Corporate Life Cycle Stages

StartUp. ScaleUp. SpreadOut.

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Most of you know that we work with a variety of firms. 

Some of them are just starting out.  For these kind of firms, we typically help them get their “stuff” together.  It involves a fair amount of hand holding, helping them negotiate the marketplace, and get their plans from concept to reality.   Our efforts are aimed to get their operations to be routine, to travel along the line of daily profits.   (We are proud to say the services and assistance we provide these firms far exceeds what one can obtain in an incubator.)

A few of our clients are in the $ 50 to $ 200 million range.  These firms already have their functions clearly defined.  They may want (or need) a product redesign, assistance with logistics to eke out more efficiencies and profits, or perhaps their management has hit a plateau.  (The product and process design efforts won’t be discussed in this blog (because it requires a completely different vocabulary and series of actions,) For the other assistance, we work with these firms to help them avoid becoming a bureaucracy, to show them what choices and actions can be taken to make where they progress along the business cycle, developing a trajectory path for new growth.  (Now may be a good time to refresh yourself with the Adizes’ Corporate Life Cycles, which we discussed back in 2012.)

Corporate Life Cycle StagesAdizes' 10 Corporate Stages

When we are called in to work with our larger client firms (those over the $ 200 million to the several billion), we are provided a clear task by the client. Product design or redesign.  Examine their current practices from an outside perspective to discern where vital changes can be made.

But, when we work with a firm that has hit their first milestone (dependent upon the type of business that can be somewhere between $1 and $5 million in annual turnover), there are a slew of considerations.  (Some of them are the same ones that apply to startups!)

The key factors to assess and amplify are operational finances, sales management (including customer/client acquisition), and personnel development.  The firms have gotten this far- but the next stage of growth is going to require them to move quickly and will demand skills that the current staff may not have- or to which they may have ever been exposed.   Learning- and using- OODA (observe, orient, decide, and act) is their key to success.

(OODA is when executives observe their environment, orient their actions towards competitors and clients, decide what they need to do (right now)- and then act.  Always repeating the process.)

How to Modify the Stages of a Corporation

Firms need to consider their needs one life cycle ahead of where they are and one life cycle behind. To discern what changes are needed (and where) to attain the next milestone.  In other words, they need to disrupt their own business and not let a competitor or even a startup take the business away. 

When these firms grow (i.e., succeed) , they start employing more folks, they help the local economy dramatically- with greater multipliers than would be found from startups- or even the middle tier firms.   The OECD (Organization for Economic Cooperation and Development) calls these firms “high-impact” entities.   Because they end up providing at least 20% growth in revenue or staffing for 3, 4, or 5 years in a row.

The irony? Most local (and state) governments just pass these firms by.  Spending more time attracting bigger companies.  That really means providing a tax break to have the firms relocate from point A to point B; and that tax concession never really provides the additional revenue governments claim they seek). 

Because, when that big company moves to town, it typically brings its own employees and doesn’t hire many of the “locals”.  On the other hand, the smaller firms that are about to capitalize on their trajectory points will be hiring folks to help them sustain this action.  Given the potential better return to the local or state government, why are they ignored? Because governments want sizzle and PR.

Results should matter more.

 

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2 thoughts on “StartUp. ScaleUp. SpreadOut.”

  1. This looks like a good reading to add to my son’s business courses this semester. He’s studying Introduction to Business and Introduction to Management right now. Pinning this to save!
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