What Is Organizational Life Cycle?

Organizational life cycle is a measure of organizational development and change. The process of an organization from its creation, development to aging, to its death, includes four main phases: the pioneering period, the growth period, the formalization, and the decline. At different stages of organizational development, the organizational structure, leadership style, and management system follow a predictable pattern that changes continuously. If these patterns cannot be successfully used to overcome problems encountered at a certain stage, the development of the organization will stagnate or even die. ^[1]

Organization life cycle

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Organizational life cycle is a measure of organizational development and change. The process of an organization from its creation, development to aging, to its death, includes four main phases: the pioneering period, the growth period, the formalization, and the decline. At different stages of organizational development, the organizational structure, leadership style, and management system follow a predictable pattern that changes continuously. If these patterns cannot be successfully used to overcome problems encountered at a certain stage, the development of the organization will stagnate or even die. ^[1]

Organizational life cycle refers to the time course of an organization from its birth to its death. Organizational life cycle is actually a continuous natural process. The organization life cycle thought holds that an enterprise organization has the same life cycle as human beings, with its childhood, youth, strong age and old age. In different periods of the organization, according to different requirements, managers should adopt a suitable management approach, survive the crisis, and transition to a more advanced management stage in order to win greater success.

During the evolution of an organization, there are generally five stages:

1. Business management stage;

2. Individual management stage;

3. Career management stage;

4. Administrative organization management stage;

5. Matrix management stage.

Each stage has its own unique management style, interpersonal relationship, crisis management and organizational management methods. The key to organizational survival is to overcome difficulties and move from one stage to another in a timely manner. Therefore, managers must first understand the organization's motivation, needs, and current stage of development in order for the organization to move forward smoothly.

When an organization is born, its focus is on producing products and survival in the market. The founder of the organization, the business owner, devotes all their energy to the technical activities of production and marketing. The organization is non-standardized and non-bureaucratic, working hours are long, and control is also under the supervision of the individual owner, and growth starts with a product or service. Apple Computer's startup phase begins

If the leadership crisis is resolved, the organization gains strong leadership and begins to propose clear goals and directions. Departments are also established with levels of authority, work assignments, and division of labor. Employees are aligned with the mission of the organization and spend a long time helping the organization succeed. Every member feels that they are part of the collective. Although standardized systems have begun to emerge, communication and control are basically non-standard. Apple was in the collectivization stage between 1978 and 1981. When the main production line was completed, employees were invested in the company and more than 2,000 people signed up for employment.

Crisis: The need for delegation. If the new management level succeeds, lower-level employees will gradually find themselves under the strong constraints of a top-down leadership system, and lower-level managers will begin to gain confidence in their role and hope for more Great autonomy. A crisis of autonomy occurs when top managers succeed in their organization because of their effective leadership and vision without giving up their responsibilities. Senior managers want to coordinate and link all the components of the organization, and the organization needs to find a mechanism to control and coordinate the various departments without direct supervision from the top.

The normalization phase includes the installation and use of regulations, procedures and control systems. Communication is less frequent but more standardized, and may require the addition of engineers, human resources specialists, or others. Senior management usually only cares about issues such as strategy and planning, leaving the management right of the enterprise to the middle managers. The formation of product groups or other decentralized units may improve coordination. The implementation of the profit-based incentive system may ensure that managers work towards the best development direction of the company. Its effect enables the new coordination and control system to continue to grow the organization by establishing relationships between top managers and business units. Apple's normalization phase was in the mid-1980s.

Crisis: Too heavy bureaucratic habits. In the development of the organization, the proliferation of systems and procedures may begin to restrict middle managers, and the organization seems to be bureaucratized. Middle managers may hate staff intervention and limit innovation. Organizations appear to be too large and complex to be managed through standardized procedures. This phase of Apple is the resignation of Jobs and the self-management challenges facing President John Sculley, who have complete control.

The resolution of the bureaucratic crisis is a new sense of cooperation and teamwork. Throughout the organization is

Organizational characteristics associated with each stage of the organization's life cycle

As the organization evolves along the four stages of its life cycle, its structure, control systems, innovation, and goals

Organizational characteristics associated with each stage of the organization's life cycle

Standards are subject to change. The organizational characteristics associated with each stage are shown in the table on the right.

1) Organization Life Cycle 1) Entrepreneurship

At first, organizations were small, non-bureaucratic, and one-person show. Top management provides structure and control systems, and the organization's energy focuses on survival and production or service of a single product.

2) Organizational life cycle 2) Collectivization

This is the youth of the organization. The organization is growing fast, employees are motivated and obey the mission of the organization, but the structure is still non-standard, although certain procedures are emerging. Effective heroic leaders such as Bill Gates of Microsofe provide goals and direction for the organization. Continued growth is the main goal of the organization.

3) Organizational life cycle 3) Standardization

The organization is middle-aged and bureaucratic. The organization has increased group personnel, standardized procedures, and established a clear hierarchy and division of labor. Innovation may be achieved through the establishment of independent research and development departments. The main goals are internal stability and market expansion. Senior management must implement delegation, but also implement standardized control procedures. At Dell Computer, for example, the talented entrepreneur Michael Dell hired experienced managers, including some retired from Apple, to help him develop and implement standardized planning, management, and budgeting systems. 31 Dell is 14 years younger than his youngest senior manager. "I would love to hire and commission," he said. During the normalization phase, organizations can also develop complementary products to provide a complete product line.

4) Organization Life Cycle 4) Fine

Mature organizations are huge and bureaucratic and have extensive control systems, regulations and procedures. Organizational managers try to develop team orientation in bureaucracy to prevent further bureaucratization. Top management is also busy building a complete organization. The image and reputation of the organization is important. Innovation is achieved by institutionalizing research and development departments. Management may criticize bureaucracy and increase its efficiency. The growth of an organization goes through various stages of the life cycle, and each stage is linked to the specific characteristics of the organizational structure, control systems, goals and innovation. The life cycle phenomenon is a very useful concept to understand the problems facing the organization and how managers can react positively to the next phase of the organization's transition. ^[2]