Where is your business on
the Organisation LifeCycle?
Courtship
State: The pre-existence, planning/dreaming stage of 'wonderful' ideas.
Also the building of the commitment of the Founder to their own ideas. Usually Courtship
is based upon the dream of one man or woman - but sometimes there is a shared dream
of two friends, usually technically-oriented but sometimes a pair of entrepreneurs
and occasionally a technician paired with an entrepreneur. Very occasionally there
may be a group of friends - often refugees together fleeing a larger organization
- who decide to go into business together. During Courtship all kinds of promises
are made to all kinds of people - from finance houses to long-suffering spouses!
- to get the commitment from others the Founder needs to bring the dream to fruition.
The making of these promises is also a part of the Founder building their own personal
commitment to the dream.
Danger point: If the Founder should become attracted to another
idea, then this is described as an 'Affair'. The use of romantic/sexual imagery in
this model is deliberate. Just as few people can sustain passionate romantic affairs
with more than one partner for any great length of time, there aren't many Founders
who can pursue two dreams simultaneously and make them both work. Usually one of
the two dreams must die. Sometimes, unfortunately, both die.
Needs: Reality checks
- will it work? How will it be made to work? Who will take responsibility for what?
What resources are needed and how will they be obtained? Detailed planning is critical
to increase the chances of success - though it often doesn't happen! And then the
Founder has to actually take the plunge and start the business….
Infancy
State: The
business is born! Suppliers are engaged - often those the Founder has previous experience
of and thinks reliable; and consequently the Founder often expects favourable treatment
from. People may be employed - usually friends or relatives, often taken on because
the Founder feels they can be trusted, rather than for their competence at the tasks
needed. The Founder will usually make all decisions, from the strategic to the trivial.
There will be few, if any, systems and probably little that would be recognised in
most management text books as 'best practice'. The Founder will work long hours -
often to the detriment of personal relationships - and all too often expects any
employees to show similar dedication. Where there are joint Founders, one will usually
become the dominant driving force and personal friendships may sour badly - especially
if the business' survival is seriously in doubt and personal guarantees have been
given to finance houses.
Danger point 1: It is not uncommon, especially where the
Founder comes from a technical background, for the embryonic organisation to be obsessed
with product/service standards finalisation while the sales ledger remains disconcertingly
empty.
Danger point 2: Unless the business is more than adequately funded, too long a gap
between the birth of the business and the development of a viable income, the embryonic
organisation can literally starve to death for want of cash (working capital). This
is known as 'Infant Mortality'.
Needs: Customers!! Sales - production - cash. Money is 'mother's milk'. The business
must do whatever it takes to get sales, carry out the orders and collect in money.
Go-Go
State: The business is a success, with mushrooming sales and an expanding customer
base. More employees are taken on - though often still by personal reference rather
than for skills and competences - and there is a growing necessity for specialisation.
Departments - sales, design, production, delivery, accounts, etc - will usually develop
during this phase - and the Founder will usually attempt to manage them all. Often
through sheer force of personality! Where the Founder does delegate some management
duties, it will usually be to relatives or friends they are confident they can trust
on a personal level - rather than people who are managerially competent.In spite
of these demands and pressures, the Founder, flushed with success, may be tempted
into diversification rather than the consolidation the organisation desperately needs.
Either as a response to pressure or sheerly by the whim of the Founder, various systems
will be tried - accounting, quality, IT, etc. How successful their implementation
is will usually depend on the commitment of the Founder - who frequently is the greatest
contravener of systems! Turnover will be high but it is unlikely the Founder will
be closely monitoring profit levels - even if such monitoring is acknowledged to
be important - as the systems to do that probably won't be in place.
Dangerpoint: By late Go-Go, as the business grows and grows, most Founders find they
(and their incompetent relatives and friends) simply cannot control everything and
everyone any more. Mistakes get made, wastage increases and customers are let down.
If this state of affairs is not rectified - the 'Founder/Family Trap' - the business
will descend into 'Pathological Go-Go' where reputation is lost, customers go elsewhere,
cashflow melts away and redundancies become inevitable. If the organisation has good/competitive
products/services, the Founder may be able to sell out to a larger organisation (probably
in the Aristocracy stage). Of course, the more pathological Go-Go has become, the
less value the Founder is likely to realise from the business. Many Founders recognise
intellectually that a major change in the way the organisation is managed is necessary
but find it very difficult emotionally to let others control their 'baby'. Some bite
the bullet and attempt to introduce 'professional management' into the business.
Some sell up and often end up starting all over again. Where there are joint Founders,
one may buy out the other and attempt to go into Adolescence. If possible, joint
Founders may even split the organisation into two smaller businesses which they can
carry on running pretty much in the 'old style' where they can still control everyone
and everything.
Needs: Structure, systems and professionals to get in control of the business. The
Founder able to sacrifice personal ego for the good of the organisation.
Adolescence
State: This stage sees the development of structure and the bringing-in
of systems and 'professional management' to avoid Pathological Go-Go. People are
recruited and promoted on competence and merit; and everyone becomes accountable
in terms of the systems introduced. As the organisation becomes 'adolescent', strategic
decision-making will be by a board of directors using systematic planning tools.
The systemisation of the organisation will inevitably be costly and is likely to
have some knock-on effect on productivity. Thus, it requires careful planning and
tight control, with compensatory actions to ensure customers aren't lost. Late Adolescence,
particularly with a multi-site organisation, may see some reaction from managers
against the centralising tendency produced by the systemisation, with calls for greater
local autonomy in decision-making.
Danger point 1: Early Adolescence is often a time of great turbulence, with the Founder
and their 'old guard' of personal cronies resentful of the professional 'young Turks'
changing their organisation around them. All too often the Founder will need to leave
- 'Divorce' -if the organisation is to get through Adolescence and their former cronies
either conform to the new ways of doing things or follow them. Founders who stay
usually end up taking a Chairman-of-the-Board type of role.
Danger point 2: It is natural for an organisation to have more of an inwards focus
during Adolescence; but it is critical the organisation retains a customer-orientation,
especially during late Adolescence - otherwise the systemisation of the organisation
will become an end in itself and is likely to cause the business to miss Prime and
go straight onto the ageing side of the LifeCycle. The systemisation of the organisation
will inevitably be costly and is likely to have some knock-on effect on productivity.
Thus, it requires careful planning and tight control, with compensatory actions to
ensure customers aren't lost. Late Adolescence, particularly with a multi-site organisation,
may see some reaction from managers against the centralising tendency produced by
the systemisation, with calls for greater local autonomy in decision-making.
Needs: Commercial, outward-focus driving internal changes - to avoid short-circuiting
into Aristocracy/Bureaucracy. Enough flexibility to allow an appropriate degree of
local decision-making.
PRIME
State: This is a near-mythical state where everything
is balanced and the organisation achieves both turnover and profit. Prime is often
characterised by considerable autonomy in decision-making - particularly in multi-site
operations - though within a largely-shared corporate vision. This enables faster
responsiveness to changes in customer requirements, with feedback systems informing
decision-making at the strategic level. Bonuses are frequently used to motivate while
cost/profit centre management is used to provide financial controls. Employees usually
feel highly valued in an organisation in Prime because it is recognised that they
are key to customer satisfaction. Organisations which pull themselves back to Prime
from the ageing side of the LifeCycle are often characterised by a greater understanding
of the value of teamwork and flexibility.
Dangerpoint: Inevitably, though, the systemisation which was implemented during Adolescence
requires conformity and that creates a natural drag to the ageing side of the LifeCycle.
The drag towards ageing is accelerated if top management in a largely-decentralised
organisation start to feel they need to get more in control of the business.
Needs:
Constant vigilance against ageing at all levels is required to keep the organisation
in Prime.
Stability
State: To the uninformed eye, the organisation might appear very much still
to be in Prime; but, in fact, it is starting to lose its impetus. There is a decreasing
focus on customers, innovation and new sales. Instead there is an increasing focus
on management control, profit and returns on investment. Shareholders are starting
to become more important than either customers or employees. More staff will be hired
to carry out auditing and control-type functions and systems of line management are
strengthened and made more formal. In multi-site operations, usually there will be
a centralising tendency. In spite of the ageing process having begun, there may still
be real growth as the enhanced controls push any flabbiness out of the organisation.
Dangerpoint: Things seem so good it is easy to ignore the first signs of ageing.
Needs:
To return to Prime.
Aristocracy
State: Having failed to recognise that it is starting
to age, the organisation flaunts its success while continuing to increase its controls.
Large payments to shareholders and large bonuses to directors (while offering only
minimal wage increases to employees), an ostentatious new headquarters building and
expensive cars for the directors are typical of organisations in Aristocracy. However,
since the focus has gone off developing new products/services and attracting and
retaining new customers, the only real growth is likely to come from acquisitions.
The vitality of businesses in Late Go-Go can make them seem very attractive purchases
- and are another way for the Aristocratic organisation to demonstrate its wealth.
However, the culture of the acquisition will be very different and much of the Aristocratic
organisation's energy and resources will go into trying to get such acquisitions
under control. In expanding markets, Aritocratic organisations can flourish for years
if there isn't any radical competition - and, as soon as they appear, they are undermined
(eg: price cuts the 'little guy' can't sustain) or are bought up.
Dangerpoint 1: Blindness to the ageing process and the way it is rotting away the
foundations of the business.
Dangerpoint 2: Acquisitions can provide new routes for growth. However, that growth
may mask the mother organisation's very real problems. Also the cultural conflicts
of trying to absorb a very different (young) organisation within the framework of
the (ageing) mothership can cause real internal conflicts and lasting bitternesses
that hinder the collaboration needed to make the acquisition work.
Needs: The organisation
needs to minimise the temptations of acquisition, cut back on perks/benefits and
institute performance targets and target-linked rewards for top management.
Bureaucracy
State: The systems and procedures have taken over - form is more important
than function. People will be rewarded and punished for how they do things, rather
than what they do. Usually the emphasis is on punishing and correcting those who
do not conform. Tight budgetary and quality/waste controls tipify the management
strategies of an organisation at this stage as every penny of profit is squeezed
out to maximise shareholder return. Although the organisation is likely to have various
quality and training awards and will usually audit its standards rigorously, the
focus is very much on the internal, with customers getting little consideration.
Thus, paradoxically, customer dissatisfaction will usually increase significantly
during this phase.However, customer complaints will only be processed if the customer
fills out the correct form in the correct way!
Dangerpoint 1: If the visionaries, innovators, marketeers,salespeople, etc, all drift
away from sheer frustration - as they usually do in Early Bureaucracy - then the
organisation will lack insight into its own decline. The accountants, auditors and
bureaucrats will simply tighten everything to increase percentage profit even as
turnover declines.
Dangerpoint 2: If the organisation has a monopoly or is supported by public funds,
it may survive in Bureaucracy for many years without anyone perceiving just how bad
things are. However, once those conditions change - the public money stops or the
monopoly is successfully challenged - the organisation is terribly vulnerable.
Needs:
To regain its customer focus.
Recriminations
State: Its reputation in ruins as customers
desert in droves to younger sales-hungry businesses, turnover and share values plummet.
Redundancies and downsizing prevail as the organisation desperately tries to cut
costs. The concept of customer service slips away almost entirely and even quality
and training & development awards may be jettisoned as the accountants look for every
last possible cost saving.
Dangerpoint: All too often the myopia which has blinded senior management to the
effects of their Aristocratic and Bureacratic policies leads to witch-hunts to find
and punish those for responsible for the increasingly-obvious mess. Thus, a culture
of blame and back-stabbing develops as people try to deflect the 'heat' away from
themselves. This will tend to undermine any rescue efforts, whether from within or
without.
Needs: Radical new management - with a customer/sales/innovation focus. Real
ruthlessness will be required in jettisoning opponents to drastic change. Often it
is impossible to save a business in toto at this stage without very large injections
of cash. Sale or break-up may be the only options as the business advances through
Recriminations.
DEATH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
So where is your business on the Organisation LifeCycle? If you're really not sure,
click here to take a basic test to help you think it through.
