Organizational development (OD) is a field of study and practice that focuses on improving organizational effectiveness and promoting positive change within an organization. The phases of organizational development represent a framework for understanding the stages an organization goes through as it evolves and develops over time.
While different models and frameworks exist, I like this one based on a previous discussion I had with Joe Sherren who owned Ethos Enterprises Inc CSP, Hall of Fame Speaker, International Speaker, Author of ‘Vitamin C For A Healthy Workplace’. Joe specialized in areas such as leadership, team development, communication, and organizational effectiveness. He worked with a wide range of organizations, helping them navigate various challenges and improve their overall performance. Joe was a colleague, a mentor, and a friend and I am honoured to share a summary of what we discussed below.
Organizations go through a set of distinct and predictable phases as they mature and they will also experience a very specific set of problems as they reach the crisis turning point.
Joe outlined the following stages in Organizational Development:
Entrepreneurial Phase in Organizational Development
Characteristics: In this phase, organizations are typically founded by entrepreneurs or small groups of individuals who take the lead and have a strong creative influence. Decision-making is centralized, and the organization is flexible and responsive to change. The focus is on developing a product or service, finding a market, and establishing the organization’s identity. Employees share the dream. They know why they come to work. They are empowered. It is a fun place to be. There are no or few policies and the focus is on growth.
Challenge: The main challenge is to establish a viable business model, secure funding, and establish a customer base. 70% of companies in this stage fail within 10 years, as they often do not learn to work smarter rather than harder.
Opportunity:
- Innovation and Creativity: Leverage the creativity of the founding team to develop unique products, services, or solutions that stand out in the market.
- Flexibility: Embrace the flexibility of decision-making to quickly adapt to changing market conditions and customer needs.
- Networking: Build strong relationships with potential investors, partners, and customers to establish a solid foundation for growth.
- Training: At this point, the organization is in need of team development, meeting skills, financial management, time management, and sales and marketing skills.
Bureaucratic Phase in Organizational Development
Characteristics: In this phase, organizations continue to grow, they start to choose their customers based on specific criteria, and the management structure becomes more complex. Leaders must delegate decision-making authority to middle managers and teams. Formal structures, roles, and procedures are established to manage increasing complexity. Hierarchies become clearer, and roles are specialized.
Challenge: This can lead to communication issues and conflicts between layers of management. Necessary policies are developed along with organizational charts, but often these stifle the creative process. The challenge here is to strike a balance between efficiency and flexibility. Bureaucratic structures can lead to rigidity and slow decision-making.
Opportunity:
- Process Improvement: Streamline and optimize operational processes to enhance efficiency while maintaining the ability to adapt to changes.
- Talent Development: Invest in training and development programs to cultivate specialized skills within the organization.
- Structured Communication: Maintaining open communication becomes important. Implement formal communication channels to ensure clear and efficient information flow throughout the organization.
- Training: At this point, the organization is in need of customer service, conflict management, stress management, and resiliency building.
Silo Phase in Organizational Development
Characteristics: Specific products and services are focused on with a focus on ROI, ROA and ROCA. Lines of business are developed and strategic business units exist.
Challenge: Different departments or teams within the organization become isolated from each other. Communication tends to be limited within each silo, leading to a lack of collaboration and synergy. Communication becomes more complicated both internally and for the customer. Conflict increases as each area competes for resources and importance.
Opportunity:
- Cross-Functional Collaboration: The main challenge is to break down these silos and encourage cross-functional collaboration in order to foster innovation, creativity, and a broader perspective on challenges.
- Team-Building: Improving communication and fostering a shared organizational culture become priorities. Organize team-building activities and workshops to break down barriers and build relationships across silos.
- Shared Goals: Align departments with common organizational goals to promote a sense of unity and shared purpose.
- Training: At this point, the organization is in need of team building, communication skills, meeting effectiveness, and accountability and values development.
Matrix Phase in Organizational Development
Characteristics: The company aligns with the customer. The matrix phase involves the implementation of a matrix organizational structure, where employees report to both functional managers and project or team managers. This is done to enhance flexibility and collaboration.
Challenge: Employees are burdened with many meetings and no direct lines of reporting. There is usually a duplication of efforts across the company. The complexity of the matrix structure can lead to power struggles and conflicts.
Opportunity:
- Flexible Expertise: Capitalize on the diverse expertise of employees by allowing them to contribute to different projects and teams. Clear communication of roles and responsibilities is also essential to avoid confusion.
- Interdisciplinary Solutions: Encourage teams to collaborate on complex problems, combining skills from multiple areas for comprehensive solutions.
- Project Management Skills: Develop project management capabilities within the organization to effectively manage the complexity of the matrix structure.
- Training: At this point, the organization is in need of negotiation, team leadership, conflict resolution, life balance, and change management skills.
Empowered Team in Organizational Development
Characteristics: In this phase, organizations shift towards more decentralized decision-making. Teams are empowered to make decisions, and there’s a focus on employee engagement and autonomy. Strategic Objectives are focused on a balanced scorecard – money/profitability, employee satisfaction and customer satisfaction. Empowered teams live values rather than follow rules.
Challenge: Organizational culture must support empowerment while maintaining alignment with overall goals.
Opportunity:
- Innovation Culture: Foster a culture that values and rewards innovative ideas from empowered teams, driving continuous improvement.
- Employee Development: Provide training and resources to empower teams to make informed decisions and take ownership of their projects.
- Responsibility and Accountability: Create a system that holds empowered teams accountable for outcomes, encouraging a sense of pride and ownership. Ensuring that teams have the right resources, skills, and support to make informed decisions is crucial.
- Training: At this point, the organization is in need of cultural development, creative thinking, future -thinking, life balance, and strategic thinking.
These phases provide a general framework for understanding organizational development. It’s important to note that these phases are not always experienced in a linear or sequential manner. Organizations can move back and forth between phases as they adapt to changing internal and external factors. Additionally, different organizations might experience these phases differently based on their industry, size, culture, and other contextual factors.
So What Does The Future Hold?
At that time Joe suggested Virtual Partnerships
Teams are formed as needed. Employees will have careers but not job focused. Success is based on making other partners better. During this phase, organizations may be in need of life balance, energy management, business planning, and succession planning.
What Else Could This Look Like Now That We Are Post-pandemic?
My mentor Joe is no longer with us. Based on what we are seeing today, an additional phase may look like this.
Networked Organization Phase:
In this potential future phase, organizations may evolve to become even more interconnected, adaptable, and collaborative. The key characteristics of a networked organization could include:
- Fluid Structure: The traditional hierarchical structure might become even more decentralized, with less emphasis on rigid reporting lines. Teams and individuals would be connected based on projects, expertise, and shared interests rather than strict departmental boundaries.
- Virtual Work: Advances in technology, particularly in remote collaboration tools and virtual reality, could allow teams to collaborate even more seamlessly across geographic boundaries. Remote work and hybrid work models would become the norm.
- Ecosystem Engagement: Organizations could increasingly focus on forming partnerships and collaborations with external entities such as other companies, startups, academic institutions, and research organizations. This ecosystem approach could enable access to diverse resources and expertise.
- Holistic Decision-Making: Decision-making might involve input from a wide range of stakeholders, including employees, customers, partners, and even the general public. Data-driven insights could play a central role in making informed decisions.
- Personalized Engagement: Organizations will leverage advanced data analytics to tailor employee experiences, customer interactions, and product offerings based on individual preferences and needs.
- Dynamic Skill Development: Lifelong learning and skill development would become integral to organizational culture, as employees continuously acquire new skills to adapt to changing roles and projects.
- Agile Strategy: Organizations would adopt more agile and iterative approaches to strategy formulation, allowing them to pivot quickly in response to market and environmental shifts.
It’s important to note that the future of organizational development will likely be shaped by a combination of technological advancements, evolving workforce expectations, and changing market dynamics. The specific phases and characteristics will depend on how these factors unfold over time. Organizations that remain open to experimentation, learning, and adaptation will be better positioned to navigate the complexities of the future business landscape.
Questions:
What phase is your team in?
Do you see these phases as still relevant as your organization grows today?
Contact Beverly about hosting a workshop for your leaders on how to address the essential needs of their team. Learn strategies to create a positive engaged workplace!
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