The Corporate Lifecycle: The Business of Growing Up

The Corporate Lifecycle: The Business of Growing Up

“The more a thing tends to be permanent, the more it tends to be lifeless.”  – Alan Watts

Death has this unique ability to awaken something within us — whether you want to call it our souls, dormant selves, raw human instincts, or simply fear.  Perhaps it’s because Death is the ultimate proof that nothing lasts forever.  That things can and will forever be changing.  But what sets us apart is how we handle our fears.  Do we accept our fates and allow Death to consume us, or do we take this as an opportunity to create life?

Similar to people, a company also has a life of its own.  In fact, I will even be so bold so say that a company is a living organism that breathes, feels, lives and dies.  As Ian MacDougall of Corporate Lifecycle, Inc. illustrates, all companies follow a similar lifecycle.  MacDougall developed milestones that many companies go through.  By understanding the Corporate Lifecycle, you can move your business to an ideal state of liveliness and profitability.

Corporate Lifecycle

The Corporate Lifecycle describes a common trend many businesses follow.  Each milestone presents us with key components that can build a stronger, more resilient business.  Within each stage, there are key personas — called the Four Primary Roles (Production, Administration, Entrepreneurship and Integration; see chart below for definition) — that really drive the success of a business. What will determine the longevity of your business is the strength of these roles—not individually, but as a unit.  Without unification, mismanagement easily occurs—which can stunt growth, or even lead to the death of a business.

P = Production — Get things done. A = Administration — Create organized structure.
E= Entrepreneurship — Moving past the status quo. I = Integration — Tie it all together.

Courtship – During this phase, the business idea is being developed.  Founders test the water to see if their idea will take hold in the market.The stages of the Corporate Lifecycle are as followed:

Infancy – The business idea has taken hold and can generate scale.  There is great emphasis on sales, in this stage.

Go-go – A somewhat chaotic phase where a business says yes to any opportunity that can generate revenue.  Everything is a possibility, which may spread people thin and create tension within the organization.

Adolescent – The organization becomes more focused on infrastructure and process.

Prime – All Four Primary Roles are emphasized at this point.  Structures are developed and are followed, creating an ideal stage where growth and profitability occurs.

Late Prime – Typically, an organization loses vision and innovation during this phase, simply resting on past methods and experiences.

Aristocracy – The status quo comes into play during this phase.  People are stuck in a routine, and little innovation is done.  However, this is also a highly profitable stage.

Recrimination –  The point where an organization has lost its vision, drive and ambition.

Bureaucracy –  Structure begins to crumble and the business turns into non-thinking organization.  This is the start of death for a business.

Death – Business structures and process are rigid, choking the life out of the organization until it ceases to exist.  Money is lost and bankruptcy follows closely behind.

We can see from the chart, there is an emphasis (indicated through the capitalization of the letter—P, A, E, and I) on one or more roles at different stages of the lifecycle.  For example, as an organization begins to grow, the emphasis is on Entrepreneurship and Production is critical for getting the idea off of the ground.  As a business scales, it then needs to create better infrastructure to handle the growth through Administration and Integration. However, once an organization loses their Entrepreneurial- and Production-oriented spark, they start to decline – eventually resulting in the death of the business.

Understanding this model and where your business is on the graph can help you strategically plan and develop growth.  A thorough understanding of this Corporate Lifecycle model can be found in the book Corporate Lifecycles: How and Why Corporations Grow and Die and What to Do About It by Ichak Adizes.

Death is unavoidable in business, but it isn’t necessarily bad because it simulates life and activity.  Having an awareness of where your business stands in the Corporate Lifecycle allows you to make appropriate changes to nurture growth.  By understanding and accepting this, we can let go of our fears of death and bankruptcy and move towards creating life in our organizations.

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