Organisational Failure And Success

Theories Of Organisational Failure And Success

Several theories have been put forward to explain why organisations or business enterprise fail or succeed. Of course in this chapter many factors have already been enumerated to describe what things are likely to happen. Now we shall examine some of those factors more systematically, using the theory of organisational growth and development. This is also called the integrative theory of organisational success or failure.

According to a scholar known as Flamhoitz (2002); Flamholtz and Randle (2000) all organisations have strategic building blocks. When these building blocks are in place the organisation succeeds, grows and develops, but when these blocks are not in place, the organisation fails. Critical among these blocks is the strategic model chosen by the leader or entrepreneur to grow and develop the organization or business to a success. Some of the following questions which a strategic model seeks to answer include the following;

a.       What are the core issues in strategic organizational growth and development model that the business must consider?

b.      What should be the business life cycle?

c.       What should be the model for the various levels and stages of growth and development for the company?

d.      What should be done for the company to avoid operating below installed capacity at any point in time?

e.       What should be the normal model that will take care of dysfunctional consequences when optimal organisational growth and development strategies fail?

f.       What happens when organisational infrastructure completely fails or collapses?

In order to address some of these issues several theories have called attention what variables that need to be focused upon to answer the above questions. For example, Aldrich (1979), Britain and Freeman (1980), Freeman and Hamman (1983) have called attention to market forces and domination of the products market as the key option to resolving the above issues.

However, Burns and Stalker (1961); Midgley (1981) suggest that quality of products and services must be considered first if an organisation is to succeed and avoid failure. Others have called attention to the resources sustainability of the organisation as the panacea (Pfeffer and Salmamack (1978), Britain etal 1980; Caroll and Yaneching 1986).

Still some have called for maximum attention to be paid to the Operational System of the organisation, others the management system and yet others suggest that the organisational personality and culture are the most critical contributory factors to success or failure. Using the system approach, we suggested in this article, that the dynamic development and growth of the various composites of an organisational success may yet be the critical key. Indeed the kind of growth being suggested here must be hierarchical like MASLOWS needs hierarchy.

Road Mapping And Successful Enterprises

Road mapping or process mapping refers to the construction of process that translates visions and idea into entrepreneurial enterprise. In road mapping and tracking visions and ideas, the following must be kept in mind;

All new ideas must be tested in the real world and every step necessary for the realization of the visions must be spelt out. Questions to be answered shall include the following;

i.                    What are the precise activities to be performed?

ii.                  How are they to be performed?

iii.                How are they to be sequenced?

iv.                How much time is to be used, during and between activities?

v.                  Who is or shall be responsible for what?

vi.                What ICT is necessary?

When these questions are answered the next step would be to compare the process maps to the baseline data, visions, directions, mission, objectives and goals. Every good and viable idea shall often end up in an enterprise or organisation.

But what kind of organisation is an entrepreneur having in view? What structure? Is it leaner and flatter shapes or fatter and more rigid hierarchies? The next stage will be the testing of the created prototypes which are often results of long grueling research. Testing of proto types shall be based on process maps, using SIMULATIONS, based on a set of environmental assumptions.

Why is this Necessary? This is because any new creation involves the creation of corresponding new environment which shall fit and facilitate the new process, thereby changing the new organisation, making it easier to assess the validity and reliability of any new goals or value or assumptions. in order to achieve success and avoid failure in the organisation, it is important to radically change your information system (IS) by envisioning the necessary and needed new technologies and determine their drivers.

Sustainable success process further implies that the leader or entrepreneur must create the desire to learn and acquire the necessary skills to do so or be trampled by the pace of change around him or her.

Signs Of Business Failure

There are many signs of business failure which are often referred to as organisational “Growth Pains” or “Organisational Development Pains” or “Growing Difficulties”. Some of them include the following;

  •           Excessive pressure from demands, not enough hours in a day, failure to cope
  •           Putting out company fires takes too much time. Very weak traffic control mechanisms.
  •           Signs of departmental and unit discontent
  •           Communication break down
  •           Stake holders not being carried along
  •           over centralization which results from low or non existence delegation practices
  •           Very few good dedicated, loyal and committed skilled managers at all levels.
  •           Little or no follow up after meetings, or plans already made
  •           Things not being done after all efforts.
  •           More sales are recorded but less profit is made, this comes as a result of leakages
  •           Boxed thinking, depends on past glory, for example “Big Powerful Trashed” Slogans.
  •           Money wasted on advertisements without concrete business plan for the future
  •           Widespread lawlessness and lack of accountability leading to Entrapment and the “We VS Them” mentality.
  •           Risky – Shift Phenomenon
  •           Lowered self awareness and self evaluation
  •           Low benchmarking and minimum standard
  •           Mafia culture and the illusion of invisibility and invulnerability
  •           lack of foresight, creativity and innovation
  •           Collective rationalization and justification of failure deriving from idiosyncratic and stereotypical thinking.


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