Strategic Management is very important for organization to operate successfully in dynamic environment. In an organization, there is always countervail between the pressures to maintain status quo and pressures for change. Strategic management process involves activities guided by mission, objectives, strategic choice made after diagnosing of internal and external environment and strategic implementation to achieve competitive advantages (Allied Academies International Conference,2012).
Here, we will discuss about the five phases of organizational growth mentioned in Greiner, (1998).
Phase 1 (Creativity): This phase is the first revolution marked by creativity. Several characteristics of phase 1 are unstructured organizational structure, frequent and informal communication between the employees, primary involvement in product development, understanding market, and promotional work.
As mentioned in (Greiner, MAY–JUNE 1998 ISSUE), for the further growth of the company, the crisis of the leadership role in phase 1 needs to be addressed properly by choosing leaders who is also a strong business manager.
Phase 2 (Direction): In phase 2, role of business manager is remarkable to give proper direction to the company. Company after understanding its market, they work for the internal development. Functional organizational structure helps company emphasize in their activities through job specialization. As the organization proceeds in phase 2, there tend to occur tensions between senior and the lower management levels because lower level demands for autonomy, oppose the idea of central authority and want to take initiatives on their own. This autonomy crisis demands for delegation. If the company sticks to the status quos, they may lose the highly qualified employees (Greiner, MAY–JUNE 1998 ISSUE). Company, thus after realizing that the centralized method does not represent the true sentiments of the organization, so they move towards delegation of authority and power to all management levels.
Phase 3 (Delegation): Phase 3 involves successful delegation and having clear organizational structure. The decentralized organization with managers having greater authority and the incentives is the main characteristics of phase 3. Delegation allows company to penetrate quicker in the market, make quicker respond to the market and develop new products quickly to address the customers need. This phase gives enormous freedom to creativity and use of the creativity of the lower level managers/employees. Ultimately, top level managers sense that they are losing control over the diversified activities. Soon phase 3 crisis, crisis of control is under way where the senior management wants to regain control over the overall activities of the company. They want to return to the phase 2, direction. But the attempt to create again a centralized management fails because of the company’s new greater scope of the operations. Therefore, for the growth of the company there is no better alternatives than to coordinate, which is phase 4.
Phase 4 (Coordination): In phase 4, top management takes initiatives for most of the activities such as administering the new systems. Each product group is carefully analyzed and return on investment is considered a priority. Company wide profit sharing is most common to help growth of all strategic business units. This phase sooner gives rise to the conflicts between the senior managers and the product managers because seniors managers give direction which may not align with the local conditions or the business units. Manager in the business segments criticize that the senior managers are uncooperative and uninformed. Therefore, this rigid systems and formal programs hurt the true sentiments of the organization. Therefore, the organization proceed to phase 5, collaboration.
Phase 5 (Collaboration): Phase 5 characterize mutual goal setting, participative management style, matrix type of organizational structure and management focus in on problem solving and innovation. We can see interpersonal collaboration and the team spirit in the organization. Teamwork is the core of daily management function. To perform specific tasks, they form team which includes associates from each management level. The incentives are targeted for team performance. Also, experimentation to new practices are appreciated in the organization. Real time information is gathered from all management level in the form of reviews which helps company make an effective decision for simplified and result oriented everyday operations.
Customers today has an exponential choice. They are brand aware, they are active, resourceful, demand a high-quality service and product, seeking dialogue and relationship. Interactive social media channel has allowed company to reach to wide audience. Therefore, evolution and revolution is always important for the company to say ahead in the competition.
References
Allied Academies International Conference. (2012). Proceeding of the Academy of Strategic Management, Volume 11, Number 1. (pp. 1-32). New Orleans: Dreamcatchers Group, LLC, Arden, NC.
Greiner, L. E. (MAY–JUNE 1998 ISSUE). Managing People: Evolution and Revolution as Organizations Grow. Harvard Business Review, https://hbr.org/1998/05/evolution-and- revolution-as-organizations-grow. Retrieved from Managing People, Evolution and Revolution as Organizations Grow.
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