CHAPTER 19

Riding the Life Cycle across the Forms

Many organizations spend much of their lives in one structure, where they get on with an established mission. For example, a symphony orchestra is likely to be a personal-professional hybrid no matter who is the conductor. But in the world of organizations, nothing is sacred. From time to time, most organizations have to, choose to, or are forced to, transition to some other structure, whether another form, or a hybrid. This chapter describes what seems to be a pattern of the common transitions, as a life cycle of organizations.

Here are some postulates about the main characteristics of these transitions.

• A transition can be rapid or gradual, complete or partial, permanent or temporary. Much as a supersaturated liquid freezes suddenly when it is disturbed, so too when its founder departs can a Personal Enterprise freeze rather quickly and permanently into a Programmed Machine. This suggests that organizations, too, can experience punctured equilibrium: long periods of stability interrupted by occasional bursts of change. But gradual transition is also possible, suspending an organization temporarily between the old and the new, or oscillating between them, as when a founder who stays at the helm of a growing mass production company gradually gives way to the formalized controls of the staff analysts.

• A transition can be (a) expected naturally, as when a new school makes an early transition from the personal toward the professional form, (b) imposed by particular influencers, as when a government forces the public schools to act more programmed than professional, or (c) caused by an unexpected external disturbance, as when a strike by the teachers of these schools forces them to consolidate power around a single superintendent.

• A transition can be smooth or conflictive, either way, functional or dysfunctional. When the founder quits a Personal Enterprise, the transition to a Programmed Machine can be rather smooth, whereas other transitions can be accompanied by considerable conflict, which can be functional when the transition is necessary, otherwise it is dysfunctional.

A Life Cycle Model of Organization Structure

We can delineate several stages—as leading tendencies, not imperatives—of a life cycle model of organization structure. These are summarized below and described in turn.

1. Organizations are usually born as Personal Enterprises, as in start-ups.

2. In youth, many sustain this form, at least partially, so long as their founder remains.

3. As they mature, organizations tend to settle into whatever structure fits most naturally with their conditions.

4. The settled life of a mature organization can be interrupted by impromptu transitions, whether championed by internal actors, imposed by external influencers, or driven by a change in circumstances.

5. Stagnating organizations—in mid life crisis, so to speak—can sometimes be renewed by transition to another structure, whether temporarily, as in the turnaround of a machine organization by a personal leader, or more permanently, as in the introduction of adhocratic elements to a bureaucratic structure.

6. Organizations can die of natural causes, as when they run out of funding, but some of the largest have to be brought down in the form of a Political Arena.

Birth: Start-Up as Personal Enterprise

Organizations are usually created as Personal Enterprises, for several reasons. First, most everything in a new organization has to be developed from scratch. Somebody has to find the resources, bring in the people, set up the facilities, and consolidate all of this around a new structure and culture, as well as a new strategy (unless defined at the outset). This gives founding chiefs considerable informal influence alongside their formal authority, which may last as long as they remain at the helm.

Second, direct supervision is the most natural coordinating mechanism at the outset of an organization, since people tend to turn to the chief for guidance. Mutual adjustment, in contrast, can be limited until the people get to know each other, and it takes time to establish standards.

Third, new organizations require, and tend to attract, chiefs with an entrepreneurial bent—enthusiastic builders, often rather visionary, even charismatic—to whom other people are drawn. Such founders like to grab the reins of something new, free of the constraints of the established organizations they know too well—to “do their own thing.” This can be an exciting ride for all involved.

The term entrepreneur may be commonly associated with start-ups in business, but social entrepreneurship is prevalent in start-ups in the plural sector, and so is what can be called public entrepreneurship for start-ups in government. New NGOs, new community associations, new cooperatives, new government agencies all require the same strong initial leadership for the reasons just discussed.

Youth: Sustaining Partial Personal Enterprise

Personal leadership at the outset can sometimes sustain itself, at least partially, as long as the organization grows with its founder. After all, it was built around this person’s own style, and perhaps vision as well. Plus the initial staff may remain loyal, even beholden, to the person who hired them and with whom they have likely developed a close, personal relationship. Moreover, as strong-willed individuals, founding leaders are often able to sustain a substantial degree of personal control. Think of all the famous businesses, unions, and other organizations that have grown remarkably large under personal leadership: the Amazons, Apples, and Teamsters.

Maturity: Settling into a Natural Structure

As they mature, most organizations end up with the structure most naturally suited to their conditions. We have seen numerous examples of this, ranging from hospitals as Professional Assemblies to orchestras as personal-professional hybrids.

Some organizations, of course, go nowhere else. The Personal Enterprise is their natural structure, continuing to suit them even as they develop. Big retail chains can thrive with a hands-on management that makes pressing decisions faster than would a “professional” management inclined to rely on analysis. A two-hundred-store retail chain might, after all, be managed as a one-store retail chain repeated two hundred times. Regular visits to a few of them can sometimes keep the CEO in touch with the whole of them.

Pivoting away from Personal Leadership

More commonly, however, personal leadership eventually becomes a liability. Grounded managing can become micromanaging, with the chief overwhelmed by the details, or it can become macromanaging, as the chief tires of the details and decides to lead from on high. Think of the legacies destroyed by entrepreneurs who diversified their businesses in the belief that they could manage anything.

FIGURE 19.1 Settling into a Natural Form

Hence, as they mature, most organizations make a pivotal transition away from the personal organization, if not to some hybrid (the intermediate arrows of Figure 19.1), then to any of the other forms (the following arrows), as discussed below.

To a Professional Assembly The pivotal transition from the personal organization toward the professional one can happen rather quickly. Consider a general hospital. From Day 1, alongside the founding chief arrive highly trained professionals, all ready to use their skills once the facilities and equipment are in place. Hence a natural transition can begin almost immediately—at least to an intermediate hybrid of the personal and professional forms so long as the founder remains.

To a Programmed Machine Probably the most common transition of all is from the Personal Enterprise to the Programmed Machine—especially in business, since so much of it is about mass production or mass service, founded by private entrepreneurship. As discussed earlier, this transition can be rather smooth: replace the founder with that professional management, and off you go. But if the founder refuses to leave, political games may be required to drive him or her out—whistle blowing to the board, perhaps, or the insurgency game. (Think of the mass movements that have been required to unseat so many autocratic rulers.)

To a Project Pioneer The project organization, like the professional one, tends to emerge quickly, especially when an organization begins with a project—for example, a firm of architects with a first commission. But the full transition can be prolonged when a strong chief is required to ensure collaboration in and across the teams.

To a Community Ship When a plural sector association begins with a compelling mission, the founding leader may have to yield power to more egalitarian communityship, which could be accompanied by conflict (famously in the case of Doctors Without Borders).

Midlife: Impromptu Transitions

The transitions so far described occur in the natural life cycles of organizations. But along the way can be impromptu transitions, championed by particular influencers or driven by unexpected changes. Several common ones are discussed below, some for the better, others for the worse.

Diversifying toward the Divisional Form

With a chief intent on accelerating growth, many successful businesses diversify and thus make a transition toward the Divisional Form. This transition is so common in businesses grown large that it may seem to be a natural one. (Some of the academic and popular literature has certainly made it seem so.) I put it here instead, as an impromptu transition, because “this ain’t necessarily so.”

For one thing, many successful businesses have “stuck to their knitting, more or less”—General Motors, for example.¹²⁴ For another, as discussed in Chapter 14, many of the corporations that have fully diversified, to become conglomerates, have eventually failed, or reconsolidated. Partial transition to an intermediate form of divisionalization seems to have worked better, for example, to the by-product or related product version in business (Panasonic), or the geographic version in plural sector associations (the Red Cross Federation).

Automating or Outsourcing Bureaucracy toward Adhocracy

As described earlier, by automating or outsourcing much of its operating work, a Programmed Machine can be left with an administrative structure that functions as a Project Pioneer: it concentrates on projects to design and maintain the automated facilities or negotiate the outsourcing contracts.

Settling Innovative Adhocracy into Professional Meritocracy

As they age, some operating adhocracies seek the calmer life of the Professional Assembly. Early in their careers, scientists, consultants, and other experts may be especially drawn to innovative work in teams—opportunities abound, the world is their oyster—and so they create or join Project Pioneers. But as they and their organizations age, these preferences can change. The excitement of project work can become unnerving, with its relentless boom-and-bust cycles. Those operating adhocracies that do project work for their clients can institutionalize their skills and settle down to become a Professional Assembly.

Then the battles can begin. “Enough change,” say the meritocrats. “Let’s concentrate on a few of our successes and tailor them to the needs of many clients.” But the adhocrats want none of this. “What’s done is done; let’s find a new creative challenge.”

When one group prevails, the organization either shifts to a Professional Assembly or remains as a Project Pioneer. When neither does, it might divide in two, as do those management consulting firms discussed earlier: one part does ad hoc project work on contract while the other offers more standardized executive search services. Physicians in hospitals often split themselves personally in this way, doing their standardized clinical work alone and their more open-ended research in teams (although the former can contaminate the latter, driving much medical research, so-called, toward development, as the term is used in the pharmaceutical industry—for example, testing some existing medication on some new population).

Transition in the opposite direction—from the professional to the project form—while certainly possible (every conceivable transition is possible) is less likely. The Professional Assembly, with its entrenched skills and dispersed power, is the most stable of all the forms and thus the most enduring. Consider all the old universities still going strong after centuries, compared with the comings and goings of big corporations across decades.¹²⁵

One other transition from the Project Pioneer is worth mentioning. When a project brings forth a new product of particularly high potential, there may be an inclination to give up the volatile life of the pioneer and exploit it, namely pivot to the stable life of a mass-production machine, and get rich.

Forcing Transition to Bureaucracy

As discussed, external influencers and internal analysts often drive an inappropriate transition of any of the other forms toward the Programmed Machine. Here is where that “one best way” thinking does its most damage.

As soon as any company goes public, no matter what its appropriate structure, stock market analysts can be at the door pushing for formalization. (“Can we please see your organization chart?”) If a founder sells a Personal Enterprise to an established corporation, its analysts may descend on the place likewise. (“Do we have a Strategic Planning tool for you!”) No wonder founders who stay on as CEO often leave soon after.

Of course, public sector departments and plural sector associations cannot issue shares or be sold. But many are dependent on funding agencies that have their own analysts, all ready with their technocratic controls. (“If you are not measuring it, how can you possibly be managing it?”)

A small Personal Enterprise no more needs an organization chart than a Professional Assembly needs measures that drive its professionals to distraction. And why must they all go through the motions of some Strategic Planning ritual? To summarize, a narrow form of technocratic managerialism runs rampant in our organizations and thus contaminates our societies.

Aging: Renewal for Survival

Sooner or later, every organization has to expect the unexpected, no matter how stable its structure. The survival of a business can be threatened by a new competitor; a pandemic can throw a government into turmoil. As they age, healthy organizations revitalize: they find ways to renew themselves when necessary, although some forms do this more easily than others.

The Project Pioneer renews naturally, and constantly, within its existing form, thanks to the unique projects that come and go. As we saw with the rise of feature films in the National Film Board of Canada, one novel project can take the whole place to a new strategy.

The Professional Assembly can be highly adaptive at the operating level—think of the constant upgrading of medical protocols in hospitals. But with its power so diffused, and with the many standards imposed by the professional associations, the overall organization can be extremely resistant to renewal, no matter how necessary.

The Personal Enterprise, in contrast, can be as adaptive as its chief. One may be inclined to entertain all sorts of radical changes—except for the power system itself—while another may want to keep everything intact.

In the Community Ship, where everything tends to be sacred, renewal can be resisted fervently by adherents who would rather fight than switch. Here, then, can be found some of the most intense Political Arenas. But when isolation threatens its survival, the Community Ship may have to come ashore, so to speak—that is, moderate its culture and transition toward another structure.

The prize for resisting renewal, however, often has to go to the Programmed Machine, not only because everything is so tight, but also because the preferred way to fix any problem is to tighten it further: more planning, more measures, more rules, rules, rules. But rationalizing is not renewing. Hence, what is so often seen as the all-time one best way, from Taylor to today, can be the all-time worst way to renew an organization.

There has developed a massive literature on how to change organizations, most of which is actually about how to change the stagnating machine organization, often, in effect, by taking it toward another form. Job enlargement takes the machine organization toward the professional form, innovative teamwork takes it toward the project form, and turnaround takes any form to the personal organization, temporarily. Each is discussed in turn.¹²⁶

Enhancing Proficiency through Job Enlargement

By strengthening the proficiency of its workforce, a machine organization can transition toward a professional one, in three successive steps (Figure 19.2).

First, job expansion can increase the scope of positions in the operating core. For example, the jobs in a call center can be redesigned so that each addresses a wider variety of customer questions. Second, people empowerment can give the operating employees greater control over their own work—for example, to decide together who goes on which shift. And third, skill enhancement can upgrade the capabilities of the operating employees, so that they get closer to professional status, and the structure closer to the professional organization. These call center operators, beyond giving pat answers, can be trained to work out the customers’ problems with them. The COVID pandemic, by the way, enlarged many jobs because people working at home were less directly supervised by their managers.

FIGURE 19.2 Job Enlargement in Three Steps

Encouraging Innovation through Teamwork

Any structure in need of more innovation can likewise take three successive steps toward more of a project structure.¹²⁷ Figure 19.3 shows this with regard to the machine organization, where such efforts are most likely to be attempted.

Initially, the organization can add a separate unit to carry out innovative projects on behalf of the whole organization, as when a manufacturing company sets up a research lab to develop new products. But if contamination of this unit sets in, the organization can take a further step by laying adhocratic teams over its formal structure, drawing their members from various units.¹²⁸ Creative people from engineering, manufacturing, and marketing, perhaps with an outside customer, can work together across traditional boundaries to develop new products.

Finally, when a truly significant shift to widespread innovating is necessary, the organization can try to infuse a culture of innovation throughout its structure. This way, everyone can contribute ideas, as in the use of kaizen (continuous improvement) in Japanese companies. Toyota “views employees not just as pairs of hands but as knowledge workers . . . [with] the wisdom of experience . . . on the company’s front lines.”¹²⁹ In a highly Programmed Machine, however, this last step is more easily said than done, which explains why, when a new technology radically alters a product, the established manufacturers are usually outsmarted by new entrants in the industry—likely to be Project Pioneers. They don’t need the intrusion of innovation because they have a profusion of it already. But not so the Professional Assemblies, whose structures can be more set than those of the Programmed Machines (see box).

FIGURE 19.3 Collaborative Innovation in Three Steps

Turning around through Personal Leadership

Any other organization in need of significant renewal most commonly reverts temporarily to the Personal Enterprise, to enable a new chief to effect a turnaround. Again, this is shown in Figure 19.4 in three steps, from the Programmed Machine, where we can expect it to be most common.

This happens for the same reason that organizations rely on personal leadership at their birth: direct supervision can be the fastest and most integrative mechanism for coordination. Bring in the new chief, suspend the established rules to allow him or her to make the necessary changes, and, once done, if appropriate, take the organization straight back to where it was, for example, to consolidate as a renewed machine—and sometimes rid itself of the savior who no longer fits.¹³¹

FIGURE 19.4 Turnaround in Three Steps

Three kinds of turnaround can be described—operating, strategic, and cultural—in steps toward deeper changes.

1. Operating turnaround. This concentrates the renewal in the operations, to render them more functional. One lauded CEO turned around a British manufacturer of trucks by focusing his personal attention on the treatment of the workers in the factory, which resulted in a marked improvement in productivity. Operating turnaround is the easiest of the three because it keeps the strategies and systems largely intact. But it can also be the weakest, because the changes can be cosmetic—a veneer that washes off in the first crisis.

2. Strategic turnaround. This repositions the organization in its environment, or brings in a whole new strategic perspective. A manufacturing company may add product lines, a government department may charge for a service that was previously free.

3. Cultural turnaround. This takes renewal farthest, to renew a culture that has atrophied. Since organizations don’t have cultures, but are cultures (as Karl Weick was quoted earlier), restoring what’s left of a good culture may be easier than trying to create a new one in its place. In one declining company that I came across, remnants of the culture that had made it successful remained, at least in the hearts of some of the old-timers, in the vestigial places from which it could grow back, much as an octopus can regenerate a lost limb.

Renewal in the Other Forms

Turnaround need not be restricted to the machine form. A Personal Enterprise itself can be turned around with a new chief, since power is already concentrated in one place. Not infrequently, retired founders have come back to revive their own enterprises that were faltering under their successors.

In the Professional Assembly the professionals are inclined to defer to no one, least of all a chief who suddenly wants to call the shots. Hence, overlaying a project team on the professional structure may be preferred when possible (as described above in the box on the hospital ER team). But when a crisis is severe enough, the political games that arise may have to be suspended to give a new chief time to fix the place for everyone’s benefit.

The situation of turnaround in the Project Pioneer can be similar, except that this form of organization is so used to changing that it can often self-renew before someone is needed to turn it around.

The Role of Politics in Renewal

Finally, failing all of the above, when an organization lacks the necessary capacity for self-renewal, political games may have to force it to change—for example, by challenging the existing culture, defying the outmoded rules, sabotaging the intrusive measures. Look for insurgency games, whistle-blowing, rival camps, and more. If this doesn’t work, because the organization is too far gone, it may have to face the final stage in its own life cycle, just as we do in our own lives.

Demise: Natural or Political

Can a failed organization rise from its own ashes, the way the mythical phoenix does every five hundred years? Should it? The business press revels in reporting such stories of resurrection, compared with reporting the far more common stories of over-and-out demise, sometimes after fixes that have failed repeatedly. Fixing a failing organization can be as mythical as that phoenix.

Organizations age and atrophy, just as humans do. As time goes by, joints stiffen, channels block, parts degenerate. Turning inward if they can, for protection as closed systems, may serve certain stakeholders temporarily, but not the society around them.

Organizations on Life Support

Do we need so many ailing organizations sustained by their established wealth or political influence? We are inundated with geriatric consulting—that’s where the money is—compared with pediatric, even obstetric, consulting. Enormous effort goes into trying to make sclerotic machine organizations “agile,” or “getting elephants to dance.”

But do we need machines to be agile, or have to put up with elephants forced to dance? As discussed, machines are generally made for specialized purposes. When they cease to be necessary, or efficient, we don’t adapt them, we get rid of them, and recycle their parts. So too with our Programmed Machines, if not our Project Pioneers, which are meant to be agile.

If this sounds brutal, please understand that I am responding in kind: the ailing organizations are rarely the compassionate ones, compared with younger, more energetic ones that can be built on their ashes. Did not the economist Joseph Schumpeter rightfully sing the praises of “creative destruction” in our economies?¹³² Besides, since most of these spent organizations are likely to die soon anyway, why prolong the agony, and the expense? Wouldn’t it be more productive if they died of a quick stroke, instead of suffering through a prolonged illness?

A healthy society maintains a steady flow of fresh, new organizations to replace its exhausted old ones. In other words, it is not the renewal of single organizations that should concern us so much as the renewal of our society of organizations. Smaller organizations usually die quickly, largely unnoticed, thus enabling their resources to be recycled immediately. The problem lies with the large ones that have the power to sustain themselves politically, with the support of their owners and executives (who willingly suspend their praise of “free enterprise”). This is often supported by elected governments, of all stripes, that are inclined to rescue big bankrupt businesses for fear of suddenly losing one mass of employment, while far more employment is steadily lost with the smaller bankruptcies.

Demise as a Political Arena

Eventually some of these big organizations are brought down by the very political activities that may have sustained them in their dying days. They become Political Arenas, overrun with political games, as all sorts of influencers scavenge what remains of them. Another great legacy succumbs, while the messy world of organizations does, finally, carry on.

Now let’s get back to life, agile life.