Life cycle and development of the organization

Corporate development is change aimed at effectively adapting to an ever-changing environment. It implies modifications in all areas of the company's operation including its structure, the prevailing organizational climate and preferred styles of management and organizational behavior. Development, being primarily a qualitative phenomenon, also involves product, process, structural and organizational and management innovations. More than half of start-ups go bankrupt within four years. A further 30% fail within ten years. The rest survive, but often fail to reach their full potential.

All bankruptcy statistics show that the main reason for bankruptcy is lack of cash. Moreover, all that is needed to start a new enterprise is an idea, self-confidence and some necessary initial cash. Nothing more. And further, well, further, you need to do things according to your concept of the company better than others, differently than others, cheaper than others or for others, distancing competitors and establishing cooperation. So proper management has a not inconsiderable part to play here. The reason for the difficulties of companies at the various stages of their development is, on the one hand, the lack of a strategic concept, and on the other hand, the lack of awareness of the functioning of the company in the cycle called the life cycle of the organization.

Background of the concept

The concept of an organization's life cycle is founded on a very universal model of life: birth-youth-maturity-decline:

• Birth (Entrepreneurship, Creativity)
  In a newly or recently formed organization, the emphasis is on producing products and services and entering and staying in the market. Management is entrepreneurial, and all attention is focused on production and marketing. The organization itself is informal and unbureaucratic. The small team and highly committed employees do not count working hours, treating work with full devotion and dedication, enjoying every success together.
• Youth (Teamwork)
  As the organization grows, taking on new employees, organizational problems increase. Market-oriented and production-oriented management is not interested in or unable to organize work in a way that suits the size and scale of the company. The organization is still characterized by a spirit of cooperation and shared responsibility. Innovative activity and a high level of involvement in the organization's operations prevail.
  At this stage of development there is a need to precisely define the company's development directions and goals to be achieved. The structure of the organization begins to take shape, along with the hierarchy and the superior-subordinate relationship inscribed in it. Conflicts arise between the "old" employees of the organization and the new staff. Accounting systems are being run. Communication still informal begins to formalize, in addition to signs of specialization and a kind of "calming" of the organization, the first signs of bureaucratization appear. The introduction of new management methods inevitably evolves in the direction of reducing the powers of lower-level employees and strengthening the position of top management.
• Maturity (Formalization)
  Characterized by the consolidation of the formalization of rules and principles. The structure of the organization is stabilizing and formalizing and the efforts of management are focused on improving productivity and efficiency and continuously improving organizational performance.
  There is an increasing emphasis in the organization on adherence to procedures with a reluctance to change the existing status quo. The organization is losing touch with the market, but its stable position, its financial surpluses and its size seem to confirm the correctness of its management policies.
• Decline(Bureaucracy)
  Excessive bureaucracy, atrophy of management decisions, lack of flexibility and loss of marketing orientation cause, organizational inertia and induce a gradual decline. People don't work hard but don't earn well either. No one holds them accountable for results. There is a progressive complete lack of understanding of one's own markets and customers - after all, it used to be so good. The bureaucratic machine is spinning hard and the results of work are lacking. Consumption of spare capital and gradual selling off of physical assets keep the organization afloat. A gradual decline is proceeding.

The life cycle of an organization, can be compared to a phenomenon called apoptosis. It is the programmed (genetically) death of every living cell. This phenomenon has a fundamental function for the entire organism. It causes its continuous "repair". It also provides an important opportunity for gene expansion, or simply evolution. To adapt to changing conditions.

The stage of decline in wise well-managed organizations is transformed into a period of radical corporate renewal. Organization researchers differ slightly in describing the above developmental phases of organizations. However, leaving aside terminological issues, knowledge of the cycle and understanding of the fact that it is a completely natural phenomenon introduces the extremely important calm so necessary at the moment of factual analysis...what and how to improve in the "new hand".