B'A Business Studies

1
B.A Business Studies

• Management of Change
• Lecture 6
• Managing Organisational Transitions

2
In this session we will

• Consider the changes in the history of
  organisations
• Discuss issues relating to organisational growth
  decline
• Become familiar with various life cycle models
• Consider the limitations of life cycle theory
• Participate in a seminar in which one such model
  is applied to an organisation of your choice

3
Managing Organisational Evolution

• Evolution of Organisation relates to two opposing
  scenarios
• Organisational Growth
• Organisational decline
• Until recently, growth has been regarded as the
  natural order, because
• success stories
• bigger is better (economics of scale)
• survival
• growth effectiveness
• growth power

4
Managing Organisational Evolution

• Model of Organisational Growth (based upon the
  idea that organisations experience periods of
• prolonged calm growth, followed by
• periods of internal turmoil
• Thus each stage of evolution creates its own
  crisis when this is resolved another period of
  evolution is initiated

5
The Product Life Cycle
New products needed to sustain growth
Sales
Decline
Maturity
Growth
Intro
Time
6
Lifecycle DiagramsGreiners Evolution
Revolution as Organisations Grow 1972
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
5. Crisis of ?
Large
4. Crisis of RED TAPE
5. Growth through COLLABORATION
3. Crisis of CONTROL
4. Growth through COORDINATION
Size of organisation
2. Crisis of AUTONOMY
3. Growth through DELEGATION
1. Crisis of LEADERSHIP
2. Growth through DIRECTION
Small
1. Growth through CREATIVITY
Old
Young
Age of organisation
7
Characteristics of Greiners phases of growth
(Clarke 1994)
8
Characteristics of Greiners phases of growth
(Clarke 1994)
9
Organisational Evolution

• Thus consider Quinn Camerons model (which has
  4 stages)
• Entrepreneurial
• Collectivity
• Formalisation
• Elaboration
• Organisational Decline
• Such models are growth models and do not consider
  the prospect of decline

10
Quinn Cameron Organisational Life Cycle
Competing Values of Effectiveness

• Entrepreneurial
• Provide a service or manufacture product
• Survival is the key strategy
• Organisational culture is fashioned by the
  founders of the organisation
• Success brings growth the need to recruit more
  staff
• Staff need managing
• The question of future organisational strategy
  becomes more complex
• Alternatives limit growth remain small or to
  grow recruit professional managers

11
Quinn Cameron Organisational Life Cycle
Competing Values of Effectiveness

• Collectivity
• Organisation begins to take shape
• Departments and functions begin to be defined
• Division of labour is the dominant theme
• Professional managers recruited tend to be strong
  leaders sharing the same vision as founder
• Further growth need for management control and
  delegation
• Has begun to establish its position
• Internal tasks allocated who has responsibility
  and autonomy becomes pre-eminent

12
Quinn Cameron Organisational Life Cycle
Competing Values of Effectiveness

• Formalisation
• Systems of communication control become more
  formal
• Need to differentiate between the tasks of
  management (stratgic decisions and implement
  policy) and those of lower-level managers (carry
  out oversee operational decisions)
• Bureaucratisation occurs as systems of
  coordination control emerge (salary structures,
  reware incentrive schemes, levels in the
  hierarchy, reporting relationships formalised
  areas of discretion autonomy for lower-level
  managers
• Organisation continues to grow, but burdened by
  the process of bureaucratisation the need for
  the structure to tbe freed up becomes pressing

13
Quinn Cameron Organisational Life Cycle
Competing Values of Effectiveness

• Elaboration
• Stage of strategic change
• Organisation may have reached a plateau in its
  growth curve and may even show the first stages
  of delcine in performance
• Managers used to handling bureaucratic structures
  and processes usually have to learn new skills to
  achieve change (team work, self-assessment
  problem confromtation)
• This stage may include rapid turnover and
  replacement of senior managers

14
Organisational Evolution

• However, later theorists built a different
  approach upon the concept of the product life
  cycle, which sees every product going through 4
  stages
• Introduction
• Growth
• Maturity
• Decline
• One theorist who has adapted this to relate to
  organisations is ADIZES who developed a 10 stage
  model

15
ADIZES 10 Stage Model
PAeI Maturity
Organisational Growth Decline - 1979
PAEi Prime
pAeI Aristocracy
Behaviour
pAEi Adolescence
_A_I Early bureaucracy
PaEi Go-go
_A_ _ Bureaucracy
Paei Infancy
_ _ _ _ Death
PaEi Courtship
Aging
16
Organisational Evolution

• Courtship Maturity
• Infancy Aristocracy
• Go-Go Early Bureaucracy
• Adolescence Bureaucracy
• Prime Death
• Based on the extent to which each of 4 behaviours
  are present in the organisation
• Production
• Administration
• Enterprise
• integration

17
Organisational Evolution

• Note Quinn Cameron collate Stages with size
  Adizes relates Behaviour Aging over growth
  decline
• Why should organisations decline?
• Two theories
• Whetton
• Ford

18
Organisational Evolution

• Whetton who says
• Decline is marked by reductions in
• Number of employees
• Profits
• Value of assets
• Customers
• And Results in
• Increased stress on members
• More interpersonal conflict
• Low morale
• High labour turnover
• He quotes FOUR reasons
• ATROPHY
• VUNERABILITY
• LOSS OF LEGITIMACY
• ENVIRONMENTAL ENTROPHY

19
Whetton

• ATROPHY
• Loss of edge, lack of responsiveness, a
  complacent organisation
• VUNERABILITY
• A susceptibility to failure occasioned by lack of
  marketing skills, management or finance
• LOSS OF LEGITIMACY
• An inability to find an answer to why
  organisation exists
• ENVIRONMENTAL ENTROPHY
• Irreversible tendency for systems to run down

20
Whetton

• Whetton suggest FOUR responses to decline
• Defending
• Responding
• Preventing
• Generating
• Response chosen depends upon whether the
  organisations attitude is positive or negative

21
Jeffrey Fords model

• Model notes several characteristics about
  organisations in decline
• The number of administrators may be greater in
  decline than during growth stages
• Declining organisations are more likely
  structured than growing ones
• Size-structure relationships during growth
  periods are not the same after a decline as
  before it
• Decline causes structural changes.
  Re-establishing the original structure after the
  decline is difficult (Structural Hysteresis)

22
A Power Model

• Mintzberg has created a Power Model relating life
  cycle stages to various configurations of
  organisational power
• The model has six power types
• Autocracy
• Power tightly controlled by an individual,
  external stakeholders have little power
• Instrumental
• External groups have a high degree of control
  (internal groups operate bureaucratically as an
  instrument for pursuing external group goals
• Missionary
• Internal person or group with strong belief in
  the organisations mission exerts a high degree
  of control

23
A Power Model

• Closed system
• Internal control is bureaucratic with
  administrators wanting to increase their power
  base. (External control is passive or impotent)
• Meritocracy
• Internal group professional expert, external
  groups have little influence
• Political arena
• Internal group politicised with a lot of
  conflict. External group power is diffused

24
Mintzbergss Power Model
Instrument
Political Arena
Closed System
Autocracy
Missionary
Political Arena
Meritocracy
Political Arena
I II III IV Formation Development
Maturity Decline
25
Problems with Life Cycle Theory

• How do you separate the stages?
• How many stages are there?
• Assumes that each part of the organisation moves
  through the stages at the same speed
• It is an unproven theory
• Organisational Life Product Life are not
  co-terminous so if product dies, organisation may
  have to re-structure regardless of the stage it
  is in
• Assumes that organisations are identical. Makes
  no allowance for uniqueness