Organizations are like living beings that are born, mature, develop, go through ups and downs and finally… die. Changes follow predictable patterns, and the organization's development phases form a sequence of successive stages. However, the pace of change is influenced by many factors, and the end of any activity may occur at any stage of development.
The division of the life cycle into individual stages of the organization's development, as well as their number, name and sequence, are in fact of a contractual nature. Organizations can be reborn many times, and a decline does not necessarily mean the fall of the enterprise. Identification of the current moment in the life cycle can provide the organization with answers to many questions related to the direction of the company's development and the dangers that may be lurking around the corner.
Each organization has its own specific development cycle. The analysis of the organization's life cycle allows, among others predict changes that may occur inside the company in the near future, suggest actions to be taken as part of the sales and marketing strategy, as well as define the style of capital and human resources management. The organization never stands still, so it is worth analyzing each step and adapting to the changes that occur in order to survive on the market as long as possible.
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The rise, that is, the phase of the birth of the organization
The life cycle, the phases of an organization's development, are most often associated with the product life cycle. The first phase is typically conceptual - a more or less innovative idea appears in the owners' minds to meet a specific market need. The stage of designing the dream product or service follows in order to introduce it to the market as soon as possible. The owners mobilize all available material, intellectual and human resources to create a new organization.
The management focuses all energy on production and marketing. The organization is still informal, so there is a risk of a typical leadership crisis. Establishing a company is most often accompanied by unprecedented enthusiasm and a sense of freedom and omnipotence. Everything seems possible. The first steps, often ending in stumbles, do not seem painful, and the undying enthusiasm does not cease to motivate to further work. In addition, the belief in success prompts owners to take more risks.
The birth of any organization is associated with the need to satisfy the specific interests of consumers by finding your own target audience and its place on the market. The organization has one most important goal: survive! The leader gathers a group of other people around himself and his vision, which becomes the foundation of the organization. This in turn - as possible - begins to take the shape of a much more complex institution.
Organization development phases - a brilliant idea is not enough
A brilliant idea is not enough to survive on the market. Success is influenced by a number of different, more or less predictable factors. The development of the company is possible mainly due to the creativity and commitment of the people who make up a given organization. The initial lack of hierarchy begins to give way to a more formalized structure of activity. The first regulations, procedures and specific guidelines for action are beginning to appear - in the sphere of communication strategy, public relations etc. More and more tasks are delegated to employees at lower levels of the structure. There is a need to monitor the progress of work and the flow of internal information as well as self-sufficiency.
There is a dynamic growth in the development phase of the organization. It occurs as a result of a sudden increase in demand for the offered products or services, or due to the expansion of their potential. The dynamic growth of sales is also influenced by the professionalization and specialization of human resources, which occurs naturally with the increase in experience.
However, nothing lasts forever. Over time, as a result of many different internal and external factors, there must be a phase of stabilization and then decline and degradation. The organization loses its innovative impetus and begins to observe some kind of balance, stagnation. This is a sign that something needs to be changed quickly. The lack of new ideas and the stagnation of structures herald the end. The task of the entrepreneur is to extend the phase of dynamic development as much as possible or find an idea for the revitalization of the current business.
Factors influencing the development phases of the organization
From the moment of being established, an organization must constantly adapt to changing internal and external conditions. It is exposed to sudden fall risks throughout its life cycle and operates under conditions of high uncertainty. Short life cycles of an organization predominate in industries in which many small entities compete with each other, do not have distinct brands and use similar technology.
The dynamics of development is stimulated by a number of different factors. They are, among others:
- industry and its development potential,
- market entry costs,
- technological development,
- management method,
- environment and competition,
- relationships with customers and suppliers,
- marketing strategy and sales,
- the size of the market share.
Organizations emerge, develop their potential, achieve success, weaken and eventually cease to exist. This is the natural course of things, so it is worth preparing sufficiently for the next phases of development to come. Some companies have been in the market for decades. Others disappear shortly after registering a business. Still others are reborn in completely new structures, based on a new, innovative idea. The most important thing is to understand that volatility is inherent in any business, and the role of an entrepreneur is to use the company's potential as efficiently as possible at every stage of its development. And you, how well are you doing it? Contact us - we will help you fully use the potential of your company!