Where is your business on
the Organisation LifeCycle?
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….
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.
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.
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.
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.
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.
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.
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.
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.
Adizes via Greiner
The LifeCycle depicted on the previous page is derived from the Corporate LifeCycles model developed by Dr Ichak Adizes from over 40 years research as a practical ‘hands-on’ management consultant. (Adizes’ blue chip’ clients have included the likes of Domino’s Pizzas; and he is often cited as being the man behind the ‘Mexican Miracle’ of the 1990s – ie: sustainable economic growth.) Adizes’ model provides the most complete ‘map’ of how organisations grow, sometimes lose their way and fold, restructure, peak and then all too often go into decline.
However, the LifeCycle depicted, especially with regard to the growing and peak stages, also reflects the work of Adizes’ forebear, Dr Larry E Greiner – the pioneering nature of whose work Adizes only too readily recognizes. (Greiner has been closely associated with the Harvard Business School for more years than probably either chooses to remember willingly!)
Adizes’ model also considers how 4 key structural roles influence an organisation’s development:-
- Production – short-term effectiveness (what do we need to do now?)
- Administration – short-term efficiency (how do we do it now?)
- Entrepreneurship – long-term effectiveness (what could/should we be doing?)
- Integration – long-term-efficiency (how should we be doing things for sustainability?)
– and the natural tensions between the 4 roles!
The graphic below depicts the typical ebb, flow and influence of the the 4 roles over the LifeCycle…
Capital letters – eg ‘P’ (Production) in Infancy – indicate the capitalised role could normally be expected to be dominant at that given stage while roles shown in lower case play a lesser part. In advanced stages of ageing, some roles are effectively missing.
From his earliest findings that Entrepreneurship was the dominant role in the Courtship stage, Adizes has come to the view that Founders who also take an Integration perpective have much more idea of how their business is likely to develop and are able to plan and use the other roles to accelerate and control growth as appropriate.
By considering how the vMEMES (of Spiral Dynamics) are functioning in an organisation, the ‘health’ of the thinking underpinning the 4 roles can be investigated and the management of their inter-relationships improved. From a 4Q/8L view of an organisation, we are matching the thinking in the Left Quadrants to the structure roles of the institution in the Lower Right. This facet makes the LifeCycle the premier tool for applying an integrated approach to organisational development.
Click here to take a basic test to get you thinking about which roles are most important in your organisation at this time.
Further information on the considering the inter-relationships between vMEMES and the 4 Roles can be found in the Article, ‘The SME Spiral’.
The Value of the LifeCycle Approach
By using the Organisation LifeCycle in an integrated approach – taking into account other factors such as motivation (vMEMES), dynamics across the neurological levels and the temperamental dimensions of key players – we can map where an organisation is, what its problems are, where it needs to go (including the option of staying pretty much where it is) and what it needs to do, relative to both what is happening to it internally and what is happening externally (the markets), With this breadth and depth of information, it is then possible to avoid the one-size-fits-all solutions offered by most consultants and business support agencies and develop strategies which really do make a difference.
Not every organisation goes through the LifeCycle in the same way and Adizes has acknowledged many variations – some of them critical – and laid different emphases at times in his writings to make different points. Greiner has made much of the kind of industry an organisation is in and the opportunities for and constrictions on growth intrinsic in the very nature of the industry. Nonetheless, the LifeCycle provides a comprehensive and cohesive schematic with which to map structure, roles and natural tensions in any organisation.
A case study of applying the LifeCycle and Spiral Dynamics in a commercial company can be viewed here.
Whilst the Organisation LifeCycle is most commonly used to map commercial organisations, it can be used to great effect in both the public and voluntary sectors. A case study of a local government department using the LifeCycle and Spiral Dynamics to effect a partial redesign is available here.
Adizes himself has even used the broad concepts of the LifeCycle in personal relationship counselling!