If you’re leading a growing nonprofit, you’re likely familiar with the idea of the life cycle of an organization.
While the terminology may vary, there are several commonly accepted phases of the organization life cycle:
- Startup phase: At this stage, the organization is either new or going through major strategic shifts, such as the arrival of a new Executive Director or a substantial change in core program areas. In the startup phase, the organization will be imbued with an entrepreneurial spirit. There may be few internal silos and staff, board, and volunteers are often ready to roll up their sleeves and get to work on whatever needs doing. This can be an especially exciting phase in the life cycle of an organization.
- Growth phase: The organization will have established its ability to create impact and begun to secure anchor funders. In a growth phase, the organization will be adding staff and programming, and may be especially tempted by mission creep. The sense of creating something new and different will continue to motivate staff and volunteers, but as the organization adds capacity and individual roles become narrower and less “all hands on deck,” there may be growing pains.
- Enterprise or formalization phase: The formalization stage in the organization life cycle focuses on clarifying organizational structures, professionalizing systems, operations and infrastructure, and making the transition from a growing organization to an established and respected institution. This phase can be one of the most challenging—and it can last for years or even decades. The organization will have established its role in the field, built a robust donor pipeline and donor relations system, and built out independent departments for core functions, such as finance, communications, and HR. There are several risks at this stage, as siloes between and within departments may increase, innovation may be de-prioritized, and founder’s syndrome can begin to creep in.
- Decline phase: This is the phase in the life cycle of an organization that haunts nonprofit leaders. No one wants to be in charge of a “sinking ship”—meaning an organization with its best days behind it, rather than ahead. Declines can be slow or fast, a matter of months, years, even decades. Though in the moment a decline may feel like it comes out of the blue, when doing a retrospective analysis you’ll likely notice the roots of the issue stretch far back. In the business world, this is where you’ll see CEOs being ousted and massive restructuring.
- Renewal phase: Often instigated by a crisis, the renewal phase is a chance for an organization to take stock and reset its vision and mission. In this phase you may see things like mergers or programs spinning off into independent organizations. Executive Directors may retire and the board may be eager to bring in fresh leadership. You may also see organizations re-embrace innovation and entrepreneurial spirit, starting the organization life cycle all over again.
As a nonprofit leader, understanding your organization’s current life cycle phase can be invaluable for long-term planning.
But understanding the concept of an organization life cycle is one thing, seeing it in action can be a whole other matter. Which is why the headlines about today’s tech giants—like Twitter and Meta—have us on the edge of our seats.
Organization Life Cycles in the Headlines
If you’ve logged into a news site or read the newspaper lately, it’s hard to miss the many analyses of the turmoil at Meta and Twitter. It’s rare that we get to watch multiple organizations publicly struggling through the “decline phase” of their lifecycle—and trying to claw their way into the “renewal phase.”
For Meta, Vice sums up the challenges coming at the company from seemingly every angle, including:
…years of sheer mismanagement, a failure to innovate, setting money on fire in pursuit of a metaverse that seemingly no one wants, a vulnerable business model that Apple is squarely taking aim at, and upstart competitors like TikTok that the company seemingly has no answer for.
For Twitter, recently purchased by billionaire Elon Musk, the future is just as cloudy. The company is operating with massive financial losses and has taken on significant new debts. Users and pundits alike are questioning the app’s purpose and what it will become under new leadership.
In its piece, “Twitter, Once a Threat to Titans, Now Belongs to One,” The New York Times explains that Twitter’s sale:
…was a symbolic bookend to a decade in which social media evolved to be, in many ways, more useful to the powerful than the powerless.
Which leads to not only fundamental questions about individual companies, but a potential rethinking of how we use and manage social media and its role in society—in essence a reconsideration of the viability of the overall business model. Investigations into tech monopolies and widespread disinformation on social media has also led to increased awareness of the way social platforms can be manipulated.
For now, both companies’ fates remain undecided. The future of Twitter will likely become its own soap opera, which we’ll be watching with curiosity. Whereas for Meta, Vice points out that the company’s decline is also an opportunity for users to reassess what we want out from the next round of digital innovations:
What sort of communication, payments, and social media platforms do we actually want—especially if we don’t design them with advertiser revenue as the core concern?
Worried About Decline? Get a Strategic Plan
As a leader, one important takeaway from the challenges of Meta and Facebook is that the startup, growth, and formalization phases cannot last forever. But that doesn’t mean decline is inevitable.
Strategic planning can play a critical role at every stage in the life cycle of an organization. For example:
- If you’re in the startup phase, a strategic plan can keep you from fumbling around and making unnecessary and costly mistakes.
- If you’re in the growth phase, you may want to focus your planning on building out the internal capacity and expertise you’ll need to take your organization to the next level.
- If you’re just cresting the enterprise or formalization phase, you’ll want to consider how to proactively guide your organization to avoid a decline.
- If you’re in a decline phase, your strategic plan could focus on innovation and a strategy to transition your organization into the renewal phase without triggering a crisis.
While our individual organizations’ challenges may not garner quite so many headlines as Meta and Twitter, that doesn’t mean our challenges are any less difficult.
The good news is nonprofit leaders can prepare for many of the upheavals that come at different stages of the life cycle of an organization. The first step is understanding where your organization is currently operating.
The second step is investing in a strategic planning process that can give you the tools to keep your organization strong, sustainable, and, ideally, making headlines for the good work you do.