAGRAMOLC – CHART/DIAGRAM


There are a variety of findings when it comes to the number of stages of the organizational life-cycle. There are a variety of findings when it comes to the number of stages of the organizational life-cycle.

Figure 2: 4 stages of Organizational Life Cycle



OLC – CHART/DIAGRAMOLC – CHART/DIAGRAM


Figure xx: Critical points in Organizational Life-Cycle

Figure xx: Classic Organizational Life-Cycle Chart



GROWTH (EXPANSION) STAGEGROWTH (EXPANSION) STAGE


Fast growing companies can often be chaotic places to work.

As workloads increase exponentially,

approaches which have worked well in the past start failingteams and people get overwhelmed with work previously-effective managers start making mistakes as their span of control

expands, and systems start to buckle under increased load.


The "Greiner Curve" is a useful way of thinking about the crises that organizations experience as they grow.


As workloads increase exponentially,

approaches which have worked well in the past start failingteams and people get overwhelmed with work previously-effective managers start making mistakes as their span of control

expands, and systems start to buckle under increased load.


The "Greiner Curve" is a useful way of thinking about the crises that organizations experience as they grow.



GROWTH (EXPANSION) STAGE – cont.GROWTH (EXPANSION) STAGE – cont.


FIGURE XX : Greiner’s Model of Organizational Growth

Greiner's Growth Model describes phases that organizations go through as they grow.

Source: http://www.mindtools.com/pages/article/newLDR_87.htm



MATURITY (CONSOLIDATION) STAGEMATURITY (CONSOLIDATION) STAGE


The maturity stage results in an expanded operation related to production like purchasing, inventory control, etc and also diversely deployed sales staff. The organization was geared towards maximizing its production and sales capacity.

In consolidation stage, the focus shifts towards cost control, productivity and profit.

The leadership focus is on achieving the organizational effectiveness.

The organization size is almost stable, the expansion stage might have lead to some redundancies in core functions, but consolidation stage might include additional manpower in supporting functions. The growth can occur in additional staff related to quality control, customer support, administrative functions and marketing. Unlike growth stage when the size increases linearly, the consolidation stage involves both downsizing and hiring.

The maturity stage results in an expanded operation related to production like purchasing, inventory control, etc and also diversely deployed sales staff. The organization was geared towards maximizing its production and sales capacity.

In consolidation stage, the focus shifts towards cost control, productivity and profit.

The leadership focus is on achieving the organizational effectiveness.

The organization size is almost stable, the expansion stage might have lead to some redundancies in core functions, but consolidation stage might include additional manpower in supporting functions. The growth can occur in additional staff related to quality control, customer support, administrative functions and marketing. Unlike growth stage when the size increases linearly, the consolidation stage involves both downsizing and hiring.



MATURITY (CONSOLIDATION) STAGE – cont.MATURITY (CONSOLIDATION) STAGE – cont.


There is an increase in number of products, even though they might be still related to the core competencies; as a consequence, the organizational structure becomes divisional with more departments.

The organization’s culture becomes bureaucratic due to high degree of formalization and processes that are deemed necessary as a way to better control the operations.

The leadership challenge is to establish seamless communication protocol between different departments, look for signs of external environmental changes and make necessary corrective actions.

There is an increase in number of products, even though they might be still related to the core competencies; as a consequence, the organizational structure becomes divisional with more departments.

The organization’s culture becomes bureaucratic due to high degree of formalization and processes that are deemed necessary as a way to better control the operations.

The leadership challenge is to establish seamless communication protocol between different departments, look for signs of external environmental changes and make necessary corrective actions.



DECLINE STAGEDECLINE STAGE


The life-cycle stage that an organization enters when it fails to anticipate, recognize, avoid, neutralize, or adapt to external or internal pressures that threaten its long-term survival

Continuous reduction in resources and revenue over a substantial period of time will lead an organization enters the decline phase.

Ironically, the decline can be recognized with certainty only when it is too late to recover from it, early signs are often mistaken to be temporary.

The life-cycle stage that an organization enters when it fails to anticipate, recognize, avoid, neutralize, or adapt to external or internal pressures that threaten its long-term survival

Continuous reduction in resources and revenue over a substantial period of time will lead an organization enters the decline phase.

Ironically, the decline can be recognized with certainty only when it is too late to recover from it, early signs are often mistaken to be temporary.



DECLINE STAGE (cont.)DECLINE STAGE (cont.)


Figure 3: Organization birth, growth and decline stages





Reasons for decline

Quantitative reasons of declineThe quantitative analysis can be found in the organization’s financial statements, its internal operation reports and by using other mathematically measurable parameters.

Reduced workforce: A cutback in size of the organization reflects a reduced total market, reduced need of products; lack of capability to deliver the product, hence the underlying reasons implies a decline. However, there are times when cutback is a temporary measure to realign and revitalize the organization for another phase of growth.

Reduced market share: The reduction in the market share of the company implies several issues, growing competition if the total market is indeed growing or is stable, or contraction of overall market due to obsolete products or technologies.

Reduced profit or share price: It provides the investor’s assessment of the companies operating margin and its prospects of growth in future.





Reasons for decline (cont.)

Qualitative reasons of decline

Fierce competition: During the entrepreneurial stage, the big players might try all tools in their arsenal to counter the threat of a newcomer. It includes practices of aggressive pricing, luring their established client base with bonus deals, acquisition of competitive technologies and developing parallel products etc. Many times, the hostile takeover by large and established company is for the purpose of quick termination of a competitor.

Lack of Customers: It happens due to unexpected decline in the niche market, a change in consumer’s choice for a different product or simply because the organization fails to find proper market for the product. It can happen at any stage of life-cycle, the quarterly sales and revenue over a period of time are good indicators of change in customer base.





Reasons for decline (cont.)

Obsolete technology: Older organizations are very much vulnerable to newer technologies that can adversely impact its core business and competencies.

Economic downfall: Harsh economic environment reduces the customer spending; multiple vendors compete for the reduced market share. It also gets hard to obtain fresh credit and finances for new ventures or existing operations.

Organizational atrophy: It usually occurs in older organizations that have experienced healthy growth & long period of stability; the hierarchical structure & the bureaucratic culture of such large organization cause its slow degeneration. The organization size is large with excessive personnel, middle management is incumbent that tolerates incompetence, management processes are excessive and counterproductive; finally there is a leadership crisis. Employees loose trust in the leadership and its vision; the employee satisfaction level starts to dip consistently and so does its operational efficiency.





Weitzel and Jonsson’s Model of Organizational Decline

Five stages of declineStage 1: Blinded: organizations are unable to recognize the internal or external problems that threaten their long-term survival

Stage 2: Inaction: despite clear signs of deteriorating performance, top management takes little actions to correct problemsGap between acceptable performance and actual performance increases

Stage 3: Faulty action: managers may have made the wrong decisions because of conflict in the top-management team, or they may have changed too little too late fearing more harm than good from reorganization

Stage 4: Crisis: by the time this stage has arrived, only radical changes in strategy and structure can stop the decline

Stage 5: Dissolution: decline is irreversible and the organization cannot recover



DEATH STAGEDEATH STAGE


The total loss of purpose and hope

Conflict, back stabbing, and infighting abound

The primary goal is preservation and survival

No one knows what to do about the problem, but everyone thinks that it is the other person's fault.

Falling into the death stage of the life cycle can be avoided:

First keep the vision alive and fresh

Second, avoid spiritual decay.

Third, avoid maintenance mentality.

Fourth, refuse to become exclusive in ministry and leadership



REFERENCESREFERENCES


Gibson, James L, John M. Ivancevich, and James H. Donnelly, Jr. Organizations: Behavior, Structure, Processes. Irwin, 1994

http://webuildpeople.ag.org/wbp_library/9608_organization_lifecycl.cfm

Organizational life cycle finalize (1)

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