Phases of Organisational Development

Sohini Paul
Aug 6
5 min read

This simple model offers amazing insights into your NGO

The four phases of organisational development describe the evolution of an organisation as it grows and adapts to the changing internal and external environment and the critical characteristics of each phase. Organisations are like humans – they are born, develop, and eventually pass away. Each phase has distinct characteristics, management styles, and organisational dynamics.

Adaptation of Friedrich Glasl & Bernhard Lievegoed, 1993: Dynamische Unternehmensentwicklung.

The Pioneering Phase:

This is the startup or entrepreneurial phase, when the pioneer, usually one person or two, starts the organisation with a big idea of what he or she wants to achieve. At this stage, the organisation is driven by a visionary leader or a small group of founders. The pioneer is highly motivated and has a lot of energy. Pioneers gather enthusiasts and trusted friends around them and invest significant time and commitment in the new organisation. The focus is on innovation, creativity, and exploring new opportunities. Leadership is charismatic, informal, and highly involved in day-to-day activities. The structure is flexible, and the roles are not clearly defined.

Characteristics:

A pioneering organisation
Has a family atmosphere,
Small, close to the community/clients
Charismatic leadership by the pioneer
Highly personalised functions organised around the abilities of staff
It can be informal without clear policies and procedures.
Decision-making is quick and often driven by intuition.
Much experimentation takes place- creative, improvising and flexible.
Personality of the pioneer shapes the organisation, and its ways of working.

Challenges:

If the organisation is successful, it attracts resources and often proliferates. With growth, problems arise over time.
New people who do not share the initial joys and struggles of the early days are employed.
Lack of formal processes, over-reliance on key individuals, and potential chaos due to lack of structure. Things can become chaotic and too disorganised.
Often, the sense of intimacy is lost.
With more workload and staff, things become more complex, and difficulties arise.
Motivation decreases, and conflict increases.

As the Organisation develops, the challenges may lead to a crisis. The leadership can appreciate the crisis and see the need for transformation; the organisation can move through the crisis, albeit with some pain, into a new growth phase.

Many organisations stay in this informal and lean pioneering phase for years or even decades and operate well. However, there is also the other case: The organisation grows, the initial pioneer keeps it locked in this phase, and the organisation keeps revolving around the pioneer's character. This inability to changeand the pioneer's inability to hand over power to others is sometimes calledfounder's syndrome.

The Rational/Differentiated Phase

This phase marks a significant shift from a personal, intuitive, and experimental approach to a more objective, conscious, clear, and planned way of meeting the growing organisation's objectives.

The organisation establishes formal structures, processes, and procedures to improve efficiency and scalability. Roles are clearly defined, and there is a focus on specialisation and standardisation. Shared and written goals and policies, transparent decision-making systems, procedural handbooks, and formal reporting relationships exist. Precise leadership functions regarding plans, procedures, objectives, policies, organisation evaluation and review are developed.

In this phase, staff have more specialised functions. Departments and new layers of management are established to divide the work more manageably. New leadership is promoted. This is what differentiation means.

Characteristics:

Structure and roles become formalised.
The focus is on efficiency, planning, and control.
Prioritises consistency, predictability, and performance measurement.
Guided by policies.
Differentiated management, rational division of labour.
The staff meets organisational requirements.

Challenges:

In this phase, there is a risk of:

Becoming bureaucratic, less flexible, and losing the original, innovative spirit.
Through differentiation, the pioneer's ideas are scattered.
People get stuck in seeing only the aspect that they are responsible for.
Tension starts to develop as staff who are more experienced and empowered in the process become frustrated with the hierarchies of communication and decision-making and the division of work into competing silos.
Staff may start challenging or breaking the rules, and there is hidden resistance, such as decreased motivation and low productivity.
A vicious cycle can set in. “Office politics” and corridor gossip become the centre of a shadow organisation.

When the challenges become strong, the organisation might slip into another crisis. The leaders might take action and try moving the organisation into the next phase, sometimes with the support of consultants.

The change process towards the next phase is not always successful, and organisations may meander between the differentiated and integrated phases.

The Integrated Phase:

In this phase, the organisation integrates the various functions and departments, focusing on collaboration and cross-functional coordination. It combines the best features of pioneering and rational phases. It is more humane and efficient and, therefore, more effective in mobilising the diverse capabilities of more mature staff and relationships. Emphasis is placed on communication, shared goals, and a unified organisational culture.

The integrated phase's organisation is held together by a strong shared vision, purpose, and values, which are more than the rules and policies of the rational phase.

The more mature staff will want flatter, more straightforward, decentralised structures that facilitate fluid communication and collaboration. This may look like a network of pioneering teams or units with a smaller and more facilitative hierarchy. The organisation is held together by a strong shared vision and a sense of purpose and values rather than by the rational phase's rules, procedures, and policies.

Characteristics:

Renewed vision, values, and culture developed cooperatively
More self-organisation, self-control
Synergy and teamwork
Flatter structure
Integrated functions by aligning different parts of the organisation to work towards common objectives.
Best of pioneering and rational phase qualities
Fluid-networking-interdependent

Challenges:

Challenges may arise because the organisation is isolated from its environment and other organisations (perhaps as competitors).
Mature and talented people who work in the organisation may lack purpose and have an urge to think beyond competition and growth.
The challenge is to let go of their competitive urges, team up with other organisations, and achieve something new and exciting together.

A new organisational culture and structure can emerge when organisations value collaboration and purpose, and organisational leaders might make bold decisions and move them into the associated phase.

The Associated Phase:

In the increasingly globalised world, there is a need for interdependent relationships that connect different organisations across an ever-widening spectrum into creative and authentic partnerships. In this phase, the organisation becomes more open, adaptive, and interconnected with external environments, such as partners and the broader community. There is a shift towards networking, partnerships, co-creation and collaboration beyond the organisation's boundaries as there is a need to work together to achieve social harmony and sustainable development that will protect us and our planet in the future.

Characteristics:

Interdependent relationships with other organisations and the environment (shared destiny)
Innovation through external alliances
Adaptability and continuous learning
Functions are more like an ecosystem than a traditional hierarchy.
Moving from constraints of competition to possibilities of collaboration
Acceptance of a broader responsibility

Challenges:

Key challenges during this phase include managing complex relationships, sustaining a cohesive identity, and dealing with the ambiguity of less-defined organisational boundaries.

Reflection exercise:

1. Which phase is your organisation currently in?

2. What are some of our organisation's challenges in the current situation, and how has the leadership overcome the crisis? Please reflect on the different steps taken and the role of your leadership.