The business lifecycle sets the stage for how solutions come to see the light of day and prosper.
No business goes on to live forever
While this is statement has proven to be true, a significant percentage of businesses don’t even make it long enough to enjoy a prosperous life of few years. This is particularly saillant in the startup scene for reasons such as the lack of market need, bad execution or inability to turn a profit.
Co-founders, CEOs and business manager need to have a good understanding of the business lifecycle’s phase they are operating in. It requires self-awareness and humility to question the state of the business. As a result, many wrongly set the priorities and come up with strategies that are anything but strategies.
The business lifeycle
The lifecycle informs the business managers on the phases business go through when considering bringing a solution to the market. Each phase requires careful attention, and informs managers on the type of validation they must get prior to moving on to the next one.
How businesses come to live their life is context dependent. These phases act as the blueprint for successful businesses.
Most businesses wrongly assume that an idea based on some insights it acquired is enough to justify investing resources into pursuing it. The focus is put on research with the aim to validate the idea by identifying repeatable patterns amongst a well-defined audience that would lead to the idea being a solution to its struggles.
Gaining validation of an underserved market is the beginning of a long journey to find the fit between the market and a desirable solution. It is time to focus on iteration, continuously tweaking the delivery, marketing and usage of the solution. We seek to maximize the fraction of customers that would feel disappointed would they have to give up using the solution.
Knowing that the solutions is indispensable (but not irreplaceable!) for some people sets the stage for seeking growth. Focus must be put on building momentum through marketing activities and other initiatives that contribute to the flywheel effect. We keep a close eye on acquisition, conversion and retention metrics to assess the performance of the business.
With growth comes a fair share of organizational challenges. A deep understanding of how the business operates is required to focus on the areas where efficiency gains bring significant improvements to the bottom line. It starts with linking each activity with a customer outcome and assessing the resources utilized.
A business that grows profitably is by nature healthy. People pay for the value they obtain from the solution, and the business delivers the solution in an efficient manner. That sets the stage for reproducing the journey in an adjacent space. We focus on the customer base to assess new opportunities to consolidate our position in their mind.
Nothing in life lasts forever. Technological shifts occur; the regulatory environment changes; competition stiffens. In a constantly changing environment, keeping customers satisfied requires constant agility. The moment we stop retaining customers, we get the signal that quality/reliability or relevance of the solution is at risk.
An exit, defined as the moment a business successfully transfers ownership of the company to stakeholders outside of the co-founding team and/or their heirs, is the pinnacle of an innovative business’ life. In most cases, it is the recognition for the successful journey it has undertaken.
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GROWTH
Business that don’t grow, don’t drive interest. It is not a matter of how much the business grows, but whether the business can prosper and live on. Growth in customer base; growth in income; growth in human ressources; all of this to drive professional and personal growth for all stakeholders involved.
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PROFITABILITY
The ability to turn a business into a profitable business is a measure of its sustainability. It ensures growth is not driven by vanity metrics that favors short term-sighted behaviors. It is the result of continuous improvements in efficiency; removing the slack; maintaining high standards in performance; operating in a lean and mean manner.
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BRAND EQUITY
The brand is a powerful asset. It has the power to convey values and ideology. It creates a shortcut in people’s brand. People love a brand for what it stands for; people despise a brand for the missteps of the operations, the quality of the solutions, or the behaviors of high profile stakeholders, from the CEO to its sponsored ambassadors.
“The main thing is to keep the main thing the main thing.”
Uri Levine
Waze Co-founder & author
