CHAPTER 7

MANAGING NETWORKING
THROUGHOUT
ORGANIZATION LIFE CYCLE
 Defining Organizational
Life Cycle

Discuss about business

Objectives development and
organizational life cycle

Describe the phases

and crises in the
organization's life cycle
• Organizations go through different phases of growth. The first challenge for
leaders who wish to grow their organizations is to understand what phase of the
organizational life cycle one is in. We divide the organizational life cycle into the
following phases:

1. Startup or Birth

2. Growth

3. Decline

4. Renewal or Death
 The Growth Phase:
It was the best of times, Reasons For Decline
It was the age of wisdom,
Too much Debt 28%
It was the spring of hope
Inadequate Leadership 17%

Poor Planning 14%

Failure to Change 11%

Inexperienced 9%
•The Start-Up Phase: Management
•Getting ready is the secret of success.
Not Enough Revenue 8%
 ORGANIZATION LIFE CYCLE

Greiner (1972) 'Evolution & Revolution as Organization

Grows' - an organization led by an entrepreneur will go
through several phases in its development.

From established (small) to thrive, mature (large) and

show signs of decline.

Furthermore, organizations that have become larger &

more complex to manage may be dissolved or merged
or purchased & acquired if no corrective measures.
• According to Baker (1994), there are 6 phases in
the organizational life cycle it is:

creativity direction delegation coordination downsizing networking

• Throughout the development, the organization

will go through stable and unstable times and
undergo various crises after crisis in its life cycle
 Six predictable stages and crisis
(Baker 1994)

1. Creativity 2.Direction 3.Delegation

and the crisis and autonomy and the
of leadership crisis control crisis

4.Coordination 5. Downsizing 6.Networking

and the red and overload and integration
tape crisis crisis crisis
 DEVELOPMENT
& CRISIS
• Based on the Baker model, the
organization is developing at every
phase but will have a major crisis in
each phase except in the final phase.
• Creativity (leadership crisis), direction
(autonomy crisis), delegation (crisis
control), coordination, downsizing
(overload) & networking.
1) PHASE OF CREATIVE &
LEADERSHIP CRISIS

•Phase 1 - birth or establishment of a firm / business.

• Entrepreneurs through their creativity establish & start business operations

- as founders & leaders, leading the organization's early development, to be
the source of inspiration & the key driving force of the business.

• Organizations start operating & showing encouraging early growth.

1) PHASE OF CREATIVE
& LEADERSHIP CRISIS
• The organization is still small, with a small number of
staff and managed informally with a sense of family and
belonging.

• Management runs in a friendly & spontaneous network

and relationship environment. Face-to-face interactions
& all staff recognize each other.

• Organizations flourish in a harmonious atmosphere

1) PHASE OF CREATIVE
& LEADERSHIP CRISIS
• Eventually organizations began to grow & crowded.

• With the increase in staff, sales increase, customer

& supplier increase, business transaction hassles,
increased receipt & payment accounts, messaging
& more things make the organization's mood
shudder.
1) PHASE OF CREATIVE
& LEADERSHIP CRISIS
• In the atmosphere of internal affairs shows signs of trouble.
Relationships & networks with external parties become less
manageable.

• Entrepreneurs as founders & leaders are unable to manage their

business well, effectively & efficiently.

• The organization is experiencing a 'leadership crisis'. To avoid this

problem, entrepreneurs should release some of his leadership
powers; find & bring 'professional manager' - a CEO
2) PHASE OF DIRECTION &
AUTONOMY CRISIS

• CEOs formulate & form new direction and make organization operate in a
harmonious way - restructure organization according to function (work &
expertise each) - create units / departments.

• Organizations continue to grow. Over time 'differentiation' creates a gap in

internal relationships. Culture & behavior of each. Each department tends
to gain more power to make their decisions (autonomy).
2) PHASE OF DIRECTION
& AUTONOMY CRISIS
• Relationships & networks in organizations are problematic.
Each department has their own 'long-time' influence. Want
to make more immediate & flexible decisions. Want to be
less bound to the CEO's headquarters.

• The organization experienced an 'autonomous crisis'. To

overcome this crisis the CEO must be delegate or release
some power to the departments to make their own
decisions in accordance with specific jurisdictions.
3) PHASE DELEGATION & CRISIS
CONTROL

• The CEO delegates certain powers to their respective department managers

(centralized / decentralized). Relevant departments will be merged into
divisions, branches & managed by their respective General Managers with
more autonomous powers in routine & daily activity. The CEO focuses only
on long-term strategic planning, vision & mission of business expansion.

• The organization is back safe & growing rapidly.

3) PHASE DELEGATION
& CRISIS CONTROL
• Over time these divisions and branches become too powerful to be
able to determine & be responsible for their division & branch
profits / losses.

• Relationships in the organization as a whole become separate &

unhealthy for moving organizations as a troop.

• Excessive decentralization makes the CEO out of control. The

organization experiences a 'control crisis' & needs to be re-
coordinated.
4)
COORDINATION PHASE & BUREAUCRACY CRISIS

• Coordination means the organization enacts a new system for re-closing

divisions & branches. Organizations in the re-structure. The power &
administrative hierarchy is restructured. The relationship is reinvigorated
through 'integration'. At this phase the bridges are back in touch.

• New rules are enacted to allow more monitoring done. Excessive power is
reduced. Spending is reduced according to certain limits & limitations. Audit
implemented. Emphasis is given to the organization's 'procedures', rules,
policies & systems.
4) COORDINATION PHASE
& BUREAUCRACY CRISIS
• Organizations continue to grow with increased operations,
branches & staff.

• Excessive controls with strict monitoring & regulation make the

organization too bureaucratic.

• Over time relationships have become problematic amongst the

operational staff (the line) with the administrative staff (staff) who
audit, monitor & enforce policies, disciplines & regulations (hostility
& bad luck). "Bureaucratic Crisis". Need to 'downsizing'
5) DOWNSIZING PHASE &
OVERLOAD CRISIS

• Organizations that became too big for a long time to operate have their
own problems.

• Too many workers, job overlaps, high payroll costs for senior staff, too
many rules & procedures, high management structure (high structure)
slow and unresponsive results on market changes, technology & customer
needs.
5) DOWNSIZING PHASE &
OVERLOAD CRISIS
• At this stage many organizations are forced to
implement a downsizing strategy.

• Offer VSS and layoffs, early retirement of staff,

closure of branches and subsidiaries, reducing
layers in the organizational structure, branches and
divisions sales that are not a core competency
etc.
5) DOWNSIZING PHASE &
OVERLOAD CRISIS
• Downsizing creates problems. Defeat organizations to 'overload crisis‘

• Retrenchment caused the organization to lose contact, contact &

network with existing, long-term customers, suppliers & other
stakeholders.

• Work & burden of responsibility remains the same but staff are
reduced. Those who remain will have a more normal workload. The flat
structure has led the manager to control more staff - too many
relationships have to be taken care of.
6) NETWORK PHASE

• The network phase helps organizations get out of the 'overload crisis'.

• This phase emphasizes the establishment of relationships within the

organization - verticle relationship (up & down) & horizontal (to the side).
Relationship between individuals & relationships between groups (units,
departments, divisions & branches) & relationships / networks with parties
outside the organization. Build bridges to overcome bottelenecks in
relationships. Overcome differentiation with integration
6) NETWORK PHASE
• Being 'network organization' - staff building &
managing networks across individuals, group
boundaries, inside & outside organizations.

• Based on mutual understanding, a balanced

exchange of mutual benefits and the creation of
mutually beneficial cooperation in the win-win
situation
END OF CHAPTER 7
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