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Lifecycle Quiz for CEOs

Company’s, like people, go through a natural evolution from their entrepreneurial beginnings or embryonic phase, through the growth phase into …

Company’s, like people, go through a natural evolution from their entrepreneurial beginnings or embryonic phase, through the growth phase into maturity, and if they are not careful they can age prematurely and eventually die. The individual products that make up the company sales have their own product lifecycles as well.

The problem is that many CEOs do not know where their company lies on the lifecycle curve. Nor do they seem to know where their products fit in the natural evolution of product lifecycles. As a result they are frequently surprised when they realize that it is often too late to reverse their situation.

The scenario is familiar to anyone during the course of one’s life when one realizes that he has no career plan when one loses a job, and discovers it’s too late to do anything about it at their age. Likewise, when one becomes ill because one did not take care of himself, it comes as a shock when few medical remedies are left to arrest  life threatening ills.

I’ve said many times before that “nobody plans to fail…they just fail to plan”.

Planning anticipates the inevitable, but if you do not know what the inevitable is then you obviously can’t plan for it!

We all start out small wrinkled up little people, and we all wind up small wrinkled up little people, 70, 80 or even 90 years later these days. The path we take from one wrinkled up little person at birth to another at the end of our life is quite predictable given certain sets of circumstances.

The lifecycle of a business mirrors the biological cycle of humans. The stages of the business/product lifecycle have been well documented and are played out in the marketplace every day. The question is – where is your business in this age old evolution? Do you know?

If you don’t, I would be worried. You are not alone, I visit with many CEOs who don’t know either. Recently, for example I spent a day with the CEO of a company who has been in business for about 25 years. I was there because he did not know what to do as his business was going nowhere, and as a matter of fact declining for reasons not explained solely by the current economic recession.

After asking several simple questions about the business it was clear that he did know where his company was in its lifecycle. It was obviously not a good, healthy, growing, or profitable enterprise. There was no business plan and very little useable information about the business. I asked “what are the key performance indicators that you look at religiously”? There were none! 

There was the typical mound of data about how much was sold to which customers in sales dollars, but in no organized format; nor by product. There was no way to easily determine what has been sold by different sizes and configurations of each individual product type. As a result profitability by product or by customer could not be readily determined.

There were many other unanswered questions. Here was a business that was going nowhere but down. And, the CEO and management team had no idea of where the business was in its lifecycle, nor what to do about it.

Every company generates immense amounts of data. However, all that data has to be converted into information and that information used to develop insights to determine where the company and its products are in their natural lifecycles. Without an accurate profile of where the company is, it impossible to make assumptions about where one wants it to be. Nor can one determine the strategies to get there.

Each stage of the lifecycle of a business has natural strategies that can be implemented successfully to continue the profitable evolution of the company. However, if you don’t know where you are you certainly cannot contemplate the inevitable and develop the proper strategies to deal with it. The inevitable may already be underway and arrive sooner than you realize.

Review the following illustration of the natural lifecycle of any business and see if you can determine where you are with your business.

If you are concerned about the evolution of your business let’s start a dialogue.

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU’s Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.

He is the author of GUIDEBOOK TO PLANNING – A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.  Email Bob at: rmdonnelly@chiefexecutive.net

About Robert M. Donnelly

Robert M. Donnelly
Robert M. Donnelly is CMO of Flo-Tite Valves & Controls, a U.S. based supplier of valves and components to the process control industry in North America. A coach, educator, and advisor to founders/CEOs of growing firms, he is a serial entrepreneur, having started, grown and sold several technology based businesses. Previously he held executive positions at IBM, Pfizer and Exxon.