Growing up in business terms

The Adizes Life Cycle of Business model is a great way of diagnosing where a business is at and the major changes required to position it appropriately in its quest to reach PRIME.

The left or ascending side of the bell curve represents the GROWING phase and the right hand or declining side the AGING phase of the life cycle. The various stages can be summarised as follows:

COURTSHIP defines the creative ideas stage where innovation is born and nurtured. Only when commitment and risk are brought to bear on an idea will it germinate into a new business or business element. The entrepreneurial stage, it requires a focus on the producing or operating style to move from Courtship to Infancy.

INFANCY is the high risk and heavy resource stage characterised by a complete shift to the producing or “doing” style. Similar to what we do for infants, they require constant and careful nurturing, continuing resource investment (particularly cash), and need to be managed very differently from the more mature stages. Over 80% of infant businesses fail mainly due to constant cash requirements.

The business enters the GO GO stage when it is ready to grow beyond infancy - which it must do, or it dies. In this stage, new products or product variations are added to reduce the vulnerability of an infant business and growth is paramount in terms of turnover or sales, but not profit. The challenge is to modify behavior to focus more on profit and move to the Adolescence stage.

In ADOLESCENCE the focus is on efficiency or process improvement, and requires less focus on short-term results for the necessary changes to take effect. Entrepreneurial impetus must be maintained so the organisation does not age prematurely.

A further challenge here is the conflict between the systematisation process and the entrepreneurial people – particularly if the entrepreneur is the founder. Often, the entrepreneur sells out and, with the administrators in charge, the business risks premature aging.

In the PRIME stage, which follows successful implementation of the adolescent phase, short term tactical and longer term strategic aspects are balanced and well managed. Getting to Prime is difficult, but staying in Prime is even harder. To ensure continuing growth, there must be emerging or growing business elements in each stage, even though the core business is in PRIME.

During the STABLE stage, current results often look superb, but caution is advised as they might decline tomorrow. From Prime, it is not uncommon for the organisation to become more risk averse and for senior executives to develop an over inflated sense of their own importance. The commitment to ongoing Marketing and Research diminishes which can threaten results.

It is rare for organisations in the Stable stage not to progress to ARISTOCRACY. The diminished risk profile in Stable leads to diminished short term results, although the senior executive usually find excuses, rather than focusing on their own effectiveness. Corrective action is often not taken by the incumbent team and the slide continues into Early Bureaucracy.

EARLY BUREAUCRACY is characterised by diminished results, lack of risk taking and future investment and a continuing focus on efficiency with a “SCAPEGOAT” mentality. It is again rare that the existing senior management team can make the necessary changes in both production of results and a return to a GO GO type culture. It requires a huge behavioral shift, which usually means a fresh approach - in most cases a new CEO or equivalent – or the inevitable slide continues.

BUREAUCRACY is the penultimate stage where the focus is on how things are done, how efficient they are, but results are abysmal. “DEATH” or closure will follow unless the organisation is supported for reasons other that profit growth and Return on Investment. DEATH is the final stage, and is self explanatory.

Life cycle diagnostic tools are available, which can assist in developing a clear strategic plan to continue up or move back into the Growing Phase of the life cycle. Understanding where we are and where we want to be is paramount in making the correct strategic decisions, followed by implementation.

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