Managing Organizational Evolution

MANAGING ORGANIZATIONAL EVOLUTION
ALI ASLAM SHAIKH

UMAR AHMED
RIDA KALEEM
MELINA FRANCIS
ANNAMARIE FERNANDES
ORGANIZATIONAL SIZE
Organizational Size
Number of employees working in an organization.
In what circumstances, organizations are forced to increase their size?

• Pressure for growth: Grow fast and large
Tap other regional markets
• Threat of globalization
ORGANIZATIONAL SIZE
• Threat of globalization:
1. Expand business for survival
2. Invest in advanced technology
3. Access to new and untapped markets
4. Control distribution channel
Organizational Life-Cycle
1. Entrepreneurial Stage
✔ Birth of an organization
✔ Informal organization (no or less formalization)
✔ Emphasize on development of product/service.
✔ Non – bureaucratic organization
✔ Product line: Single or Few
✔ Innovation is by owner.
✔ Goal is survival
✔ Crises: Need for Leadership
✔ Control Strategy: Creativity
2. Collective Stage
✔ Organization enjoys a youth time period.
✔ Direction is set by Top Management.
✔ Goal settings and procedures are emerging.
✔ Pre-bureaucratic organization
✔ Division of labor
✔ Employees associate with the organization’s mission and core values.
✔ Product line: variation
✔ Management Style: Direction given
✔ Goal is growth.
✔ Crises: Need for Delegation by Middle Management
✔ Control Strategy: Provision of clear direction
3. Formalization Stage
✔ Organization is in the mid-life time period.
✔ Formalization is at its peak.
✔ Bureaucratic organization
✔ Division of labor
✔ Top management is concerned with strategic planning * operations are looked after by Middle
Management.
✔ Communication is less frequent & more formal.
✔ Innovation is done by a separate R&D Dept.
✔ Management Style: Delegation with control
✔ Goal is internal stability & market expansion.
✔ Crises: Red tape
✔ Control Strategy: Addition of internal systems
4. Elaboration Stage
✔ Product line: Multiple
✔ Limit bureaucracy
✔ Organization is split into multiple divisions
✔ Innovation is done by a separate R&D Dept.
✔ Management Style: Team approach
✔ Goal is reputation and goodwill
✔ Crises: Need for revitalization
✔ Control Strategy: Development of Teamwork
5. Decline Stage
✔ Decline occurs when an organization fails to anticipate, recognize, avoid, neutralize,
or adapt to external or internal pressures that threaten its long-term survival.
✔ Decrease in an organization’s resource base occurs over time.
✔ Shrink in consumer demand due to taxation
✔ Shift in consumer demand.

Causes of Organizational Decline
Organizational Atrophy
1) Faced by large, bureaucratic organization
2) Loss of ability to respond to changing environment
3) Administrative matters/system become counterproductive
Vulnerability
1) Loss of resources
2) Loss of market share due to outdated technology
3) Faced by Small & Medium Enterprises (SMEs) and Ancillary business.
Causes of Organizational Decline
Environment Decline/ Competition

1) Stagnant economy
2) Flat/ shrinking market
3) Increased competition
4) Other regional players may provide quality product in reasonable pricing.
A Model of Decline Stages
1. Blinded stage
- Internal changes are not noticed
- External changes are not noticed.
- Disharmony b/w company and customers
- Appropriate response/ strategy: Gain good information
Kodak was a dominant player in the photographic film industry. However, it

failed to recognize the rapid shift towards digital photography. Despite
inventing the first digital camera in 1975, Kodak was blinded by its success
in film sales and did not capitalize on digital photography early enough.
2. Inaction
- Denial state
- Problems are not acknowledged
- Shortcuts like creative accounting or window dressing is done by managers
- Appropriate response/ strategy: Prompt action
Blockbuster was a leading video rental chain. Despite recognizing the threat
posed by online streaming services like Netflix, Blockbuster failed to take
significant action to innovate its business model. They declined to buy
Netflix when offered and stuck to their traditional rental model for too long.
3. Faulty stage
- Due to information bombardment, incorrect actions are taken
- Appropriate response/ strategy: Retrenchment
Blackberry, once a leader in the smartphone market, attempted to recover

from its declining market share by releasing new models and a new
operating system. However, these actions were insufficient as they failed to
match the innovation and user experience provided by competitors like
Apple and Android devices
4. Crises Stage
- Faith of stakeholders is lost
- Panic state
- Appropriate response/ strategy: Revitilization
Lehman Brothers, a global financial services firm, entered a crisis stage during
the 2008 financial crisis due to excessive exposure to subprime mortgages.
Despite attempts to secure a buyer or a government bailout, the firm was forced
to declare bankruptcy, causing a significant impact on the global financial
system.
5. Dissolution
- Game is over
- Decline is irreversible
Toys "R" Us, a renowned toy retailer, went through prolonged financial
difficulties due to mounting debt and increased competition from online retailers
like Amazon. Efforts to restructure and revamp stores were too late, leading to
the company filing for bankruptcy and closing all its stores in the United States.
Managing Downsizing
Downsizing is reduction in the workforce to become cost effective.

The myth is that top management is reluctant to have face to face meetings
with the displayed workers that may lead to spread of negative word of mouth.
Managing Downsizing
Techniques to smooth downsizing process
1) Communicate more, not less.

2) Provide assistance to displaced workers
3) Help survivors thrive
Turnaround Strategies
• Entrepreneurial approach • Efficiency approach

– Create new products – Reduce operating costs
– Increase R & D – Increase use of existing assets
– Enter or create new markets – Drop failing aspects of business
– Apply Blue Ocean Strategy – Cut inventories
Organizational Control Strategies
The strategies for control came from a framework for organizational

control proposed by William Ouchi.
Market Control: Competition, prices, exchange relationship

Bureaucratic Control: Legitimate authority, hierarchy, standards, rules
Clan Control: Trust, shared values, beliefs, traditions
Market Control
Market control uses external market mechanisms such as prices,

competition, and market share to evaluate and regulate organizational
performance. The focus is on how well the organization responds to
market conditions, with performance metrics often tied to financial results
and competitive positioning.
Apple Inc.: Apple uses market control by setting ambitious sales targets for its products based on
market demand and competition. For instance, when launching a new iPhone, Apple analyzes
market trends, consumer preferences, and competitor pricing. Performance is measured by sales
figures, market share, and revenue. If the sales of a new product fall short, Apple adjusts its
strategy, such as by revising prices, increasing marketing efforts, or improving the product based
on customer feedback.
Bureaucratic Control
Bureaucratic control relies on formal rules, policies, procedures, and

hierarchical authority to manage and control organizational activities. It
emphasizes standardized processes, clear job descriptions, and a well-
defined chain of command to ensure consistency and efficiency.
McDonald's uses bureaucratic control to maintain consistency and quality across its global
franchises. The company has detailed procedures for every aspect of its operations, from food
preparation to customer service. Each franchise follows strict guidelines to ensure that every
McDonald's location delivers a uniform experience. Managers regularly conduct audits and
inspections to ensure compliance with these standards. For example, cooking times, ingredient
quantities, and cleanliness protocols are meticulously documented and enforced.
Clan Control
Clan control focuses on shared values, beliefs, traditions, and

socialization within the organization. It relies on creating a strong
organizational culture where employees are aligned with the
company’s goals through mutual trust, teamwork, and a sense of
community. This approach fosters intrinsic motivation and loyalty
among employees.
Clan Control
Google exemplifies clan control through its emphasis on a strong

corporate culture and employee engagement. Google fosters an
environment of innovation and collaboration with open communication
channels, flexible work arrangements, and numerous team-building
activities. The company promotes shared values such as creativity,
diversity, and continuous learning. Employees are encouraged to
contribute ideas and work together on projects, often in cross-functional
teams. Google's unique work culture includes perks like free meals,
wellness programs, and opportunities for professional development,
which help build a cohesive and motivated workforce.
Clan Control
Toyota uses a blend of bureaucratic and clan control. Its production

system, known as the Toyota Production System (TPS), relies on
standardized procedures and continuous improvement (kaizen). At the
same time, Toyota emphasizes teamwork, employee involvement, and
a shared commitment to quality, which are hallmarks of clan control.
By understanding and implementing these control strategies,
organizations can better align their internal processes with their overall
strategic goals, ensuring efficiency, adaptability, and long-term
success.

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MANAGING ORGANIZATIONAL EVOLUTION

ALI ASLAM SHAIKH

In what circumstances, organizations are forced to increase their size?

✔ Decrease in an organization’s resource base occurs over time.

✔ Shrink in consumer demand due to taxation

✔ Shift in consumer demand.

Environment Decline/ Competition

Kodak was a dominant player in the photographic film industry. However, it

Blackberry, once a leader in the smartphone market, attempted to recover

Downsizing is reduction in the workforce to become cost effective.

Techniques to smooth downsizing process

1) Communicate more, not less.

• Entrepreneurial approach • Efficiency approach

The strategies for control came from a framework for organizational

Market Control: Competition, prices, exchange relationship

Market control uses external market mechanisms such as prices,

Bureaucratic control relies on formal rules, policies, procedures, and

Clan control focuses on shared values, beliefs, traditions, and

Google exemplifies clan control through its emphasis on a strong

Toyota uses a blend of bureaucratic and clan control. Its production

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