The seven life stages of businesses

Les McKeown identifies seven life stages in the life cycle of any organization. Once you get to Stage 4, you need to stay alert. The pendulum will always move to stage three or to stage five. In practice, the various management forces and egos are constantly fighting with each other. For example, the visionary and the maleputter want their freedom back and are trying to work the processor out. Therefore, make sure there is someone who can act as a connecting link in your team.
Auteur: Erik Camman
Categorie: Communications

1. Initial struggles (Early struggle).

A phase characterized by a search for sufficient resources and customers. An exciting time, revealing whether the company, started with great ambition, will make it. In an ideal start-up, if you are a visionary, you look for a male putter as a partner or vice versa. It takes someone who produces ideas and vistas at the assembly line AND someone who immediately picks up the phone without hesitation and immediately removes all obstacles on the way to the goal.

2. Fun (Fun).

In the second stage, everything seems to go by itself. This phase also sees the rise of some so-called “big dogs”: employees who go to great lengths and make a big difference. Heroic stories and myths are created about the company, giving the company success, growth and with it complexity. Your self-confidence is high. Everything is going well, the only thing everyone focuses on is the question: how can we sell even more? You are no longer looking for a market; you can start milking it. Your worries about cash flow fade into the background; you can make new investments. Meetings in the elevator, decisions implemented immediately, late hours with a tight-knit team in the office. This is the period when your company’s heroes are born.

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3. Wild water (White water).

In this growth phase, the organization becomes increasingly complex, the first setbacks occur, and the first conflicts arise between the founder(s) and employees over execution or strategy. More alignment is needed between structure, system, process and human plus the need for specialization. From three employees, you have now grown to forty employees or more. Clearly, cracks are beginning to appear in the organization. Things no longer seem to come naturally. You still make quick decisions, but in implementation, suddenly all sorts of things go wrong. Orders that are suddenly delivered wrong, a first-time customer who walks away from you angry. Things are getting more complex, but your business is not set up for that. Your profitability decreases, a feeling of losing control arises.

Where you have to fight from stage 1 to get to stage 2, you end up in stage 3 as a matter of course. It is inevitable. Ideally, you want to go back to the previous period. The key, however, is to strike out now. It’s time to bring in the third management type: the processor. That should ensure that proper processes and systems are in place. This will create a lot of resistance. The typical reaction of a visionary is that of withdrawal: “Processor you arrange it nicely, you find me on the golf course if you need me.” The male well-wisher also doesn’t like the sudden need for meetings; he’s used to putting out fires and running out of time.

4. Predictable success (Predictable success).

This success is the result of the previous stages: an expression of proper control and focus. There is both direction and flexibility and a financial cushion that absorbs headwinds. An organization in this phase values craftsmanship, is creative, continues to innovate, dares to take risks. She has enough structure and process to manage this. This is the stage you want to get to and stay in. The processes are in place, but you are still flexible as an organization. Whether you want to sell only in the Netherlands or Europe, conquer the entire world or enter new markets, you can scale up indefinitely from now on. You can also stay where you are.

The key to success is to include the fourth type of manager on your team, the connecting process manager. The processor has made sure that there is a well-oiled organization, he has taken the rotten apples out of your organization. He also has a weakness: his rule-seeking makes him inflexible. The connecting process manager on your team is someone who knows how to overcome these weaknesses and can also recognize and manage all the weaknesses of the other roles.

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5. Treadmill (Treadmill).

At this stage, the innovative capacity disappears and the organization is no longer innovative and enthusiastic. The innovative people left, the risk averse ones stayed. The organization is still in good shape, but is in danger of becoming a rigid bureaucracy with inflexible people. If you wake up as an organization and recognize the symptoms in time, you can get back to Stage 4, but if you don’t, you inevitably sink to Stage 6.

6. Big rut (Big rut).

The focus is now mainly internal, the reality of the outside world with real customers fades into the background. Products go out of fashion, the financial situation worsens. Self-diagnosis is no longer possible at this stage. In the important positions are people with good working conditions who have no interest in change. This phase, without forceful intervention with changes of entire layers of management (or merger), naturally leads to phase 7.

7. Death rattle (Death rattle).

The dying process: the organization is coming to an end. In this phase, the death throes of your business take place. All denial is gone; you are in despair. You are now just saving what can be saved. At most, there are still parts and patents that you might be able to sell to generate some more cash. If you want to be successful again, the key is to learn from your mistakes and focus on the future with a new business.

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