lifecycle of a business - business coaching
DESCRIPTION
Understanding where your business is and where it could go. Lifecycle of a business is a tool that helps businesses identify issues and growth hurdles.TRANSCRIPT
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Iden%fying the predominant characteris%cs of your business and its lifecycle stage will help you understand where you are in the organiza%on's maturity scale, point out the symptoms and risks and ul%mately lead you to having a healthy mature business. What business are we in and who are we aiming to please?
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A company is like a human body which ages from infancy to death and will get certain sicknesses and symptoms at different “stages” of life. Some symptoms are OK for their age and some are not e.g. Its ok to get acne as a teenager but not when you are in your fiHies. The important ques%on is: Are we dealing with the right problems at the right %mes?
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COURTSHIP
INFANCY
GO-‐GO
ADOLESCENCE PRIME
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STABLE ARISTOCRACY
EARLY BUREAUCRACY
BUREAUCRACY
DEATH
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Organiza%on is not born yet
Lots of excitement
Focused on the future
Leaders are overly op%mis%c
Making promises you may not be able to keep
May appear irresponsible in hindsight
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Unexpected symptoms : An affair The move to Infancy always involves risk. If the risk is taken the courtship has commitment and the dream will not die. An organiza%on or new ini%a%ve can die before its born if there is only willingness to think up ideas but no thought for results, implementa%on and capability to get along. In this case its only an affair and not a courtship. The birth of a business happens when the people are prepared to take the risks involved. If the risks aren't taken the organiza%on will not move up to infancy
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ShiH from vision to ac%on Nega%ve cash flow – requires constant cash injec%on and working capital All ac%on – people doing “stuff” Daily opera%onal crises No supplier or customer rela%onships established Making excessive commitments Schedules overbooked and delivery dates being postponed Responds to complaints and needs Management by crisis Vulnerable – every small problem is a big fire Few to no systems, policies and processes Employs unsophis%cated management
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The move from the Infancy stage to the Go-‐Go stage will start occurring when cash flow and general ac%vi%es become somewhat stable & clients bring in repeat business. This is when “loyalty” signs appear. There is a high risk of infant mortality at this stage. Any mistake could lead to the death of the company.
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Everything is a priority and a crisis
Everything is a deadline and everything is a opportunity
No management skills
Externally focused – looking at what's happening outside the company – not in)
High level of op%mism
Management by intui%on : seat of the pants : lacking systems and figures
Company is arranged around the people instead of the people around the Company
Reports are focused towards sales – not profits
Hiring tomorrow those needed yesterday : no responsibility, appraisals and accountability
OHen a one-‐man show
Company gains market share
No Clear roles and role defini%ons.
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Founders trap: Company remains a one-‐man show and does not develop an ins%tu%onalized vision. Unwillingness to develop or work within systems Grows to founders limits and poten%al Organiza%on will likely die with founder or if it’s a family business, within three genera%ons. Company needs to be “re-‐born” again as a new en%ty, separate from the founder. THIS will lead to Adolescence stage.
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Also known as the second birth away from founder
Founder accepts organiza%onal sovereignty (Company leads itself)
Professional leadership style and systems
The people, the structure and all processes align with new vision
Conflict arises between those who want change and those who want to preserve the status quo
Conflict between administra%ve and entrepreneurial styles
“we – they” sydnrome. Cliquish
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Risk of premature ageing: The internal conflict is not well managed and leads to cri%cal loss of trust and respect which in turn leads to lack of team work The good people leave Loss of buy-‐in to vision, mission and values The founder divorces the company and tried to lead the company in his own way. This lack of leadership oHen ends in death of the organiza%on.
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Company is results driven
Good systems and procedures
There is a plan and its followed
Aggressively growing
Reports growth in profits
Has Go-‐Go aggressiveness but is predictable
Begins to generate new lifecycles within itself
May lack enough quality managers for the growth experienced
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At this point the company needs to constantly re-‐invent itself in order to con%nue ageing towards death which otherwise is expected. The “trick” is to stay in Prime Stage although this is not the norm. This is the stage where the company is making the most profit with the least problems and is running the most smoothly. The major risk is that companies become less risk orientated , more conserva%ve in all aspects and lack crea%vity.
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Loss of vision
Working on yesterdays vision
Less conflict – nothing worthwhile figh%ng about
Complacency
Low mo%va%on and risk – “If it aint broken..”
Low aspira%ons. Happy where it is.
Few expecta%ons to conquer the market
Rewards those who do what they are told and get along with everyone
Focus on past acheivements
Power shiHs from marke%ng and research and development to finance
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At this point the organiza%on is ageing in the nega%ve sense of the word. This is the start of the slide towards death. A new vision is urgently required.
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The company is perceived as being successful
Heavy cash reserves
Overly concerned with ROI (return on investment)
Starts to func%on with “paper-‐clip policies”
Enchanted with the past – old school senior management “%e clubs”
People are afraid to express their concerns about the company – “don’t make waves”
People deny the reality – its business as usual
Low internal mo%va%on
The company tries to buy other businesses to buy entrepreneurship
The company is cash rich and is a poten%al take over target
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Aristocracies do not want to take charge of their lives or des%na%on. They want the environment to become favourable or wait for someone else to do something to avoid the impending decline.
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Due to too many ar%ficial correc%ve ac%ons in the Aristocracy stage, there is an eventual day of reckoning
Severe loss of market share
Managers go on witch-‐hunt : who’s fault was this? People are fired
Staff get paranoid : who is next
Much conflict, back stabbing and infigh%ng
Survival mode
Internal focus. Worried about internal wars not figh%ng the compe%%on
Customer sa%sfac%on levels in decline
The customer becomes a nuisance, not the focus
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Bureaucracy develops when companies are taken care of financially (subsidized) orkept alive by having a monopoly on their ac%vi%es. The health is delicate, roden to the core and on the brink of bankruptcy. This happens when no one is commided to the company anymore. This oHen happens in Government departments. Death may take years.
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Death is simply when the company falls apart in all aspects and eventually closes.