Organisation : Leaders and Lifecycles


Albert A. Vicere is executive education professor of strategic leadership at Penn State's Smeal College of Business, and president of Vicere Associates, Inc., a leadership consulting firm with clients around the globe.  He is one of the country's top leadership coaches, and is the author/editor of several books including Leadership By Design, The Many Facets of Leadership and more than 80 articles on leadership development and organizational effectiveness.

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Why are some organizations successful year after year while other seemingly extraordinary companies eventually fall by the wayside?  I believe it comes down to having leaders who understand how to manage innovation and growth throughout the lifecycle stages of an organization.

Think about the stages companies go through throughout their evolution.   It begins at the start up phase when an often “crazy” idea becomes the germ of an organization. If the crazy idea catches on, the company experiences growth—the business develops, demand begins to exceed capacity, and the new company begins to expand and develop.  Growth invites competitors and imitators so eventually maturity sets in and growth slows down.  Unless the organization takes action to revitalize, it begins to decline. Absent dramatic action, a crisis hits, decay sets in, and the company is on its way out.

Before you panic, it is possible for companies to manage this cycle.  Just look at GE, 3M, Johnson & Johnson and countless other companies that have stayed relevant and effective for decades.  But it’s rare that a company will survive unscathed once it moves into decline and decay.  Under CEO Lou Gerstner, IBM revived itself with a massive restructuring and an expanded business focus.  But for every successful turnaround like IBM’s there are examples like Digital Equipment Corporation, Westinghouse, and other formerly great organizations that couldn’t right their ships.

Long-lasting organizations stay vital by resisting decay.  As they mature, their leaders successfully manage the tension between innovation - doing things differently, offering unique products, changing the rules, and adaptation – perfecting and improving existing products, services and processes.  They realize that the healthiest organizational cultures maintain a balance between these two perspectives.  They constantly strive to get better, yet they remain open to new ideas and new ways of thinking.

How do they do it?  They recognize that the lifecycle stage of an organization often has a parallel connection to the mindset of its senior-most leaders.  Consider start-up organizations.  They tend to be on the cutting edge and their leaders are passionate zealots bent on success at all costs.   Though many start-ups don’t survive, those that do can change the world with their passion and focus. 

If the organization survives and starts to grow, its leaders tend to become aggressive conquerors, creating new markets and conquering competitors who are often too slow to respond to the new threat in this exciting and intense phase.

As intensity and excitement give way to growth, the organization seeks out investment capital so it can meet demand and keep growing.  Processes are developed, rules arise and structure emerges. The company moves into the mainstream.  

As growth begins to level or slow, the structured, process-driven company moves into potential decline.  The focus tends to shift to rules, systems, and efficiency.  But if that administrative mindset becomes the dominant focus of leaders, bureaucracy sets in.  A firmly entrenched bureaucracy can isolate senior leaders from the reality of a maturing business environment.  They can become removed, aloof, elite, out of touch with reality, and destined for disaster.

What can a leader do to stop the progression into bureaucracy and decay?   It’s simple.  Take a good, hard, realistic look at your organization.  Better yet, ask your people and your customers.  Where are you on the lifecycle?  Can you sense any of the fiery passion of the early stages?  Are you open to ideas and new ways of thinking or preoccupied with systems, processes and efficiency?   Do you have the right mindset and focus for the lifecycle stage of your organization?  Do you have a balance of perspectives in your leadership team to keep you from becoming a victim of your own success? 

Being an effective leader comes down to seeing and understanding the patterns in your organization. The key to maintaining success and sustaining performance is to recognize your organization’s lifecycle stage and who, if not you, might have the leadership qualities needed at any given time.

Copyright © 2004 Albert Vicere

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