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How to Avoid the 6 Stages of Decline Organizations Pass Through on Their Way to the Bottom

Organizations are often vibrant and energetic places where employees come together to plan, strategize and create. However, sometimes the opposite happens: organizations decline and eventually dissolve. But the decline of a company is not sudden, but a gradual process that occurs in specific stages. Here are some of the major stages of decline that organizations usually go through before they reach dissolution.

Stage One: Denial of Risk and Peril

This stage occurs when an organization fails to recognize that outside changes or market conditions are posing a significant risk to its current operations. The company holds onto its current position and is resistant to change, even if the writing is on the wall. This resistance to change often comes from the top, refusing to accept that new approaches are necessary.

Stage Two: Interpreting and Defending

At this stage, the organization begins to realize that the denial at stage one can no longer continue. They start interpreting the outside changes and try to come up with reasons why these changes will not affect their company. They may attempt to defend their current position instead of adapting.

Stage Three: Crisis and Urgency

As the organization's revenue dwindles, the threat of lay-offs, bankruptcy, or closure looms. Some employees may be let go, or departments downsized to save the company. Leaders begin to feel pressure from employees and stakeholders who demand that they take bold steps to try to get the organization back on track.

Stage Four: Blame and Confusion

At this stage, there's no denying that the organization is in decline. Employees start to blame each other or point fingers at management for the company's struggles. The team may become confused and unable to rally together to come up with solutions.

Stage Five: Externalization and Seeking Salvation

In this stage, organizations focus on external factors as sources of difficulties it faces. It may look toward regulatory changes or shifts in economic policies as sources of its woes. The company may also seek salvation from a merger or acquisition.

Stage Six: Inevitability and Black Humor

Finally, in its last phase, the organization tends to accept that its time is up. The culture may become cynical, and humor may turn dark. Thinking about the future of the organization becomes futile. Members prepare for closure, redundancy payoffs, and unemployment.

How to Avoid It All:

In this rapidly changing world, vision is a morphing phenomenon. Leaders can no longer assume that simple laser focus is the key to success. In today’s ever-changing world, our lasers must now be mounted on swivel heads. Making the slightest micro-adjustment to your laser can now be the determining factor between success and utter failure.

Leaders of the 21st century must master the art of micro-adjustments to their leadership brand and communicate those adjustments to their leadership team with the greatest efficiency. Gone are the days of making big changes slowly. Instead, the 21st-century leader must make micro changes effectively to remain competitive in this new marketplace.

To remain successful, organizations must now learn to develop their own unique leadership brand. They must skin it to reflect their company’s corporate identity, package it in a way that it can be easily adjusted to accommodate approaching chaos, and successfully train current leaders to align with the brand. They can’t stop there; however, the next step is to onboard new leaders into the brand and utilize consistent recertification processes to update and perpetuate the brand.

At The Kannenberg Group, we are deeply committed to this process and are driven to help our clients attain this level of leadership proficiency. For more information as to what this process looks like, check out our Structural, Cultural, and Styling Alignment Program at

If you would like to talk more about how this program can help your organization, you can book a free strategy call simply by clicking the link below!

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