Life Cycle Models

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1. What are some things about organizations that a life cycle model is particularly helpful in explaining?

The organizational life cycle (OLC) is a model that proposes that over the course of time, business firms move through a fairly predictable sequence of developmental stages. Specifically, it is based on a biological metaphor -" the organization as an organism".

This is a helpful in explaining how organizations work. The model suggests that business firms resemble living organisms because they also demonstrate a regular pattern of developmental process. The that organizations that are said to pass through a recognizable life cycle, wrote Gibson, Ivancevich, and Donnelly in Organizations: Behavior, Structure, Processes, are fundamentally impacted by external environmental circumstances as well as internal factors:

"We're all aware of the rise and fall of organizations and entire industries.... Marketing experts acknowledge the existence of product-market life cycles. It seems reasonable to conclude that organizations also have life cycles." (1)

Focusing on external factors, as well as internal factors (machine model) also gives the model utility. It is important for managers to identify external and internal opportunities for growth as well as potential threats to the business. In other words, a life cycle model helps a manager identify which stage the organization is in and especially helps a manager to understand the kinds of things to expect at different stages. It also helps leaders who wish to grow their organizations to link the stage of the organizational life cycle, with the external and internal growth factors for growth and opportunity (2) This helps in the decision-making process. (see the extra reading section below for a discussion about the specific stages)

The stages help to explain that if something is not done differently, the business will probably go in decline and possibly death. This need not be, however, but complacency is one of the leading problems in organizations that slip into decline, and possibly death. If the manager understands the life cycle model and the kinds of things (which the model does not fully explain) that tell her or him that the organization is in that stage, the manager can do things to prevent it from slipping into decline and death. For example, if/when the managers see certain things beginning to happen in the organization that suggest the organization is slipping into decline, she or he can take immediate action to prevent the further decline, and possibly the death of the organization. It prevents complacency, where other managers might ignore these warning signs e.g. expecting things to be better next year, but changing nothing to make it happen.

That is, following a life cycle model can also help leaders/managers be more aware when the organization might be slipping into decline as certain events begin to happen. The managers need to identify the early signs of the decline stage, prompting attention (the model does not do a very good job explaining what exactly that a manager should do, however, to prevent going into decline and to avoid the death of the organization). Saying that, early warning signs for a manager to watch out for to avoid slipping too far into the decline stage include such things as:

· The inability to pay,
· Betrayal between employees and management,
· Increasing of aging of accounts payable or accounts receivable,
· Crumbling morale,
· Increasing absenteeism,
· Increasing turnover of the most productive workers,
· Deteriorating financial ratios,
· Substituting long-term planning with short term crisis management,
· Stagnating or declining sales,
· Political decision-making,
· Blaming others and complaining,
· Rampart turf protection and catering to special interest groups,
· Inadequate or nonexistent training,
· Resource scarcity leading to infighting and disruptive competition, and
· Innovation becomes risk version (3)

It is highly recommended that if a manager can say positive to any 5 of these early symptoms associated with slipping into a decline, a manager should seriously think about taking action or death of the organization is more than likely inevitable.

In other words, the life cycle model helps an organization and managers ...