The Most Important Phase in the Life Cycle of an Organization - Essay Example

? CONSIDER THE PROPOSITION THAT SUCCESS CAN BE AS PROBLEMATIC FOR ORGANISATIONS AS FAILURE, WITH REFERENCE TO GROUPTHINK (JANIS 1972) AND THE ICARUS PARADOX (MILLER 1992), ILLUSTRATING YOUR ANSWER WITH APPROPRIATE EXAMPLES. Is it a matter of pride or concern if an organization is succeeding at a rapid pace? High turnover, augmented profits, all broken past records, high goodwill, increase market share, increased earning per share, investment in new ventures, expansions, and diversifications and so on. Too good a result is generally not a matter of rejoice, but an alarming signal for the firm.  Success if not managed well, can result in disastrous consequences for an organization (Davies, R 2011) and here I would like to probe deeper into the area and find out the impact of groupthink on the same. Past researches have clearly revealed the fact that all organizations pass through a particular life cycle, commencing from introductory stage to growth, maturity and decline.   In a study conducted by Miller D (1994) on 36 organizations, it was found that success actually resulted in negative consequences for a firm leading towards high degree of over-confidence, deterioration in implementing good and effective communication policies internally as well as externally( Hannaway , C & Hunt , G 1995). Organizations get used to old strategies and traditional policies, hence new tools and techniques are generally avoided due to comfort and ease for a particular work culture (Hamel G & Prahalad KC 1989). The end results of research disclosed that the most important phase in the life cycle of an organization is one when it reaches its maturity because that is the point where maximum profit and maximum return is recorded (Myers 2006).  Chances of sustaining the attained success are barely low as most of the firms succumb as soon as they reach the pinnacle of growth. Either they end up in a ‘Burnout Syndrome’ where high returns lead to even high pressures and loss of control or ‘Premature ageing Syndrome’ where the organization fails to keep up with the emerging trends, avoid to adopt change management, reinventions are discouraged, easy life culture rather being focused is promoted Probst, G and Raisch, S (2005).   Success for an organization becomes a matter of concern when the groupthink concept is attached to it (Janis 1972). As mentioned above, an organization that is more prone to adopt a stereotype attitude towards work, result in mental inefficiency, decline in real and practical applications etc. A similar reason for the inefficiency is highlighted by Irving Janis in his book ‘Victims of Groupthink’ published in the year 1972. The author pointed out that organizations tumble when they get carried away with the success especially the groups who are overwhelmed with their past success records and their cohesiveness. All the members of group take uniform decisions and generally do not like to criticize one another, hence wrong decisions are supported which ultimately lead to a big ignominy. Janis I L & Mann L Janis, (1977), has reflected upon eight main indications for groupthink that may hamper the growth and development of an organization. First being imperviousness where the group tends to ignore obvious danger and possible risks in a business. Group becomes over optimistic which turns down the positive aspects of business. Collective reasoning and explanations give way to decisions which are opposite to group thinking. Group thinkers believe that their decisions are correct but ethically they are not sound. Stereotype behavior poses numerous problems for the other members of the organization as well. Extreme pressure on the group gives rise to opposition which is taken to be infidelity. Members of the group restrict to pass on their views and criticisms for the raised arguments due to group compulsions and avoidance of unnecessary hassles. Members are in a notion that all members agree to decisions taken but actually silence always is not assent. Group contentment or smugness is challenged when one of the members takes responsibility to protect others from unpleasant and undesirable situations. There are numerous examples that can be quoted to represent the fiasco done by the Groupthink philosophy. One of the most popular examples of it is the presidential consultative faction who was responsible to put Kennedy into turbulent situation of nuclear war. US had to bear disastrous consequences due to its inability to foresee the future attack on Pearl Harbor (Matsushita, K 1985). Examples of groupthink are also visible in the decisions taken up by the Bush government in collaboration with Congress in regard to initiation of Iraq invasion on the basis of military strategy to be used against terrorism and supporting nations (McGee, Thomas & Wilson 2005). The hasty decision to rush to war before a well planned action to create an association of members who support the motion, have actually led US into an unpleasant military situation that has added enormous cost burden to the country along with massive death poll, increased causalities and tampered image of the country. As per Lawrence Davidson (www.sabbah.biz), even political despots are not aloof from the groupthink problem. Very much like Louis XVI, who lived a mere 25 miles from Paris in the royal premises at Versailles and was oblivious of his people’s plights, Hosni Mubarak also managed to turn from a ruler to an old liability and had to flee Egypt. He had survived six assassination attempts and numerous public outbursts. In an interview on 3rd February to ABCs’ Christiane Amanpour, he mentioned that he would happily leave presidency if it had not been in the interest of the people of Egypt who would not want to see their beloved leader leave. Surrounded by like minded decision makers with vested interests in his policies who echoed his thoughts and reiterated his political views, this is a classical incident of group think as mentioned by Irving L. Jenis in his book (Victims of Groupthink) wherein the ruling political elite class is unaware of their nation’s dilemma and their political advisors second the dictator’s vision due to: Desire to belong to a group Long term personal survival Vested Interests Pressure to arrive at a consensus (Janis, I.L. 1982) The member turnover within the think-tank is relatively low and it considers few options, does not develop contingency plans and neither are they critical of each other’s perspectives. In case of Egypt, when the whole world including the Arab states saw the reality of Egypt, whereas Mubarak chose to turn a blind eye (Janis, L I 1983). In the recent economic recession, many groupthink examples can be quoted. The common one being the downfall of the most reputed banks Lehman and AIG. They clearly reflected the groupthink strategy. The banks adopted irrational and unjustified incentive packages, ineffective strategies and groundless policies just due to excessive pressures from different stakeholders, senior authorities; CEO’s etc and finally ended by in bankruptcy. US government displayed the groupthink philosophy permitting the relief wells to be issued, keeping into consideration the attributes such as low cost oil, tax revenue, job opportunities etc. British Petroleum and many other oil companies followed a similar strategy and ignored all possible risks just due to the groupthink and ended up into deep trouble. Overlooking the visible negative aspects of situation is serious peril that groupthink encompasses (Miller, PF, Vandome, FA & McBrewster J 2009). Challenger disaster is a perfect example of groupthink, where the members of the group include all business people who reached a common consensus on the catastrophe from their individual business perspective without critically evaluating it, testing or analyzing it (Jason R, 2005). What was obvious in this case was over estimation of group power, closed mindedness and pressure for uniformity (Forrest J, 2005). Hence, it can be said that to avoid success being a major cause for future failure of a firm, group must ensure that all the negative consequences of group think are avoided by leaders taking responsibility and being neutral while taking group decisions (Rosewater M 2005). They must give a fair chance to all members so that a positive atmosphere can be created where open discussions are encouraged (Hart P, 2008). Criticism must be accepted and worked upon for improvement and enhancement in existing work culture (Hannaway, C & Hunt, G 1995). Devil’s advocate philosophy must be imbibed to deeply inspect all alternatives and select the best out of them (Kowert, P 2002)s. Alarming signals from other competitive groups must be given due consideration. The group should be made aware of the causes and consequences of group think (Wilcox, C 2010). Groupthink can completely be eliminated by avoiding communication and contact with other group members until very necessary. Groups must be encouraged to develop alternative plans and give thought to multiple perspectives such as shareholders viewpoint and other stakeholders as well who are directly or indirectly affected by organizational decisions on the whole (Walsh, EH 1989). Miller D (1992) has investigated into the area and revealed in his book the ‘Icarus Paradox’ that reflects the similar behavior leading to success for one organization while failure for the other. The author has drafted a behavior structure divided into four parts, The Venturing Path that guides those entrepreneurs who initiate business with a future vision incorporating growth and development into something that gets converted into reckless dominators who exhaust their resources without making any real additions and putting hands onto those areas that are completely from their line of business (Drummond H 2007). The Focusing Path is a route where people associated to it value quality and hires the best talent of the industry but gradually turn the flexible environment into a rigid one. They intend to become detail-obsessed unskillful worker who promise to deliver the best to their customers but some completely irrelevant and extraneous. The Inventing Path aims to hire fresh talent with fresh experience in research and development areas, high-tech products etc and finally get them converted into high headed groups who unnecessarily waste resources just in view that some events or inventions might happen in future. The Decoupling Path is designed for those organizations that establish themselves as SALESMEN organizations with exceptional marketing strategies and skills but gradually transform into unfocused and impractical organizers who face constant design issues and deliver a dismantled, outdated product in the end (Miller D 1990). For instance, the decoupling trajectory was well observed in Chrysler, where Lynn Townsend at a very young age of 42 took over the working of the company as its president. Townsend was regarded as a financial wizard and an expert marketer. In his initial years of presidency, the sales of the company were exorbitant; the market share of Chrysler was almost doubled. But sticking on to his traditional strategy of aggressive marketing and selling, the designing and production aspects were completely ignored (Collis, DJ & Montgomery, CA 1995). Moreover, his insistence on producing new models that could cash on the marketing plans made the entire process much more complicated and extremely extravagant. Very soon the old successful strategies of the organization lost clear directions and gradually the profit began to decline. Salesmen are supposed to be the key drivers who use the other strengths of the firm like packaging, advertising, etc to build the company image among the competitors, but soon the salesmen turned into drifters who replaced themselves with facilitators (Hamel G & Prahalad CK, 1993). Over confidence, unrealistic assumptions, increased bureaucracy ultimately detaches the leader from his organization, the organization from the business, even the products from their respective divisions. An automobile goliath like Toyota with state of the art manufacturing plants employing the best HR resources and robotics for world class automobiles have also in the past recalled 2.17 million of its products recently due to faulty components like accelerators pedals. Similarly Honda has also faced such problems in the past with its mal functioning hybrid system in the civic prompting it to recall thousands of civic hybrids. These Japanese companies have conceived and pioneered quality and production efficiency concepts across all levels of manufacture. Yet, it is very disturbing fact that despite its quality protocols and TQM processes, it has installed faulty components in thousands of its products (Miller, D 1992). In the meanwhile, sales have suffered a slowdown and can translate into brand dilution is the big question. These cases reiterates the term coined by Danny Miller known as the “Icarus paradox” in which the mythical Greek, so emboldened by his airborne prowess; flew close to the sun and plunge into the Aegean Sea when the heat melted the wax (Burton M 1992). Similarly, multinational conglomerates suffer catastrophic setbacks when their overconfidence paves way for such glitches despite numerous checks (Amason CA & Monney CA 2008). To quote the universally acclaimed dialogue from Toby Maguire in Spiderman “with great power comes great responsibility” would aptly fit here. Nigerian banks have infamously scripted their own doom (Ndanusa S 2009).. Post consolidation, the corporate success that resulted in rigid protocols resulting in inability to adapt to the changing market dynamics and suppression of innovation and flexibility. Inability to respond to the rapidly changing market scenario results in collapse.  Each level of success demands a higher level of managerial ingenuity, caution and allegiance to key growth drivers. If an organization continues to grow at a rate which itself is not sustainable and that too without adaptation to the environmental dynamics, the system fails resulting in a shutdown. Life system support was extended by the Central bank of Nigeria and resultant which 4.2 billion dollars were infused into the banking system to keep the sector afloat and renew public confidence (Ogidefa, I 2008). This money was the result of management’s incompetence and its inability to resurrect the policies. Clearly, a case of Icarus’s paradox wherein the bank had staunch faith in their own systems which eventually failed leading to a catastrophic circumstances and ultimately the Central Bank of Nigeria had to step in the reinstate public confidence. 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