The solution to today's problems inevitably entails preparation for tomorrow's tasks. The future of the company, its heyday or collapse, depends on how efficiently the problems facing the organization and the ability to overcome obstacles invisible to the ordinary eye are resolved. According to the theory of Yitzhak Adizes, designated as managing the life cycle of a corporation, the functioning of any company is influenced by the same factors on the development path.
The difficult role of a leader
All forms of organizational management of any company, organization or enterprise are aimed at the result. Therefore, all kinds of changes and their consequences have a direct impact on the development of the company.
Models of behavior in case of problems are predictable and can be caused by the following characteristic factors:
- Disintegration of the control system.
- Similar causes of problems.
- A predictable model of behavior in solving the difficulties encountered.
- The occurrence of normal and abnormal problems.
- Leadership requires the company to constantly change, while maintaining the integrity and stability of the organization.
Corporate life cycle management can be objectively systematized and divided into several characteristic stages.
Mysterious PAEI
The duration of the organization, its success in the near and future period of time is determined by various properties and the ability to perform certain functions.
The book by management guru Yitzhak Calderon Adizes, Corporate Life Cycle Management, defines PAEI as an approach or code that needs to be applied in the development of any organization. This system of measures has gained recognition in the business world.
The PAEI model (Production, Administration, Entrepreneuership, Integration) consists of various functions that an organization needs to use to ensure vital functions, and is conditionally divided into four main segments:
- P - a product or service that is produced to meet consumer demand. This function answers the question of what the company needs to do to create or develop.
- A - administration and effective management. The purpose of this stage is the ability to determine how to do this (release a product, service).
- E - enterprise as the ability to constantly search for prospects, the ability to set new goals in connection with a changing market, quick adaptation to variable conditions. He is responsible for expediency, explains when and why this should be done.
- I - integration, or the ability to unite a team and achieve goals together. Definition function: who should do this?
The impact of PAEI on company development
Management functions have a significant impact on the management of the life cycle of a corporation, since each is aimed at solving a specific problem and achieving an exact goal. Successful completion of all tasks of the PAEI code not only forms the company’s working style, but also ensures its profitability and comfortable existence on the market. However, in his book Corporate Lifecycle Management, Yitzhak Adizes argues that most organizations successfully complete only one or two of the functions considered.
What do companies lose sight of, what opportunities are not used from those offered by PAEI?
- P - the production cycle is aimed at creating functionality and results, has a short-term form, is not calculated as an indicator for the long term. Basically, the product or service produced produces results in the short term and can be replaced at any time, depending on market requirements.
- A - competent administration turns the organization into a well-functioning business system that can effectively solve tasks. In corporate lifecycle management, everything should be focused on short and long term prospects.
- E is the most productive and creative function of management activities, always ready for proactive and anticipatory actions, aimed at the long-term perspective in the organization’s activities.
- I - function of the effectiveness of team efforts that are required yesterday, today, tomorrow; the successful use of this function always determines the long-term development prospects of the company.
Scheduled development or common growth diseases
Summarizing the experience of many companies from various countries, they developed a methodology for recognizing organizational changes specific to business development. Its author is Yitzhak Calderon Adizes. Corporate life management is a research that fundamentally changes ideas about ways to increase company performance. According to the model proposed by I. Adizes, the formation and development of the company goes through several stages, expressed in the schedule.
Three stages at the beginning of the journey
The original seed in the methodology of the management guru is the identification of the origin of business with the beginning and development of relations between people. From the graph of the life cycle model, the first three stages of development are defined as:
- courtship - courtship;
- infancy - infancy;
- go-go or c'mon.
In conjunction with the PEAI code, the first three stages can be characterized as follows:
- At the first stage of “courtship”, the PEAI model is valid, since the organization exists in the form of an idea or intention to organize a type of business. Function E, or the entrepreneurial component of the code, is most pronounced. At this stage, two development paths are possible, the emergence of an organization, or an idea remains an idea. “A company is born when there is a material manifestation of devotion to the idea, that is, when the founder of the company takes the risk” (Iskak Adizes, “Corporate Life Management”.
- The second stage of the schedule of the control cycle, or infancy, is characterized by the most pronounced P in the coordinate system. This is the production stage when the idea is realized, but the company’s management is still in its infancy and has not been worked out according to the company's procedures, budget or policies. Behind the bustle and organizational issues development prospects may be missed. During this period, the company feels the need to attract working capital, is subjected to pressure from short-term and minute decisions, which, according to the guru, can lead to death in infancy.
- The next stage of development (“come on, come on”) leads to the PaEi indicator. What does it mean to preserve the result (P) when seeing prospects (E). The danger of the stage, according to the Adizes methodology, lies in the excessive arrogance of the organizers and an intuitive approach to doing business, focused mainly on growth rates. If at the stage of the third stage of development administration is not organized with the introduction of regular management, then the company will inevitably fall into the “trap of the founder” when management is inherited.
According to market experts, the main share of companies in our country is going through this very stage with a rapid growth into "Youth".
Where youth is, prosperity is not far off
A few more steps, defined by the model proposed by Yitzhak Calderon Adiez, in managing the life cycle of a corporation. It:
- Youth.
- Heyday.
- Stability, or late flowering.
A detailed study of the company's life cycles again leads to the PAEI model and the corresponding “imbalances” in acronym preferences. In cycles, it looks like this:
- Adolescence (or youth () is characterized by pAEi, or the transition from entrepreneurship (p) to professional management (A) with the delegation of managerial authority. There are changes in the production policy of the company (E), the transition from the pursuit of production volumes to strengthen quality indicators. stage, conflicts may arise between the "old" and "new" personnel of the company, corporate and individual goals, between the founders and collective interests. Only a clear distribution will save the situation responsibility, the introduction of information systems to assess the work of everyone. Otherwise, "premature old age" (failed business) is guaranteed.
- Stage Prime (flowering) implies the development of three indicators PAEi. Focus on efficiency and outcome (P) with developed administration (A) and control of prospects (E) gives excellent growth rates and stability. At this stage, the focus is on customers and employees, the stage of creation and creativity with clear and defined values. At this stage, it is possible to create new lines of business, which will significantly increase the life cycle of the company.
- Late Prime, or late prosperity, it is, according to the methodology of the guru, defined as stability with the PAeI code. At this stage, the organization is characterized by performance indicators (P), the strengthening and streamlining of management methods (A), and developed corporate friendship (I). However, the reluctance to be active in the market (e) leads to the loss of innovative ideas, to the appearance of a routine even in interesting and pleasant changes for employees and earnings. The danger is that the emphasis on current achievements deprives the company of a vision of development prospects.
How business aristocrats become bureaucrats
At the next stages, a huge role in the development of the corporation is played by internal relations, the absence of conflicts and minimizing all kinds of changes. The last stages of aging of an Adizes company are:
- Aristocracy. At this stage, the indicator A, I plays the most important role in the pAeI model system. Neither results, nor entrepreneurship play a big role, risky decisions are not made, the influence of administration is growing, this is the time of meetings and conference rooms, corporate clothes, cool-polite relations. The focus is on past achievements.
- Early bureaucracy (pAei) develops in the next stage of the organization's obvious and disappointing results. Management is busy finding the culprit, managers are struggling with each other to survive and stay in the corporation; interest groups are created that are friends against the chosen scapegoat and the witch hunt conducted by the leadership.
- Bureaucratization - this stage systematically leads to the fact that the organization is isolated from external contacts, leaving one telephone channel for the right customers. Invented and used new procedures, rules, instructions that are not relevant to the organization, but create problems for customers. Potential customers are forced to leave due to unwillingness to overcome new bureaucratic obstacles.
- Death is the stage at which an organization cannot demonstrate effective leadership, enterprise, innovation, or well-coordinated teamwork. She ceases her activities.
A light in the end of a tunnel
The practical application of the Adizes model raises a logical question: are all doomed? Yes and no. Indeed, practical observation of enterprises at all stages of development shows that organizations go the same way. Nevertheless, some manage to avoid "death" in the timely determination of prospects.
There are many examples in the history of business when companies managed to avoid deadly management and bureaucratization. Nokia has been counting its history since 1865, and in those days it started the business of producing wood pulp. However, having managed to make out in time the prospects and changes of the market, now it is one of the largest manufacturers of communications.
Motorola started by buying a bankrupt communications enterprise, and then, through the introduction of innovations, it released the first radio receiver, the first commercial GPRS-based mobile phone.
Examples can be given, but not the point. And the fact is that each stage of the organization’s development leads to a new starting point in business that cannot be missed.