In business, as in life, there are seasons and cycles for growth and renewal. As a leader, the performance, and capital value, of your business will only be optimised if you are able to discern and recognise these various seasons and cycles and aligned your strategy with these patterns.
Active Knowledge Question:
What season is your business in now?
All businesses experience seasons and cycles through their life, and these should be recognised, acknowledged and addressed by leaders.
Seasons are more short-term and really reflect periods of focus and rest. For example, after an intensive growth phase, the acquisition of a business and its integration, it’s likely the business needs to take a break and allow everything to be settled down before stepping out again.
Life cycles are more macro and offer a deeper perspective of where the business is in its life. For example, is it becoming a bit lethargic? Or has it lost some of its founding entrepreneurial spirit?
Seasons reflect your business’s capacity, maybe readiness, to engage. In contrast, cycles represent capability and where investment needs to be made.
If you are entering a phase of strategic planning, then to recognise the season and life cycle stage your business is in, is critical. This will strongly influence what is possible and what should be done in your business.
There are seasons to grow and seasons to rest. There are seasons to expand rapidly, and there are seasons to consolidate. There are seasons to innovate and seasons to refine. There are seasons to seek out new relationships and seasons to invest in established relationships.
In crafting your strategy, you must have regard to the season that your business is in. The seasons can be impacted by the conditions of the market in which you compete, but this is only one influencing factor and does not determine the season.
When thinking of seasons, think of your business as if it were a person. Consider:
- What is its emotional, physical and mental health?
- How hard has it been working?
- Have the conditions been particularly tough or very quiet and everyone is bored?
- Do you need to pull back and invest in internal processes?
- Or is it time to step out and take on some risks and new challenges?
Seasons can also be described as follows, periods of:
- Spectacular success.
- Devasting loss.
- Rest and restoration.
- Never-ending effort.
Yes, I know your business is not a person, but it consists of people, and they come together as a team and a community. In considering strategy, you must reflect on where that Community is ‘health wise’ and accordingly ask, ‘what would be the best course of action to pursue’?
Seasons set the capacity, readiness if you like, of the business to respond to your call to action, and sometimes your initial strategy must be focused on transitioning your business from one season to another so it can deliver on your intended principal strategy.
Ignore the season, and you will not achieve optimum performance from your business, in fact, it can cause your plans to fail.
Life cycles are different to seasons and reflect the growth stage of your business and often are also expressed relative to the market in which you compete.
There is a language that exists in the strategy field of mature markets. The narrative goes something along the lines that markets will become mature, and at that stage, sales and performance will cap out, and growth will soften and progressively decline. Accordingly, you should recognise when a market in which you compete is moving to mature and diversify into other new growth markets. This approach is flawed.
I think this approach to mature markets is the language of economists and not strategists. Much of modern-day strategic management theory has been developed by academics whose background is economics. From a strategist viewpoint, there is no such thing as a mature market, but there are markets populated by companies that do not innovate nor seek to deliver an ever-improving value.
Research has shown that 80 per cent of a company’s performance is attributable to its own capabilities and not the conditions of the market in which it is competing. So, a great business can do well in a mature market and, in essence, reinvent that market. But a poor business may not do well even in a thriving and growing market.
The other aspect to be considered when crafting a strategy for your business, and certainly in identifying the challenges the business may face in delivering on a strategy, is its stage of life. Businesses, as they grow, must overcome various hurdles and learn new skills. In crafting a strategy, regard must be had to stages to be stepped through to ensure the right capability is always built.
These stages can be described in many different ways, but using the analogy of your business being a person from conception to death will give you a good handle on this point:
A life cycle of a business often follows this path with the stages, the challenge which that stage presents and what the strategic focus (in brackets) should be, set out below:
- Inception: Finding an idea that will translate into a profitable business, mustering the resources to bring it to life and giving birth. (Value: Can this great idea really work? Why will it and what will it take?)
- Just Born: Establishing a market presence and winning customers from whom a business can be built. (Reality: Translating the ideas into reality and delivering the value promised).
- Walking and Talking: Building stable relationships with suppliers, partners and customers. Establishing efficient and effective processes. Beginning to trust others in managing the business. (Stabilising – Creating processes and systems to support consistent value delivery).
- Establishing Identity: We are in the world, finding our place, testing our limits and working out whom we want to be and are. (Recognising and building – your unique strengths and value proposition).
- Developing Self: Growing to another level and understanding what that means for the business and the skills it needs to access. (Expanding – Building the capital value drivers that will underpin the growth of the business).
- Testing the Limits: Exploring how far the business can go, while trying not to lose sight of why the business was formed. (Foundation – Not losing sight of your purpose and chasing every opportunity that appears but growing from meeting the needs of customers).
- Matured and Settled: Overcoming the sense that the business has reached its peak and cannot do much more in its current market. (Rebirthing – Ensuring that change is part of the business’s DNA and that the value delivered is constantly challenged and improved).
- Opportunity: Not allowing growth to fall away. (Renewal – Need to restart the business to take it to another level).
- Maybe Too Settled: Recognising that the business is losing touch with its customer needs and is no longer delivering greater value. Change is required. (Reaching – Needing to reconnect with your purpose and reaching back to your beginnings to find energies for growth).
- Really Settled: The time to change has probably passed, and an exit strategy may be required to crystalise a fair capital value. (Alliance – Having left it too long, so you need to find a marriage partner to introduce new life into the business).
- Slowing Down: Capital value is disappearing, and the remnants of brand equity is all that is keeping the business going. (Exit – Step away or sell).
- Gone: The business is finished, but management may not yet recognise the end is already there. (Liquidation – Close down).
Recognising what stage of life your business is in and where it needs to transition to is vital in enabling its continued growth, and importantly ensuring that it does not fall into decline. And businesses can ‘loop through’ and repeat this life cycle many times, it is not necessarily a single linear experience.
I like to think of seasons as the mental readiness of my business to engage, whereas life cycle tells me where I need to invest in enabling continual growth. Both are critical to performance and enduring success, and it is the certainty of the enduring success of my business that will determine its capital value.
As you review your strategy and consider the next set of goals that you seek your business to achieve, factor in the season and cycle in which you believe your business to be in and ensure they align. Such an approach will optimise performance.
An entirely new level of performance.
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All the best in the success of your business,