Wheels within wheels.

[pbrower2a]

(10-16-2019, 02:25 PM)Eric the Green Wrote: Toynbee is a cyclic theorist. The basic idea of cyclic theory is not that everything is always in decline, but that after a decline and death a new birth comes. The question is where are we on the cycle. And how do you define who "we" are, and what a rise and decline looks like, and so on. And what is the length of the cycle you refer to, since there may be many. Different theories have different answers.

I tend to agree that the Renaissance was the start of our civilization, but I prefer to think that the Renaissance era ended at the turn of the 20th century. Our times today since then are not just a continuation of the Renaissance, but a new beginning that altered that older era. That puts us close to a beginning of a civilization cycle rather than near the end. But if you define our civilization as having been founded by the Declaration of Independence, then we are farther along.

Toynbee is not quite cyclical. Every civilization rises from seemingly nothing, perhaps a clan or tribe a bit more successful than its neighbors. Maybe someone innovates, finding a more efficient way to herd livestock or irrigate crops. Maybe it does war a little better. Maybe it has attractions in its culture.A possible analogue is the firm. To be sure, one does not want government to operate like a business. I do not know whether this business analyst read Toynbee, but the parallels are evident:

http://www.adizes.com/lifecycle/




So that I can provoke some thoughts about business in general. 

 

Courtship is the first stage of an organization's development. At this stage, the company is not yet born. It exists as a gleam in the Founder(s) eye. The focus of Courtship is necessarily on dreams and possibilities.

The primary goal of this stage is to build the Founder's enthusiasm and commitment to his dream. The higher the risk, the deeper the commitment needed. As Conrad Hilton said, "If you wish to launch big ships, you have to go where the water is deep."

In Courtship, it is normal to experience fear, uncertainty and doubts. What exactly are we going to do? How is it going to be done? When should it be done? Who is going to buy this and why? Now is the time to wind-tunnel test the brilliance of the Founder's vision.

The goal of the fledgling business should be to add value and satisfy market needs. Founders that are in it solely for the money, often don't have the fortitude to sustain their companies over the rocky road they will encounter in Infancy and Go-Go. A useful definition of a Founder is someone with; "unreasonable conviction in the face of insufficient evidence." By definition, most will think that the idea for the new business is risky, and probably won't work. It is not important that everyone else believes it will work. It is crucial that the Founder(s) believe it will, and are committed to doing whatever it takes to make the new company succeed.

Infancy begins the moment financial risk has been undertaken and the Founder quits her paying job, signs the loan documents or promises 40% of the company to outside investors.

Infant organizations are necessarily action-oriented and opportunity-driven. The focus instantly changes from ideas to action. The time for talking is over. It is time to get to work and produce results (sales and cash). Like a real baby, Infant organizations need two things to survive: 1) periodic infusion of milk (operating capital), and 2) the unconditional love of their parents (Founder(s).

Like a newborn baby learning to walk, performance in Infant organizations is inconsistent. Unexpected crises appear with little notice. Because Infant organizations lack systems, it's easy for them to get into trouble. Moving from one crisis to the next is normal. The Founder and all employees constantly test the limits of their endurance for work, stress and confusion. Employees are often attracted to Infant companies for reasons that go far beyond money; and their loyalty to the team often extends beyond the struggling Infant's ability to pay them. They end up working seven days a week and sleeping under their desks but still there is not enough time and talent to do everything that must be done.

A Go-Go organization is a company that has a successful product or service, rapidly growing sales and strong cash flow. The company is not only surviving, it's flourishing. Key customers are raving about the products and ordering more. Even the investors are starting to get excited. With this success, everyone quickly forgets about the trials and tribulations of Infancy. Continued success quickly transforms this confidence into arrogance, with a capital A.

Go-Go companies are like babies that have just learned to walk. They can move quickly and everything looks interesting. Fueled by their initial success, Go-Go's feel that they can succeed at almost anything that comes their way. Accordingly, they try to eat everything they touch. On Friday night the Founder of a Go-Go retail shoe business goes away for the weekend. On Monday morning, he walks into the office and announces, "I just bought a shopping center". This does not surprise the employees. It has happened before. The success of the Go-Go is the realization of the Founder's dreams, and if one dream can be realized, why not other dreams too? "What we did for shoes we can do for a whole mall". This arrogance is a major asset of the Go-Go, but when taken to an extreme, it is also how they get into trouble.

During the Adolescent stage of the organizational lifecycle, the company is reborn. This second birth is an emotional time where the company must find a life apart from that provided by its Founder. This critical transition is much like the rebirth a teenager goes through to establish independence from their parents.

The Adolescent company teeters on the brink of both success and disaster. So long as the Adolescent company does well, investors and the Board regard the Founder as a genius with a golden touch. However, when the infrastructure collapses, sales slow down, costs mushroom or profits decline, the finger pointing begins in earnest. The Founder, accustomed to the magic of adoration, is instantly transformed into a goat who is no longer up to the task of leadership.

Adolescence is an especially stormy time characterized by internal conflicts and turf wars. Everyone seems at odds with everything. Sales fall short or exceed production's estimates, quality is not up to customer expectations, and old timers plot against the new hires. Emotions are volatile and organizational morale traces a jagged line: ecstasy in one quarter, depression and dejection in another. Throughout the organization, people are busy tracking the real and imagined injustices they have suffered, which they nurse with great care. The Founder's safe conduct through this tempest is by no means guaranteed. If these conflicts are not resolved, Adolescent companies can find themselves in Premature Aging that can lead to the early departure of entrepreneurial leadership, or the professional managers leading to pathologies called Divorce or Premature Aging.


Prime is the optimal position on the lifecycle, where the organization finally achieves a balance between control and flexibility. Prime is actually not a single point on the lifecycle curve. Instead, it is best represented by a segment of the curve that includes both growing and aging conditions. This is because flexibility and self-control are incompatible and there is no stable equilibrium. Sometimes the Prime organization is more flexible than controllable, and sometimes it's not flexible enough.
These are the characteristics of an organization in Prime:

• The organization is guided by the vision of its reason for being. There is a clear purpose and people know what they will do, and will not do, "they walk their talk".
  
• The company operates in a focused, energized and predictable manner.
  
• Stretch goals are set, aligned and consistently achieved.
  
• There is an enterprise-wide focus on customers and earning their long-term satisfaction. There is a high degree of customer loyalty. At the same time, the organization knows when and how to say "no" to the market. It is disciplined enough to protect itself.
  
• Priorities are clear. The organization knows what to do, and what not to do. It enjoys a certain composure and peace of mind when making tough decisions.
  
• The entrepreneurial spirit is fully institutionalized. Evidence of organizational fertility abound. This creativity repeatedly produces controlled, profitable innovation.
  
• Organizational structures work well. Opposing forces are balanced. There is alignment between vision, strategy, structure, information, resource allocation and rewards. A company in Prime is continuously realigning these subsystems.
  
• The infrastructure provides reliable support.
  
• The governance process is institutionalized. People know and understand where and how decisions are made.
  
• Decision-making is done is an environment of healthy, constructive conflict. Points of view are considered, but there are no hard feelings if one's recommendations are not heeded. Differences of opinion rarely deteriorate into personality clashes or turf wars.
  
• There is intra- and inter-organizational integration and cohesion with clients, suppliers, investors, and the community. This internal cohesion enables the Prime organization to devote much of its energy externally.
  
• People enjoy working at the company. Few willingly leave and there is a backlog of people applying for positions at all levels.
  
• They embrace change. Prime companies work hard to adapt to changes in markets and technology so that they can gain share from weaker competitors.
  
• They enjoy consistent, above average growth in both sales and profits.
  

So far, so good. But this halcyon era comes to an end.

The Fall is positioned at the top of the Lifecycle curve, but it is not the place to be. That position is Prime, where organizational vitality is at its maximum. Companies that are in the The Fall phase have started to lose their vitality and are aging. When an organization first begins to age, the symptoms won't show up on its financial reports. In fact, the opposite is true. The Fall companies are often cash rich and have strong financial statements. Like medical tests, financial statements reveal a problem only when abnormal symptoms finally surface late in the Aristocracy stage. If you wait until the signs of aging appear in the numbers, the company will already be significantly aged. If you want to catch aging early, you must look elsewhere.

When people begin to age, the initial signs aren't apparent in their actions or bodies. Aging starts in their minds with subtle changes in attitude, goals, and their outlook on life. This is also true for companies. When an organization starts to age, the first place the symptoms appear is in the attitudes, outlook and behaviors of its leaders.

The leaders of The Fall companies are starting to feel content and somewhat complacent. This attitude has been developing for some time. The company is strong, but it is starting to lose flexibility. It is at the top of its lifecycle curve, but it has expended nearly all of the "developmental momentum" it amassed during its growing stages. The rocket is slowing down and starting to change direction and head down the lifecycle curve. The organization suffers from an attitude that says, "If it ain't broke, don't fix it." The company is losing the spirit of creativity, innovation, and the desire to change that brought it to Prime. It has sown the seeds of mediocrity. As the desire to change lessens, the organization mellows. There is less contention than in previous stages. More and more, people are adhering to precedence and relying on what has worked in the past. The company's dominant position in the marketplace has given it a sense of security. From time to time, creativity and a push for change surface, but such eruptions become less and less frequent. Order and predictability prevail. To avoid endangering success, people opt for conservative approaches.

As organizations enter Aristocracy they characteristically:

• Are cash rich and have very strong financial statements.
  
• Have reduced expectations for growth.
  
• Demonstrate little interest in conquering new markets, technologies, and frontiers.
  
• Focus on past achievements rather than future visions.
  
• Are suspicious of change.
  
• Reward those who do what they are told to do and punish those who do not.
  
• Are interested in reducing their risks.
  
• Invest much more on control systems, benefits, and facilities than they do on R & D.
  
• Form dominates function in the organizational climate. More emphasis is placed on how things are done, than what was done.
  
• Value uniformity, consistency and formality in dress, decorum, and behavior.
  
• Employ individuals who are concerned about the company's vitality, but are willing to abide by a "don't make waves" operating motto.
  
• Engender only negligible innovation with internal efforts.
  
• Acquire other products or companies for new products, markets, and entrepreneurship to feed into their distribution channels and operating systems.
  
• May be takeover targets themselves.
  

When an Aristocracy is unable to reverse its downward spiral and the artificial repairs finally stop working, management's mutual admiration society abruptly ends. The good-old-buddy days of the Aristocracy are gone, and the witch-hunts of Recrimination begin. Companies in this stage exhibit the following behaviors:

• People focus on who caused the problems, rather than on what to do about the problems.
  
• Problems get personalized. Rather than dealing with the organization's problems, people are involved in interpersonal conflicts, backstabbing, and discrediting each other.
  
• Paranoia freezes the organization.
  
• Personal survival and turf wars absorb all available energy leaving precious little to deal with the needs of customers or the world outside the organization.
  

The Witch Hunt

Everyone is busy trying to find out who caused the disaster. With blades drawn, it's backstabbing time in the boardroom. Like primitive tribes afflicted by extended drought or famine, there is a rush to appease the gods. The organization needs a sacrifice. Whom does it sacrifice? The fairest maiden, the finest warrior, or the cream of the crop? Typically, the management of a company in Recrimination sacrifices its most valuable and scarcest treasure.........the last vestiges of innovation and creativity. The company fires the EVP of Marketing, explaining, "We're in the wrong market with the wrong products and our advertising does not work." The heads of Strategic Planning, Business Development and Engineering are the next to find themselves on the street. "Our strategy does not work. Our acquisitions are not working. Our products and technology are obsolete." The people who get fired don't feel they are responsible for the company's situation. The Marketing VP often said that the company ought to change its direction. The strategist has an ulcer worrying about the lack of direction. Privately, these individuals complained, urged, begged, and threatened, but their efforts were like pushing wet spaghetti up a hill. Their exodus merely exacerbates the problem because these creative people are the indivduals the organization needs most for survival.

Although it should be dead, the company in Bureaucracy is kept alive by artificial life support. The company was born the first time in Infancy, it was reborn in Adolescence, and its third "birth" is in Bureaucracy when it gets an artificial continuance on its life. Death occurs when no one remains committed to keeping the organization alive. If there is no business or government commitment to supporting a company in Recrimination, death can occur instead of bureaucratization.

In the Bureaucratic stage, a company is largely incapable of generating sufficient resources to sustain itself. It justifies its existence by the simple fact that the organization serves a purpose that is of interest to another political and business entity willing to support it. The Bureaucratic organization:

• Has many systems and rules and runs on ritual, not reason.
  
• Has leaders who feel little sense of control.
  
• Is internally disassociated.
  
• Creates obstacles to reduce disruptions from its external environment.
  
• Forces its customers to develop elaborate approaches to bypass roadblocks.
  
  

Finally, when creditors pull the plug on infusions of cash, when clients choose elsewhere rather than deal with this company, when a government chooses to cease subsidies, along comes

Death when no one remains committed to sustaining the organization. Monopolies and government agencies that are quarantined from competitive pressure and provide a large employment base, often live long and very expensive artificially prolonged lives.