Stage of the organizational life cycle

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Read the following information and discuss, "How can a corporation keep from sliding into the Decline stage of the organizational life cycle?" Use examples from "The Icarus Paradox:  Trajectories of Decline".

The Icarus Paradox: Trajectories of Decline

In The Icarus Paradox, Miller proposes that companies go into decline because the very characteristics that helped make them successful tend to be taken to extremes over time and eventually cause a decrease in performance.  A successful firm develops a theme based on a mission and a mutually supportive configuration composed of strategies, policies, structure, and culture.  Success creates momentum, causing organizations to keep extending their theme and configuration until they push too far and eventually start to decline.  Based on studying over 100 companies, Miller found four very common "trajectories" of decline.

  • Focusing trajectory turns quality driven Craftsmen with masterful engineers and excellent operations into rigidly controlled, detail obsessed Tinkerers making perfect products with little appeal to the marketplace. By focusing on perfection and not on the marketplace, they alienate customers. By the end of World War II and before Daniel Krumm broadened the company's product lines, Maytag was probably well on its way to becoming a niche-oriented tinkerer of high quality washing machines.
  • Venturing trajectory converts growth driven, entrepreneurial Builders with imaginative leaders and brilliant financial staffs into impulsive, greedy Imperialists who squander their resources by expanding helterskelter into businesses they know nothing about. ITT under Harold Geneen was first a brilliant success in conglomerate diversification, but eventually could not keep track of all its acquisitions and went into decline.
  • Inventing trajectory turns Pioneers with unexcelled R&D and state of the art products into utopian Escapists, dominated by cults of free spirited scientists in pursuit of interesting inventions with little market appeal. Polaroid under Dr. Land became an escapist firm when it continued to develop wonderfully innovative products, but forgot about the marketplace.
  • Decoupling trajectory converts Salesmen with superior market skills and prominent brand names into aimless, bureaucratic Drifters whose sales orientation ignores product development and produces a stale and disjointed line of "metoo" products. For years, Xerox took advantage of its patented technology to make and sell high quality copy machines. Its focus on current sales and profits allowed it to ignore innovative developments in computers at its Palo Alto Research Center.

Source:

D. Miller, The Icarus Paradox: How Exceptional Companies Bring About Their Own Downfall (New York: Harper Business. 1990).

Reference no: EM131163388

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