Organizational Homeostasis - The Reason your Business, Corporation, and Government will never Fail again, But Flourish

ORGANIZATIONAL

HOMEOSTASIS

THE REASON YOUR BUSINESS, CORPORATION, AND GOVERNMENT WILL NEVER FAIL AGAIN

BUT, FLOURISH

Dr. Patrick I. Amadasun Ph.D., DM.

First Edition

US Paper Warehouse, Inc.

10990 Galen Place

Johns Creek, Georgia 30097

USA

Organizational Homeostasis:

The Reason your Business will never fail Again

But, Flourish

eBook ISBN: 978-1-7355241-3-9

Paperback ISBN: 978-1-7355241-4-6

Hard Cover ISBN: 978-1-7355241-5-3

Copyright © 2019 by Dr. Patrick I. Amadasun

US Copyrights Office - Registration Number: TX 7-349-186

eBook ISBN: 978-1-7355241-3-9

Paperback ISBN: 978-1-7355241-4-6

Hard Cover ISBN: 978-1-7355241-5-3

Printed in the United States of America

Dedicated to my wife, my family, all entrepreneurs and all those who dare to dream so that they will be better prepared in seeking innovative knowledge that will ensure the success of their endeavors.

About the Author

Dr. Patrick I. Amadasun, Ph.D., DM., has a background in Biology and Medicine. He did his Doctoral studies in Finance, Economics, and Management at Georgia State University and University of Maryland. He is a life member of Phi Kappa Phi and a member of the Academy of Management. He was former Chairman of First Continental Insurance and seat on the Board of several Corporations. He has been a consultant for numerous corporate entities, including a nation. He is an erudite scholar and has authored several works of scholarship.

Contents

About the Author

Chapter 1: Introduction – Why Businesses, Corporations, and Government Agencies Fail

Chapter 2: Organizational Homeostasis – What is this?

Chapter 3: Mechanisms of Organizational Homeostasis

Chapter 4: Application of Organizational Homeostasis to Global Corporations

Chapter 5: Application of Organizational Homeostasis to Manufacturing Companies

Chapter 6: Application of Organizational Homeostasis to Real Estate Companies

Chapter 7: Application of Organizational Homeostasis to Finance Companies

Chapter 8: Application of Organizational Homeostasis to Service Companies

Chapter 9: Application of Organizational Homeostasis to Retail Companies

Chapter 10: Application of Organizational Homeostasis to Small Businesses

Chapter 11: Application of Organizational Homeostasis to Government Agencies

Chapter 12: Conclusion, Implication, and Recommendation for Future Study

CHAPTER 1

Introduction –

Why Businesses, Corporations, and Government Agencies Fail

In this book, the reasons why organizations and corporate bodies fail are explored. In addition, a new seminal work on organizational homeostasis that will prevent business failures and ensure that businesses survive, thrive and prosper is presented. The concept of this new orthodoxy will be selectively applied to different sectors of the economy so that scholars, students, business consultants, corporate leaders, corporate managers, business owners, and government agencies’ employees will have the new knowledge on how to manage their enterprises and ensure the survival of their businesses. Further, the text advocates on the significance of the old adage which states that knowledge is power. Indeed, the acquisition of novel and innovative knowledge that is not known or used by competitors becomes serious core competencies, competitive advantage and power for corporate entities that have the knowledge and applies it in their processes. It is not complex. Companies that do not innovate and acquire new knowledge will definitely fail. In chapter 1, conceptual and theoretical reasons why organizations fail are presented. In Chapter 2, a new orthodoxy termed organizational homeostasis is proffered, and the conceptual and theoretical foundations that support this new seminal work are addressed. Also, how this new schema reinforces organizational prosperity, and prevents organizational failures and senescence is supported by evidence-based and scientific facts. In Chapter 3, the mechanisms of organizational homeostasis are addressed. Chapters 4 through 11 present the practical applications of organizational homeostasis schema to different organizations as case studies on how these organizations can be competitive, survive, prosper, and prevent systemic failures. Chapter 12 presents the conclusion to this book. A picture of a biological scientist that models organizational homeostasis is shown in Figure 1.1.

Figure 1.1: A picture of a biological scientist that models organizational homeostasis.

Mellahi and Wilkinson (2004), in their systematic review, investigated the main causes of organizational failures. Their lines of inquiry identified and historicized the four main schools of thoughts on the causes of organizational failures: industrial organization (failure due to environmental impact with management having little or no control); organization ecology (organization mortality is dependent on organizations crowding within a population); organizational studies (failures due to management inadequacies in dealing with external threats); and organizational psychology (failure due to erroneous management perceptions of organizational issues). More specifically, this review offered compelling evidence of the authors’ claim that their conceptualization of the relevance of an integrative model, which they viewed as antecedent to the process of blending the various schools of thoughts, will establish a common concept on the causes of organizational failures. However, there was a problematic issue with regards to the discussions on the methodologies adopted by the various schools of thoughts. The studies which were predicated on the causation of organizational failures had a finding that was limited in propriety and universality due to non-inclusion of cohort studies or randomized controlled trials (except organizational ecology school of thought which explored causation through longitudinal study). However, these various schools of thoughts agree that organizational failures are problematic and the causes vary. Table 1identifies some failed well-known organizations and their causes for failure. As can be seen in Table 1.1, causes of failures range from external impact from the environment, internal toxins unraveling the organization, attack from large corporate predators, to leaders’ ineptitude.

Table 1.1: List of some Failed Companies culled from Dunn & Bradstreet (plus Author’s notes)

In this text, the position adopted on the causes of organizational failures follows that espoused by the organization ecology school of thought due to the fact that causation can truly be investigated through longitudinal studies. Specifically, the life cycle of an organization was investigated in an attempt to understand the dynamics of what causes organizations to decline, age, and eventually fail. Moreover, this author postulates that organizational homeostasis will enable organization to adapt to both external and internal factors, which essentially, satisfy the conditions that could prevent organizational failures as proposed by the four schools of thoughts.

Leading Organizational Thoughts on Causes of Organizational Failures

Various scholars have taken different positions on the causes of organizational failures. Most of these positions can be grouped into four main schools of thoughts: industrial organization; organizational ecology; organizational studies; and organizational psychology which are shown in Figure 1.2. Industrial organization school of thought propose that organizational failures are due to technological, environmental, and economic changes that negatively impact the organization creating reduction in its resources. Organizational Ecologists are of the view that the causes are due to micro-niche sizes, density, and life cycle which have impacted the organization’s resources. Organization studies’ scholars are of the opinion that the causes are due to issues arising from management tenure, homogeneity, and succession. Organizational psychologists hold the beliefs that the causes are due to managerial perceptions and cognitions (Mellahi & Wilkinson, 2004). The delineation of the causes or the reasons why organization fails creates the foundation for scholars to propose possible renewal or regeneration solutions that could minimize organizational aging, decline or senescence. The use of researches that explain organizational failures could consistently produce revitalized organizations within a vibrant ecosystem by limiting the parody of research cues, while simultaneously encouraging the invention of sophisticated solutions to the managerial problem. The methodologies adopted by the various schools of thoughts are discussed in the next section and the current thoughts on the new organizational orthodoxy and its renewal strategies are discussed in the following chapter.

Figure 1.2: Leading organizational thoughts on causes of organizational failures

Methodologies Adopted by the School of Thoughts on Organizational Failures

The various school of thoughts on organizational failures adopted different methodologies in their attempt to prove their epistemological stances as portrayed in Figure 1.3. Industrial organization scholars adopted econometric methods in their search for proofs of causes of organizational failures. Both organizational studies and organizational psychology scholars adopted qualitative methods in their searches for proofs of causes of organizational failures. Organizational ecologists adopted longitudinal methods in their searches for evidences. The focus of this text is to explore how organizations grow and develop through their life cycles, and as such, this book examines the organizational ecologists’ thoughts on the causes of organizational failures (Mellahi & Wilkinson, 2004). The longitudinal methodology adopted by organizational ecologists is appropriate due to the fact that organizational growth and development through various stages of its life cycle can only be effectively investigated over long period of time.

Figure 1.3: Adopted methodology by the various organizational thoughts in the generation of proofs of what causes organizational failures

Conceptual Model of Organization Life Cycle

Organizational growth and development follows a sequential pathway that is parallel to the way living organisms grow and develop as illustrated in Figure 1.4. Organizations are idealized, created, and birthed by their founders. This first stage of organizational growth is shaky and fragile resulting in high mortality rate. The organizations that survive beyond the birth stages are nurtured by these founders into the growth stage. The growth stage is dynamic and organizations face various challenges from predators, internal and external toxins, diseases, and other environmental factors that involve fierce competition for resources. This fierce competition for niches within its industry could result in more organizational failures. The organizations that survive this stage will develop into the matured stage. At this stage, most of these organizations would have carved a controlling niche within its industry. The organization becomes heavy and loses its agility due to bureaucracies, politics, stances of feeling invulnerable, lack of mutational abilities, and insensitivity to its environment (Carroll, 1984; Sammut-Bonnici & Wensley, 2002). Generally, young and agile organizations are created that could challenge these mature organizations by encroaching into their controlled niches. The matured organizations could face mortality if not adequately prepared to destroy or fend off these threats from the young and agile organizations within their industry. At this stage, the matured organization that does not renew or regenerates itself becomes senile and faces senescence or decay into the decline stage. At the decline stage, the organization has lost its credibility and incapable of sourcing and producing resources to sustain itself. Negative entropy occurs and the organization deteriorates rapidly into the failure or death stage.

Figure 1.4: Life cycle model depicting sequential progression of organizational growth and development

Renewal Orthodoxies for Organizational Survival

Various Scholars have proposed different renewal concepts on how to revive and regenerate organizations facing failures. Most of these concepts and models are reactionary and attempts to reverse problems which have already impacted the organization. The dominant and current orthodoxy entails the institution of organizational learning, management of organizational environment, development of human and intellectual capital, and strategic management which is depicted in Figure 1.6. These policies, generally, are not coordinated as a whole paradigm by the organization for organization’s health and wellness. Rather, each of these concepts is applied singularly to solve a problem (Andries & Debackere, 2006; Capron & Mitchell, 2009).

Figure 1.5: A symbolic picture of biological genes referencing biological homeostasis.

The new or suggested orthodoxy proposed by this author entails a proactive view in the application of environmental adaptation, organizational homeostasis (see Figure 1.5), and equilibrium maintenance in the renewal of aging and failing organizations. The proposed homeostatic control units should not, only, be applied when problems arise, but, should be institutionalized as part of permanent organizational designs that are purposeful, dynamic, and continuous in an attempt to create a healthy, efficient, effective, balanced, and agile organization that will continuously renew and regenerate itself in the promotion of organizational survival and longevity (Cannon, 1929; Dencker, Gruber & Shah, 2009; Greenwood & Hinings, 1996). The paths followed by the two orthodoxies are illuminated in Figure 1.6.

Figure 1.6: Organizational survival and longevity based on different orthodoxies

Further Reading

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