Evolution of Business

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Evolution and Revolution as Organisations Grow
17th October 2006

•Five phases of development – calm period ending in management crisis. •Problems rooted in history (past decisions). Organisations are too forward looking and overlook where it has been and where it is now. •Inability of management to understand development problems can result in the company remaining static. •Evolution – prolonged periods of growth.

•Revolution – substantial confusion and disturbance.
•Management's solution will determine if the next stage is reached. •Market opportunities determine a company's strategy and hence its structure.

•From an analysis of recent studies, five key dimensions emerge as essential for building a model of organization development: •Age of the organization - Management problems and principles are rooted in time.

•Size of the organization – change markedly as the number of employees and sales volume increase.
•Stages of evolution - The term evolution seems appropriate for describing these quieter periods. •Stages of revolution - Smooth evolution is not inevitable; upheaval of management practices. Companies fail that can't change. •Growth rate of the industry – related to market.

•Each phase is both an effect of the previous cause and a cause for the next phase.

Phase 1 – Creativity
•Create product and market
•Communication frequent, long hours and modest salaries
•Management acts as customers react – market determines control •Volumes increase and so does management responsibilities.

Phase 2 – Direction
•Period of sustained growth
•Formal Structure and process is implemented
•Becomes inappropriate and lower levels feel restricted
•Delegation to lower level managers who are not used to it. As a result, many companies flounder

Phase 3 – Delegation
•Decentralised structure
•Greater amount of responsibility distributed to various areas •A degree of control is lost...
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