Discuss leadership crisis with respect to organizations and how-02441

As company grows, needs larger production, specialized knowledge, better marketing and finance techniques and need of capital, therefore needs increased number of professional people in all functional areas. This is very difficult and cannot be managed at an informal level, further formalization, procedurals also come into play for their respective financial and managerial control. The owners found themselves with unwanted managerial responsibilities, as they still try to act it in the past ways. Owners enter into conflict with managers. This issue is cited as agency theory in corporate governance and strategic management courses. At this point crisis of leadership occurs - the first revolution. The Owner / founders, often hate to step aside even though they are probably temperament wise unsuited to be managers. So the developmental choice for founder is to choose strong manager and step aside for perpetual growth or select week manager and compromise on growth.