But inaction in the hope of a clearer picture emerging in which you are able to make a rational decision is also highly risky. You may be swamped by the next big wave, the storm may get worse, you may be driven onto rocks, you may be washed overboard, etc.
An understanding of your managerial psychology is a key component in determining the right course of action. You must identify in yourself whether you are being driven to ill-considered activity or inactivity by panic or fear, and factor your emotional state and that of your colleagues into your decision-making process.
If you are inexperienced and the conditions are unfamiliar and hostile, maintaining the maximum flexibility is paramount in case your initial action proves to be wrong.
In turbulent times taking some action is better than taking no action, but failing to recognise the wrong action and not being brave enough or sufficiently flexible to abandon this and adopt a different course is a cardinal error.
Rather than allowing yourself to be consumed by the detail of the current manifestations of the problems you are facing, I suggest that understanding the position of your organisation and the prevailing managerial psychology are the necessary starting points.
You must have an objective assessment of where your organisation lies on its lifespan to determine the characteristics that may inhibit your capacity to implant change. For example, in the UK Woolworths spent perhaps 25 of its 99 years in decline following a long period of maturity. Despite frequent changes of senior management it became seemingly impossible for it to adapt and to abandon its entrenched but no longer viable proposition. Incremental change was perused as if the business was in maturity when what was needed, but resisted forcefully, was radical change in recognition of decline.
Early into the recession of 2008/09 Woolworths collapsed.
You must address turbulence differently depending on the phase of its lifespan your organisation is in.
Endnotes
5 Peter F. Drucker (1909-2005); Professor of Social Science and Management at Claremont Graduate University in Claremont, California. [return to text]
6 Prof. John P. Kotter (b.1947); Harvard Business School. [return to text]
7 Technically it is defined as a non-linear dynamic system. [return to text]
3. Corporate lifespan
Change is the constant condition of the physical universe. Some things change so slowly that they appear constant but then unexpectedly vary significantly and suddenly. But if there was no capacity for major or unpredictable change there would be no novelty and no progress.
Our economic system is similar and within it the role of management is not to eliminate change but to moderate the pace to a level at which progress, that is incremental constructive change, can be induced as the persistent state.
But the notion of progress implies the replacement of one thing with something new and preferable. Hence the product, process, service or distribution channel that is superseded must either adapt or die.
This constant churning, the dance of progress, follows a pattern that applies to all things.
Sometimes this change is turbulent, occasionally it is the result of unexpected and unpredictable events but it also arises naturally in the transit between the sequence of phases an organisation encounters as it evolves along its lifespan.
The lifespan, sometimes misleadingly called the life cycle, describes the way an organisation grows, matures and declines. The way it lives its life and dies and, in particular, the crises, both natural and unexpected, that it encounters which shape and colour the organisation as it ages just as similar events mould our own lives.
Few organisations, if any, enjoy an incident free or turbulent free lifespan. If they reach the phase of maturity they will encounter at least one economic recession and with it externally induced turbulence. If they do not reach maturity then they will encounter the turbulence of premature decline and collapse.
The corporate lifespan illustrated below provides the basic model along which leadership and management must function as the company encounters, in turn, the need for change or consolidation.
© Anthony Holmes 2004
The natural turbulent turning points are the transitional events that arise when a company moves from its growth phase into maturity and the change from maturity to decline. The change to maturity marks the need for managerial skills to replace the pioneering attributes that have been employed to found and grow the company, and marks the point at which the managerial challenge changes to control what has, through success, become growth in excess of system capacity which, unless it is controlled, will lead to failure.
The movement from maturity into decline may result from the ossifying control imposed by management which has inhibited the organisation’s capacity to adapt rapidly to environmental changes (as per the Woolworths example given earlier). This drift is usually signalled by declining profit, reduced cash flow and increased income gearing.
The psychological mode of management that characterises each phase in the lifespan can be described simply as follows:
| Lifespan Phase | Mode |
| Infancy | Beginning |
| Growth | Becoming |
| Maturity | Being |
| Decline | Reversing |
Beginning
The organisation is born and the management orientation is focussed on ensuring that it becomes sufficiently established in its landscape to allow it to sustain a viable existence.
Becoming
Management is concerned primarily with achieving what the organisation is, according to their assessment, capable of becoming.
Being
Having grown to the stage at which additional marginal expansion declines and further substantial organic growth is unlikely, management turns to maximising the value to be extracted from being.
Reversing
In a climate of decline when the prognosis may be organisational demise, incumbent management is initially concerned with returning to the preceding state of stable maturity.
You might regard it as controversial to suggest that the more appropriate psychology mode is ‘becoming’ and that the failure to recognise this explains why incumbent management sometimes are less able to operate successfully in this phase than are new individuals who look only forward.
Managers generally predict a steady state over the short to medium term and, as a result, fail to anticipate the emergence of a turning point that leads to a transitional event and to begin an orderly modification in the managerial mode in recognition of the need for significant change and the turbulence that may accompany it.
In addition to these natural turbulent phase transitions, high impact low probability events (HILPEs) also