Disorganize or Bust

One half of all new organizations will close their doors forever after only five years. Those organizations – started with vision, enthusiasm, and hope for the future – will leave employees, clients, and constituents in limbo. Within sixteen years only twenty five percent will still be viable. There are a number of reasons for failure but some result from their own success.

There is a definite cycle in the life of organizations. It is not chronological but a functional cycle. A simplified pattern might include five phases; Initial Structuring, Formal Organization, Maximum Efficiency, Institutionalization, and Disintegration.

[wcm_restrict]Initial Structuring

At start – up a new organization there is a sense of destiny among the leaders and their initial team. In the beginning of any organization a Utopian future is just over the horizon. In initial structuring there will be a strong commitment to the leader’s vision and mission. Decision making is spontaneous, plans are being formulated and there is little organizational structure. As a result change and course corrections are easily implemented. There is a sense of ownership in the entire team. Innovation and creativity thrive in new organizations.

Formal Organization

As the organization continues to move forward, roles are established and understood based upon the mission and purpose. The sense of ownership grows and one’s identity is tied to the organization. Structure is created only in response to functional needs. It is still easy to incorporate changes. Morale is still high and leaders listen to suggestions from all levels.

Maximum Efficiency

When the business approaches “maximum efficiency,” vision, mission and purpose are still highly visible and well understood. Everyone realizes the common goal and work together for its achievement. Even new people quickly find their place and participate enthusiastically. New programs are created in response to new needs. Leaders freely delegate responsibility and authority as new roles are created. New proposals are given serious consideration. Morale and self-esteem are at their highest levels and confidence has become contagious.


As the organization approaches the institutionalization phase, there is a lowering of understanding purpose. Individuals begin to focus on their own areas of responsibility and do not extend themselves. Few, if any, new programs are added. Now the organizational structure itself creates needs, rather than responding to missional needs. Changes are not considered if they radically depart from the status quo. Morale becomes polarized into two groups; high and low self-esteem.


In the disintegration phase the vision, purpose, and mission are lost and survival of the organization becomes the purpose. Programs are eliminated for lack of participation. It is difficult to recruit new participants and/or employees. Ten percent of the workers are doing ninety percent of the work. Funding has become difficult and services are being reduced or eliminated. The primary focus is on preservation and survival. In the disintegration phase, Leaders rationalize why goals cannot be achieved. Morale is at an all-time low. Leaders do not know how to stop the decline. There is a frustration and despair among workers whose self – esteem suffers.

Avoiding or Breaking the Cycle

This cycle can be observed in all types of organizations; businesses, religious groups, and even nations. All are too big to fail, but they are failing. The problem lies in the organization itself, its culture, leadership, and the organizational structure. In large bureaucracies a change takes time, while in smaller organizations change comes easier and quicker.

Reorganization is not the answer to institutionalization. The answer is chaotic disorganization that can change the culture as well as the structure. This will require strong leadership and a desire for change throughout the organization. Chaos becomes that motivator. When a person is suffering from an infected wound that threatens the entire body and medications have not worked, amputation is often the solution.[/wcm_restrict][wcm_nonmember]

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About the Author

William F. JohnsonWilliam F. Johnson is an award winning author writing primarily in the field of leadership and personal development. His background includes starting and leading three different business entities and he is currently CEO of a non-profit organization. Bill can be reached at

Bill’s book, Disorganize or Bust (Aslan Press), provides an understanding of organizational development, traces some real life organizations through their life cycle, and is provided as a tool for leaders and entrepreneurs to avoid or slow down the institutionalization process. It will be uncomfortable for some whose main desire is a smooth operation, but growth is not smooth.