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Mgmt 610: Organizational Theory
Module 5: Organizational Life Cycles—their Influence
Life Cycle
• The concept and practice of associating stages of organizational structure/activity with stages of human life and development in order to better grasp needed strategy and management.
Life Cycles –Not All Organizations Look the Same
0
50
100
W.L. Gore&
Associates
Wal-Mart State ArtsAgency
Formalization
Specialization
Centralization
Configuration(%nonworkflowpersonnel)
TECHNOLOGY Manufacturing Retailing Government Service
SIZE (#employees) 6,000 250,000 35
Organization Characteristics During Four Stages of Life Cycle1.
Entrepreneurial2.
Collectivity3.
Formalization4.
Elaboration
Characteristic
Nonbureaucratic Prebureaucratic Bureaucratic Very Bureaucratic
Structure
Informal, one-person show
Mostly informal, some procedures
Formal procedures, division of labor, specialties added
Teamwork within bureaucracy, small-company thinking
Products or services
Single product or service
Major product or service with variations
Line of products or services
Multiple product or services lines
Reward and control systems
Personal, paternalistic
Personal, contribution to success
Impersonal, formalized systems
Extensive, tailored to product and department
Innovation
By owner-manager By employees and managers
By separate innovation group
By institutionalizedR&D
Goal
Survival Growth Internal stability, market expansion
Reputation, complete organization
Top Management Style
Individualistic, entrepreneurial
Charismatic, direction-giving
Delegation with control
Team approach, attack bureaucracy
Sources: Adapted from Larry E. Greiner, “Evolution and Revolution as Organizations Grow,” Harvard Business Review 50 (July-August 1972): 37-46; G. L. Lippitt and W. H. Schmidt, “Crises in a Developing Organization,” Harvard Business Review 45 (November-December 1967): 102-12; B. R. Scott, “The Industrial State: Old Myths and New Realities,” Harvard BusinessReview 51 (March-April 1973): 133-48; Robert E. Quinn and Kim Cameron; “OrganizationalLife Cycles and Shifting Criteria of Effectiveness,” Management Science 29 (1983): 33-51.
Organizational Life Cycle
ORGANIZATION STAGES OF DEVELOPMENT
1.Entrepreneurial
Stage
2.Collectivity
Stage
3.Formalization
Stage
4.Elaboration
Stage
Crisis:Need to dealwith too much
red tapeCrisis:Need for
delegationwith control
Crisis:Need for
leadership
Creativity
Provision of clear direction
Addition of internal systems
Development of teamwork
Crisis:Need for
revitalization
Decline
Continuedmaturity
Streamlining,small-company
thinking
SIZE
Large
Small
Sources: Adapted from Robert E. Quinn and Kim Cameron, “OrganizationalLife Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1983): 33-51; and Larry E. Greiner,“Evolution and Revolution as Organizations Grow,” Harvard BusinessReview 50 (July-August 1972): 37-46.
Organizational Life Cycle Deficiency – Need to Move Forward
• Decision making is delayed or lacking in quality
• The organization does not respond innovatively to a changing environment
• Too much conflict is evident
Differences Between Older/Larger and Younger/ Smaller Organizations
• LARGER-> Multi-National– Economies of scale– Global reach– Vertical hierarchy– Mechanistic– Complex– Stable market
• SMALLER- Niche– Responsive– Flexible– Regional reach– Flat structure– Organic– Simple– Niche finding– Entrepreneurs
Source: Based on John A. Byrne,“Is Your Company Too Big?”Business Week, 27 March 1989, 84-94.
Three Management Strategies
TYPE
Bureaucratic--older
Market—mid-life/larger
Start Up
Management Controls
Rules, standards, hierarchy, legitimate authority
Prices, competition, exchange relationship
Shared values and beliefs, trustSource: Based upon William G. Ouchi, “A Conceptual Frameworkfor the Design of Organizational Control Mechanisms,” ManagementScience 25 (1979): 833-48.