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The purpose of this paper is to explain how the process of change is determined by the product lifecycle and the product lifecycle's relation to the organization structure.

This paper is based on years of experience helping business organizations adapt to change by installing computer systems and consulting with senior management in this process.

Business organizations are highly variable in their structure, it is the environment that determines the organization structure. Where businesses are in a stable environment business organizations are capital intensive. Where the environment is highly volatile capital investment is limited and small flexible organizations prevail. In addition, there is a biological theory that totally parallels this theory.

Those who fail to understand the concepts are inclined to make massive mistakes in capital investment. This is often the reason why small startup companies are able to beat out larger established competitors in highly volatile environments.