Francois de la Rochefoucauld is attributed with saying “The only constant in life, is change”. This is true of humans and of business. With humans being, there are buckets of time broken down into decades – we signify these evolutions or passages of time with names such as “the terrible two’s”, the “the teen years”, “mid life”, “old age” and “death”. Businesses also go through phases, stages or life cycles, and we refer to these as “start up”, “growth”, “expansion”, “maturity”, and “out of business”.
Business Organizations have life stages
Similarly to the evolution of a person’s life, there are characteristics and demands of a business life cycle that are “age” or “stage” appropriate. Business owners and managers must be vigilant in their assessments of their own business, and the market, and understand what part of the life they are in, in order to stay in the game. During the start up phase, an owner may want to hire aggressive marketing and sales personnel, but during the maturity phase, the company owner may spend more time on managing its distribution channels or supply chain.
You may have heard of companies such as “Skybus Airlines”, “Circuit City”, “Digital”, and “Pan American Airlines”. These are all business organizations that have gone out of business because they failed to evolve and manage their business effectively. Some businesses fail to meet the customer demand, others over produce, some can’t manage costs, some lose sight of market changes, and some fail to manage their human intellectual assets, appropriately.
Business organizations must evolve to stay successful
A business organization must understand total costs of time and material, their wastes related to failed communications and process flow; while managing their supply chain in a way that fosters long term good will and cost containment. The focus on assets and liabilities will be different, at different stages.
Recently, James Cameron’s “AVATAR” employed technology that simply wasn’t available when he made the movie “The Titanic”. This is true in business organizations as well. Ten years ago, a business might employ 12 workers to generate a manual forecast for inventory. Today, with computers, that same forecast might be generated automatically, and only require one person to look over the end results to give it a sanity check. Years ago, engineers used drafting and drawing boards, but now they are likely to use a CAD software system.
How do businesses evolve?
Launching a new product into an existing customer base is one way of growing a business, (examples of this are “new and improved”, “gluten free”, “0 calorie”, and “high energy” types of products).
Other ways to grow a business organization are to take an existing product and market it to a specific niche, such as Bill Gates did with his Microsoft operating system, and catering his product specifically to schools. Applying new technologies to old ways of doing things is another way to stay in the game and remain profitable. Social media outlets such as Twitter, Facebook and StumbleUpon are revolutionizing the way advertising works.
With the market changing constantly, and consumers continuing to raise the bar, businesses must evolve. It is a requirement of managers everywhere to stay informed and proactively manage their businesses for sustainability.