THE LIFE CYCLE OF AN ORGANISATION

From an organizational perspective, "life cycle" can refer to

various factors such as the age of the organization itself, the
maturation of a particular product or process, or the maturation
of the broader industry. In organizational ecology, the idea of
age dependence is used to examine how an organization's risk
of mortality relates to the age of that organization. Generally
speaking, organizations go through the following stages:
1.

Birth

2.

Growth

3.

Maturity

4.

Decline

5.

Death
The Enterprise Life Cycle
The Enterprise Life Cycle is a model that underlines the way in
which organizations remain relevant. The Enterprise Life Cycle
is the dynamic, iterative process of changing an enterprise over
time by incorporating new business processes, technologies,
and capabilities, as well as maintaining, using, and disposing of
existing elements of the enterprise.

Richard L. Daft's Four Stages

Richard L. Daft theorized four stages of the organizational life
cycle, each with critical transitions:
1.

Entrepreneurial stage Crisis: Need for leadership

2.

Collectivity stage Crisis: Need for delegation

3.

Formalization stage Crisis: Too much red tape

4.

Elaboration stage Crisis: Need for revitalization

Structural Implications of the Life Cycle
The life cycle of an organization is important to consider when
making decisions about the organization's structure and design.
Richard L. Daft's model underlines criticalproblems within each
stage of an organization's life cycle that can often be solved
through intelligent structural design.
Daft first notes that the entrepreneurial (or startup) stage of an
organization requires leadership. In this situation, decisionmaking

must

be

enabled

and bureaucracy should

be

minimized. This lends itself well to pre-bureaucratic stuctures in

which everyone involved is empowered to take the reins and
employ their creativity and innovation.
In the collectivity stage, momentum has been created and
expansion is required. This is where functional or divisional

strategies may begin to emerge, enabling managers to

build teams and delegate tasks.
Companies continue to expand in the formalization stage,
requiring increased bureaucracy and more levels of authority to
approve a given decision. In this stage they grow large enough
to accommodate functional,
even matrix structures

divisional,

in

order

to

or

produce

at

scale.

Organizations in this stage must be careful not to fall too

strongly

into

rigid

structures

that

inhibit

or

disrupt efficiency, communication, or decision-making.

The Enterprise Life Cycle comes strongly into play in the
elaboration stage. During this stage the organization must
retain

its

relevance

in

the

industry

through

reinforcing

competitive advantages and/or creating new products to fill

changing consumer needs. This requires a great deal of
organized creativity and exploration of new markets, which may
justify

team

or

divisional

structures

within

the

broader

organizational structure. Such structures allow small teams to

experiment and react quickly as they try new entrepreneurial
strategies while the larger organization maintains operative
efficiency in established markets.