“We cannot direct the wind,
but we can adjust the sails”
— Contemporary Western Proverb

Your firm is a living organism, a complex system. As with all living systems, it self-maintains, self-renews and evolves. The firms that recognize themselves as a living organism, a learning organization are aware of their environment, their place in the ecosystem and the shifts that are occurring. This awareness and sensitivity to internal and external changes gives them the flexibility to adjust and adapt.

“Adapt or die” is a common phrase that highlights the importance of survival for firms. As firms adapt and evolve, the organization determines and selects the traits necessary for the survival and through its culture continuously reinforces it. This continuous process of adaptation and evolution further ensures the success and survival of the successive generation.

The life-cycle refers to our knowledge and generalization of living systems, the principles and laws that govern life from birth till death. As businesses, we also go through our life-cycle stages. As always, these are guidelines and not definite steps. As with my son that skipped the crawling stage and went to straight to walking, firms can also skip stages. Here are the common stages of a business life-cycle:

• Seed: Similar to a plant life-cycle, the seed stage represents the germination of a compelling concept and the push for finding the first set of customers to validate the idea. The firm’s main challenge is market acceptance, and managing resources and time effectively.
• Startup: This stage is characterized as customer acceptance, where the focus shifts to obtaining new customers and delivering on the product’s promise. Usually at this stage, the firm has enough customers, are able to keep them satisfied and the focus is shifting from survival to managing revenues and expenses. The firms’ main challenge is to have checks and balances to ensure they are on track, and managing the burn rate. This is where you don’t want to run out of money…
• Growth: Congratulations, you have proven the idea, showed the market validity and are now acquiring many more new customers. The growth stage is a milestone that marks the validation of the idea, which also means increased competition. If the firm is focused on growth, it will strive for operational excellence, proper scaling of the product and the business, and will look at ways to expand into new businesses, markets and customers.
• Decline: This stage is usually marked by the reduced revenue and profitability. At this stage, there may be a crisis that calls for action and renewal. Or, the organization might be the frog in a pot of cold water, slowly being boiled, not realizing the situation they are in. All focus is now on managing negative cash flow and costs.
• Exit: The exit stage is all about closing the doors whether due to bankruptcy, selling the business, acquisition by someone, … This process mainly includes proper valuation of the company. There maybe psychological and financial impact that should be managed.

Just like a child growing up, each stage is a change, requiring different nurturing and focus areas for its survival. Yet, basics are needed for survival at every stage: basic management skills, basic financial knowhow, basic marketing competencies. In addition, there are also other factors to consider:

• Clarity on what you are and what you are not. This is important for your internal decision making, for your customers and your brand image. This continuous adjustment, explicit commitment and mutual adjustment from everyone is needed to achieve results.
• Know how you compete. Many new firms excel because they stress customer service and flexibility over what established firms can offer. This coupled with focus on high-quality products, flexibility in responding to customer needs and product customization gives them a boost in the market over competition.
• Innovate while managing your core business. It is too easy to put all your eggs in one basket or over commit yourself. Innovation and technology strategies correlated with growth, but need to be managed.
• Understand other life-cycles in motion, such as those of your customers. Where they are in their adoption curve drives their purchasing behavior and risk profile.

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