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In a climate of decline when the prognosis may be organisational demise, incumbent management is initially concerned with returning to the preceding state of stable maturity.

You might regard it as controversial to suggest that the more appropriate psychology mode is ‘becoming’ and that the failure to recognise this explains why incumbent management sometimes are less able to operate successfully in this phase than are new individuals who look only forward.

Managers generally predict a steady state over the short to medium term and, as a result, fail to anticipate the emergence of a turning point that leads to a transitional event and to begin an orderly modification in the managerial mode in recognition of the need for significant change and the turbulence that may accompany it.

In addition to these natural turbulent phase transitions, high impact low probability events (HILPEs) also create, often unexpected, crises that are also transitional events and create the need to change the managerial style.

Using the conventional description of the corporate lifespan as a base enables managers and stakeholders to understand the points at which turbulence will arise naturally, and the phases during which reliance on the procedures established to control the recent phase lose their saliency.

© Anthony Holmes 2004

Of course, this is a very simplified illustration. The lifespan of each firm is different and for those that reach maturity the duration of this phase often exceeds the period of growth.

However, all firms experience periods of comparatively rapid change that are usually positive in the early phases and negative in later stages. Resistance to these changes is, as they say, futile, nonetheless it is natural although perhaps less pronounced in the transition from growth to maturity than from maturity into decline.

The early period is a stage of building and capitalising on what has been achieved. The later period is negative and necessitates the painful discontinuation of things once considered important, perhaps the contraction of the organisation, a reduction in staff, etc., etc.

In fact many of the things that were established as desirable when ‘becoming’ and ‘being’ dominated the psychology now become impediments to survival.

Lifespans differ in length and shape and a few companies manage to reinvent themselves by recognising their imminent demise due to the dwindling availability of what they need to survive. In those that do so their managers adopt a psychology of a second phase of ‘becoming’. They pursue a new viable position rather than attempting to return to the status quo ante, which is usually not possible.

The dotted line in the figure opposite in the decline phase represents the desired change in trend which I contend can only be sought if management changes the natural psychology of ‘reversing’ to ‘becoming’.

Take, for example, the postal services. In 1635 Charles I gave the general public access to the royal mail system. This was a novel and expensive system of communication limited by the speed a horse could travel. In its lifespan a number of challenges have confronted its management. The advent of railways, enabling the unit cost of posting a letter to reduce and the speed of delivery to increase, stimulated an expansion in demand and the volume of letters, which was further magnified by an increase in literacy. Telegraphy, wireless telegraphy and then telephony caused the market to change, at first slowly and then turbulently.

Now, the advent of modern telecoms and broadband connectivity has begun to undermine hard copy communication. ISP’s have no legacy assets or culture to manage out of and their managerial psychology is ‘becoming’, whereas the objective of postal companies is to moderate the rate at which hard copy communication decays so that they can manage their decline in an orderly manner.

They have transcended the mature phase of ‘being’ and are now firmly entrenched in decline. Reversal is clearly not a viable strategy, which leaves orderly demise or ‘becoming’. No one doubts that ‘becoming’ is difficult and perhaps more so for managers who have spent many years in maturity immersed in the procedures of ‘being’, but there are notable examples of companies that have left behind their previous shape and nature to ‘become’ something new and viable. IBM is a good example that has accomplished this transition from mechanical computational machines to electronic computers to software development.

As an industrial society we have faced, and continue to deal with the legacy of, the decline in large-scale employment industries such as mineral extraction and processing, volume manufacturing of standardised products, and utilities such as the postal services. Many economists argue that the principal impediment to the transition to new industries is labour inflexibility, which resists the decline in their staple industry until it collapses catastrophically with unpleasant social consequences for many who continue to be wholly dependent on these businesses.

Although simplified, the proposition is clear; try to resist the natural change from one lifespan phase to another and the probability is that you will amplify the turbulence inherent in the transition and most likely fail as the forces that drive the lifespan process are beyond management’s control. Resistance is futile.

Only external factors can distort the sequence by either bringing forward the turning points (e.g. the firm loses business when a technically superior replacement enters the market) or, potentially retarding them (e.g. the firm wins business unexpectedly when the industry structure changes as a competitor fails).

Transitional events, because they are turbulent, are often regarded as ‘negative’ periods as the continual incremental progress, which is the ‘positive’ objective of scientific management, is suspended and reform becomes necessary.

When the rate of growth diminishes marking the transition from growth to maturity or profit declines indicating the transition to decline, managers tend to regard the changes negatively as they assess the present and future in comparison with a more successful past. They often conceive of objectives in terms of returning to this state, which is why you hear calls to ‘get back to basics’ as though the fault that needs to be rectified is some deviation from previous practice, and when this toxic component has been excised, the company will perform as it did in the past.

But in a recession the future is another country and severe economic turbulence often signals a discontinuity rather than a pause and creates a turning point of such significance that what emerges cannot easily be connected to the trends of the preceding years.

Reversing is not possible. This is a one-way street and managers who drive the corporate vehicle forward while looking through the rear view mirror will not progress far without hitting an obstacle. The faster they accelerate to escape the undesirable conditions the more damaging the inevitable crash will be.