Chapter 3: Life Stages (Part 3)

In part 1 and 2 we discussed about Introduction and Growth phase of business. Now let’s move on to next stage which is maturity. Now you are the giant, the big fish. At this stage the organization is big in every aspect, it is big in terms of number of employees, annual revenue, market share, global presence etc. Following are some of the things on which an organization at this stage needs keep tab on

• Market share
• Revenue and Margin
• Employees
• Competitors
• Global Presence
• Investors

Market Share

When an organization is at this stage it owns a large market share. At this stage it cannot grow its customer base any further as it has already got all the customers it can possibly get. Now the focus of the organization is to maintain this large customer base. The way to maintain customer base is to add new features to your product/ service. Continuously improve your product/ service through innovative ways. Most recent example for this is iPhone. Apple’s iPhone is now at maturity level. For this organization market is saturated now. So Apple is now trying to maintain its market share by adding new and more attractive features to its product. Recently they have introduced iPhone 7 which has more attractive features than the previous versions.

Revenue and Margin

At this stage although the numbers run into billion but the rate at which they grow is very less. Since the organization is operating at large scale it gets the benefit of volume. It is able to produce a product or provide service at a cost lower than its competitors who are at entry level. At this stage growing revenue and margin beyond certain level is not possible but the organization has to maintain it to continue its existence.

Employees

A mature organization has large employee base who come from different countries, different cultural back ground. All these people who have different thought process and different way of working come together to work for the organization. Management should create an environment in the organization so that all these employees can co-ordinate with each other and deliver results with least possible resistance.

Competitors

At maturity phase an organization has very few but very strong competitors who are continuously competing with each other for market share. One way of competing with opponents has been explained in the topic of “Market share” another way to maintain or increase your market share is to eliminate competitors is by acquiring them. This is also known as inorganic growth. Through acquisition an organization acquires customer base, knowledge, employee base etc. of its competitor.

Global Presence

As the business of an organization grows it has to set up its operations in different locations to get the benefit of different geographies. For example in hotel industry a property situated near beach can attract many tourists. A mining company has to set up its operations in the area where it can find the required ores. In order to set up operations in different locations an organization has to comply with the regulatory requirements of that region. This also plays a major role as it can have impact on cost of production. So before setting up facility at any location an organization must do an in depth analysis as to what benefits it is going to get by setting up facility at any location and at what cost.

Investors

An organization which is large in size cannot have single investors. Such companies are normally listed on a stock exchange and there are many investors such as individual investors, Mutual funds, Government, financial institutions. As mentioned in Part 2 of Chapter 3 – “New Investors” the founder must always keep the control with himself if he/she wants to run the business the way he/she wants.

Innovation is a balloon which helps business to keep floating, business would skid on the path decline if it’s not able to innovate, and I’d like to call it “The Floating Balloon Theory” (Fig 3.4). A mature organization must use innovative and creative ways to ensure its existence. It has to continuously analyze the changing needs of the customers and it has to provide not just what customer wants but something additional which will become need of the customer. An organization has to keep on analyzing the technological changes which could have impact on its business and adapt those changes to provide better product/ service to its customers, failure to do this would lead an organization to the decline stage which would result in demise of the organization.

“we didn’t do anything wrong, but somehow, we lost” – Steve Ballmer, Nokia CEO