The common perception is that companies, like people, pass through a series of life stages.1 Each firm begins with the experimentation and rapid-fire learning of a startup, passes through a frantic adolescence as it scales its business model, matures into a reliable albeit dull middle age and finally lapses into inevitable decline. Some companies progress through this sequence as cohorts — think of the Route 128 minicomputer makers or Lancashire’s cotton mills.2 Others pass through the life cycle alone, as Polaroid Corp. and fashion and home furnishing company Laura Ashley did.
For many people, maturity is a tough life stage, hence the midlife crisis. The thrills and excitement of youth have passed. Only the aches and decline of old age lie ahead. Maturity can be tough for businesses as well. The opportunities for product innovation seem few and far between, and the organization focuses on the relentless pursuit of process efficiencies, which at best stave off the inevitable decline. Daring acquisitions or groundbreaking research projects are dismissed as unseemly attempts to regain lost youth, the corporate equivalent of buying a red Corvette. (See “About the Research,” p. 28.)
Although the metaphor of a corporation going through a life cycle is a compelling analogy, it is fundamentally misleading. In short, life cycle is not destiny.To read the complete article, login or sign-up using the form below.
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