Basic Overview of Organizational Life Cycles

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections of This Topic Include

What Are Organizational Life Cycles?
Organizational Life Cycles and Corresponding Typical Features
Organizational Life Cycles and Management Styles
Additional Perspectives on Life Cycles

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Library's Consulting and Organizational Development Blog
Library's Leadership Blog
Library's Nonprofit Capacity Building Blog

Also see
Barbarians to Bureaucrats.
Characteristics of Developing Businesses

Related Library Topics


What Are Organizational Life Cycles?

Organizations go through different life-cycles just like people do. For example, people go through infancy, child-hood and early-teenage phases that are characterized by lots of rapid growth. People in these phases often do whatever it takes just to stay alive, for example, eating, seeking shelter and sleeping. Often, these people tend to make impulsive, highly reactive decisions based on whatever is going on around them at the moment. Start-up organizations are like this, too. Often, founders of the organization or program and its various members have to do whatever is necessary just to stay in business. Leaders make highly reactive, seat-of-the-pants decisions. They fear taking the time to slow down and do planning.

In our comparison of organizations and programs to people, we note that, as people continue to mature, they begin to understand more about the world and themselves. Over time, they develop a certain kind of wisdom that sees them through many of the challenges in life and work. They learn to plan and to use a certain amount of discipline to carry through on those plans. They learn to manage themselves. To survive well into the future, organizations and programs must be able to do this, as well. Experienced leaders have learned to recognize the particular life cycle that an organization or program is going through. These leaders understand the types of problems faced by the organization or program during the life cycle. That understanding gives them a sense of perspective and helps them to decide how to respond to decisions and problems in the workplace.

Organizational Life Cycles and Corresponding Typical Features

Organizations, as with most systems, go through life-cycles. Features of new organizations are usually markedly different from older (usually more larger) organizations. The following very useful table was summarized Richard L. Daft's work and book, Organizational Theory and Design (West Publishing, St. Paul, Minnesota, 1992), which, in turn, based information from Robert E. Quinn and Kim Cameron's Organizational Life Cycles and Some Shifting Criteria of Effectiveness, Management Science, 29, (1983), pp. 31-51. Also see Barbarians to Bureaucrats.

Birth

Youth

Midlife

Maturity

Size small medium large very large
Bureaucratic nonbureaucratic prebureaucratic bureaucratic very bureaucratic
Division of labor overlapping tasks some departments many departments extensive, with small jobs and many descriptions
Centralization one-person rule two leaders rule two department heads top-management heavy
Formalization no written rules few rules policy and procedures manuals extensive
Administrative intensity secretary, no professional staff increasing clerical and maintenance increasing professional and staff support large-- multiple departments
Internal systems nonexistent crude budget and information system control systems in place; budget, performance, reports, etc.. extensive -- planning, financial, and personnel added
Lateral teams, tasks forces for coordination none top leaders only some use of integrators and task forces frequent at lower levels to break down bureaucracy

Another Perspective

In the book, 5 Life Stages of Nonprofit Organizations (Wilder Foundation, 2001), the author, Judith Sharken Simon, provides another perspective on life cycles of nonprofit organizations. She identifies:
1. Stage One: Imagine and Inspire ("Can the dream be realized?")
2. Stage Two: Found and Frame ("How are we going to pull this off?")
3. Stage Three: Ground and Grow ("How can we build this to be viable?")
4. Stage Four: Produce and Sustain ("How can the momentum be sustained?")
5. Stage Five: Review and Renew ("What do we need to redesign?")

Organizational Life-Cycles and Management Styles

Based on the book "Barbarians to Bureaucrats"
by Lawrence Miller, published by C.N. Potter: New York.
Edited by Carter McNamara, MBA, PhD

In this very enlightening book, Miller suggests there is a strong relationship between the life-cycle stage of an organization and the nature of its leadership. He asserts this evolutionary life-cycle is typical to cultures as well as organizations. His work shows powerful insights to the nature of organizations and their management and matches the experiences of many practitioners. His work can be referenced to explain much of the wide variation in management styles, yet close association between styles of management and stages of an organization's life.

Miller suggests that the life of an organization is similar to the shape of a bell curve, that is, the organization experiences a rise of health, it peaks, and then gradually declines. The life-cycle stages of Prophet, Barbarian, Builder, Explorer stages are on the way up the curve of health, the Synergist is at the peak, and the Administrator, Bureaucrat, and Aristocrat stages are on the way back down the curve of health.

Life-cycle stage

Business Environment

Beliefs

Mission/Tasks

Management Style

Nature of Organization

Prophet visionary, one product, debt passionate faith in product get organization started! single leader, many ideas, not listen well, not like details no organization!
Barbarian ideas to actions; broaden customer base success lies in faith in Prophet get product to market high control and direct action; no delegation simple, few if any systems
Builder and Explorers now showing a profit focus on efficiency; expand market and products create means to production of product; conquer market focus on detail; few focus on long-term plans; based on interpersonal relationships organization is growing rapidly
Synergist (note 1) (see list after this table)
Administrator mastered market, much profit focus on efficiency and quality maximize efficiency and full use of profit not effective dealing with people; decisions based on facts and studies very efficient and smooth; additional staff functions added
Bureaucrat now diversified; generate profit; slow growth; cost cutting professional management efficiency; less focus on customers and more on profit impersonal; like reports overly organized
Aristocrat declining; loss of creativity and investment cynical prevent further erosion aloof excessive layers of management; is an informal, underground organization

Synergist: Miller says a synergist is "... a leader who has escaped his or her own conditioned tendencies toward one style and incorporated, appreciated and unified each of the styles of leadership on the life-cycle curve. The best managed companies are synergistic." Miller asserts that the synergist is a synergy of the other management styles, and therefore, is best described by a set of principles.
1. Spirit - Corporations are both spiritual and material in nature. In their youth, they possess spiritual rather than material assets. In decline, this is reverse. Health is maintained by unifying the spiritual and material assets.
2. Purpose - The purpose of the business organization is to create real wealth by serving its [stakeholder!]. It is a function of leadership to instill and reinforce social purpose.
3. Creativity - The first and most important act of business is the creative act: the creation of new and improve products, services, selling and means of production. Change, youthfulness and energy are requirements until death. (Those who lean toward creativity will be required to sacrifice for the sake of administrative sanity.)
4. Challenge and response - The task of leaders is to create or recognize the current challenge, respond creatively, and avoid a condition of ease. Reliance on yesterday's successful response in the face of new challenges leads to decline. (It is an irony of life that satisfaction and security are the enemies of excellence.)
5. Planned urgency - The urgency to decide and act promptly leads to expansion and advance. Prompt action must be balanced by deliberate planning. There will always be conflict between promptness and planning.
6. Unity and diversity - Advancing cultures are socially unifying and become diverse in character. Leaders must act to unify diverse talents and traits. Leaders must actively resist the tendency to attract and promote like personalities and skills.
7. Specialized competence - Specialized knowledge and skills and the integration of those competencies must be pursued vigorously. Efficient methods are derived from specialized competence; however, specialized competence leads to inefficient methods.
8. Efficient administration - Efficient administration is required to achieve integration and performance as differentiation increases. Unchecked administration inevitably leads to bureaucracy and the decline of creativity and wealth creation.
9. On-the-Spot Decisions - Decisions should be made by those on-the-spot, close to the customer, product or service. The further decisions are removed from the point of action and knowledge, the worse the quality and the higher the cost. Consensus is a sign of maturity and health.

Additional Online Reading
Management Styles

Additional Perspectives on Life Cycles

Organizational Life Cycles & Corporate Culture
Organizational Life Cycle & Decline
Life Cycle of an Exempt Organization


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Managing Organizational Change

Consulting and Organization Development - Book Cover Field Guide to Consulting and Organizational Development
by Carter McNamara, published by Authenticity Consulting, LLC. Provides complete, step-by-step guidelines to identify complex issues in for-profit or government organizations and successfully resolve each of them. This book is also helpful to organizations that are doing fine now, but want to evolve to the next level of performance. This is one of the truly comprehensive, yet practical, books about this complex subject! Includes online forms that can be downloaded. Many materials in this Library's topic about guiding change are adapted from this comprehensive book.
Consulting and Organization Development With Nonprofits - Book Cover Field Guide to Consulting and Organizational Development With Nonprofits
by Carter McNamara, published by Authenticity Consulting, LLC. Provides complete, step-by-step guidelines to identify complex issues in nonprofit organizations and successfully resolve each of them. This book is also helpful to organizations that are doing fine now, but want to evolve to the next level of performance. This is one of the truly comprehensive, yet practical, books about this complex subject! Includes online forms that can be downloaded. Many materials in this Library's topic about guiding change are adapted from this comprehensive book.

The following books are recommended because of their highly practical nature and often because they include a wide range of information about this Library topic. To get more information about each book, just click on the image of the book. Also, a "bubble" of information might be displayed. You can click on the title of the book in that bubble to get more information, too.



Growing Your Organization

The following books are recommended because of their highly practical nature and often because they include a wide range of information about this Library topic. To get more information about each book, just click on the image of the book. Also, a "bubble" of information might be displayed. You can click on the title of the book in that bubble to get more information, too.



Also See for For-Profits

Strategic Planning -- Recommended Books

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Strategic Planning -- Recommended Books

Social Entrepreneurship (Nonprofit) -- Recommended Books

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Fundraising -- Recommended Books

Program Management -- Recommended Books

Planning and Project Management -- Recommended Books

Capacity Building (Nonprofit) -- Recommended Books




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