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Organizational Decline |
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Weitzel and Jonsson have identified organizational decline as a process which begins before financial signals become evident. They have developed a five stage continuum of organizational decline. These stages are; 1) Blinded, 2) Inaction, 3) Faulty action, 4) Crisis, and 5) Dissolution.
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According to this framework, decline begins when organizations are blinded to threats or opportunities. Then, after some time they see the threat or opportunity, but fail to act. When they eventually do act, the action is inappropriate (usually focussed on the symptom rather than the cause), which leads to a crisis and eventually to the dissolution of the organization. The authors point out that decline is reversible in each stage except in the final stage, in which severely diminished resources prevent recovery.
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Reversing decline is a matter of identifying, recognizing and acting upon threats and opportunities appropriately. This is why a reliance on (blinded but lucky) experience has lead to many failures, and why organizations must work to see the larger picture of interrelated wholes and patterns of change, rather than event-snapshots of discrete elements.
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Weitzel, William., Jonsson, Ellen. "Decline in Organizations: A literature integration and extension." in Administrative Science Quarterly. Graduate School of Business and Public Administration, Cornell University. Ithaca: NY. March, 1989.
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