There are stages in the life of an organization that most businesses follow. Each stage has a growth period, but the business reaches a plateau that it cannot go beyond without changing attitudes and behaviors.
Here are the four stages:
- Startup – Startup mode is characterized by a search for a business model. The ultimate example is a Silicon Valley tech startup searching for a way to make their technology into a product that consumers understand and buy. Management needs to have a comfort level with ambiguity and uncertainty to be excellent at this phase.
- Lemonade Stand – Once the business model is in place, the next phase involves selling, delivering the product or service and collecting the money, like a lemonade stand. Everything else is optional. There are many companies that don’t do accounting, file taxes, keep org charts, write procedures or other business school best practices, yet are profitable, multi-million dollar businesses.
- MBA / Mercenary – To move beyond the lemonade stand stage, the traditional business school disciplines of accounting, organization, finance, and planning come into play. This phase focuses on the bottom line and makes decisions based on the impact on the financial statements. The discipline of this level can drive growth to a new level for a company. However, there are still limits on growth associated with these behaviors.
- Best-of-the-Best – The stage where a business consistently outperforms the industry is the best-of-the-best stage. It focuses on a mission and makes decisions based on values. This approach extends to the entire management philosophy of the business. This stage has been successful in organizations including retail, financial services, basic industrial, sports teams, not-for-profit and high tech. The result is consistently outperforming the industry in good times and bad.
Follow this link for more posts on each stage and how to move from one stage to the next.