Module 5 – Organizational Life Cycle – Innovation, Change, and Redesign

How organizations grow, and is there a life cycle of organizational growth?

What are some of the critical symptoms of ineffective organizational design, especially during organizational growth cycle? ow we can make

How can we make change possible in organizations?


Why do organizations grow?

  • Business expectations ( organizational goals )
  • Executive advancement
  • Economic well-being and survival

What happens when organizations get larger?

  • Formalization: rules, procedures, manuals
  • Complexity: expansion of departments and positions
  • Decentralization: decision-making authority


The Internal dynamics of growth

  • Entrepreneurial Stage: Growth through creativity
    crisis:  Need for leadership
  • Collectivity Stage: provision of clear direction
    crisis:  Need for delegation and control
  • Formalization Stage: Addition of internal systems of coordination and control
    crisis:  Need to deal with red tape
  • Elaboration Stage: Development of teamwork
    crisis:  Need for Revitalization




Entrepreneurial Collectivity Formalization Elaboration
Characteristics Non-bureaucratic Pre-bureaucratic Bureaucratic Very Bureaucratic
Structure Informal Mostly informal, some procedures, e.g., budgets Formal procedures, division of labor, specialties added Teamwork within bureaucracy, small-company thinking
Products or services Single product or service Major product or service with variations Line of products or services Multiple product or services lines
Reward and control systems Personal, paternalistic Personal, contribution to success Impersonal, formalized systems Extensive, tailored to product and department
Innovation By owner-manager By employees and managers By separate innovation group By institutionalized R&D
Goal Survival Growth Internal stability, market expansion Reputation, complete organization
Top Management Individualistic, entrepreneurial Charismatic, direction-giving Delegation with control Team approach, attack bureaucracy


What happens after the elaboration stage?

Creating new growth platforms
Firms could grow by creating New Growth Platforms on which they could build families of products, services, and businesses and extend their capabilities into multiple new domains.

Identifying firm’s hidden assets
Sustained growth can be achieved by leveraging hidden assets that are not utilized by the firm.

Growing through an organic process
For big multi-business companies, organic growth means changing the organizational structure with the objective of linking all critical activities across all of the businesses and maintaining a long-term perspective.



What are the symptoms of ineffective Design?

Organizational decision making is slow.

Organization is not responsive to changes in its environment.

There is too much conflict among various units within the organization.


If Organizational decision making slow?
Fostering Communication  to improve decision-making
PROBLEM: Collaboration across units has all but disappeared
SOLUTION: Use informal networks to compensate for the limits of the formal structure; improve the flow of information.

If the organization is not responsive to changes in its environment?
Building Agility  to improve responsiveness
PROBLEM: There’s a persistent failure to spot new developments and opportunities in the market; innovativeness has declined.
SOLUTION: Expose people to new aspects of their tasks and opportunities for collaboration; get them out of their silos.

If there is too much conflict among various units within the organization?
Breaking Up Entrenched Interests  to resolve conflict
PROBLEM: Some groups doing critical work have trouble getting the resources they need; resources are concentrated in a few powerful groups.
SOLUTION: Change the dimensions along which resources are allocated; establish new performance measures.


What are the critical elements of managing change?

Rational Elements: Planning and Direction
Emotional Elements: Motivation and Energy
Situational Elements: Organization and work design


How does change occur?
Two critical thinking about change


How do you facilitate change?

Cultivate identity rather than consequence thinking

Consequences Model: when we are making decisions, we look at the cost and benefits of our choices and chose the one that maximizes our satisfaction (Failure focus)

Identity Model: When we are making decision, we ask ourselves three questions:  Who am I? What kind of situation is this? What would someone like me do in this situation?

Fixed Mindset: We believe that our abilities are basically static.

Growth Mindset: We believe that abilities are like muscles – they can be developed by practice

People are incredibly sensitive to the environment and the culture (the norms and expectations) of the communities they are in.

Good habits are important because they allow behavior to happen without our rational side to tell us.


The Logic of Organizational Change

What looks like a people problem is often a situation problem – To change someone’s behavior, you first change that person’s situation

What looks like laziness is often exhaustion – When people try to change things, they are usually dealing with behaviors that have become automatic, and changing these behaviors requires more energy.

What looks like resistance is often a lack of clarity – When you ask people to change, you also need to explain how.



For anything to change in an organization, someone has to act differently.