Stages of Organizational Decline

Just as there are stages of organizational maturity and growth, there are stages of decline. Since the onset of the pandemic, there are more than a handful of schools and colleges throughout the nation and globe that have been hit hard in enrollment, funding, and operations. They may not make it.

Now, they share some common attributes. Most of these organizations were smallish, not market leaders in any one area, and had a limited financial runway to keep afloat. Yet, regardless of how bad it may appear to some, there is always some level of hope and optimism that they can outrun their circumstances. My experience is they go through four predictable stages of decline that either serve to arrest – or cement – their downward spiral.

1. Optimization – At this stage, schools and colleges assume if they reduce expenses, tighten budgets, market harder, add some new shiny objects or consumer benefits, they will make it through this moment in time. Rather than fix the foundational issues to their circumstances, they work on the edges at things that are less risky. They work hard on the small things assuming this will buy them some more time. The big risk in optimization is that most schools or colleges will stay in this space too long, not acknowledging the fragile nature of their situation and fail to deal with the larger, structural issues in their market. Some might call optimization another name for “denial.”

2. Repositioning – A step beyond optimization, this is the place where a school or college may make some shift in how they are positioning their programs and services. They sharpen their focus, choosing to reduce their number of market attributes, instead focusing on one or two things that they believe it will provide them some sort of singularity or differentiation in the the marketplace. Another name for repositioning is “refocusing”, or getting down to brass tacks.

3. Reinvention – This is the stage where the rubber hits the road, or where an organization decides that it is finally time to deal with the structural conditions of their demise. This could mean a serious reset on their price, changing the mission, going co-ed, merging with another school, selling their facility or changing locations, or moving to a whole new delivery platform. Reinvention has been avoided thus far due to a fear factor and dealing with the enormous change that will be absorbed by those that love and cherish the organization. The best reinvention often causes interruption in the market. Another name for reinvention is an organizational “rebirth”.

4. Death – And, some schools and colleges just don’t get it, so they close. They waited too long to disrupt the cycle, not seeing clearly the warning signs that were present all along. Maybe their reason for existence had slowly evaporated over the decades, they become less relevant to a changing world. They stayed in stage one for years, not seeing the writing on the way, and rapidly moved through stages two and three without having enough time and momentum to arrest their slide.

My experience is that most schools and colleges will do nearly anything to stay in stage one, optimization, so that they don’t have to deal with the real challenges that change brings to an organization. But, those years spent in optimization lead to wasted time and energy that often could have arrested their slide. In fact, time is the most important asset or currency that an organization possesses once it is starts the stages of decline. Time can be bought by money or reserves, trust of stakeholders, and the belief that their mission will regain relevance. But, time wasted in stage one often just delays in the inevitable.