Organizational Lifecycle

A conceptual model used to understand how organizations transition through predictable lifecycle stages.

CORPORATE LIFECYCLE: A conceptual model used to understand how organizations transition through predictable lifecycle stages. The corporate lifecycle defines which problems are normal, abnormal, and fatal for each stage of the lifecycle. Also known as the organizational lifecycle.

COURTSHIP: Organizational style (paEi). The first stage in the growth phase of the organizational lifecycle, when there is no organization yet. The founders are dreaming about what they might do without regard for future effects. There is excitement and commitment, which are not yet accompanied by risk-taking.

INFANCY; INFANT ORGANIZATION: Organizational style (Paei). The stage in the corporate lifecycle that takes place directly after the organization is born (following Courtship), in which risk has been taken. Infant organizations are characterized by limited delegation and limited control systems. Here the critical factors for success are sales and cash flow. The organization remains very flexible as it hones its product or service to meet market requirements best.

GO-GO; GO-GO ORGANIZATION: Organizational style (PaEi). This stage in the corporate lifecycle is characterized by rapid growth without sufficient control systems. Everything looks interesting and management gets involved with perceived opportunities which, in retrospect, are revealed to be threats that should have been avoided.

ADOLESCENCE; ADOLESCENT ORGANIZATION: Organizational style (pAEi). One of the growth stages of the organizational lifecycle. Adolescence is the “second birth” of the organization, when professional management systems are put in place and take over from the founder. It is a stage full of conflict and inconsistency between the founder (E) and the organization’s need for control (A). If the conflict is not resolved it will become pathological and either (A) or (E) will be lost. If (E) is lost, the organization will suffer from premature aging, reflected in loss of market share and negative cash flow; if (A) is lost, the organization will regress back to the previous stage of the lifecycle, Go-Go, and risk falling into the Founder’s Trap. If the conflict is successfully harnessed and resolved, the organization will be able to make commitments, become stabilized, proceed to the next stage of the lifecycle, Prime.

PRIME; PRIME ORGANIZATION: Organizational style (PAEi). The location on the organizational lifecycle where controllability and flexibility meet. A Prime organization is able to grow revenues and profits at the same time. Control systems have been properly established and accepted and now the organization is able to decentralize without abdication of control.

THE FALL: Organizational style (PAeI).The location on the lifecycle that follows Prime. An organization moves from Prime to Stable when it begins to believe it has reached the top, causing people to stop taking risks and set goals a bit lower so that they can be more easily attained. Form begins to take precedent over function. Opportunities begin to be viewed as problems. Support functions (accounting/ finance, human resources, admin/development) begin to hold greater power than sales/marketing and production/R&D.

ARISTOCRACY; ARISTOCRATIC ORGANIZATION: Organizational style (pAeI). One of the aging stages of the organizational lifecycle, in which the entrepreneurial spirit has been lost and there is an absence of creativity and risk-taking. Form takes precedence over function, and the organization survives on momentum alone. The organization may be asset-rich, but will soon begin to suffer from negative cash flow.

RECRIMINATION: Organizational style (-A-I). One of the aging stages of the organizational lifecycle, characterized by internal witch-hunts. The bad results of the organization’s aging are finally evident and managers start blaming each other for those poor results. (Also known as Witch-Hunt.)

BUREAUCRACY; BUREAUCRATIC ORGANIZATION: Organizational style (--A-). One of the aging stages of the organizational lifecycle, characterized by dominance of 11 systems and rules that paralyze the organization and keep it from changing. In this stage all external focus has been lost, and only the organization’s administrative procedures remain. Form has completely replaced function. A Bureaucratic organization cannot produce effectively since it has lost its entrepreneurial ability and ability to integrate. Bureaucracy is the stage preceding Death.

DEATH: Organizational style (----). The final stage of the lifecycle, when (P), (A), (E), and (I) have disappeared from management and only a lifeless shell remains.