1. Origin
2. Infancy
3. High activity stage
4. Youth
5. Heyday
6. Stages of an aging company according to Adizes

Courtship

The birth stage is the first stage in the evolution and development of an organization. At this stage, the company exists solely in the form of an idea that was formed in the head of the founder of the company. This period of enterprise evolution is based on dreams and opportunities, and the main task of the leader is to create and develop a deep commitment to the idea. The higher the risk and uncertainty of the project, the stronger the belief in the result should be. Hired managers at this stage of the company's development will be useless

Business problems in the nascent stage

In the nascent stage, any idea is subject to active criticism and can lead to the closure of the business if the founder of the company does not withstand its pressure and gives up at the first problems and difficult questions.

A Recipe for Successfully Passing the Inception Stage

In order for a company to pass the inception stage and move into the infancy stage, the owner must have strong confidence in his idea. The sooner the idea is evaluated, the idea is finalized to a “finished” state, and all the evidence in favor of creating a business is collected, the faster the company will begin to develop. The founder must, at this stage in the development of the organization, put all his efforts into developing his idea and give it a clear look, and then make a bold decision to create a company.

Infancy

The infancy stage begins at the moment when the owner of the idea founds a company and assumes financial risks and obligations. The idea is transformed into concrete actions, the time for discussion is running out, and clear results are already required from the company. An organization in its infancy requires two things: a periodic infusion of working capital and boundless love and support from the founders.

The performance of the new company is at a low level, it is just learning how to function effectively in the industry. Quite often, crises and problems of a different nature appear, the solution of which accumulates work experience and increases its efficiency. Employees and managers of the company constantly work to the limit of their capabilities (7 days a week, 24 hours) in order to compensate for the lack of experience and achieve the required results.

Business in infancy is very dependent on its founders: if they lose faith in the idea or are unable to solve problems, the young company ends its activity. In a young company, the delegation process has not yet been formed, there are no processes for transferring and managing information, so everything is limited to the manager, who takes part in every event of a small company.

Business problems in infancy

Lack of stress and problems is usually a sign that the company is not functioning properly and is dying. Let's consider natural and abnormal problems for the given stage of development of the company. Natural and abnormal business problems during infancy include:

Lack of problem solving leads to "infant mortality", in other words to the liquidation of the organization at an early stage. The main reasons for the early closure of the company are: lack of cash and inability to cover the negative cash flow; loss of faith in the idea of ​​leaders. Long-term functioning of the company at the stage of infancy also leads to the termination of its activities.

Recipe for successful infancy

Companies in the early stages of development require high attention and a strong management hand. The head of the company should by his example show involvement in work and focus on results, act as a guarantor of clarity, certainty and stability for hired personnel. What a baby company needs most is sales growth (including repeat sales growth) that can stabilize cash flow. All efforts should be focused on creating products, improvements, working with customers. The company needs a rigid centralized decision-making system, there is no time for decentralization and the search for compromise solutions. A company in its infancy may use outsourcing as a way to acquire valuable staff and solve key tasks.

When a company's product becomes stronger in the market, demand grows and repeat sales appear, the organization moves to the next stage of its development - the stage of high activity ("Go-go" stage according to Adizes).

High activity stage (Go-Go)

In the high activity stage, the company's product is highly popular and has high loyalty. Sales are skyrocketing, allowing the company to thrive. Success gives rise to excessive confidence and arrogance of the leader. The business acquires an unbridled appetite for growth and a process of strong diversification begins. Decisions are made so quickly, and any opportunities for growth are exploited so rapidly, that decisions are made hastily, without accurate calculations and analysis. The company assumes obligations that it cannot fulfill given the available resources.

At this stage of the development of the organization, the internal processes in the company are weak, accounting for costs, income and cash flow is rude. At the stage of high activity, the company does not always have a clear idea of ​​the real profitability of its products. Functions are not yet fully assigned to specific people, tasks are set out of habit and may conflict with previously set tasks. The lack of clear goals and objectives, increased workload cause dissatisfaction among the company's staff. New employees are hired at a rapid pace, but usually with limited experience and skills.

The company does not have well-established processes for information exchange, decision-making and control. The infrastructure of the company turns into a house of cards and develops chaotically as new tasks appear and the need to solve new problems. The result of such work is a managerial crisis, in which the company significantly reduces its efficiency and may begin to lose loyal customers. All members of the organization want one thing - centralized control, prioritization, assignment of responsible and correct setting of tasks.

Business problems at the stage of high activity

At the stage of rapid growth and activity of the company, a "founder trap" (founder trap) occurs. The term means the high dependence of the company on its founder, who closes all the processes in the company, but he himself is not able to allocate time for the analysis and solution of all problems. The founder of the company becomes the bottleneck in the organization. The founder trap occurs in three cases: when the head of the company ceases to meet the requirements of the organization and no longer has the necessary skills to manage a large business; when the head of the company does not delegate part of the functions to employees; when the manager seeks to understand all the processes and projects of the company.

The founder trap often occurs in family traps. In such a situation, the main positions in the company are occupied by members of the same family, but they very often do not have the necessary experience and competencies to solve problems in accordance with the priorities of their position.

Recipe for Success in the High Activity Stage

Flexibility is the most important element of strategy in managing a high activity stage company. The head of the company must determine the main priorities of the work and reject all non-priority issues. Companies at the stage of high activity need continuous restructuring. Managers must constantly review and update the organizational structure, review the functions and KPIs of employees, monitor the quality of work of internal processes for information exchange and cash flow control.

Delegation is becoming an especially important skill in a company. Since managers do not have the necessary experience in the field of delegation of functions, it is recommended to start delegating not to one person, but to a group of people. Encouraging teamwork helps to strengthen the corporate spirit and create a cohesive team in the company. When the delegation process is successful, the manager can gradually move to the process of decentralization of management (transfer of responsibility for decision-making).

Stage of youth (Adolescence)

At the stage of youth, according to Adizes, the company is experiencing its second birth. This stage is characterized by the decentralization of power, the transition from entrepreneurship to professional management and the definition of a clear focus of the company. At the stage of adolescence, the most striking problem is the birth of internal conflicts in the company, which (if they are not resolved) can lead to premature aging of the business or to the loss of leadership authority.

At the stage of adolescence, the culture of company management must be transformed from an absolute monarchy to a constitutional monarchy. In fact, decentralization of power should take place, since the company already has employees who are able to take on the solution of individual issues. But business leaders are wary of the new pitfalls and problems that decentralization of control can cause because of the lack of proper processes in the organization. Such fear often provokes the creation of additional institutions of governance.

At the stage of adolescence, a professional manager takes the place of the founder of the company, who changes the approach and style of decision-making. Instead of the usual "Go-go", the new manager is more likely to answer "no-no", as he seeks to organize existing projects and processes in the company. The new manager often meets opposition in the face of the "old" employees of the company, who, in the absence of an established information storage system, become the owners of valuable data and receive excessive power.

The last group of problems at the stage of a company's youth is related to the need to reconsider business goals. At the stage of high activity, the main focus of the company's work is sales growth; at the stage of youth, this emphasis should be shifted to profit growth. The company must learn how to increase its profitability of sales and start working smarter. New tasks and projects are accepted if they not only increase sales, but also increase the profitability of sales. Such switching of goals is possible only with the revision of the principles and priorities of the work of each division in the company.

Business problems at the stage of adolescence

Growing tension within the company and the development of internal conflict between old and new employees, between the founder and the hired professional manager of the company, between employees and the founder can lead to one of two situations:

• the hired manager quits and the founder of the business again "takes the helm"
• a hired manager gains excess power and, through the Board of Directors, excludes the founder from the business

In the first case, the company runs the risk of returning to the previous stage of its development and, as a result, failing. In the second case, the company will most likely stop developing, sales will stagnate, and the business will begin to age prematurely.

Recipe for Adolescence Success

In order to achieve sustainable business development in the adolescence stage, a company must limit the flexibility that was so encouraged in previous stages and improve the company's internal management processes. The company should develop clear procedures and move all important functions of the company (marketing, sales, product development, finance) into separate departments. The company must clearly define the functions, priorities, responsibilities and levels of authority of each department.

After creating a solid structure, it is important to build trust in it and find the right people to fit into such a structure. At this stage, the mission and values ​​​​of the company (which used to be only in the head of the founder) acquire high importance. Creating a new infrastructure within a company takes time and can cause fluctuations in sales and profits. At the moment when the created infrastructure is able to once again provide a stable income growth, the company moves to the next stage of its development - to the stage of prosperity.

At the stage of adolescence, it is not worth giving a strong importance to process automation, since key processes have not yet been created or are missing.

Business Prime

The Prime is a golden age for business. The company occupies an optimal position on the life cycle curve and achieves a certain balance between flexibility and tight control in management. The company has clear goals, each department has clear priorities and all employees consistently, persistently and clearly perform their tasks. The company's mission, strategy, structure, information management processes, resource allocation and reward system have been aligned. The company works smoothly, as a single mechanism.

Problems of a business in its heyday

The biggest problem of any business in its heyday is the desire to keep everything as it is. “So everything works well”, “We have a good product and a good market share, we don’t need to invent something new”, “It’s not worth taking risks and experimenting” are the most common statements of management when a business reaches its peak. But this is the biggest mistake. A company, even at its peak, must make daily efforts that will slow down the obsolescence of technologies and prolong the “golden age”. The market and competitors are always moving forward, constantly evolving and developing new ways to optimize costs, release better products, implement better processes and business practices.

The second important business problem at the stage of prosperity is the lack of personnel with the required level of competencies and skills. Often in such a situation, companies begin to grow personnel within the organization, but this takes time.

The Recipe for Successfully Passing the Heyday

The recipe is simple - continuous development, improvement and investment in growth. At the heyday stage, a successful company begins to develop new divisions and separate business units, to master new industries, which also gradually go through the stages of infancy, high activity and youth.

As soon as a company begins to "stand still" and ceases to make any effort to develop new sources of growth, it begins to age. In the initial period of aging, the company's management may not notice the decline, since this process is quite smooth and can be very stretched in time. The company's sales and profitability are still positive for a long time, but the growth rate is slowing down, gradually turning into stagnation.

Stages of an aging company according to Adizes

The life cycle curve of an aging company gradually changes its direction and becomes downward. The processes and problems of aging organizations are approximately the same and are present at all stages of aging (stability, aristocracy, early bureaucracy and bureaucratization). The stages of aging differ only in the intensity and scale of the problems.

Business stability stage (Stable)

The business stability stage is the first step towards the aging of a company. At the stage of stability, sales no longer grow, but they do not begin to decline yet, and the company feels confident and calm. The company's management calmly follows the success of the business and completely ceases to follow the changing needs of customers. The company practically loses contact with the outside world and ceases to listen to the recommendations and trends of the external market. Often an aging company is a fairly large organization that loses its flexibility and begins to slowly respond to market changes.

Short-term goals and objectives begin to predominate in the company. Long-term projects are stopped, investment in research and development is reduced.

Aristocracy

If a company at the stage of stability stops investing in new sources of growth and stops responding to market changes, the business moves to the stage of development of the aristocracy. The aristocracy is characterized by the intensive development of a "heavy" and massive administrative apparatus. Therefore, even in the case of the acquisition of new business units for sales growth, the established administrative apparatus of the parent company suppresses all possible potential.

A business at the stage of development of the aristocracy begins to improve the head office and create excessively comfortable working conditions for management personnel. The company's management is increasingly moving away from understanding the target market, is beginning to realize the trend of declining sales, but does not seek to report this to the shareholders and founders of the company. All information is presented in a positive way and the company until the last moment refuses to admit the loss of its power and share in the industry.

Early Bureaucracy

The eighth stage of the Adizes life cycle model changed its name several times and was called "Salem City" for a long time. At this stage, the decrease in business efficiency and the lack of sales growth become obvious to the founders (or shareholders). An active search for those responsible for the drop in sales and profits begins. Of course, as in any bureaucratic structure, everyone starts blaming each other. This process ends with the dismissal of part of the management staff, which diverts the company's attention from the need to solve current problems and market problems.

Bureaucratization (Bureaucracy)

If a company does not begin active business reorganization after going through the early bureaucracy and purging the management staff, the business enters the bureaucratization stage.

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