The fifth stage of an organization's life cycle is called. Organization development. Organizational life cycle stages
Bibliographic description:
Nesterov A.K. Life cycle of an organization [Electronic resource] // Educational encyclopedia website
In matters of organizational behavior various stages life cycle Special attention is given to a fundamental assessment of each stage at which the organization is located and the measures taken in accordance with this.
Organization life cycle theory
Each organization goes through several stages in its development, from its creation to the end of its life. More often, The life cycle of an organization has 4 stages: creation, growth, maturity and decline. They may differ in duration for different organizations, but, predominantly, the longest stage is the maturity stage. It should be noted that not all organizations go through long periods of functioning, which is due to the specifics of organizations, their differences in structural capabilities to adapt to the dynamically changing external and internal environment in which the organization develops.
Life cycle of an organization– a period during which an organization goes through four stages of its development: creation, growth, maturity and decline (recession).
All these changes within the organizational life cycle (OLC) correspond to the general approach to the formation of the organizational life cycle. Within the life cycle, all stages have a certain regular periodicity and are subject to a strict sequence in the development of the organization, which changes depending on the behavior of the organization at each stage.
Organizational life cycle stages determined by the state of its development of the organization and the time of its existence.
Considering the nature of each stage of an organization’s life cycle, it is necessary to objectively correspond the reasons for the transition of each specific organization from one stage of development to another with the approach to managing the organization’s behavior chosen by its management. If these processes were predetermined by management, then an important role is played by the timing when they actually occurred, and whether it corresponded to the changes that took place in the external and internal environment specific organization.
The main problem in the area under study is the dependence of the organization’s behavior on the organization’s management’s understanding of its needs, determined by the specifics of the life cycle stage at which it is located. Therefore, the manager always gives an objective assessment of the measures taken to ensure compliance of the management style with a specific stage of the enterprise’s life cycle, which implies the need for mutual correspondence of specific measures and the style of managing the organization’s behavior depending on the stage of the life cycle.
Organizational life cycle stages
Let us consider the specifics of the stages of the life cycle in accordance with its periodization within the framework of the development of the organization.
Creation stage
At the stage of creation Each organization goes through the path of its formation in conditions of insufficiently specific goals and vision of the future of the organization on the part of management. At this stage of the life cycle, the scope of creative processes associated with the development and behavior of the organization as a whole is widest. The most significant effort is not in the organization itself, but in creating a product and surviving in a dynamic market. This explains small size organization at this stage, which also stimulates informal contacts between employees of the organization at various levels of the internal hierarchy.
At this stage, the leader of the organization, who determines its behavior as a whole, is an innovator who promotes his ideas to society. Considering that during this period the management structure, implying the creation of intra-organizational relations, regulation of responsibilities and formalization of power, we can talk about the actual emergence of an organization as independent element. Also, management activities are separated into an independent direction within the organizational structure and a management class is created. Top management is usually represented by the founder of the organization and/or his closest subordinates. Top management directly manages the production and finances of the organization, allocation special departments, usually happens later. The founder at this stage of the life cycle bears full responsibility for the future of the organization.
An organization at the creation stage of its life cycle has two main tasks:
- obtaining the required resources - financial, labor, intellectual, material, etc.;
- acquisition of sustainable competitive advantages.
Management of the organization should be aimed at the following aspects:
- analysis of demand for manufactured products, services provided or work performed in the organization’s target markets;
- studying data about competitors in relation to the capabilities and resources of the organization;
- identifying the need and possibility of increasing the production and commercial potential of the organization, if there is unmet demand or opportunities to increase sales;
- assessment of the organization’s current market opportunities and implementation of corrective measures in the short-term and long-term development strategy, if any are required;
- finding opportunities to attract additional resources from external sources or internal reserves.
Thus, we can conclude that the organization’s management at the first stage of the organization’s life cycle faces very non-trivial and large-scale tasks designed to ensure the future of the organization. Analytical activities take leading position in management work.
In accordance with the possible directions and stages of development of an organization, it is possible to present a set of management targets at the stage of creating an organization.
Analysis of the situation and target settings at the stage of creating an organization
Growth stage
At the growth stage organizations in management activities The role of strategic management is strengthened, the mission and values of the organization are formed. At this stage of the organization's life cycle, the intensity of innovation processes increases significantly. Communications, control functions, and administrative influence remain informal.
The growth of the organization is also associated with an increase in the rate of division and specialization of labor, including management work, which is distinguished as a special level of labor in the organization. As a result, new structural divisions appear, vertical and horizontal specialization appears, due to the division of labor in the organization.
Simultaneously with these processes, the organizational structure becomes more complex; the hierarchy in the organization breaks down into several levels, in accordance with the formed management powers. Also, these trends are accompanied by an increase specific gravity administrative influence and regulated management decisions. New instructions, procedures and regulations on the activities of departments are formalized, decrees are issued that form the structure of the organization in accordance with current management guidelines.
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Objectives of the organization |
Management tasks |
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The management of an organization at this stage of the life cycle forms its own type of management, relying on traditional approaches to management, or inventing its own methods, which happens much less often. The main task of management is to ensure a balance between stable development in the long term and innovative actions in order to create conditions for the effectiveness of the organization in the current period, while simultaneously creating the basis for future development.
Maturity stage
Organizational maturity stage characterized by increasing complexity of the organization's structure and increased formalization of internal operations. The degree of division of labor reaches its maximum, the specialization of workers is so great that the role of management at all levels increases many times over with the increase in the degree of assigned responsibility and power. Development and decision-making at this stage of the life cycle become more conservative, and the structure of the organization is subject to strict departmentalization, which makes it possible to painlessly replace employees with more effective specialists. The maximum emphasis of management influence converges at the point of implementation of innovative activities in any area of the organization. Management considers its goal to ensure the stability of the organization's development in the long term. Bureaucratization of management can be prevented by decentralizing management, delegating authority and adjusting the personnel motivation system.
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Objectives of the organization |
Management tasks |
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Decline stage
In decline The organization is faced with a decrease in demand for its products and services, so management is focused on finding opportunities to maintain its position in the market. At this stage of the organization’s life cycle, there is an increase in the need for specialists in the most valuable areas for the organization. Conflict within the organization increases. Along with the centralization of procedures for the development and implementation of management decisions, the organization reaches its maximum degree of bureaucratization. At this stage of the life cycle, the top management of the organization often changes, new managers try to slow down trends.
At the decline stage of the life cycle, achieving the organization's target results is complicated by decreased demand, increased competition, difficulties in managing assets, creating innovative products, and declining profits.
At the end of his life cycle organization must begin to implement fundamental changes in order to move on to the beginning of a new cycle in its development, otherwise the prospect awaits it complete care from the market and cessation of activity.
Organizational behavior at life cycle stages
The behavior of an organization is characterized by each stage of the life cycle depending on its formal and essential representation in accordance with the detail of the main stages.
Creation, growth, maturity and decline can be detailed.
Although a single point of view on the classification of detailed stages of an organization’s life cycle has not been formed in the scientific and specialized literature, this approach seems to be the most appropriate, revealing the behavior of an organization within the framework of 7 stages of its development. The behavior of the organization depends on each stage in the following aspects:
- primary goal,
- type of leader
- characteristic feature of the organization,
- self-awareness,
- aspects of special significance,
- main goals,
- planning,
- way of leadership
- general behavior model of the organization.
Analysis of the stages of an organization's life cycle based on the relevant parameters of its activities allows us to objectively assess the organization's position at a specific stage of the cycle. A detailed life cycle with the characteristics of the organization at each stage is presented in the table.
Detailed life cycle of an organization with characteristics of individual stages
The consequence of this approach is the possibility of fairly specific planning of future measures related to the organization's transition to the next stage of the life cycle.
M. Porter proposed his model of organizational behavior depending on the stages of its development. In his model, the fundamental determinants of organizational behavior are two factors:
- Organizational goals;
- Strategic Focus.
The behavior model of the organization at the stages of its development is presented in the table.
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Organizational life cycle stage |
Organizational Goals |
Strategic Focus |
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|---|---|---|---|
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Birth |
Survival: Making the Whole |
Identifying an Entrepreneurial Idea and Finding Resources |
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Defining the mission and studying the organization's environment |
Defining products, functions, markets |
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Quantitative growth |
Increasing market share, conquering territory |
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Youth |
Achieving uniqueness and conquering a market niche |
Expanding the range of products, functions, markets |
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Growing up |
Qualitative growth, acquisition of reputation |
Using position to grow well-being |
|
|
Maturity |
Stabilization and public contribution |
Maintaining a stable position |
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Old age |
Survival |
Updating, eliminating sick parts |
Only through regular adjustment of the organization’s goals and objectives for the coming periods is the organization’s management in constant compliance with its real needs at a specific stage of the life cycle and orientation towards long-term development.
conclusions
An organization goes through certain stages of its life cycle in its development: creation, growth, maturity and decline. The manager’s task is to constantly take into account what stage the organization is currently at, what are the prospects for moving to the next stage and what determines them. It is also necessary to track what stage of the industry's life cycle it is in.
The considered features of the organization’s behavior depending on the stage of the life cycle should be taken into account by the organization’s management, regardless of the management style and goals of the organization. Taking into account the characteristics and main difficulties of each stage of the organization's life cycle is a fundamental task of management.
Literature
- Kuznetsov Yu.V., Melyakova E.V. Organization theory. – M.: Yurayt, 2013.
- Trenev N.N. Strategic management. – M.: Infra-M, 2012.
- Ivanova T.Yu., Prikhodko V.I. Organization theory. – M.: Knorus, 2011.
The concept of an organization's life cycle predicts changes in it that occur in a certain sequence over a certain time. Transitions from one stage to another are non-random and predictable.
Can be identified descriptively stages of the organization's life cycle:
1) emergence- the stage of substantiating the viability of the idea of creating and developing an organization, its formal establishment, determining the factors of commercial success;
2) development- formation and small scale of production, product novelty, competition for market leadership;
3) height- expanding the scale of production, developing new markets, increasing sales;
4) maturity- characterized by a drop in sales and income, modernization and differentiation of products, the search for new markets, and a revision of the entrepreneurial concept;
5) a crisis- drop in profit volumes, limited opportunities sales of products, decrease in the solvency of the organization. Then there are two possible ways: bankruptcy or reorganization (financial recovery) and revival of the enterprise.
From the point of view of organization management, we can talk about the following: stages of its life cycle:
1) entrepreneurship: period of formation and formation of the product life cycle; to move to the next stage, a stable supply of resources is necessary;
2) collectivity: are developing innovation processes the previous stage, the mission of the organization is formed, communications and structures remain informal, the team shows the ability to make great commitments;
3) formalization and management: divisions for the development and adoption of management decisions become leading, the role of senior management, structures are stabilized;
4) development of structure: product output increases, the service market expands, managers identify new development opportunities, the management structure is worked out, the decision-making mechanism is decentralized;
5) decline: a decrease in demand as a consequence of competition and competitors’ strategies, a search for ways to retain markets and take advantage of new opportunities, an increase in the degree of conflict.
The concept of an organization's life cycle allows us to state that an organization develops only when it has a sound strategy and effectively uses available resources.
Life cycle of an organization- an objective reality, but the revival of an organization at the last stage of its cycle requires subjective actions of management personnel.
Management Theorist I. Adizes, one of the world's leading experts in the field of improving the efficiency of organizations through deep transformations, identified 9 stages in the life cycle of an organization.
1. Nursing (courtship)- there is a business project, there is no organization yet. Required good idea and the market's readiness to accept it.
2. Infancy- the organization has been created, but does not have a clear structure; there is no system for hiring, assessing the performance of tasks; subordination is weak. Decisions are made promptly, each successful one turns into a model for making similar ones. To survive, it is necessary: 1) ensuring a constant flow of resources; 2) loyalty to the idea of building a sustainable organization.
3. "Come on, come on"- fast growth. The vision of the future of the organization changes dramatically - from a very narrow view to a panorama of endless possibilities. The main mistake is trying to embrace the immensity. The organization is still built around people, not tasks.
4. Youth- functional organizational conflicts; inconsistency of the organization’s goals, inconsistency between the incentive and reward system, the “us and them” conflict. The business outgrows the founder's capabilities. Possible ways out of the situation: a) carry out rapid decentralization, giving a chance to many; b) invite a hired professional manager from outside (the organizational culture will radically change). An organization is built around tasks; clear lines of authority are established.
5. Dawn- the optimal point in the life cycle of an organization. A balance is achieved between self-control and flexibility. A clear organizational structure, a system of rights and responsibilities, readiness for innovation.
6. Stabilization- the first stage of aging. The organization is very strong in terms of financial indicators, begins to lose flexibility. The leading role of financiers; the dominant factor is return on investment at any cost; depletion of the entrepreneurial spirit.
7. Aristocratism- main attention is paid to control and insurance systems; readiness for innovation decreases; the principle “don’t drive the wave” reigns.
8. Early bureaucratization- dysfunctional conflicts. The main mistake: employees’ attention is focused on internal conflicts, while the external consumer is “ annoying fly", "which interferes with work."
9. Death- the organization no longer creates the necessary resources for self-preservation. There is no focus on results, no working team, no inclination to change, but there is a system of meaningless control.
All 9 development cycles under normal conditions cover 35-40 years.
Mission of the organization- this is the formulated main, significant functional purpose of the organization in the long term; characterizes the place, role, status of an organization in society, expresses general view the meaning of existence of the entire organization determines its relationship with the environment.
Mission - it is the reason the business exists. The mission is determined in the process strategic planning, is the main strategy of the enterprise, in accordance with which all its activities are based. The adoption of a mission allows you to clearly define the purpose of the organization’s activities and does not give managers the opportunity to navigate personal interests.
The choice of mission stabilizes the activities of the organization, as the basic principles of its work are determined. The mission allows the organization to be flexible and, if necessary, change its profile. To select a mission, it is necessary to clearly define who the customers are and what needs will be satisfied. Based on the mission, the goals of the activity are determined.
The purpose of the activity is this is the desired state of the control object after a certain time; The coherence of the staff’s work depends on its correct formulation.
The main goal of any enterprise is to make a profit, and it is often identified with the mission. In market conditions, taking into account constant changes in the position of cyanization and its competitors, intermediaries, buyers, forms of financing and the state of the industry, the mandatory goal of management is to overcome risk or risk situations both in the present and in the future.
Every company, regardless of its size, must have certain goals other than making a profit; the leader must understand this mission and bring it to the consciousness of employees.
For example, IBM's mission is to provide services to all countries to meet their computer needs. IN in this case the mission covers a wide range of activities aimed at increasing the volume of computer production and services provided in this area. It is important that this provides for meeting the needs of a certain category of consumers. Henry Ford defined the mission of his company as providing people with cheap vehicles.
GOALS OF THE ORGANIZATION: MEANING, CLASSIFICATION, TYPES
The purpose of the company, in essence, is the specification of the organization's mission. The company's system of goals includes principles, spiritual values, long-term goals - all this determines the organization's mission in society. The principles are as follows: 1) growth of the company due to the mutual benefit of it and consumers; 2) making a profit due to the mutual benefit of the company and consumers.
The goals of the organization should be: 1) specific and measurable; 2) time-oriented: long-term (planning horizon 5 years), medium-term (from 1 to 5 years), short-term (within 1 year); 3) achievable (realistic); 4) directed; 5) consistent, consistent, compatible with one another; 6) controlled; 7) understandable for the performer.
Exist requirements for the goals of the organization:
Functionality (general goals can be transformed into lower-level goals);
Mandatory temporal connection between short- and long-term goals;
Periodic review of goals;
Development of a system of goals (not just one);
Coverage of all areas and levels of the organization’s activities.
The entire system of organizational goals must be an interconnected system, which is achieved by linking goals, building "goal tree". At the first stage of goal setting in the organization, it is determined the main objective activities; then (decomposition stage, division into subgoals) one goal breaks down into a system of goals for all spheres and levels of management and activity. At the very “top” there is a general goal (mission), at the “foundation” there are tasks and work that can be completed in advance in a known way and within specific deadlines.
On the basis of the main goal - the mission - the strategic goals of the organization are formulated, i.e. a detailed understanding of what the company wants to achieve in the future. A well-stated mission statement clarifies what the organization is and what it strives to be, and also sets the organization apart from others like it. Further, within the framework of strategic planning, resources are allocated, adaptation to external environment, internal coordination, organization of strategic foresight.
Depending on the role performed, goals are classified into:
1.Scale of action: functional(previously achieved by this organization); analogue goals(the technology for achieving them is known in this organization); new - strategic: reflect the large-scale intentions of the enterprise, leading to the achievement of significant results in the field of entrepreneurship, social, and production. Strategic goals differentiate by hierarchy levels: a) stratum goal of the organization, b) functional area of activity, c) operational tasks, their assignment to performers.
2.Duration: short-term, medium-term, long-term. the main objective the company must reflect the need to ensure the welfare of the company's owners (its shareholders). Maximizing long-term profits is the main goal, which also includes maximizing shareholder returns. To avoid over-focusing on short-term profitability conditions, it is necessary to add a number of supporting (medium term) goals that balance short-term and long-term conditions.
Medium-term goals have the following purpose: a) indicate what needs to be done today to achieve long-term goals; b) the presence of such goals encourages the manager to make today's decisions taking into account the long-term perspective.
Short term goals consistently indicate what immediate and immediate results should be achieved. They show the speed required by the organization to move along the chosen path, and the required level of action, i.e. “how much and when” must be done.
3. Action object: market; economic; technical; financial, social, power; scientific; political, etc.
4. Level: national economic; industry; territorial; enterprises.
5. Validity period: promising; current.
6. Scope of the problem and scale of action: strategic; tactical; operational.
7. Functional focus: financial; innovative; marketing; production; administrative.
Management system by objectives (MBO, Management by objectives)
Since 1954, in the USA, at all levels of government, new method planning - MBO - process of decentralization of adoption management decision, integrating planning, motivation and control. Organizations use this method to reduce conflicts and reduce the negative reaction of employees to control, since employees themselves are involved in the process. Each employee's goals must support the boss's goals.
Stages of MBO:
1. Brainstorming: goals issued from above are discussed below in all departments and emerge Feedback and an agreement between management and the team regarding the achievement of set goals.
2. Based on general goals, specific quantitative goals are developed, and on the basis of specific quantitative goals, a plan for the year is developed, broken down by month. Stages of goal development: 1) defining tasks and measures to achieve the goal; 2) establishing relationships; 3) clarification of roles and delegation of authority; 4) time estimation; 5) resource assessment; 6) checking deadlines and adjusting action plans.
3.Verification and evaluation. The level of goal achievement is determined, obstacles and problems to achieving it are identified, and rewards for effective work are identified.
4. Corrective goals. If goals are not achieved and the reasons for this are known, corrective measures are taken.
The life cycle of an organization is a set of stages through which an enterprise passes. These are: birth, childhood, then adolescence, which is replaced by early maturity. At a certain stage, the prime of life begins, the stage of full maturity, aging. And the renewal stage completes the cycle.
The first stage is the birth of the organization. At this stage, the founders of the enterprise identify the needs of a potential consumer. Purposefulness and dedication are especially important for managing an enterprise at this stage. A directive method of company management is often encountered.
Childhood. This is the most dangerous period for an organization, since most problems arise during the first years of operation at the enterprise. The World argues that it was during this period that many organizations go bankrupt due to the incompetence of management. The goal of this period can be considered the healthy development of the enterprise, and not just its survival. Management must be carried out by a trained leader and his team.
Adolescence. At this stage, the growth of the organization occurs unsystematically, in spurts. The enterprise is gaining strength, planning is being established, and many specialists are being hired. In this case, friction with the previous composition may arise. The founders of the enterprise serve as the leaders of the organization. They plan, manage and control.
Early maturity and further stages
Early maturity is distinguished by characteristics characteristic of this particular period - expansion and differentiation. It may also be observed. At the stage of early maturity, the organization expands, structural divisions are formed, the results of which are measured by profit. At this stage, tendencies of bureaucracy and struggle for power begin to appear.
The flourishing of strength. The organization reaches maximum development, there are shareholders on the board of the enterprise. At this stage, the goal becomes balanced growth of the organization. Stability and control in work have great importance, as do innovation and decentralization.
Full maturity. This stage is characterized by a slight slowdown in growth rates. Under the influence of external pressure, an organization may deviate from its original goals. At the same time, the organization’s management can ignore the symptoms of the enterprise’s weakness - this typical mistake managers, which is characteristic specifically for this stage of the life cycle.
Aging. If the management of the organization understood the need for constant renewal, this stage of the life cycle would not occur. An ineffective motivation system, high competition, and bureaucratic red tape create conditions for development to stop. The organization gradually begins to disintegrate, it rolls back, and the struggle for survival begins. There is a way out of this situation - it is necessary to adopt a strict updating system.
Update. After the reorganization, the enterprise can continue its successful development by going through a series of measures to promote renewal.
Organizations are born, develop, achieve success, weaken and, ultimately, cease to exist. Few of them exist indefinitely; none lives without change. New organizations are formed every day. At the same time, every day hundreds of organizations are liquidated forever. Those who adapt thrive, those who are inflexible disappear. Some organizations develop faster than others and do their job better than others. The manager must know what stage of development the organization is at and assess how well the adopted leadership style corresponds to this stage.
The life cycle concept has received much attention in the market research literature. The life cycle is used to explain how a product goes through the stages of birth or formation, growth, maturity and decline. Organizations have some exceptional characteristics that require some modification of the life cycle concept.
One of the options for dividing the life cycle of an organization into appropriate time periods involves the following stages:
1. Entrepreneurship stage. The organization is in its infancy. Goals are still unclear, the creative process flows freely, and progress to the next stage requires a stable supply of resources.
2. Collectivity stage. The innovative processes of the previous stage are developed, and the mission of the organization is formed. Communication and structure within the organization remain essentially informal.
3. Stage of formalization and management. The structure of the organization is stabilized, rules are introduced, and procedures are defined. The emphasis is on innovation efficiency and sustainability. Decision-making and decision-making bodies become the leading components of the organization. The role of the top management of the organization is increasing, the decision-making process is becoming more balanced and conservative. The roles are clarified in such a way that the departure of certain members of the organization does not pose a serious threat.
4. Stage of developing the structure. The organization increases the output of its products and expands the market for the provision of services. Leaders identify new development opportunities. The organizational structure becomes more complex and mature. The decision-making mechanism is decentralized.
5. Decline stage. As a result of competition and a shrinking market, an organization is faced with a decrease in demand for its products or services. Leaders are looking for ways to hold onto markets and seize new opportunities. The need for workers is increasing, especially those with the most valuable skills. The number of conflicts often increases. New people are coming to leadership to try to stem the decline. The mechanism for developing and making decisions is centralized.
The main stages of an organization's life cycle are graphically presented in Figure 1. The part of the curve that has a positive slope reflects the stages of creation, growth and maturity of the organization, the other part with a negative slope reflects the stage of decline of the organization.
Figure 1 Main stages of an organization's life cycle
When creating an organization, when the creative process flows freely, the desire for stable and sustainable development is manifested. In this case, two tasks are solved - providing access to the necessary resources and mastering the mechanism of competition. The key role here is played by analyzing the situation and obtaining objective information. Table 1 can be used to analyze the situation.
Table 1. Analysis of the situation at the stage of creating an organization
Organizational life cycle stages:
Childhood. This is a dangerous period because most failures occur during the first years after the organization's inception. From world statistics it is known that a huge number of small-scale organizations fail due to incompetence and inexperience of management. Every second small business fails within two years, four out of five businesses fail within five years of its existence. The goal of this period is to achieve quick success, and its goals are healthy existence and development, and not simple survival. Often all the work is done to the limit of capabilities, so as not to lose the momentum of increasing success. Management is carried out by an active and trained leader and his initial team.
Adolescence. During this transition period, the growth of the organization occurs, as a rule, unsystematically, in spurts. The organization is increasingly gaining strength, but coordination is below optimal levels. More organized procedures are gradually replacing the risky passion for success. Planning, development of budgets and forecasts are being established. The hiring of new specialists is expanding, which causes friction with the existing staff. The founders of the organization are forced to play more of the role of immediate managers rather than entrepreneurs, carrying out systematic planning, coordination, management and control.
Early maturity. The hallmarks of this period are expansion, differentiation and possibly diversification. Structural divisions are formed, the results of which are measured by the profit received. Many generally accepted performance evaluation methods are used, job descriptions, delegation of authority, performance standards, expertise, organization of training and development. However, tendencies towards bureaucracy and the struggle for power, localism and the desire to achieve success at any cost are beginning to appear.
The flourishing of strength. Having shareholders on the board, the organization sets the goal of balanced growth at this stage. Structure, coordination, stability and control should be as important as innovation, improvement of all parts of the organization and decentralization. The concept of structural divisions is adopted, the results of activities of which are measured by the profit received. New products, markets and technologies must be managed, and the qualifications of management personnel must be more refined. As the rate of growth accelerates compared to previous stages, an organization often overestimates its successes and capabilities.
Full maturity. Having competent, but not always responsible leadership, the organization acts practically on its own. Quite often an undesirable state of general complacency is established. Despite the fact that income levels are quite acceptable, growth rates are slowing down. An organization may deviate from its original goals under the influence of public opinion. At the same time, the weaknesses are too obvious. These symptoms are often ignored by management.
Aging. This stage would never have occurred if the leadership of the organization was constantly aware of the need for renewal. Competitors invariably compete for an organization's market share. Bureaucratic red tape, not always justified strategy, ineffective motivation system, cumbersome control system, closeness to new ideas - all this, taken together, creates conditions for “clogging the arteries.” As practice shows, it is very difficult to stop and stop doing unproductive work. As a result, the organization gradually begins to disintegrate. It is forced to either accept a rigid system of renewal, or perish as an independent structure, merging with the corporation that acquires it. The organization rolls back, and the struggle for its survival begins again.
Update. The organization is able to rise from the ashes like a Phoenix. It can do new team managers authorized to carry out reorganization and implement the planned internal organizational development.
Numerous studies show that organizations grow confidently throughout their life cycle when they have a sound strategy and use resources effectively; restructure when they no longer meet the chosen goals; die when they are unable to perform their tasks. 1
The stages of an organization's life cycle can be presented in more detail in Table 1.2
The life cycle concept has received much attention in the market research literature. The life cycle is used to explain how an organization goes through the stages of birth or formation, growth, maturity and decline. Organizations have some exceptional characteristics that require some modification of the life cycle concept. One of the options for dividing the life cycle of an organization into appropriate time periods involves the following stages.
1. Entrepreneurship stage. The organization is in its infancy; the product life cycle is being formed. Goals are still unclear, the creative process flows freely, and progress to the next stage requires a stable supply of resources.
2. Collectivity stage. The innovative processes of the previous stage are developed, and the mission of the organization is formed. Communication within the organization and its structure remain essentially informal. Members of the organization spend a lot of time developing mechanical contacts and demonstrate high levels of commitment.
3. Stage of formalization and management. The structure of the organization is stabilized, rules are introduced, and procedures are defined. The emphasis is on innovation efficiency and sustainability. Decision-making and decision-making bodies become the leading components of the organization. The role of the top management of the organization is increasing, the decision-making process is becoming more balanced and conservative. The roles are clarified in such a way that the departure of certain members of the organization does not pose a serious threat to it.
4. Stage of developing the structure. The organization increases product output and expands the service market. Leaders identify new development opportunities. The organizational structure becomes more complex and mature. The decision-making mechanism is decentralized.
5. Decline stage. As a result of competition and a shrinking market, an organization faces a decrease in demand for its products or services. Leaders are looking for ways to hold onto markets and seize new opportunities. The need for workers, especially the most valuable specialties, is increasing. The number of conflicts is often increasing. New people are coming to management to try to stem the downward trend. The mechanism for developing and making decisions is centralized.
The main stages of an organization's life cycle are graphically presented in Fig. 1. In the figure, the part of the curve that has a positive slope reflects the stages of creation, growth and maturity of the organization, the other part with a negative slope reflects the stage of decline of the organization.
Figure 1 - Life cycle of an organization
When creating an organization, when the creative process flows freely, the desire for stable and sustainable development is manifested. In this case, two tasks are solved - providing access to the necessary resources and mastering the mechanism of competition. The key role here is played by analyzing the situation and obtaining objective information. To analyze the situation, the table can be used. 1. Moving on to creating conditions for economic growth, to ensuring high quality of goods and services, the organization must choose a type of management that meets the characteristics and objectives of this stage. This choice is predetermined by the conditions shown in table. 2.
Table 1 - Analysis of the situation at the stage of creating an organization
| Directions and stages | Target | Methods | results |
| 1. Selecting a product or service | Identify a niche in the market | Study sales volume and demand satisfaction (market capacity) | Possible sales volume of the product |
| 2. Assessing the actions of competitors | Identify competitors' capabilities | Study the work of similar enterprises: their technology, organization, product quality, costs, supply, sales | Dominant factor of competition |
| 3.Analysis of business scheme | Determine required resources | Explore the possibilities of creating technology (or purchasing, installing equipment, launching and operating it) | Formation of the entire system of initial conditions and prerequisites |
| 4. Analysis of the general environment | Determine the significance of external factors | Study the state of state-political, economic, technological and other factors | Uncertainty of factor values. |
Stability of factor values.
| table 2 | Characteristic | |
| Control type | Operational | |
| Strategic | Main purpose | Profit maximization |
| Maximizing profits taking into account the interests of society | The main way to achieve the goal | Optimizing the use of internal resources |
| Establishing a dynamic balance with an uncertain and unstable environment | The importance of the time factor | Not the most important factor in competition |
| The most important factor in competition | Short-term performance assessment | Profitability |
| Accuracy of forecasting changes in the internal environment and time to adapt to changes | Attitude towards staff | Employees are the most important resource of an organization |
The main criterion when choosing the type of management should be maintaining a stable balance between consistency and innovation, carrying out effective activities in the present while simultaneously planning for the future.
The maturity of the organization is manifested in the fact that the emphasis is on the efficiency of innovation and stability, product output increases and the service market expands, managers identify new opportunities for organizational development. All this is aimed at ensuring the strategic viability of the organization, maintaining and strengthening a stable position in the market. At the maturity stage, it is especially important to periodically and timely adjust the management structure of the organization, abolish bodies that have completed their task, timely introduce new divisions into the structure, create temporary targeted structural units to solve certain problems, allocate specialists to analyze the state of affairs and develop development prospects and so on.
The life cycle concept points to the most characteristic symptoms of organizational collapse that appear during the decline stage. These include, in particular:
a decrease in demand tightens competition and complicates its forms;
increases competitive strength suppliers;
the role of price and quality in competition is increasing;
the complexity of growth management increases production capacity;
the process of creating product innovations becomes more complicated;
profitability decreases.
- Temporary stages of organization development
The stages of life cycle can be presented in the form of age characteristics. Characteristic properties and parameters of the organization at each time stage of development are presented in table. 3.
Table 3 – Time stages of organization development
| Stages | Birth | Childhood | Boyhood | Early maturity | Heyday | Late maturity | Aging | Update |
| Factors | ||||||||
| Primary Goals | Survival | Short term profit | Accelerated growth | Systematic growth | Balanced growth | Uniqueness | Service | Update |
| Leader type | Innovator | Opportunist (adaptive type) | Consultant | Participant | Cooperative figure | Statesman | Administrator | Reorganizer |
| Organizational character | Struggle | Achievement | Change | Expansion, diversification | System orientation | Maturity | Focus on existing structures | Change orientation |
| Organizational image | With yourself in the spotlight | Local | Sectional | National | Multinational | International | Complacent | Self-critical |
| Energy concentration on | New | Competition | Conquests | Coordination | Integration, management | Device | Continuation of existence | Update, development |
| Central problem | Access to the market | Existence | Market share | Multilateral growth | Centralization, autonomy | Balance of interests | Stability | Rejuvenation |
| Planning type | With foresight | current | Sales, budget | By order, specialization | Difficult, complex | Socio-political | extrapolation | creative |
| Control method | One man | Small group of like-minded people | delegation | decentralized | centralized | Collegial | Based on tradition | Competitive, encouraging |
| Organizational model | Profit maximization | Profit optimization | Planned profit | Good position | Social responsibility | Social Institute | bureaucracy | Imitating the Phoenix |
Childhood. This is a dangerous period because most failures occur during the first years after the organization's inception. From world statistics it is known that a huge number of small-scale organizations fail due to incompetence and inexperience of management. Every second small business fails within two years, four out of five businesses fail within five years of its existence. The goal of this period is to achieve quick success, and its goals are healthy existence and development, and not simple survival. Often all the work is done to the limit of capabilities, so as not to lose the momentum of increasing success. Management is carried out by an active and trained leader and his initial team.
Adolescence. During this transition period, the growth of the organization occurs, as a rule, not systematically, in spurts. The organization is increasingly gaining strength, but coordination is below optimal levels. More organized procedures are gradually replacing the risky passion for success. Planning, development of budgets and forecasts are being established. The hiring of new specialists is expanding, which causes friction with the existing staff. The founders of the organization are forced to play more of the role of immediate managers rather than entrepreneurs, carrying out systematic planning, coordination, management and control.
Early maturity. The hallmarks of this period are expansion, differentiation and possibly diversification. Structural divisions are formed, the results of which are measured by the profit received. Many generally accepted methods of performance assessment, job descriptions, delegation of authority, performance standards, examination, training and development are used. However, tendencies towards bureaucracy and the struggle for power, localism and the desire to achieve success at any cost are beginning to appear.
The flourishing of strength. Having shareholders on the board, the organization sets the goal of balanced growth at this stage. Structure, coordination, stability and control must be as important as innovation, improvement in all parts of the organization and decentralization. The concept of structural divisions is adopted, the performance of which is measured by the profit received. New products, markets and technologies must be managed, and the qualifications of management personnel must be more refined. As the rate of growth accelerates compared to previous stages, an organization often overestimates its successes and capabilities.
Full maturity. Having competent, but not always responsible leadership, the organization acts practically on its own. Quite often an undesirable state of general complacency is established. Despite the fact that income levels are quite acceptable, growth rates are slowing down. An organization may deviate from its original goals under the influence of public opinion. At the same time, the weaknesses are too obvious. These symptoms are often ignored by management.
Aging. This stage would never have occurred if the leadership of the organization was constantly aware of the need for renewal. Competitors invariably compete for an organization's market share. Bureaucratic red tape, not always justified strategy, ineffective motivation system, cumbersome control system, closeness to new ideas - all this, taken together, creates conditions for “clogging the arteries.” As practice shows, it is very difficult to stop and stop doing unproductive work. As a result, the organization gradually begins to disintegrate. It is forced to either accept a rigid system of renewal, or perish as an independent structure, merging with the corporation that acquires it. The organization rolls back, and the struggle for its survival begins again.
Update. The organization is able to rise from the ashes like a Phoenix. This can be done by a new management team empowered to carry out the reorganization and implement a planned program of internal organizational development. Numerous studies show that organizations throughout their life cycle confidently are developing, when they have a sound strategy and use resources effectively; are being rebuilt, when they cease to meet the chosen goals; die when they find themselves unable to perform their tasks.
- Actions of a manager at the stages of development of an organization
On creation stage The head of the organization must:
ü carefully study consumer demand for this product or services in specific markets;
ü collect and evaluate information about the activities and intentions of competitors, compare it with the capabilities, available resources and strategy of the company;
ü weigh the need and feasibility of increasing the company’s potential and making appropriate adjustments to its strategy;
ü take the necessary measures to attract additional resources from internal and external sources;
ü rationally organize the management process, including the placement of personnel, the creation of a system of responsibility, reliable mechanism decision making, a system of motivations and incentives.
On growth stages organization to the forefront in the activities of the leader
speakers:
ü solution social problems team, allowing to consolidate and develop the interest of employees;
ü ensuring a balance between current and innovative future activities, between improving the quality of products and services and searching for new areas of investment of capital;
ü optimization of the relationship between centralization and decentralization in company management, introduction of progressive management structures, information technologies, etc.
On maturity stages The head of the organization must:
ü systematically and as a matter of priority monitor the behavior of competitors and necessary cases make changes to the organization’s long-term plans;
ü analyze the need and possibilities for technical re-equipment of production, increasing the level of technological and design preparation of production;
ü together with consumers, determine the production, scientific and technical policy of the organization;
ü create the necessary conditions for maintaining and strengthening the intellectual potential of the organization, efficient work target commands, use
ü matrix structures, etc.
On stages of decline organization there is a certain centralization of company management and in these conditions the manager:
ü considers the possibilities of saving all types of resources and concentrating the company’s activities in the direction that promises the greatest return on investment as soon as possible;
ü is exploring the possibility of merging with other companies, narrowing the range of products, if this will allow maintaining and effectively using the existing potential with minimal losses;
ü begins to implement changes in the organization and methods of enterprise management, in establishing connections with new markets and suppliers.
- Product life cycle. Concept of two S-curves
The life cycle of an organization is directly and closely related to product life cycle - time interval, including the time of creation, duration of production and time of use of the product by the consumer. This concept is used to plan marketing and supply and sales activities, organize after-sales service of products, select adequate forms of management and create the necessary structural links.
It is necessary to distinguish:
1. full product life cycle;
2. product life cycle in the production sector;
3. life cycle of products in the sphere of consumption.
Product life cycle stages:
1 – R&D (birth);
2 – development of production (growth);
3 – mass production (maturity);
4 – market saturation;
5 – curtailment of production (decline).
The life cycle curve of a product in marketing is called an S-shaped curve (Fig. 2), it shows the principle of operation of any technology or any product life cycle.
The S-shaped curve, which we will call the S-curve for brevity, is a graph of a function whose abscissa is the “cost” of technology development, and the ordinate is the “result.” It reflects the development process of any technology, including organizational technology, and has the shape of a stylized letter S.
The S-curve has three characteristic sections: a section of technology learning, a section of increased technology returns and a section of its saturation.
"Training" area
In this area of a newly born technological idea, the experience of those researchers who implement the idea is accumulated. They are the ones who “learn.” The initial learning process is a process of periodic encounters with the next technological difficulties, overcoming which will allow the technological concept to be realized in all its glory. Researchers during this period are like hedgehogs in the fog, who, moving through a forest of problems, “bump into” another tree. At the beginning of the birth of an idea, there are many such trees (and they are thicker), but as you move towards the edge of the forest, there are fewer problems and trees, and they themselves are weaker, so it is important that the direction of exiting the forest (the concept) is initially chosen correctly. During the technology learning period, the S-curve is flat - the resources invested in product development do not yet provide a good return. New ideas often resemble newly born racehorse foals. They are terribly clumsy, but they contain great opportunities that require a lot of money to identify.
The history of technology and business is replete with examples that confirm what has been said; first, a technological concept (idea) is born, and then the technology is debugged (finished), the manufacturers themselves get used to it (trained), and only after that the technology moves into a period of increased returns.
