Understanding the theory and design of organizations.

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Understanding the theory and design of organizations.
Large
1.
Entrepreneurial
stage
4.
Elaboration stage
3.
Formalization
stage
2.
Collectivity stage
Small

ORGANIZATION STAGES OF DEVELOPMENT

Exhibit 13.3. Organizational life cycle
Source: Adapted from Robert E. Quinn and Kim Cameron, “Organizational life cycles and shifting criteria of effectiveness: Somepreliminary evidence”, Management Science 29 (1983), 33-51; and Larry E. Greiner, “Evolution and revolution as organizations grow”, Harvard business review 50 (July-August 1972), 37-46

ORGANIZATIONAL LIFE CYCLE
A useful way to think about organizational growth and change is the concept of an organizational life cycle, which suggests that organizations are born, grow older, and eventually die.Organization structure, leadership style, and administrative systems follow a fairly predictable pattern through stages in the life cycles. Stages are sequential and follow a natural progression

Stages of life cycle development
Research on organizational life cycle suggests that four major stages characterize organizational development. These stages are illustrated in Exhibit 13.3, along withthe problems associated with transition to each stage. Growth is not easy. Each time an organization enters a new stage in the life cycle, it enters a whole new ball game with a new set of rules for how the organization functions internally and how it relates to the external environment. For technology companies today, life cycles are getting shorter; to stay competitive, companies like eBay andGoogle have to successfully progress through stages of the cycle faster

1. Entrepreneurial stage. When an organization is born, the emphasis is on creating a product or service and surviving in the marketplace. The founders are entrepreneurs, and they devote their full energies to the technical activities of production and marketing. The organization is informal and nonbureaucratic. Thehours of work are long. Control is based on the owners’ personal supervision. Growth is from a creative new product or service. For example, Ross Perot started Electronic Data Systems (EDS) in 1962 after failing to convince his superiors at IBM that companies would someday want to take advantage of computer technology without having to understand or manage it themselves. After a few rocky years,demand for the new service EDS offered zoomed, and the company grew rapidly. Apple Computer was in the entrepreneurial stage when it was created by Steve Jobs and Stephen Wozniak in Wozniak’s parents’ garage
Crisis: Need for leadership. As the organization starts to grow, the larger number of employees causes problems. The creative and technically oriented owners are confronted with managementissues, but they may prefer to focus their energies on making and selling the product or inventing new products and services. At this time of crisis, entrepreneurs must either adjust the structure of the organization to accommodate continued growth or else bring in strong managers who can do so. When Apple began a period of rapid growth, A.C. Markkula was brought in as a leader because neither Jobs norWozniak was qualified or cared to manage the expanding company
2. Collectivity stage. If the leadership crisis is resolved, strong leadership is obtained and the organization begins to develop clear goals and direction. Departments are established along with a hierarchy of authority, job assignments, and a beginning division of labor. Web search engine Google has quickly moved from theentrepreneurial to the collectivity stage. Founders Larry Page and Sergey Brin devoted their full energy to making sure Google is the most powerful, fastest, and simplest search engine available, then brought in a skilled manager, former Novell CEO Eric Schmidt, to run the company. Google is currently hiring other experienced executives to manage various functional areas and business units as the...
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