Organizational Growth Phases: Creativity, Direction, Delegation, Autonomy & Control Crises, Exercises of Change Management

Download Organizational Growth Phases: Creativity, Direction, Delegation, Autonomy & Control Crises and more Exercises Change Management in PDF only on Docsity! Change Management –MGMT625 VU © Copyright Virtual University of Pakistan 40 LESSON #17 GROWTH RATE OF THE INDUSTRY The speed at which organisation experiences phases of evolution and revolution is closely related to the market environment of its industry. Different industries have different growth rates, for example computers, automobiles and banking all have different growth rates. Evolution can be prolonged, and revolutions can be delayed. Revolution seems too much more severe and difficult to resolve when the market environment is poor or going down. Marginal organisation seem to do better market environment is good or moving up. Greiner identified five phases of growth – each phase of growth is marked by evolutionary progress and a revolutionary period (or crises). Each evolutionary period is characterised by the dominant management style used to achieve growth, while each revolutionary period is characterised by the dominant management problem. Companies in faster growing industries tend to experience all five phases more rapidly while those in slower growing industries encounter only two or three phases over many years It is also important to note that each phase is both an effect of the previous phase and a cause for the next phase. For e.g. Directive management style in one phase may lead to autonomy crisis (rev.) and eventually followed by delegation The principal implication of each phase is that management actions are narrowly prescribed if growth is to occur. So organisation experiencing crisis of autonomy cannot return to directive management style for a solution – it must adopt a new style of delegation in order to move ahead PHASE 1: CREATIVITY At birth stage, emphasis is on creating both product and a market. So the characteristic of the period of creative evolution are: • Founders are usually technically or entrepreneurially driven and disdain management activities • Communication is frequent and informal • Long hours of work are rewarded by modest salaries • Control – comes from market feedback management acts quickly as the customer reacts • Leadership crisis occur as individualistic and creative activities help organization to take- off 1. Leadership Crisis As company grows, needs larger production, needs specialized knowledge about the efficiencies of manufacturing, marketing and finance or capital, therefore needs increased number of professional people in all functional areas. All this cannot be managed at an informal level. Formalization, proceduralism and bureaucratization come into play for better financial and managerial control. Founders found themselves with unwanted managerial responsibilities. They still try to act it in the past ways. Owners enter into conflict with managers. This issue is cited as agency theory in corporate governance and strategic management courses. At this point crisis of leadership occurs – the first revolution. Founders, often hate to step aside even though they are probably temperament wise unsuited to be managers. So the developmental choice for founder is to choose strong manager and step aside for perpetual growth or select week manager and compromise on growth PHASE 2: DIRECTION Those who survive by installing strong and capable managers usually embark on a period of sustained growth under able and directive leadership. The traits of this evolutionary period are: docsity.com