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Monday 30 December 2013

Corporate Life Cycle



It is a fundamental truth that every organization like a living organism has a natural life cycle and that it goes through predictable and repetitive patterns of behavior as it grows and develops. At each new stage of development the organization faces a unique set of challenges. How well or poorly management addresses these challenges and lead a healthy transition from one stage to the next has a significant impact on the success or failure of that organization.


 
               
Courtship

At this stage, the company is not yet born. It exists as a gleam in the founder’s eye. The focus is necessarily on dreams and possibilities. The primary goal of this stage is to build the founder’s enthusiasm and commitment to his dream. The higher the risk the deeper the commitment needed.

A pre establishment phase when ideas and possibilities are discussed to start the venture.

Infancy

Infant organizations are necessarily action oriented and opportunity driven. The focus instantly chargers from ideas to actions. The time for talking is over. It is time to get to work and produce results (sales and cash).

Action time when venture is started. A few policy system, procedures or budgets. When companies start business and cross pre establish phase.

Go and Go

A go and Go organization is a company that has a successful product or services, rapidly growing sales and strong cash flow. The company is not only surviving its flourishing. Key customers are raving about the product and ordering more. Even the investors are staring to get excited. With this success everyone quickly forgets about the trials and tribulation of infancy.

The company is not surviving its growing.

Adolescence

During the adolescent stage of the organizational life cycle, the company is reborn. This critical transition is much like the rebirth a teenager goes through to establish independence from their parents. The phase demand delegation of authority professionalism and setting of new goals. In Adolescence companies like merger, and Acquisition.

Prime

Prime is the optimal on the lifecycle where the organization finally achieves a balance between control and flexibility. Prime is actually not a single point on the lifecycle curve. Instead it is best represented by a segment of the curve that includes both growing and aging conditions.

Stable

The company is still strong but it starts to loss flexibility. Companies that are in stable phase have started to lose their vitality and are aging. Stable companies are often cash rich and having strong financial statements.

In this phase, companies try to safe their market share rather than try to increase their market share.

Aristocracy

Money is spent on control system. Emphasis on how things are done rather than why it is done. In this stage company focus become increasingly short term. For the most part its goals are financially oriented and low risk. With less of a long term view, the climate in an Aristocratic organization is relatively stable.

Early Bureaucracy

Companies in this stage focused on who caused the problems, rather than on what to do about them. In this stage the head offices distribute powers to subsidiaries




Bureaucracy

Although it should be dead the company in Bureaucracy is kept alive by artificial life support. The company was born in Infancy, it was born in Adolescence and its third birth is in Bureaucracy when it gets an artificial continuation on its life. In Bureaucratic model companies highly emphasize on distribution of power to their subsidiaries and subsidiaries further distribute power to the departments.

Death

Death occurs when no one remains committed to sustaining the organization. Monopolies and government agencies that are quarantined from competitive pressure. Bureaucratic organizations may survive for years ineffectively and inefficiently. Death occur when companies start to lose their market share.


Reference
Adapted from The Pursuit of Prime, by Ichak Adizes. Copyright ©1996 by Ichak Adizes. Published by arrangement with Knowledge Exchange LLC ,U.S.A. All rights reserved.

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