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5 Stages of Management Evolution

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Featured Best Practice on Organizational Design

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Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]

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Organizational Development has matured hand in hand with the stages of human societal development.  Anthropological investigations have identified at least 5 distinct organizational structures throughout human history.

This development has been described in several ways by different experts.  Frederic Laloux, in 2014, started analyzing emerging organizations that were setting themselves apart from the established organizations in their style of management.  Laloux examined a large number of organizations and then concentrated on 10.  Selected organizations were the ones that were the most progressive in evolving business practices and structures.

He made use of philosopher Ken Wilbur’s concept of using colors to illustrate the non-linear development of human civilizations to name the successive phases of management evolution.

Red, Amber, Orange, Green, and Teal have been used to indicate the 5 major organizational development phases that correlate to the evolution of human civilization. 

Let us delve a little more into some detail of the 5 types of organizations. 

Red

The 1st stage of organizational evolution is characterized by continuous application of power by the leader to keep the foot soldiers in concordance.  The focus of the organization is extremely reactive and immediate.  This type of management flourishes in disorderly settings.

Important innovations in this type of organization included Division of Labor and Command Authority.

Humans at this stage of growth were inclined to view the world as a tough place where only the formidable, or those they shelter, get their requirements met.

Amber

The 2nd stage of organizational evolution is distinguished particularly by proper roles within a ranked pyramid.  Command and control flows downward from the top in such settings.  Coming events are a reiteration of the past in this type of management.  Important innovations are formal roles i.e., stable and scalable hierarchies, stable and replicable processes.  Examples of such organizations include the Catholic Church, Military.

Orange

The aim of management at the 3rd stage of organizational evolution is to defeat the rivals while realizing profit and growth.  The style of management is typified by Management By Objectives (M.B.O.)—what needs to be done is controlled but how it is to be accomplished is left up to the doer.  Contemporary examples would be multinational companies, charter schools.

Green

The emphasis at this stage is on ethos and enablement to increase employee motivation.  Stakeholders take place of shareholders as the chief reason for operation.  Postmodernity ushered in the Green phase which emphasizes collaboration rather than competition and endeavors for Equality, Solidarity, and Tolerance.

Teal

At this stage of management evolution, self-management is substituted for the hierarchical pyramid.  Organizations are viewed as living entities, geared towards reaching their potential.

Interested in learning more about 5 Stages of Management Evolution, particularly about Teal Management?  You can download an editable PowerPoint presentation on 5 Stages of Management Evolution here on the Flevy documents marketplace.

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Organizational Design involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. This framework focuses on the following 3 initial steps of the full 10-step Organizational [read more]

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Organizational Design (AKA Organizational Re-design) involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. It includes:

1. The overall organizational "architecture" (e.g. decentralized vs. centralized model).

2. The design of business areas and business units within a larger organization.

3. The design of departments and other sub-units within a business unit.

4. The design of individual roles.

In the current Digital Age, there is an accelerating pace of strategic change driven by the disruption of industries. As a result, to remain competitive, Organizational Design efforts are becoming more frequent and pervasive—with the majority of organizations having experienced redesign within the past 3 years. This has only been exacerbated by COVID-19.

Frustratingly, only less than a quarter of these Organizational Design efforts are successful. Most organizations lack the best practice know-how to guide them through these Transformations effectively.

Learn about our Organizational Design (OD) Best Practice Frameworks here.

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The Greiner Growth Model (Stage of Evolution and Revolution), developed by Larry Greiner, is a maturity model describing how organizations evolve through 5 stages of growth. Each stage requires appropriate strategies and structures to cope. The Greiner Growth Model is a descriptive framework that [read more]


 
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About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

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