This organizational development consists of four phases namely pioneering phase, differentiation phase, and integration phase (Silber and Kearny 2004). Associative phase is the fourth phase of the organizational evolution process. It is a modern technique that emphasis on the point to link the organization’s environment such as suppliers, customer to the system (MuzelÄ“s 2001).
Pioneering phase consist of building up the vision, creativity and thought. It helps the organization to give employees the vision to work and to strive for the best. It also enables creativity and innovation among the employees to think differently and prohibits conventional methods (Flamholtz, Corporate Culture and the Bottom Line 2001). According to a research, organizations that were established using the “differentiation phase”, failed drastically in the short run. The purpose of this phase is to create such an organization that ensure fulfilment of customer need from the beginning (Basadur, Basadur and Licina 2012). The leadership style of the pioneers of the organization influences all the employees working in the organization. A research was conducted, and it has been found that most of the organization leaders from the beginning posses the autocratic style of leadership (Chattopadhyay and Malhotra 2004).Now, if we talk in reference to Beyond Budgeting, it can be concluded that, in the beginning, the particular style of leadership of the pioneers were adjacent with the devolved style of leadership of Beyond Budgeting. This practice helped in keeping and maintaining the alternative model for generations and decades. Following are examples of the leadership philosophy, which includes the philosophy of Linus Torvalds (Linux), Bill Gore (W.L. Gore & Associates), Richard Branson (Virgin) and Roger Sant (AES) (MuzelÄ“s 2001).
Most vital features of the pioneering phase are as follows:
There are no specific staffs like HR to take care of the employees and solve employee’s related issues, but employees take care for each other like a big family (Flamholtz, Corporate Culture and the Bottom Line 2001).
Most of the organizations face common business and management crises under this phase that are as follows:
Because of the rapidly changing environment and technology, new entrants come in the markets, and it becomes difficult for the pioneers to compete in the industry with the new and the old ones (Basadur, Basadur and Licina 2012).
Customers are increasing in the market, and it becomes difficult to address the unsown needs of the customers (Blau, Andersson and Davis 2008).
It takes time and cost to train new hires and adjust them with the style of the organization. Sometimes, they leave the organization, which create problems (Chattopadhyay and Malhotra 2004).
According to research, it has been found that if the organization suffers from these problems in the beginning, it enters into another phase known as overripe pioneering phase and it has to come up with the new crises and problems that are as follows:
The employees of the organization stop trusting the pioneer’s institution and the autocratic style of leadership controls the organization. Moreover, the pioneer image also decreases within the organization.
Low profits (MuzelÄ“s 2001).
Conflicts within the employees and the leadership style (MuzelÄ“s 2001).
Rate of customer complaints increase and it becomes difficult to satisfy the customer and build a good image (Basadur, Basadur and Licina 2012).
Motivation among employees decreases (Basadur, Basadur and Licina 2012).
Now to tackle these crises of overripe pioneering phase, Scientific Management is used. It is also known as command and control system or Tayloristic system. The word scientific distinguish the organization structure of the pioneering phase that was unscientific. The scientific management was formulated to deliver the maximum efficiency (Chattopadhyay and Malhotra 2004). Now, this differentiation phase enables the selling of non- customized mass product. In this phase, the sales promotion function in created to push the products into the market (Flamholtz and Hua, Searching for Competitive Advantage in the Black Box 2003).Organization work under the “Make and Sell” philosophy and customer are incentivized to buy them, regardless of they need it or not (MuzelÄ“s 2001).
Specialization –this principle is used to generate economies of scope and scale. With reference to specialization, execution, planning and control are also separated. Specialization also enables both mechanization and standardization (Chattopadhyay and Malhotra 2004).
Coordination – the purpose of this principle is to link specialization together. Coordination is formulated by the control span, remuneration (Theory X view), staff and line organization, vertical Theory X style leadership, planned personal trainings and top-down communication (Silber and Kearny 2004).
Formalization – this aim of this principle is to convey the message of the pioneering organization (MuzelÄ“s 2001).
Hierarchical or organizational structures are divided into different functions and further departments. Rational documentation of task, competences, policies and procedures takes place. Formulas, job descriptions planned personal trainings, planned personal trainings. Budgeting, planning, rules and regulation become an important part of the organization (David 2009).
According to the different researchers, this differentiation phase consists of different crises symptoms that are as follows:
Inflexibility increases because of bureaucratization and formalization issues, and it becomes difficult to cope up with the rapid changes in the environment (Tohidi and Jabbari 2012).
Problems related to coordination (Tohidi and Jabbari 2012).
Issues and problems related to the internal vertical communication. Too long communication trails within the organizational structure hinder the flow of communication in the organization. It becomes difficult to pass on the market information in the organization (David 2009).
Process related problems: No one takes the responsibility as processes are not in line with each other. So, it becomes difficult to take the autonomous responsibility. The processes are too static (Silber and Kearny 2004).
Line and staff organization problems (MuzelÄ“s 2001).
Formalized and specialized work decreased the motivation (Basadur, Basadur and Licina 2012).
Measure to cut cost increased.
Inability of the management to trust people.
Budgets and plans become out of date quickly (MuzelÄ“s 2001).
Increased competition that may result in rivalry between departments (David 2009).
The pioneering phase helped the organization to flourish in the beginning. The entrepreneurial spirit of the pioneer influenced all members and employees and all the functions and departments in the organization (Basadur, Basadur and Licina 2012). The integration phase enables the function of the entrepreneurial spirit in a unique and different way. It is not related to the charismatic leader leading the organization, but the whole system of the organization demands responsibility and from every employee to play its part. As every employee will play its part and take the intelligent action, towards a shared goal, it helps the organization to evolve to a new stage (Chattopadhyay and Malhotra 2004).
According to (Silber and Kearny 2004) “all employees can and will act intelligent in the sense of the entire organization”.
The most important features of the integration phase are explained below:
No vertical orientation, instead horizontal orientation takes place (Silber and Kearny 2004).
The focuses of the employees are on the customer, either internal or external. They are focused on the work flow and not on the supervisors.
The organization transforms itself into a living system that updates and renews its markets, structure, product and procedure from time to time (Blau, Andersson and Davis 2008).
The employees work under the theory Y. Employees act as a responsible work force, and they perform their job with fulfilment. Employees act intelligently to achieve the common goal and every try to compete and corporate in the organization (Silber and Kearny 2004).
Increase in the responsibility and autonomy. Employees become elf control and self –initiative.
Effective flow of communication within the organization both ways, top to bottom and vice versa (Tohidi and Jabbari 2012).
The former three phases were clearly distinguished and defined by a line between the environment and organization. Associative phase combine the environment and the organization to create synthesis (Chopra, Meindl and Kalra 2009). Associative phase is a modern development in the organization development. Relationships based on trust and faith are established and nurtured with the external stake holders by a common exchange of interest. Examples can be profit sharing and the entire supply chain Management. Organizations these days form as company-biotopes, which are closely connected and linked to the Japanese keiretsu system (Flamholtz and Wei, Strategic Organizational Development and the Bottom Line 2002). These days, business is removing lines between the environment and system by using the o concepts of open innovation or external crowd sourcing/collective intelligence. In the context of these concepts, the Beyond-Budgeting-Pioneers Dell and Google are the good examples for open creativity and innovation. The dell has managed its supply chain exceptionally well by using modern development techniques (Chopra, Meindl and Kalra 2009).
Basadur, Min, Tim Basadur, and Gordana Licina. Organizational Development. Chicago: University of Illinois at Chicago, 2012.
Blau, Gary, Lynne Andersson, and Kathleen Davis. "The Relation Between Employee Organizational and Professional Development Activities." Journal of Vocational Behavior 72, 2008: 123-125.
Chattopadhyay, Gouranga P, and Ashok Malhotra. "Hierarchy and Modren Organization: A Paradox Leading to Human Wastage." The Indian Journal of Social Work, 2004: 561-565.
Chopra, Sunil, Peter Meindl, and D V Kalra. Supply Chain Management. Dehli: Indian Press, 2009.
David, Fred R. Strategic Management. South Carolina: PHI Learning Private Limited, 2009.
Flamholtz, Eric. "Corporate Culture and the Bottom Line." European Management Journal, 2001: 268-275.
Flamholtz, Eric, and Hua Wei. "Strategic Organizational Development and the Bottom Line." European Management Journal, 2002: 72–81.
Flamholtz, Eric, and Wei Hua. "Searching for Competitive Advantage in the Black Box." European Management Journal, 2003: 222-225.
MuzelÄ“s, Nikos P. Organization and Bureaucracy. Transaction Publishers., 2001.
Silber, Kenneth H, and Lynn Kearny. Organizational Intelligence. San Francisco,: Pfeiffer, 2004.
Tohidi, Hamid, and Mohammad Mehdi Jabbari. "Organizational Culture and Leadership." Procedia - Social and Behavioral Sciences 31, 2012: 856-860.