Home » OPINION » Columns » PHIL HARDWICK — Using life cycle charts to analyze your business and plan your future

PHIL HARDWICK — Using life cycle charts to analyze your business and plan your future

Hardwick drawing_rgbLife cycle charts can help your business or organization identify its strengths and weaknesses and plan the future.

Life cycles are commonly associated with products. In Marketing 101 students are introduced to product life cycles. They learn about the stages of the product life cycle: Growth, stability, decline and renewal. For example, the disposable camera is a product that came along and created a new sub-market, a camera that allowed the taking of photographs, only to be discarded at the photo developer’s shop. Afterwards dropping off the camera the customer returned to the photo shop and picked up photographs. Sales of disposable cameras grew exponentially in their first few years of existence. They were in the growth cycle. Eventually, sales leveled off and remained relatively constant during the stability cycle. That lasted awhile until smaller cameras that could be attached to computers came along. The disposable camera then began to enter the decline stage as sales decreased. Nowadays, smartphones have built-in cameras that have made disposable cameras all but obsolete. If disposable cameras come back as a popular consumer item they will enter the renewal stage and go through the product life cycle again. That will probably not happen. They will more likely go the way of buggy whips. Still around in very limited quantities.

Companies go through life cycles as well. Since we are on the subject of cameras, the most well-known camera company of all time is useful to consider. Kodak also had a period of growth, stability, decline and renewal. Whether Kodak will ever reach the pinnacle of its glory days is doubtful as it struggles to renew itself.

PHIL HARDWICK

PHIL HARDWICK

Using a life cycle chart, such as the one illustrated here, can be an extremely useful tool for analyzing your business or for discussion of your business, say at a staff or employee meeting. The first step is to introduce your employees to the concept of a life cycle and give a brief overview of its use. Then ask each employee to give their opinion on where the company is located on the life cycle. Is the company still growing? Has it grown to a point where it has the highest market share it will probably have? Have times been a little tough and things have begun going downhill? These questions are a good discussion starter. You might want to have a poster or large paper and easel and ask each employee to place some kind of mark on the spot on the life cycle where they believe that the company currently stands. Afterwards, there could be a good discussion about the future of the company.

Life cycle charts are not just for products or businesses or organizations. They can also be used to analyze neighborhoods, communities and even individual selves. The chart depicted here is from a recent chamber of commerce leadership retreat at which participants were asked to consider where their city might be located on the life cycle chart. They were asked to place a dot on the space that represented their opinion. As can be seen, most of the participants believe that their community is still growing or is in the early stage of stability. What is so interesting about this particular community is that only a few years earlier the same chamber of commerce leadership retreat saw (different) participants opine that the community was in the latter stages of stability or even the early stages of decline. Thus, the use of a life cycle chart was a good way to measure how the community was perceived at different points in time. It also provided a barometer for community leaders who could then take appropriate actions.

By the way, there is not set amount of time for each stage. The growth stage might last for a few months or even many years. Likewise for the other stages.

So, what are the characteristics of each stage? Obviously, it depends on what the chart is being used to evaluate. The most common measurement for a business would most likely be sales. For an association, the number of members might be the best measure. For a library, it might be number of patrons or number of checkouts. For nonprofit organizations that provide a service, the number of users or participants might be the chosen indicator. In the neighborhood life cycle, the percentage of residences occupied by owners is often used as an indicator. Also, there does not need to be – indeed should not be – only one indicator. When considering which stage a community might be on the chart it is certainly appropriate to measure things such as population, number of business, permit applications, etc.

After it is determined where it appears that the business or organization is located on the chart the future planning should begin based on where it appears the business is heading and how long it will remain in that stage. One way to visualize that would be to bring forth another life cycle chart and ask where the business will be on the chart five years from now.

Once the current state of affairs is determined then it is time for envisioning the future and setting goals. All of this is one technique to begin the discussion and analysis of the current situation and what the future might hold.

Happy charting.

 

» Phil Hardwick is a regular Mississippi Business Journal columnist and CEO of The Hardwick Company, LLC, which provides strategic planning facilitation and leadership training services. His email is phil@philhardwick.com and he’s on the web at www.philhardwick.com.

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