Obsolescence of Organizations: a Modeling Approach in System Dynamics

Abstract

Economic crisis as well as human crisis is well alive. Bankruptcy filings, the collapse of financial/capital markets, strategy failures, the death of some organizations accuse theturbulenteconomic environment. But what about their potential activities, their internal capacities that change over time. It is unfortunate that some literature areas dealing with the decline of organizations focus on their disease at a specific time by giving importance to factors related to age, size and performance. Thisis wrong to underestimatetheevolutionary aspectoftangibleand above all intangibleresources. The purpose of this communication is to highlight that before the decline and death of an organization, there is a preliminary stage, often misperceived: the obsolescence. Obsolescence defines a condition that prevents the organization to perform correctly its vital functions and that without her being fully conscious. Our model of system dynamicshas the primarily objective of definingthe stateof obsolescence and secondly to highlightthe importance of two strongly linked subsystemsmeaning:organizational capacityand managerial ability. These twodimensions,coupled together, are oftenmisidentifiedormisunderstoodby the top management, whereas they maybe able to characterizeand anticipatean emergency situation.