The company life cycle can be represented with a curve that is in effect similar to the one that represents the life cycle of a product.
The four phases in the case of companies are: birth, development, maturity and decline.
When entrepreneurs lead the company by checking only the economic and financial indicators to decree the state of health, it is almost certain that the change is only thought when the curve is at a point of irreversibility and therefore salvation is seriously questioned.
When the company life cycle is instead in the interval between growth and stabilization, it is advisable to trigger a new growth curve.
This is the moment when the company has the time, energy, enthusiasm and resources to activate the new path and prevent maturity and decline from weakening the organization.
Of course, it is necessary to review the paradigms within the company just when “things are going well”, but it should be noted that moving to a new growth curve becomes strategically fundamental when aiming for excellence.
The company life cycle is closely related to some management phases.
Usually the company passes from an entrepreneurial stage strongly focused on creativity to a collective stage. In this phase, the crisis of the need for leadership is overcome and the definitions of a clear direction for the company become important.
The next crisis usually manifests itself in the need for delegation with control. This is how the complexity of the organization is faced, the inclusion of internal control systems that formalize the company and therefore burden its bureaucracy.
Hence the need to manage excessive bureaucracy that is faced in a stage of development of alternative solutions that develop teamwork.
Finally, the business life cycle feels the need for revitalization that can lead both to organizational streamlining and therefore to the philosophical return of the small business and to continued maturity through continuous innovation or to the decline during which the entrepreneur finds himself having to face the new addition. indifference of collaborators.