Evolution and revolution as organizations grow

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Evolution and revolution as organizations grow

Growing organization move through 5 phases of development, each of which contains a relatively calm period of growth that ends with a management crisis. Each developmental phase is strongly influenced by the previous one. Thus by knowing an organization’s development history it is possible to be more prepared for the next developmental crisis. These crises can be used in order to achieve future growth.

Evolution- long periods of growth with no major organizational problem
Revolution- crisis periods, where companies need to find solutions to newly occurred organizational problems

Phase1: Creativity

This developmental phase is a period of evolution. At its birth stage an
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This is when the second revolution occurs: the autonomy crisis: Lower-level employees find themselves restricted. They feel being torn between following procedures and taking initiative on their own. So lower level managers demand more autonomy.
The solution adopted by many companies is to move toward greater delegation. Yet it is difficult for top managers to give up responsibility. And lower-level managers are not accustomed for making decisions for themselves. As a result many companies struggle during this revolutionary period, because many lower level employees leave the organization since they stick to centralized methods.

Phase 3: Delegation

The next evolution period evolves from the successful application of decentralized organization structure.
Much greater responsibility is given to lower-level managers.
Bonuses are used to stimulate motivation
Top executives manage by exception based on periodic reports from the field
Management focuses on new gains, which can be lined up beside other decentralized units

However a serious problem eventually occur: the control crisis: when top executives feel that they are loosing control over a highly diversified field operation because of autonomous field managers.
In order to move ahead companies need to find a new solution in the use of special coordination techniques.

Phase 4: Coordination

During this phase the evolutionary period occurs by the use of formal systems for acheveing greater
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