Company operation lifecycle: paving a path to success

by Konstantin Demishev

Company operation lifecycle: paving a path to success

We can compare any company to a living organism: it is born, develops, reaches the peak of its growth, and fades. In other words, it goes through certain stages of its lifecycle. Management theorists believe that any business is predictable in its development, and they offer us a clear plan for managing a company at different stages of an enterprise’s lifecycle. Knowing the stage at which the business currently is, the manager can choose the proper management method, take all the necessary risks, and make the right decisions that allow him to compete in the market effectively.

What is the company’s operation lifecycle?

In 1950, American economist Kenneth Boulding first proposed the “enterprise lifecycle” concept. Since then, all the theoretical schools of management, marketing, sociology, psychology, and public administration began to discuss and develop this theory vigorously. The classic, simplest model of the lifecycle of an organization includes only five stages. Each stage of the company’s development has its own characteristics, opportunities, risks, and optimal management option.

Company lifecycle stages:

  1. Launch (Startup)
  2. Growth
  3. Shake-out
  4. Maturity
  5. Decline (Renewal)

The development of a company along the organizational lifecycle curve is inevitable, predictable, and consistent. This evolution is due to three reasons:

  • A successful company is constantly growing, turning into a complex organizational structure. It has more and more stakeholders (sometimes with opposite priorities).
  • As the company grows, it must introduce new information processing and decision-making processes.
  • The company constantly “jumps” between the introduction of innovations and the strengthening of these innovations in the company, changing approaches to management.

The change of stage occurs at the moment when the internal processes of the company begin to conflict with the conditions of the external environment, which leads to business inefficiency. The company embarks on a path of survival and changes its approach to management. Such a transition is often painful, as business leaders do not immediately realize that their previously successful approaches need to be changed. But if you know and plan for such a transition in advance, the company will be able to increase its efficiency.

Why knowing about a company’s lifecycle is essential?

The development of an organization without taking into account natural processes often leads to disruption of its functioning and sometimes even to the destruction of the organization. In other words, the problem of “organizational integrity” arises.

It is crucial to anticipate the company’s development and create opportunities. Every big company has grown from a small business, so always keep it in mind. Make sure that you “cure” childhood diseases in childhood.

What are the challenges a company might face as it grows?

In a small company, it is easy to share information. But as the team grows, people begin to lose their relationships. They don’t know who does what and the other employees’ responsibilities. At the same time, the processes such as HR or asset management, which previously seemed so simple, are rapidly becoming more complex.

If small companies do not use management systems at all, then as departments grow and appear, each of them starts using its own system. These systems are usually different, which is logical: after all, each department selects it for itself according to specific needs. Some departments use Google Spreadsheets, while others choose simple management systems. As a result, the company uses many different solutions. It might seem convenient at the moment, but it will lead to chaos later when the company is bigger.

Over time, this little thing begins to turn into a real snowball. At some point, management realizes that for successful development, it needs an integrated platform in which all indicators of the company’s performance would be stored and analyzed. But this is impossible: each department uses its own system, and they are incompatible. Some systems are challenging to synchronize due to data duplication and data loss.

A complete redesign of the entire management system can affect employees’ productivity: employees are confused, and their motivation decreases. The result is lower effectiveness of the business overall.

How to avoid problems when moving to a new lifecycle stage?

If you plan to grow your business, start paving the way to growth at the very beginning. Think of your company as a large business, even if it is still little, and choose solutions that would help it get bigger. In order not to get into a situation of confusion about management systems, choose a single platform already at the first stages of the company’s existence.

Here are what should be its features:

  • standardize operations such as managing employee records and their assets;
  • create and manage employee growth plans and their performance;
  • build intercompany and interpersonal communication;
  • help managers work with their teams effectively.

All this helps to increase employee motivation and, as a result, accelerates business growth.

The focus on employee development and business efficiency formed the basis of Audra — a platform that includes different applications. It can track employee records and perform behavioristic and motivational assessments, helping employees grow professionally. Also, the platform is perfect for recruitment and asset management.

Wrapping up

Don’t wait until your company grows big to implement a genuinely end-to-end management platform. Do it now to focus on more important tasks in the future. It is also crucial to remember that there are enough organizational challenges at the stages of active development in business. Therefore, platforms and their implementation methods must fit organically, complement business growth, and not contradict it.