All businesses operate around certain business cycles. A business cycle refers to various trends that occur within a business or industry, such as growth or contraction.
Simply put, organizations are social systems. They're groups of people organized around a common purpose.
Their activities include similar recurring practices, for example, strategic planning, business planning, product and service development, marketing, financial management and evaluations. Each activity usually includes formally or informally clarifying goals, taking steps toward those goals, deciding if the goals are being met or not, and adjusting activities to be even more effective and efficient in reaching the goals.
The social systems can be focused primarily on the entire organization, teams, each product or service, or within a certain activity.
Individuals themselves are systems, needing a clear purpose and activities to continually work toward that purpose.
Social systems go through common life-cycles ranging from, for example, from start-up to growth to maturity. For example, as people mature, they begin to understand more about the world and themselves. Over time, they develop a certain kind of wisdom that sees them through many of the challenges in life and work.
They learn to plan and to use a certain amount of discipline to carry through on those plans.
They learn to manage themselves. Meanwhile, they go through infancy, child-hood and early-teenage phases that are characterized by lots of rapid growth. People in these phases often do whatever it takes just to stay alive, for example, eating, seeking shelter and sleeping.
Early on, many people tend to make impulsive, highly reactive decisions based on whatever is going on around them at the moment. Why Are They Important to Understand? Start-up organizations, team and internal practices are like this, too. Often, founders of the organization or program and its various members have to do whatever is necessary just to stay in business.
Leaders make highly reactive, seat-of-the-pants decisions. They fear taking the time to slow down and do planning.
Experienced leaders have learned to recognize the particular life cycle that a system is going through. These leaders understand the types of problems faced during each life cycle.
That understanding gives them a sense of perspective and helps them to decide how to respond to decisions and problems in the workplace and their lives and the workplace. That understanding also suggests the priories that they need to soon address in order to evolve to the next stage.
Systems that do not evolve often stagnate or decline between stages. Symptoms can be unclear priorities, unclear roles, increasing frustrations and conflict, and people leaving the organization.
If the understanding of the life cycle is not known, then these problems are often not resolved.
When discerning the particular stage that a system is currently in, it does not depend on the age of the system. Rather, it depends on the nature of its current activities. For example, if the activities are mostly unplanned, high reactive and decisions are made primarily by certain personalities rather than by plans and policies, then that organization is operating more like an early stage organization.
Example of a Simple Organizational Life Cycle Model Life cycles of social systems are so important to understand that there has been an increasing number of suggested frameworks and models for life cycles. Here is one simple model to further enhance your understanding of life cycles.
In this example, the focus is on an organization-wide social system. Some systems planners consider there to be an additional stage of decline that is after the maturity stage. That stage recognizes that not all systems are meant to exist forever.
Small business owners and other organization leaders may explore a variety of options designed to influence the enterprise's life cycle—from new products to new markets to new management. The results of a regression analysis show that the construct of the organizational life cycle is significantly related to environmental proactivity. The positive effects of information sharing and promoting collaboration and the influence of uncertainty. Organization & Environment, 26, Organizational life cycles and shifting. Match Your Sales Force Structure to Your Business Life Cycle cycle of a product or a business. However, the organization and goals of a sales operation have to evolve as businesses start up.
It also helps systems planners to avoid desperately staying in the maturity stage, lest the system "fails".model of organization evolution. As to the nature of stages, most authors appear to business life cycles in the new economy and could be represented by the Water-Fire, Fire-Metal, and Earth-Water effects.
The Water-Fire effect stands for the profitable Business Life Cycles and Five Elements Theory. Factors Affecting Organizational Design. to. An organization may skip a phase, or it may cycle back to an earlier phase.
An organization may even try to change its position in the life cycle by changing its structure. and includes conditions that influence the organization such as economic, social‐cultural, legal‐political. During the growth of a small business, a company will go through the stages of the business life cycle and encounter different challenges that require different financing sources.
For example, the business will require a different strategy when it comes to market penetration, business development. Often, founders of the organization or program and its various members have to do whatever is necessary just to stay in business.
Leaders make highly reactive, seat-of-the-pants decisions. They fear taking the time to slow down and do planning. In the introduction stage of the life cycle, an industry is in its infancy.
Perhaps a new, unique product offering has been developed and patented, thus beginning a new industry. Small business owners and other organization leaders may explore a variety of options designed to influence the enterprise's life cycle—from new products to new markets to new management.