Organizational life cycles


In every organization, there comes a time when the existing management style no longer works and must be changed. This usually happens because the organization has reached a different stage in its development or because the external environment has changed.

There are four distinct stages in the life cycle of an organization: startup, growth, maturity, and decline. Each stage presents different challenges and requires a different management style.

The startup phase is when the organization is first established and is trying to find its footing. The growth phase is when the organization starts to expand and grow rapidly. The maturity phase is when the organization has stabilized and is no longer growing. The decline phase is when the organization starts to shrink and decline.

The management style that is appropriate for each stage will be different. In the startup phase, the management style needs to be very entrepreneurial and risk-taking. In the growth phase, the management style needs to be more focused on execution and expansion. In the maturity phase, the management style needs to be more focused on efficiency and stability. In the decline phase, the management style needs to be focused on restructuring and downsizing.

The Pre-Bureaucratic Stage

The Pre-Bureaucratic organization is the first stage in the Organizational Life Cycle. This stage is characterized by a lack of formal structure and limited resources. The Pre-Bureaucratic organization is typically small in size and is ruled by an autocratic leader. This stage is also known as the entrepreneurial stage.

The Entrepreneurial Stage

In the Entrepreneurial Stage, organizations are typically small, dedicated, and entrepreneurial. They are often founded by a charismatic leader who is able to rally people around a shared vision. The focus at this stage is on survival and growth. Organizations in this stage are often structured in a very simple way, with a flat hierarchy and little formality. Communication is typically informal.

There is a great deal of flexibility and adaptability in this stage, as the organization tries to find its footing. Larger organizations may acquired smaller ones in order to gain market share or expertise. This can be a period of tremendous opportunity and growth, but it can also be very uncertain. Organizational structures and processes are not yet well-established, which can lead to problems down the road.

The Autocratic Stage

The first stage of the organizational life cycle is known as the Autocratic Stage. This stage is characterized by a highly centralized power structure, with all major decisions being made by a small group of people at the top of the organization. This can often lead to a very autocratic leadership style, with decisions being made without consulting those lower down in the hierarchy. This can be an effective way of running an organization in its early stages, when there is a need for quick decision-making and a clear hierarchy. However, it can also lead to problems later on, as employees become disillusioned with their lack of input and responsibility.

The Bureaucratic Stage

In the bureaucratic stage of the organizational life cycle, organizations are characterized by formalized rules and procedures, a high degree of specialization, centralized decision making, and a hierarchical structure. This stage is often seen in large organizations that are well established and have been in business for many years.

The Charismatic Stage

The bureaucratic stage is the second stage in the organizational life cycle. In this stage, organizations develop formal structures and systems to help them run more efficiently. This can include things like formalized job descriptions, rules and regulations, and clear lines of authority. This stage is often necessary for organizations to grow and scale, but it can also lead to bureaucracy and red tape.

The Legal-Rational Stage

The legal-rational stage is the third stage of the bureaucratic model of organizational life cycles. This stage is characterized by organizations having a clear set of rules and regulations that employees must follow. Additionally, decisions made in this stage are based on logical and rational thinking rather than on personal relationships.

The Post-Bureaucratic Stage

While the machine metaphor dominated early thinking about organizations, organizations are not machines. They are complex, organic entities that must be understood on their own terms. One way to do this is to think of organizations as having life cycles, just like living organisms.

The Networked Stage

The Post-Bureaucratic Stage is the fourth stage in an organizational life cycle. This stage is characterized by a flat organizational structure, a decentralized decision-making process, and a focus on employee empowerment and satisfaction. The Post-Bureaucratic Stage is also known as the Networked Stage because of the emphasis on networking and collaboration.

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