What Business Stage Are You In? – Part 3

We’ve come to the last installment of our series on the “7 Stages of Every Growing Business”, as defined by Les McKeown, President and CEO of Predictable Success.  Parts 1 and 2 summarized the first four stages, from Early Struggle through Fun, and on to White Water and Predictable Success.  In this last segment, we’ll cover the final three stages of Treadmill, Big Rut, and finally, Death Rattle.

When we left the business last week, it had achieved Predictable Success, that stage where the business is growing, profitable and stable.  Now the question is – How long can the business remain in this stage?   

The answer is – It depends.  As long as the business continues to evolve and adjust to meet the changing market expectations, and maintains its focus on its vision, strategy, and customer base, it can stay in the Predictable Success stage for a long time.

However, there will be those businesses that will be too successful over time, believing that they have all the answers.   These businesses will stop progressing and adjusting, become complacent, bloated and bureaucratic, and lose focus on those key areas that originally made them successful.  As this happens, the business will eventually fall through one, or all, of the last three stages.

Stage 5 – Treadmill
The business has been successful, and performing well for a period of time.  But, complacency is setting in, and it is losing focus on its vision, strategy, direction, and customers.  The bureaucracy is managing the business, and needs to justify its existence by requiring more systems, processes and procedures.  This, in turn, is making the business more complex, rigid, and slower to react to changes.  With the business now more focused on internal activities and tasks, it will eventually stop evolving.

While this stage may be good for fixing specific issues and/or problems, the business must find its way back to Predictable Success to survive long-term.  This will require a critical, objective self evaluation of the entire business, and possibly drastic action, to get back on track.

The strategy here is to Simplify What’s Workingand get back to Predictable Success.

However, if the business stays in Treadmill too long, it will eventually lose its objectivity, and the ability to critically evaluate and fix the business, falling into the Big Rut.

Stage 6 – Big Rut
The business is now complacent and insular, the bureaucracy has taken over, it has lost all objectivity, and its all about maintaining the status quo.  It has lost touch with market requirements and customer expectations, and has stopped evolving.  Without a significant course change, and major restructuring (and maybe not even then), the business will not be able to make it back to Predictable Success.

In this stage, however, the business may still be a going concern, in terms of revenue and profitability, and have enough cash to just drift and decline over time.  A primary example of this is Kodak, which was able to operate very profitably for years, ignoring what was really happening to its core business, until it was too late.

If nothing changes, or if the course changes and restructuring programs are not successful, the business will enter the last and final stage, Death Rattle.

Stage 7 – Death Rattle
After being in Big Rut for some time, revenues are declining, losses are mounting, the cash is gone, and customers are defecting.  At this point, the business is not in a position to make the required changes to survive.  It has now entered Death Rattle, and the business, as it is currently known and operated, disappears through closing, filing bankruptcy and reorganizing, or being acquired.  This is the end of the line.

Now that you know about these 7 Stages, let me ask:

  • What Stage Is Your Business In Now?
  • What is your Strategy for the Future?  

Consider these questions carefully. The future of the business will depend on the answers!


 

“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” – Jack Welch

“Whenever an individual or a business decides that success has been attained, progress stops.” – Thomas J. Watson

“Any business today that embraces the status quo as an operating principle is going to be on a death march.” –  Howard Schultz

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