Historians and academics have observed that organizations, like living organisms, have life cycles. They are born (established or formed), they grow and develop, they reach maturity, they begin to decline and age, and finally, in many cases, they die. Study of the organizational life cycle (OLC) has resulted in various predictive models. These models, which have been a subject of considerable academic discussion, are linked to the study of organizational growth and development. Organizations at any stage of the life cycle are impacted by external environmental circumstances as well as internal factors. We're all aware of the rise and fall of organizations and entire industries. Products too have life cycles, a fact that has been long recognized by marketing and sales experts. It seems reasonable to conclude that organizations also have life cycles.
Students of this subject agree for the most part that predictable patterns can be seen when viewing the life span of a business organization. These patterns can be characterized by stages, often referred to as development stages. These development stages tend to be sequential, occur as a hierarchical progression that is not easily reversed, and involve a broad range of organizational activities and structures. The number of life cycle stages identified by any particular researcher will vary with the finds of other researchers depending on the granularity of his or her study. Some analysts have delineated as many as ten different stages of an organizational life cycle, while others have flattened it down to as few as three stages. Most models, however, hold to a view that the organizational life cycle is comprised of four or five stages that can be summarized simply as startup, growth, maturity, decline, and death (or revival).
