What might you expect next based on where your company is in the Corporate Life Cycle? Are you effectively balancing entrepreneurship and management disciplines?
The life cycle of an organization is widely believed to include ten stages:
When a company is formed, it is almost always a consequence of someone’s BRAINCHILD. If the concept fails to take off, the brainchild is effectively stillborn, and the firm never gets off the ground. GENERATION OF THE IDEA, on the other hand, is generally the second stage.
INFANT is the third stage of the life cycle. The urgent necessity of a newly formed organization is to survive. As it becomes stronger and develops physical characteristics, the most important thing is to keep it alive. The greatest concern at this point is a lack of cash to support the company’s early growth. If the organization fails at this point, it will result in infant mortality.
As a company grows out of its infancy, it begins to realize success. Customer numbers typically increase, sales volumes increase, and costs increase. The company begins to develop its own identity, and as its self-confidence grows, it takes on greater and bigger problems.
It can make a major error if it has too much arrogance, and if it doesn’t have the financial wherewithal to sustain it, it will fail. TODDLER is the fourth stage of the life cycle.
As a result of stage four, businesses often recognize that there are risks to be aware of, but that they are fundamentally expanding and thriving. The hallmarks of stage five of the life cycle – ADOLESCENT – include reproducing their success, increasing, and reinvesting in the firm.
While the first five stages of the life cycle are filled with risks and challenges, they are also exciting years in an organization’s development.
The organization’s members are united by a single objective of success, the tremendous speed of reaction, mutual support, risk-taking, the celebration of achievement, informality, and a feeling of shared experience and learning together.
There is generally a reluctance to recognize the necessity for self-imposed restrictions in order to retain the winning formula and avoid formality. The checks, disciplines, procedures, and structures that are now required to safeguard the company against excessive trading are frequently neglected. However, in order to be successful, the organization now needs these, as the size of its company and inherent dangers necessitate people in charge of it to have more data to make decisions.
The transition from stage 5 (ADOLESCENT) to stage 6 (PRIME) is the most difficult in an organization’s life cycle. Entrepreneurship must be preserved, and managerial principles must be implemented. As individuals who established the firm come into confrontation with newly acquired management, there is usually a clash of values, differences of opinion, and a ferocious exchange of opinions. It’s as though the organization is in the midst of a civil war!
Acceptance of the need to expand and empower others to take on genuine responsibilities with an acceptable degree of freedom is essential to effectively achieve the proper balances required at PRIME.
This may be a very painful and time-consuming process. Some individuals don’t believe in it or don’t want it, so they leave. This is very normal. Others then step up to take on the task of making the required adjustments. It’s critical to maintain the organization once you’ve arrived at PRIME. The organization must continue to REINVENT itself at this point.
Backsliding is risky, and going beyond into increased managerial control is even riskier. If the latter occurs, BUREAUCRACY and an internal emphasis will quickly take control. Arrogance causes clients to leave, sales to drop, profit margins to shrink, and the best employees to depart. The organization is on the verge of collapsing.
Without a clear new vision, a transformation plan, and strong leadership, the company will deteriorate into TERMINAL ILLNESS, at which point heavyweight management consultants will be engaged, and their bill will finish the organization dead!
The lesson is clear: in order to thrive, businesses must combine entrepreneurialism with a solid infrastructure and managerial practices. They will only be successful in the long run if they continue to reinvent themselves.