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Life cyles of an organization
Managing Life Cycles Influences in an Organization
For everything in life there is a season, and the same holds true for business. There is a life cycle that successful businesses inevitably pass through. They endure the perils up start-up, often on a shoestring; they grow to greater size and stability, permitting the owners to think about building wealth for themselves and their employees; and they progress to a point where owners have to think about valuing and succession or sale of the business (Forbes p9).
Your intelligence gathering–what you need to know and when you need to know it–will vary depending on the cyclical speed of the industry life cycles. When you recognize cyclical trends you will be able to determine effective intelligence strategies. If you work in a relatively new industry you will want to identify potential (new or would-be) surprise competitors. Near the end of the growth stage, you will need intelligence that will help hold market share during the market’s eventual decline ( Inside R & D, p NA).
Start Up Stage
The start up stage is the most trying stage. A newly formed company is still testing out the waters. Expenditure is high and usually greater then the revenue due to start up costs and other start up fees. This is the time where you need to have strong management personnel that will stick with the company during the not so lean times. They have to have clear defined goals that they can pass on to their department.
Each stage also demands different talents and perspectives, and new leaders usually have to be brought in as businesses progress. The visionary who is well suited to leading a new business through its early experimental stages is often poorly equipped to guide the venture through the expansion and integration stages, when sales and organizational skills become more important than bold thinking and creativity (Garvin, 2004).
The manager?s job is three-fold. They need to: 1) decide what needs to be done and how it is to be accomplished; 2) continually react to market conditions,
3) make sure his and his employees’ efforts support that continually changing vision. Without a strong leader at the helm, the vision of the firm will be quickly outdated and the firm will be overrun by increased costs and declining sales (Osheroff p21).
The goal of management is to see that rules are followed, budgets are met, and metrics are achieved. Employee action with this kind of encouragement will be limited to the goals of that management. For a successful business, however, employees should actually be striving to fulfill the leader’s vision and mission.
To do this, employees must share the mission. Periodic staff meetings keep everyone abreast of vision fulfillment and change. Without broad company knowledge, employees in a rigid departmental structure may inadvertently sabotage this vision to achieve their own individual departmental goals. Instead of rewarding employees for achievement of benchmarks, reviews and bonuses should be based on overall achievement of the leader’s vision and employee
contribution. When employees share in the vision, their actions aren’t guided merely be their job descriptions. Instead, they are guided by and focused on total company success. Employees then become part of that leadership, which typically is the most effective way to achieve a vision (Strategic Finance, p2) .
Growth Stage
During this stage, businesses develop a market niche while gaining customers, market share and a positive bottom line. Everything they do seems to work, and
the business is successful. This success results in the growth of the business, the expansion of the organization and the development of internal protocol and policies. (Behavioral Healthcare p31).
Growth strategies can be implemented through 3 ways: direct expansion, mergers and acquisition and diversification. Concentration or direct expansion, as sometimes known, involves a firm internally increasing operating sales, the workforce, and production capacity through introducing new products and business initiatives. Growth can be achieved also by the company choosing to grow by itself through it own business operations.
Another popular route that many organizations choose to grow is by merging with or acquiring similar firms in a strategic takeover move. A company can opt to grow by diversification and by various forms of strategic alliances. Which may include subcontracting, joint ventures, licensing and/or cooperative agreements.
This stage can be very trying for management because there are usually changes in how the business is run, especially with mergers and acquisitions.
Exceptional managers have a way of emerging when times are toughest.
There can be new products introduced so that can mean more training for some departments, more reporting, new pricing, etc. In merger and acquisitions sometimes top management changes and that can mean middle or lower level changes also. There might be a new mission and vision statement, different rules and regulations that employees now have to follow. This can make a manager?s job very difficult especially if there is lack of communication. Maturity/Stability Stage
As businesses become comfortable within their area they reach the period of maturity. This can be the longest stage of the life cycle. It is the stage at which profits are regularly produced, banking relationships are solid and relationships with vendors are strong. Some growth can occur, but at nowhere near the rates during the growth stage. Competition is growing as other firms enter the market with similar products or services. This phase can last from several months to decades. (Tillsen p26). During this time companies should focus on business efficiency to maintain profit and reputation. Some specialists suggest the need for business renewal to avoid decline or cessation of trading or strategies to maintain a state of steady trading with sufficient profit.
Management can use these times to try new training and different ways with their departments to improve their skills. Be it better sales, customer service,
finance, credit or even marketing.
Decline Stage
This final stage is the most crucial to any business. This is the time when the industry and market require a business to either transform itself (change) or risk its continued existence. During this stage, many businesses find themselves unable to change, so they continue working harder, doing the same things they did in an earlier stage as they try to survive. As the decline continues, cost reduction strategies continue to be implemented and employees continue to be asked to “do more with less.” But because market conditions have changed
(greater competition, higher costs, increased accountability, etc.), the earlier tactics no longer work. ( Behavioral Healthcare p31).
In a time of economic recession, managers will need to effectively grapple with employee anxiety/uncertainty, offer more verbal support and keep employees honestly informed.
It’s recommended that, during tough economic times a manager should: (1) tell their employees everything they can about where the organization is going; (2) tell the employees what they–and you–can and need to do to help the company weather the slowdown; (3) ask for everyone’s ideas for ways to improve productivity, employee retention, sales and whatever needs improvement and; (4) having laid the groundwork for addressing their concerns in a positive way, invite your employees to discuss their anxieties, fears, concerns and hopes. In general, managers who are conscious of interactions with direct reports and who understand the importance and invest in their relationships with their employees, strengthen the bond between themselves and their subordinates. This strength provides stability during lean economic times and positions the company for greater productivity as the business climate improves.