Managing life cycles in an organization

Managing Life Cycles in an Organization

The Start-Up Phase

The start-up phase is the first phase experienced by a company at its inception. This phase is also referred to as "birth." Actions taken during this phase include thinking about the business, forming a management group, and writing a business plan. Challenges faced during this stage include acquiring start-up funds, testing marketability of the product or service, and being effective in writing the business plan.

The above-mentioned challenges are closely interlinked with each other. Start-up funds for example is integrated with the marketability and business plan of the product or service. If a product is not marketable, it is unlikely that a sponsor or loan will be found for it. The success of the business is thus dependent upon the quality of planning in this stage.

Marketability is tested by methods such as telephone surveys and questionnaires. The entrepreneur should make sure that a large enough proportion of the market over representative areas is surveyed in order to provide an accurate view of the market. In order for the business plan to be successful, the market and its demographics should be taken into consideration. Marketing experts could be consulted for this. Once the business is declared open, it enters the growth phase.

The Growth Phase

During the growth phase, the business becomes established. Here it is expected that the funds invested in the business would regenerate itself. Revenues are expected to climb, new services and products implemented, and the company also grows in size by hiring additional employees. External challenges faced during this stage could include competition from rival companies, and a lack of customer interest in products or services. Internal challenges, which could include a lack of growth and thus a lack of revenue, are related to external challenges. When the core of the problem is dealt with, all the challenges should then be faced with greater effect.

Competition could then be dealt with by implementing new products and services that the rival has not considered for his or her company. When this is done, marketability of the company should be improved and revenues should grow. The management team should then work together to provide the best possible of service and products in order to deal with this problem. When growth is reestablished, the team should continue to think of ways to improve and supplement products and services in order to maintain market interest. Marketing challenges could be dealt with locally by the management team, or outside experts can be hired.

The growth stage is often the most exciting and most tumultuous in a new business. When a level of revenue is reached that remains stable for a period of time, it can be assumed that the growth stage is over and that the maturity phase has begun.

Maturity Phase

Although the period of time that needs to pass for maturity to be reached differs from company to company and their products and services, it usually takes some years of existence before a company reaches this stage. The growth stage has stabilized here, and the rapid growth of revenue experienced during the previous stage stabilizes. The inherent danger in this is a concept known as "dry rot."

Dry rot occurs in the maturity phase when the period of growth stabilizes to reach a stage of stagnation. When this period continues for too long, the company begins to reach a stage of decline, which is more difficult to avoid than dry rot. It is therefore very important to identify and deal with the symptoms of dry rot before the company begins to decline.

An external problem faced during this stage is once again competition. Other start-up companies offering the same products and services could experience a period of rapid growth during their inception, with new and alternative products and services offering a lure to customers.

Dry rot can then be dealt with by implementing a team of observers to recognize the symptoms of the problem. These symptoms should be identified by the management team beforehand, even as early as in the planning stage. This is then used by the team of observers to identify any problems relating to dry rot in the company. The observing team and management team then work together to once again implement new ideas regarding products and services.

In order to deal with rivalry, a marketing team can be formed in order to respond to the challenge offered by rivals in terms of new products and services. The rival's products and services can then be observed by this team, after which improved products and services are then created.

Challenges in the Growth and Maturity Phases

Challenges in the growth phase are mostly related to issues of revenue generation, and implementing new products and services, as well as employing new people. The focus is on maintaining a steady rate of development. In the maturity phase, the focus is on avoiding dry rot and decline as far as possible. This is done by responding to new products and services from other companies, rather than as such focusing on one's own growth through new products and services. The important factor is recognizing which stage of development is faced by the company, and whether any decline in income is the result of dry rot or simply of the need for establishing a few new strategies. The company's management team should thus be very aware of the stages of growth faced at any particular time.

Decline and Renewal do believe that it is possible for a company in its decline phase to be renewed. Ideally, decline should be avoided altogether. If however symptoms of decline are detected, this should occur as early as possible in the decline phase, because the longer a company is allowed to decline, the more difficult renewal will be.

Several elements play a role in the possible decline of a company. One of these is with management. With a company's mature stage, management also reaches maturity. The greatest inherent danger here is inflexibility: management does the same thing in the same way, but expects results that differ or grow from what they have been before. Other factors that play a role include debt, poor planning, inexperienced management, inadequate leadership, and a lack of revenue.