Organisational Lifecycle

A definitional review. Citations follow IEEE style; see References.

Abstract

The organisational lifecycle is a family of stage models describing how organisations change in structure, management style and dominant problem as they age and grow. The family shares one foundational assumption — that organisations develop as organisms do — and disagrees on nearly everything else, including how many stages there are. This article sets out the concept, the biological metaphor it rests on, the models most often named, the nonprofit variant, and the comprehensive review that found neither agreement nor empirical confirmation across four decades of model-building.

I. Definition

An organisational lifecycle model asserts that an organisation passes through a limited number of distinguishable stages, each marked by a recognisable configuration of size, structure, formality of systems, management style and dominant problem, and that the stage an organisation occupies explains the problems it faces and constrains what its managers should do next.

The most quoted statement of the underlying assumption is that “Organizations grow as if they are developing organisms” [3, quoting 14]. Three propositions follow from it [3, after 15]:

1. distinctively different stages of development can be identified, as in a growing organism;
2. the sequence and order in which they are undergone is pre-determined and thus predictable;
3. all organisations develop by prefigured rules progressing from a latent or “primitive state” to one “progressively more realized, mature, and differentiated” [3, quoting 16].

The second and third propositions are what make it a lifecycle rather than merely a typology.

II. Origins

The analogy is old: Marshall likened the growth of firms to the life cycle of trees in a forest in 1895 [3]. Its mid-century revival ran through two channels — developmental psychology, which Greiner drew on explicitly, and the product life cycle, whose stage names (growth, maturity, decline) carried an organismic reading into management vocabulary although the concept concerned product sales under competition [3].

Greiner is candid about the borrowing. He introduces his model by “drawing from the legacies of European psychologists (their thesis being that individual behavior is determined primarily by previous events and experiences, not by what lies ahead)” and then “[e]xtending this analogy of individual development to the problems of organization development” [1]. His pacing argument is frankly developmental: managers “should be cautious, since it is tempting to skip phases out of impatience… A child prodigy, for example, may be able to read like a teenager, but he cannot behave like one until he ages through a sequence of experiences” [1].

Of the 104 stage models published between 1962 and 2006, only four proved to be independent conceptual sources — Greiner (1972), Christensen & Scott (1964), Lippitt & Schmidt (1967) and Normann (1977) — with the product life cycle a fifth; Greiner’s is the most influential, cited by 21 later models [3].

III. The metaphor imports what it cannot support

This is the concept’s most useful critique, and it can be made from the literature’s own record rather than from objections raised later.

Lippitt & Schmidt justified the organismic analogy by quoting Gardner: “Like people and plants, organizations have a life cycle. They have a green and supple youth, a time of flourishing strength, and a gnarled old age…” [3, quoting 8]. They omitted the passage immediately following it in the original:

”…But organizations differ from people and plants in that their cycle isn’t even approximately predictable. More important, it may go through a period of stagnation and then revive. In short, decline is not inevitable. Organizations need not stagnate. Organizations can renew themselves continuously.” [3, quoting 8]

The reviewers judge that this omission “undermines Lippitt & Schmidt’s use of the analogy” [3]. Twenty years later Birch reached the same conclusion from large-scale longitudinal data on US firms: “Companies do not develop like human beings. Young, small firms, unlike youngsters and trees, do not necessarily grow. And not all large, old firms decline. We need to discard anthropomorphic inclinations and obtain a more sophisticated model of the economy, based upon empirical evidence rather than imagery” [3, quoting 9].

Four entailments of the metaphor fail:

• Ageing. Organisations do not necessarily grow with age. Greiner concedes that “[a] management that is aware of the problems ahead could well decide not to grow” [1]; Churchill & Lewis found firms that “passed through the survival period and then plateaued — remaining essentially the same size, with some marginally profitable and others very profitable, over a period of between 5 and 80 years” [2].
• Mortality. Decline is not a terminal phase organisations cannot escape — which is why the nonprofit variant (§V) carries turnaround as a stage in its own right [6].
• Irreversibility. Movement is not one-way. Churchill & Lewis map explicit regression paths — a take-off firm may “drop back to Stage III… or, if the problems are too extensive… drop all the way back to the Survival Stage” [2] — and later work treats regression as “a viable and worthwhile option for organizational change” rather than as failure [3].
• Indivisibility. Organisms are single things; organisations are not. Churchill & Lewis found firms “at one stage with regard to a particular factor and at another stage with regard to the others” [2], and the nonprofit literature agrees that “an organization may not be wholly in one stage of the cycle” [6].

IV. The major models, and their disagreement

A. Greiner — growth through crisis

Greiner builds on five dimensions: age of the organisation, size of the organisation, stages of evolution, stages of revolution, and growth rate of the industry [1]. Evolution names “prolonged periods of growth where no major upheaval occurs in organization practices”; revolution names “those periods of substantial turmoil in organization life” [1].

Five phases each pair an evolutionary management style with the crisis it eventually produces: Creativity → crisis of leadership; Direction → crisis of autonomy; Delegation → crisis of control; Coordination → crisis of red tape; Collaboration → the ”?” crisis, which Greiner leaves unnamed because “there is little clear evidence” [1]. The engine is that “these new practices eventually sow their own seeds of decay and lead to another period of revolution” [1].

He is more deterministic about response than about trajectory. “The principal implication of each phase is that management actions are narrowly prescribed if growth is to occur” [1] — yet “[s]mooth evolution is not inevitable; it cannot be assumed that organization growth is linear” [1]. A companion note republished in 1998 [18] was not obtained; nothing here rests on it.

B. Churchill & Lewis — small firms, and the rejection of grow-or-die

Churchill & Lewis wrote against the existing models on three counts, the first decisive: “they assume that a company must grow and pass through all stages of development or die in the attempt”; second, they “fail to capture the important early stages in a company’s origin and growth”; third, they proxy size by annual sales alone [2].

Their model runs Existence · Survival · Success — split into Success-Disengagement (III-D) and Success-Growth (III-G) · Take-off · Resource Maturity, plus a possible sixth condition, “ossification”, marked by “a lack of innovative decision making and the avoidance of risks” [2]. Each stage is described by five management factors — managerial style, organisational structure, extent of formal systems, major strategic goals, and the owner’s involvement — while success turns on eight further factors, four belonging to the enterprise and four to the owner [2].

The empirical base is 83 usable responses from a questionnaire sent to 110 owners and managers of firms in the $1m–$35m sales range. Those respondents “had read Greiner’s article” before being asked which stages their companies had passed through [2] — a priming condition limiting how independently the result confirms anything. What the authors report is a disconfirmation: “the grow-or-fail hypothesis implicit in the model, and those of others, was invalid” [2].

C. Quinn & Cameron — integration, and effectiveness by stage

The primary text was not consulted. What follows is verbatim from the publisher’s abstract [4]. Quinn & Cameron begin “by reviewing nine models of organizational life cycles” and derive “[a] summary model of life cycle stages … that integrates each of these nine models” — coded elsewhere as four stages [3] — then map a four-model framework of effectiveness (rational goal, open systems, human relations, internal processes) onto them, concluding that “major criteria of effectiveness change in predictable ways as organizations develop through their life cycles” [4]. The evidentiary base for that conclusion, by their own description, is “[t]he analysis of a state agency’s development over five years”, offering “some evidence to support these hypothesized relationships” [4].

D. Adizes — organisational passages

The primary text was not consulted. Adizes’s 1979 paper in Organizational Dynamics [5] is recorded by the comprehensive review as a four-stage model cited as a source by 15 later models — the third most influential source node after Greiner and Churchill & Lewis [3]. The much longer stage taxonomy popularly associated with Adizes’s later book-length treatment is not described here, because no primary text supporting it was obtained; nothing about its stage names or count should be inferred from this article.

E. The disagreement is the finding

The most comprehensive review analysed “the universe” of stage models published in scholarly work between 1962 and 2006: 104 distinct models, 50 claiming to apply to any firm and 54 to a specified type [3]. Its headline result is that the analysis “shows no consensus on basic constructs of the approach, nor is there any empirical confirmations of stages theory” [3].

On stage count: “there is no agreement as to the number of stages in these models. The majority of models include 3 or 4 or 5 stages; the rest have 6-11 stages. No clear preference for numbers of stages is identifiable, nor is there a distinct theoretical reason why more or fewer stages appear in each model” [3]. Nor did the field converge — the variance did not narrow, the number of distinct transition frameworks increased, and “a full 44% of the models have no theoretical connection to any other stages models at all” [3]. The verdict: “stages models are like clear but misleading roadmaps which create an illusion of certainty about the path ahead” [3].

V. The nonprofit variant

The nonprofit sector uses a distinct seven-stage formulation attributed to Stevens [7], restated as Idea · Start-up · Growth · Maturity · Decline · Turnaround · Terminal [6].

Its methodologically interesting feature is that stage is assessed not by age but by direction of travel across three metrics over recent years: whether funding has increased or decreased, whether staffing has increased or decreased, and whether activity — services delivered — has increased or decreased [6]. Because the diagnostic reads trend rather than elapsed time, a twenty-year-old and a two-year-old organisation can occupy the same stage, and moving backwards is not anomalous. Placing turnaround between decline and terminal encodes the same point: the sequence is not one-way.

The source stating these seven stages and the three-metric test is a practitioner explainer read in full [6]; Stevens’s book itself was not obtained [7], so nothing here reports what that text argues beyond the attribution of the model to it.

VI. Limitations

Descriptive, not predictive — and the literature knows it. Greiner concedes that “[t]he phases outlined here are only five in number and are still only approximations”, and that one should not “wait for conclusive evidence” before teaching managers to think developmentally [1]. He later added that “[m]y sample was small, mostly secondary data, and limited largely to industrial/consumer goods companies. So there is a need for a larger more systematic study” [3, quoting 17].

Stages function as post-hoc labels. Greiner offers the model’s intuitive obviousness as evidence for it — “I hope that many readers will react to my model by calling it obvious and natural… To me this type of reaction is a useful test of the model’s validity” — then immediately concedes the problem: “at a more reflective level I imagine some of these reactions are more hindsight than foresight” [1]. High face validity is exactly what a retrospective labelling scheme would produce, which is why the reviewers describe stage theory as yielding “non-verified yet comforting models” [3].

The empirical record is against the deterministic reading. A longitudinal test across 36 firms found organisational forms “by no means connected to each other in any deterministic sequence” [3, quoting 10]. A test of the five-stage small-firm model found “nearly 40% of the companies sampled did not follow the predicted growth model”, leading its authors — one of whom co-authored the model being tested — to conclude that “using ‘Stages of Growth’ is no longer an appropriate term to refer to this process, and may be misleading” [3, quoting 11]. A study of 645 small firms found its results “contradict… much of the relevant literature that describes stages of the organizational life cycle in terms of deterministic sets of problems” [3, quoting 12]; and of 93 high-technology ventures tracked over ten years, “less than one third… followed growth paths that could in any way reflect the paths predicted by a life cycle model” [3, quoting 13].

What survives. One proposition holds: growing organisations do display distinguishable states at different points in their history, and up to 60% of small firms fit somewhere in a general typology of such states [3]. What does not hold is the count, the ordering, the inevitability, or the claim that the sequence is the same for all organisations [3].

Sourcing limitation of this article. Two of the models named in §IV — Quinn & Cameron [4] and Adizes [5] — were not read in the original, and are described only as far as a publisher abstract or a source read in full supports. References [8]–[17] were likewise not obtained directly; they are cited as reported in [3], and marked “quoting” in the text.

References

[1] L. E. Greiner, “Evolution and Revolution as Organizations Grow,” Harvard Business Review, vol. 50, no. 4, pp. 37–46, Jul.–Aug. 1972. Read from the authorised reprint in L. Mainiero and C. Tromley, Developing Managerial Skills in Organizational Behavior, 2nd ed. Englewood Cliffs, NJ: Prentice Hall, 1994, pp. 322–329.

[2] N. C. Churchill and V. L. Lewis, “The Five Stages of Small Business Growth,” Harvard Business Review, vol. 61, no. 3, pp. 30–50, May–Jun. 1983, reprint 83301.

[3] J. Levie and B. B. Lichtenstein, “A Terminal Assessment of Stages Theory: Introducing a Dynamic States Approach to Entrepreneurship,” Entrepreneurship Theory and Practice, vol. 34, no. 2, pp. 317–350, Mar. 2010, doi: 10.1111/j.1540-6520.2010.00377.x. Read as the author accepted manuscript deposited at the University of Strathclyde (Strathprints 16367); pagination differs from the published version.

[4] R. E. Quinn and K. Cameron, “Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science, vol. 29, no. 1, pp. 33–51, 1983, doi: 10.1287/mnsc.29.1.33. ⚠️ Full text not consulted — cited from the publisher’s abstract.

[5] I. Adizes, “Organizational Passages — Diagnosing and Treating Lifecycle Problems of Organizations,” Organizational Dynamics, vol. 8, no. 1, pp. 3–25, 1979, doi: 10.1016/0090-2616(79)90001-9. ⚠️ Not consulted — cited for attribution only.

[6] R. R. Ross, “How the Nonprofit Lifecycle Model Clarifies What to Do Next,” The Ross Collective, Oct. 29, 2024. [Online]. Available: https://www.therosscollective.com/blog/how-the-nonprofit-lifecycle-model-clarifies-what-to-do-next

[7] S. K. Stevens, Nonprofit Lifecycles: Stage-Based Wisdom for Nonprofit Capacity. Stagewise Enterprises, 2001. ⚠️ Not obtained — cited for attribution only, via [6].

[8] J. W. Gardner, “How to Prevent Organizational Dry Rot,” Harper’s Magazine, pp. 20–26, Oct. 1965.

[9] D. L. Birch, Job Creation in America. London, U.K.: Free Press, 1987.

[10] D. Miller and P. H. Friesen, “A Longitudinal Study of the Corporate Life Cycle,” Management Science, vol. 30, pp. 1161–1183, 1984.

[11] J. H. Eggers, K. T. Leahy, and N. C. Churchill, “Stages of Small Business Growth Revisited,” in Frontiers of Entrepreneurship Research 1994. Babson Park, MA: Babson College, 1994, pp. 131–144.

[12] H. R. Dodge, S. Fullerton, and J. E. Robbins, “Stage of the Organizational Life Cycle and Competition as Mediators of Problem Perception for Small Businesses,” Strategic Management Journal, vol. 15, pp. 121–134, 1994.

[13] E. Garnsey, E. Stam, and P. Heffernan, “New Firm Growth: Exploring Processes and Paths,” Industry and Innovation, vol. 13, no. 1, pp. 1–20, 2006.

[14] H. Tsoukas, “The Missing Link: A Transformational View of Metaphors in Organizational Science,” Academy of Management Review, vol. 16, no. 3, pp. 566–585, 1991.

[15] J. R. Kimberly and R. H. Miles, Eds., The Organizational Life Cycle. San Francisco, CA: Jossey-Bass, 1980.

[16] A. H. Van de Ven and M. S. Poole, “Explaining Development and Change in Organizations,” Academy of Management Review, vol. 20, pp. 510–540, 1995.

[17] A. H. Van de Ven, “Suggestions for Studying Strategy Process: A Research Note,” Strategic Management Journal, vol. 13, pp. 169–188, 1992.

[18] L. E. Greiner, “Revolution Is Still Inevitable,” Harvard Business Review, vol. 76, no. 3, pp. 64–65, 1998. ⚠️ Not obtained — recorded for lineage only; no claim here rests on it.

Reading note. References [1], [2], [3] and [6] were obtained and read in full; all quotations attributed to them are verbatim from those texts. Reference [4] is quoted verbatim from the publisher’s abstract. References [8]–[17] were not obtained directly — they are cited as reported and quoted in [3], and marked “quoting” wherever they appear. References [5], [7] and [18] are attribution only.