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Can your business survive the traditional life cycle?

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Successful startups seem to follow paths similar to greatness, and unfortunately, too often, this path brings them back to the hill much faster than they did. Large companies, such as IBM and Xerox, have taken fifty years to make the cycle, but new companies today, in the Internet, often cycle in five to ten years, even less. Consider MySpace and Webvan.

It is up to each entrepreneur to start looking at these things more carefully from the beginning. By definition, most startups start with an innovation in the product, process, or service. The problem is that innovations in most areas of business are so fast these days that yours can be outgrown while being extended across geographies and other products.

In other words, the challenge now is to build a culture of continuous innovation, continuous scaling and continuous consolidation, simultaneously. It's a daunting challenge, especially when your business culture needs to integrate into the myriad of international and local cultures that are part of every market nowadays.

In the classic book, "Fish Can not See Water," Kai Hammerich and Richard D. Lewis explore these cultural, national and international issues that can make or break your company's strategy. Incidentally, I love this book title, which seems to me applicable to most aspects of business (and even people), as well as to the corporate culture.

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To pave the way for all cultural issues and timing, the authors begin with a summary that I like of the five phases of the life cycle that any business is likely to experiment with in the long run or to short term, whatever its culture:

  1. Innovation . This phase of business is where every entrepreneur starts. This is a volatile time for all businesses, where most are struggling to gain commercial and technological traction, usually based on a single product or service. A particularly critical moment is when the founders entrust the management to a more managerial regime.
  2. Geographic expansion. This phase is characterized by rapid regional or global expansion for growth (ramp-up). It is there that the startup culture has to adapt to the cultures of the markets served. A common practice is to hire local employees who know the geographic culture, although this may dilute the company's culture.
  3. Development of the product range. For additional growth, most companies expand the product portfolio to serve more customers and sell more to existing customers. The challenge of this phase is to stay innovative and agile. This usually marks the end of organic growth, as partnerships and alliances promote growth, but again dilute the focus on culture.
  4. Effectiveness and scale. As the company matures, there is a natural tendency towards more efficiency, often because of the scale and desire to increase market share. Companies with innovative and creative bias, which flourished during the innovation phase, generally struggle at this time. The focus is on global processes and strict execution.
  5. Consolidation . This is the final game for an industry, and many businesses, characterized by mergers and acquisitions to some dominant players. Value creation for major shareholders is often hampered by integration issues and cultural conflicts. Crises definitely hit here, if not earlier, and even survivors can be trained.
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In fact, crises can and continue to strike in any phase, due to poor execution, complacency of success, a less competitive strategy, A change of leadership and good for other reasons. It is important to note that a company in crisis will often return to its core national culture, which will only exacerbate the problem.

It is therefore important to ensure that your business culture quickly becomes a global enterprise, without any specific national bias, since the speed of change is so great. You need global perspectives, even if scanning and Web 2.0 mean that you do not need to have a physical presence in other countries to participate in the global market.

As businesses grow in the high-speed Internet environment of today, with constant pivots and new products, they will not even see the phases of the life cycle and , in fact, all competitors. There is no time to change your culture to match the life cycle. How much do you work to avoid the "fish can not see water" syndrome?

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