How to lead at every stage of your business lifecycle

One area that has attracted academic interest over the years is how businesses naturally evolve. A study, which appeared in a 2003 article published in the International Journal of Organizational Analysis, found that there are five stages that every business goes through over time.

The question is, what stage do you think your organization is at? The answer might tell you a lot about how to think about your role as a leader.

First Stage: Existence

The first stage that any organization goes through is its start-up or its entrepreneurial birth. The goal of the organization at this stage is to become viable – where you generate enough cash to fund the operations of the organization. You're trying to get customers to buy just about anything from you at this point. It's almost like you're running out of air. A CEO plays an outsized role in an organization's ability to survive the existence stage, primarily because most decisions are focused on him or his small management team.

Stage Two: Survival

Once you get past the early years of a business, it becomes a battle to survive and grow. This is where the structure of the organization becomes paramount, where you need to add new skills and professional management. There is also the threat that something could go wrong at any time and wipe out the business altogether. The CEO must also evolve as the organization grows through this stage. They must change their behavior from that of an individual contributor to that of a coach and leader who guides the team towards its common vision and goals.

Step Three: Success

At this point, the company has crossed a threshold of success. It has established a clear customer base and a competitive advantage in the market that fuels growth year after year. The catch is that bureaucracy and organizational politics have become hurdles to overcome. As the business has evolved, so have the number of policies, procedures, and hierarchies. Everything looks much more formal than in the previous stages. The role of the CEO has also changed again, where it has moved from thinking about day-to-day operations to a much greater focus on planning and strategy. This shift in position also leads many entrepreneurs to look for a way out of the business. Although they thrived at first, the new part isn't quite as fun - it's already starting to feel more like a job. I've written about this dynamic before, and it's key, to be honest with yourself and recognize if it's time to leave and start something new instead, especially if they're not ready. and able to commit to reinvesting their energy in the future of the company.

Step Four: Renewal

This is a critical stage in an organization's life cycle, as it typically reflects a change in leadership, where the founder has made the transition to a new CEO. This new leader sees the business very differently, which may be necessary to spur the creativity and innovation needed to create new growth opportunities for the organization. It may also be an opportunity for the new CEO to break down some of the silos and hierarchy that have developed over time to refocus on customer needs and recapture that feeling of newness and energy from the good old days. .

Stage Five: Decline

This is a stage that no organization wants to be in. This can happen when the renewal step goes wrong. You will see that the growth slows down or even becomes negative. The people inside the organization also elevate their needs above those of the business. It has become much more political than ever, and the winners of political battles are consolidating decision-making power among themselves. As a result, the company becomes increasingly limited in its ability to meet the needs of its customers, which only erodes the company's prospects over time.

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