Business Life Cycle

Business Life Cycle

We’ve been looking at the stages in the business life cycle, Start-up, Growth, and Expansion, and correlating them to the developmental cycle of the Zodiac.  In this post we look at the final two phases, maturity and transition. 

In Reframing Organizations. Artistry, Choice, and Leadership , the authors Bolman and Deal perfectly describe the last signs of the zodiac cycle, stating, [with my additions]:

The proliferation of complex organizations has made almost every human activity a collective one.  We are born, raised, and educated in organizations.  We work in them and rely on them for goods and services. [Capricorn]  We learn in schools and universities. [Sagittarius] We play sports in teams. [Aquarius] We join clubs and associations. [Aquarius]  Many of us will grow old and die in hospitals or nursing homes. [Pisces]  We build organizations because of what they can do for us.  They produce consumer goods, bring entertainment into our homes, provide education and health care, and deliver the mail.

Capricorn

Capricorn signifies the beginning of the phase when the business becomes a complex, collective organism or institution. This phase is another major transition for the business, with great rewards.  However the risks are very real.  At this point the business is known in the marketplace and the community.  There is prestige, honor, and success before the public.  There are loyal customers and a significant volume of repeat business. 

Yet, now that the business is so integrated into the overall economy, economic changes due to societal or market conditions can impact sales and profits.  The bureaucracy which has allowed the institution to reach the mature stage has become imbedded in the organizational culture.  This bogs down the entrepreneurial spirit needed to respond to market changes with new products and innovative services.

The business is beholden to and may become run by stockholders, and employees may wield control with collective bargaining.  The business is less and less able to compete with smaller, more responsive competitors.  Capricorn qualities of strength, dependability, persistence, efficiency and practical response to internal and external threats are needed at this stage.

 

Aquarius

In the Aquarian phase the entrepreneur’s original goals of individual self-expression and gain have been left long behind.  By this phase, not only has the bureaucracy made innovation highly cumbersome and unlikely, but the company has become an arena for union activity, employee ownership, and pension obligations.  The social has overtaken the individual.  Costs are high and productivity may stagnate.  If the company attempts to reduce costs, it must fight against entrenched attitudes and the status quo. 

When a company is in the aging side of the lifecycle, it is less likely to be able to call upon traits such as adaptability and flexibility.  These are the “too big to fail” companies and government intervention may shore them up but at a high price in terms of reputation and control.

In order for innovation to be created, it must come from the bottom up, and management must provide the means for employee team contribution.  Or the business may look to collaboration with outside partners and open innovation for new ideas and invention.  Yet this carries risks if outsourced suppliers deliver inferior goods, as was the case with toy company contracts in China.  The Aquarian traits of mental pioneering, and independent, imaginative, creative, thinking are critical to see the company through this phase. 

 

Pisces

The Pisces stage is the transition stage, either to decline or to a new cycle of innovation.  Retiring staff and owners are interested in management succession and exit strategies.  Key employees may break off from the behemoth institution to begin their own start-up activities, taking talented resources with them.    The company may be broken up into smaller divisions in an attempt to reinvigorate the entrepreneurial spirit. 

This is the phase when high costs and declining sales can lead to dissolution.  The company may falter, leaving it open to attack by corporate raiders.  The business retreats from the public eye to retrench, restructure, or terminate.  A successful retrenching will allow the giant company to retain the competitive advantages of its size while discovering and harnessing the entrepreneurial talents of individual contributors.

This leads the business to the start-up phase again, as our Zodiac wheel turns to Aries.