Objective: Revitalizing the Entire Organization

All organizations, regardless of past success, are vulnerable to a period of slow growth or decline. There is no law in nature that the most successful will inevitably remain so. For some companies, decline merely leads to stalled growth; for others, it leads the firm to the verge of bankruptcy; for still others, it leads to their failure. When organizations grow they reach transition points, develop and grow larger. However, as organizations begin to stumble and decline, there are no definite points. Decline is a steady process of deterioration and the fall can be quite rapid if management fails to recognize the signs.

Organizational decline is typically a product of many complex factors. Some of the most common factors include increasing competitive forces, a loss of management’s entrepreneurial skills, a sense of complacency that inhibits organizational change, and the inability of management to build an organizational infrastructure necessary to keep pace with the demands growth. Organizational decline is a complicated issue and the solutions tend to be complicated as well.

Entrepreneurship Must Return

Whatever the cause, the company must regain the flexibility and entrepreneurial skills that will allow it to adapt to a changing environment. Organizations begin to decline when entrepreneurship decreases because of the increasing noise associated with the size, scale, and scope of a larger company.

The key challenge, then, for a company that is no longer growing or is in decline is revitalization. An organization must rebuild itself almost from the ground up. This, in turn, requires that the firm do everything possible to stimulate and support entrepreneurship as a mindset and cultural component throughout the organization. A total revitalization, including a major cultural transformation, is typically the only effective strategy to overcome decline.

Rethink Everything

Although there are a number of issues involved in organizational decline and revitalization, the basic problem that makes reversing decline so difficult is that management must focus on all of the key areas of an organization’s development at the same time. The business must simultaneously rethink its markets, its products and services, its resources, its operational systems, its management systems, its people development, and its corporate culture. Although companies at every stage must give some attention to all of these key areas, each growth stage only requires that an organization concentrate on a few key areas at a time. For a company stalled or in decline, it is critical to concentrate on all seven areas, and this reality makes revitalization particularly difficult.

Most of the causes of an organization’s decline are largely self-inflicted; therefore the cures are almost always entirely within the organization’s control. While decline can be reversed, it isn’t easy. The demands on the leadership and individuals of an organization attempting to reverse decline can be enormous.

Non-Growth Stage Keys to Success

• Overcome the pressures leading to decline, whether they are caused by competitive forces, a loss of management’s entrepreneurial skills, a sense of complacency, or the inability to develop an organizational infrastructure to support the company’s earlier growth.
• Stimulate and support entrepreneurship as a mindset and cultural component throughout the organization.
• Management must give its full attention to all areas of the organization’s development simultaneously: (markets, products and services, resources, operational systems, management systems, people development, and corporate culture).