The 10 Stages of Corporate Life Cycles

An excerpt from Adizes' book The Pursuit of Prime.

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Further Reading

So you've got business problems. Well, thank God! Problems come with change,change comes with growth, and no company ever achieved peak performance withoutgrowing. The struggle for success is a struggle with problems. Rejoice. Withoutproblems you'd be dead.

But there are problems, and then there are problems. Some problemsthreaten while others beckon. Like good parents, good CEOs know that someproblems are just not worth getting all bent out of shape over. They're thenormal--that is, perfectly appropriate and even predictable--maladies,stresses, strains, and pitfalls of successful corporate growth and development.Some threats CEOs avoid by taking the available preventive vaccines. Most theytreat--promptly and skillfully--lest the problems fester or fulminate.

Abnormal problems are abnormal only in their timing. They're normal problemsthat break out when they're not supposed to--like mumps, say, in middle age, orprostate trouble in adolescence. If CEOs do not or cannot deal effectively withthe problems that confront a normally growing business, those problems willbecome chronic.

If leaders cannot handle a problem with the same energy they apply to othersituations, that problem is abnormal. If the same type of problem repeatsitself despite the founder's having tried to solve it, that problem isabnormal. If the founder needs outside professional help to solve it, thatproblem is abnormal.

By contrast, normal problems are those that founders can resolve routinely orwith the application of their energy. If a CEO can increase sales; create newmarkets; control cash, accounts receivable, and inventory; and design newproducts so that the company is able to make a smooth ascent to Prime--theideal stage of balanced creativity and discipline--then those problems arenormal.

Before you can judge whether a problem is occurring at a normal time, you mustunderstand the corporate life cycle. Once companies know where they are inrelation to Prime, they can learn what they need to do to get there--either forthe first time or on a return trip.

For each defining stage there is a set of actions: the steps required for ayoung company to reach Prime or for older companies to regain Prime. Again andagain, real companies have lived through the process and validated the theory.In essence, successful organizations passionately nurture both their expansive,creative energy and their need for structure and discipline. That is thedynamic of Prime organizations.

Corporate life cycles are defined by the interrelationship of flexibility andcontrol. They are not defined by a company's chronological age, sales orassets, or number of employees. The goal is to reach--and stay at--Prime.

The 10 Stages of Corporate Life Cycles

Courtship. Would-be founders focus on ideas and future possibilities,making and talking about ambitious plans. Courtship ends and infancy beginswhen the founders assume risk.

Infancy. The founders' attention shifts from ideas and possibilities toresults. The need to make sales drives this action-oriented, opportunity-drivenstage. Nobody pays much attention to paperwork, controls, systems, orprocedures. Founders work 16-hour days, six to seven days a week, trying to doeverything by themselves.

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