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Lifecycles of an Organization

November 5, 2013

Organizations do not last forever.  They have lifecycles and the truly successful ones find ways to extend their lives.  This is just as applicable for not-for-profits as for businesses.

Capture

Businesses have a growth stage where they develop and mature.  At maturity, they become stable and left alone, they age and decline.  The successful organizations find ways to continue developing and growing.

I have seen many businesses grow very nicely after they start… only to max out at some point.  There are many reasons for this, but the point today is to make you aware of the cycles and have you work on overcoming the inertia that settles in.  Companies cannot rest on their laurels and must keep their focus on continuous growth.  Past the peak, arrogance sets in that then hastens the decline and death.

What to do: 

  • Find the position on the curve where you think you are
  • Evaluate the momentum
  • Develop a plan to get to the next lifecycle if you are on the left side of the curve.  Reverse the trend if you are on the right side
  • If at the stable peak, work out a method to continue growth and forestall the decline
  • One extremely effective method to follow is to lay out your previous three or four years’ operating statements and use the trends to project the next three or four years
  • Do the same as the last bullet, but with units, e.g. products, pounds or hours.  If the trend of what you sell is different than the dollar trend, examine the effect on your market share or position in marketplace
  • Evaluate the trends and decide if that is where you want to be, or how to do better

The lifecycle measurement is an effective tool that can help place your business in perspective with indications of the direction the business is headed toward.

The chart and discussion was based on information in Corporate Lifecycles: How and Why Corporations Grow and Die and What to Do About It and subsequent books by Ichak Adizes.

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