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    Organizations progress through different life cycle stages as they grow. Very large organizations can become overly bureaucratic, limiting flexibility and creativity. Smaller organizations are more susceptible to environmental changes but are also more adaptable. As organizations age, they can experience atrophy, vulnerability, and decline if they do not adapt to changes in their environment. Downsizing attempts to address organizational decline through restructuring, effective communication, and support for displaced workers. Causes of unsuccessful scaling include spending too much on customer acquisition before validating the business model, developing products without clear problems or needs in mind, hiring too quickly or in the wrong roles, and not adapting the business model as the market changes.

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    Organizations progress through different life cycle stages as they grow. Very large organizations can become overly bureaucratic, limiting flexibility and creativity. Smaller organizations are more susceptible to environmental changes but are also more adaptable. As organizations age, they can experience atrophy, vulnerability, and decline if they do not adapt to changes in their environment. Downsizing attempts to address organizational decline through restructuring, effective communication, and support for displaced workers. Causes of unsuccessful scaling include spending too much on customer acquisition before validating the business model, developing products without clear problems or needs in mind, hiring too quickly or in the wrong roles, and not adapting the business model as the market changes.

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    5 views10 pages

    Lec 14

    Uploaded by

    Deebak
    Organizations progress through different life cycle stages as they grow. Very large organizations can become overly bureaucratic, limiting flexibility and creativity. Smaller organizations are more susceptible to environmental changes but are also more adaptable. As organizations age, they can experience atrophy, vulnerability, and decline if they do not adapt to changes in their environment. Downsizing attempts to address organizational decline through restructuring, effective communication, and support for displaced workers. Causes of unsuccessful scaling include spending too much on customer acquisition before validating the business model, developing products without clear problems or needs in mind, hiring too quickly or in the wrong roles, and not adapting the business model as the market changes.

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    of 10

    Organizational Life Cycle

    Organizational Life Cycle

    2
    2
    Challenges with growth
    Over-bureaucratization is evident in the inefficiencies of large organizations

    Narrowly defined jobs and rules limit creativity, flexibility, and rapid response

    Cutting bureaucracy:
    ◦ Temporary structures for emergencies or crisis situations
    ◦ Small geographic based teams
    ◦ Increase authority of workers
    ◦ Professionalism, training of employees

    3
    Population ecology perspective
    Firms enter an environmentally rich niche
    Can focus on one nice – Specialist.
    Or have a larger domain and thus focus on managing more niches - Generalist

    Large Generalists are able to get back to business more quickly following a disaster by leveraging
    different sub domains
    Large organizations also tend to display inertia when responding to change

    Small Specialists are susceptible to environmental changes


    Small organizations are also flexible and can be responsive

    4
    Organizational Decline and Downsizing
    ◦ Organizational atrophy
    ◦ Vulnerability
    ◦ Environmental decline

    5
    Causes of unsuccessful scaling
    Customer: Spending too much on customer acquisition before product-market fit and
    repeatable business model; Overcompensation for missing product-market fit with marketing
    Product: Building product without problem-solution fit; Investing in scalability before product-
    market fit; adding “nice to have” features
    Team: Hiring too many too early; hiring specialists before they are critical like CFO/ customer
    service reps/ DB specialists; Hiring managers instead of doers; Having more than one hierarchy
    level
    Financials: Raising too little money; raising too much money as it may lead to premature scaling
    Business model: Focusing too much on profit maximization too early; spending too much time
    on planning or executing without regular feedback; not adapting the business model to changing
    market; failing to focus on business model and then finding that costs exceed revenue at scale

    6
    Stages of Decline
    Blinded Stage – Needs timely information
    Inaction Stage – Needs prompt action
    Faulty action Stage – Needs correct action
    Crisis stage – Needs effective reorganization
    Dissolution stage – Is irreversible

    7
    Downsizing
    1) Search for alternatives
    2) Communicate more, not less
    3) Provide assistance to displaced workers
    4) Help the survivors thrive

    8
    At your leisure
    https://s3.amazonaws.com/he-assets-prod/interactives/158_zappos/Launch.html

    https://www.nytimes.com/2008/05/02/technology/02kodak.html

    https://www.forbes.com/sites/chunkamui/2012/01/18/how-kodak-failed/?sh=1b5fbf1b6f27

    9
    Good Luck!

    10

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