How the growth curve in business works

Written by Mario Loubier

At this stage of your career or business, you may be wondering where you stand in relation to your competitors and your market.  I'd like to introduce you to your company's growth curve.  Knowing it is crucial for several reasons. Firstly, it enables you to make strategic decisions adapted to each phase: at start-up, the emphasis is on innovation, while at maturity, cost optimization becomes a priority. Secondly, it helps you manage resources efficiently, allocating capital, manpower and time optimally according to the needs of each stage. What's more, understanding your position prepares you for future challenges, such as increased competition in the growth phase or managing saturation in maturity. Finally, it will enable you to align the organization with common goals and maximize opportunities by adjusting your strategies to market conditions. In business, there's no such thing as the status quo. Each stage of a company's life cycle requires constant adaptation and evolution to ensure its success and longevity.

In business, there's no such thing as the status quo.

Start-up phase

When we start a business, it's a time to experiment with different approaches. It's a highly creative and innovative period, when innovation is at the heart of everything we do. However, we mustn't forget that survival is a crucial issue. We don't have unlimited resources, so time is running out to find what really works. Every day counts, and it's essential to test ideas quickly to see which ones will bear fruit. Culturally, this stage is characterized by a high level of dependency. The organization depends heavily on the vision and direction of its founder or management team. As resources are limited, it is crucial that all employees adhere to the strategy defined by management. New employees, for example, must be aligned with our vision. They depend on us for their development, just as we depend on them to drive the company forward. It's a period of intense learning, when adaptability and the ability to work together are crucial to overcoming challenges and ensuring the company's longevity.

Growth phase

When we enter the growth phase, new characteristics emerge. We've found a model that works, and we repeat it. Our motto then becomes: “If it works, don't change a thing.” At this stage, profits are high and growth rapid, a testament to our success. A key feature of this phase is the independence of relationships within the company. As we grow, we begin to structure the organization by setting up separate departments such as sales, service, accounting and other essential services. Each department begins to operate independently, with its own processes and methods. There's no need to worry too much about other departments; each has its own role and its own way of doing things. This phase is marked by rapid growth and high profits, allowing the company to consolidate and prepare for new challenges. It is crucial to maintain this momentum, while remaining alert to opportunities for improvement and diversification. This is a period of expansion where independence and specialization are present.

Maturity phase

As we said at the beginning of this text, there's no such thing as the status quo in business.  When a company reaches maturity, new dynamics come into play. The market becomes more competitive, and new competitors appear, intensifying the rivalry. As a result, prices start to fall, squeezing profit margins. In this context, product differentiation between brands becomes increasingly difficult. Products look alike, and it becomes crucial to find other ways to stand out, such as service quality or innovation in the customer experience. The strategies that led to growth need to be reassessed and adapted to new market conditions. The key to surviving and thriving in this phase is to differentiate oneself from competitors by improving product or service quality and increasing market share.  The cultural characteristic of organizations at this stage must be interdependence. Success can only be achieved if all parts of the organization work together harmoniously. It is no longer sufficient for departments to operate independently. Quality and customer service, which are essential to stand out in the market, can only be achieved through close cooperation between all departments. When customers evaluate a company, they are judging their overall experience, not the performance of individual departments.

Change or die

At this point, we have several choices. We can continue to do things the way we've always done them. However, the phrase “change or die” takes on its full meaning here. If we remain independent in the way we do things, we risk disappearing. On the other hand, we will grow if we become interdependent. Interdependence means establishing close, mutually beneficial collaborative relationships. This applies between manufacturer and distributor, between employee and employer, and also between our products and services and our customers. Each party must work together to achieve common goals. If we fail to develop these interdependent relationships, our survival will be in jeopardy. To succeed in a mature and competitive market environment, we need to focus on the quality of our products and the customer experience we offer. These are the elements that will set us apart and enable us to prosper. Ultimately, the choice is simple: move towards a model of collaboration and cooperation, or face the risk of failure.

Two examples that illustrate this concept.  Henry Ford in the second phase of his company sold 15 million Model T cars with very little competition. Customers could choose any color... as long as it was black! Because, as you know, the Model T was only sold in black. There was no alternative, and the manufacturer dictated the conditions. It was a period of strong growth. However, in the third stage, the situation changed with the arrival of several competitors.  Today, the consumer is the boss, demanding more choice and better conditions. Only those who offer quality service and an excellent customer experience succeed in being highly profitable.Two examples that illustrate this concept.  Henry Ford in the second phase of his company sold 15 million Model T cars with very little competition. Customers could choose any color... as long as it was black! After all, the Model T was only sold in black. There was no alternative, and the manufacturer dictated the conditions. It was a period of strong growth. However, in the third stage, the situation changed with the arrival of several competitors.  Today, the consumer is the boss, demanding more choice and better conditions. Only those who offer quality service and an excellent customer experience manage to be highly profitable.

A second example of the 3 tiers is film rental.  In the 1980s and 1990s, video stores started out as “start-ups” offering a new movie rental service. After gathering the necessary resources, they overcame initial losses and quickly moved on to the growth and expansion phase, opening several stores and maximizing profits. This gave rise to chains of movie rental clubs like Vidéotron and Blockbuster.  However, with the arrival of digital technology, the industry entered a competitive phase. Netflix took advantage of this transition by offering a streaming service that better met the needs of modern consumers.  Interestingly, video chain Blockbuster had the opportunity to buy Netflix in 2000 for $50 million, but declined. Blockbuster executives didn't believe in the potential of the Netflix model and didn't want to invest in a digital platform that was still making losses. Today, Netflix is worth billions of dollars, while Blockbuster didn't survive the digital revolution.  I think this is a good illustration of how refusing to adapt to a rapidly changing market can be fatal.

To succeed in a competitive third-stage environment, a company cannot continue to operate according to the rules of the second stage. To thrive, it is crucial to adopt a culture of interdependence where everyone in the organization collaborates to deliver the best possible customer experience. The growth curve is not just a representation of a company's financial journey, but also a reflection of its cultural and organizational evolution and market opportunities.  The rise of a company underlines the importance of interdependence and continuous innovation to survive and prosper in an intensely competitive environment.  In the light of this explanation, where do you think your company stands?  Level 1, 2 or 3?  So what did you learn from this texte?  Enter your comments at the bottom of the screen.  Don't hesitate to share this text with your colleagues and friends.  I wish you the best!

Mario Loubier is an expert in sales, customer service/CX and Leadership, an award-winning speaker/trainer and author of the book: Vendre ça se passe ici. To find out more about Mario's conferences on customer service, customer experience, sales and his customer service training workshops, visit www.marioloubier.ca. Connect with Mario on LinkedIn.