Organizational Life Cycle

What is organizational life cycle?

 A sequence of stages of growth and
development through which organizations
may pass
 Four principal stages:
 Organizational birth
 Organizational growth
 Organizational decline
 Organizational death

10/27/2016 Indian Institute of Management, 2

Kozhikode
Organizational Life Cycle

10/27/2016 Indian Institute of Management, 3

Kozhikode
Five Phases of Organizational Growth
(Greiner’s Model)

Organizational Life Cycle 4

Five Phases of Organizational Growth (Greiner’s Model)
 Five key dimensions:
 Age of the organization
 Size of the organization
 Stages of evolution
 Stages of revolution
 Growth rate of the industry
 Stages of evolution (Incremental change / Convergence):
 Quiet periods of prolonged growth when only modest
adjustments appear to be necessary for maintaining growth
 Stages of revolution (Discontinuous change / Upheaval):
 Turbulent times typically exhibiting serious upheaval of
management practices

10/27/2016 Indian Institute of Management, 5

Kozhikode
Five Phases of Organizational Growth (Greiner’s Model)
Phase 1 Phase 2 Phase 3 Phase 4 (Co- Phase 5
(Creativity) (Direction) (Delegation) ordination) (Collaborati
on)

Management Make & sell Efficiency of Expansion of Consolidation Problem

Focus operations market of org solving &
innovation
Org Informal Centralized & Decentralized Line, staff & Matrix of
Structure functional & geographical product teams
groups
Top-Mgt Individualistic Directive Delegative Watchdog Participative
Style &
entrepreneuri
al
Control Market results Standards & Reports & Plans & Mutual goal
System cost centers profit centers investment setting
centers
Mgt Reward Ownership Salary & Individual Profit sharing Team bonus
Emphasis merit bonus & stock
increases options
Crisis of Leadership Autonomy Control Red Tape ???

10/27/2016 Indian Institute of Management, 6

Kozhikode
How companies grow? (Greiner’s Model)

Organizational Life Cycle 7

Stages of Decline and the Widening Performance
Gap (Weitzel & Jonsson’s Model)

Organizational Life Cycle 8

Stages of Decline (Weitzel & Jonsson’s Model)
 Stage 1: Blinded
 Organizations are unable to recognize internal / external
problems that threaten their long-term survival
 Stage 2: Inaction
 Denial despite of clear signs of deteriorating performance
 Stage 3: Faulty Action
 Taking wrong decisions which do more harm than
improvement
 Stage 4: Crisis
 Now only radical changes in strategy and structure can stop
the decline
 Stage 5: Dissolution
 Decline is irreversible and inevitable

Organizational Life Cycle 9