Stages of Company Maturity 4: Mature

Final entry in the Stages of Company Maturity series.

You did it! You’ve reached the Maturity stage that few companies rarely do. You have demonstrated the capability to set and reach longer term goals while balancing growth and profitability. Finally, everyone is happy and things are great, right? If only. Not only do you now have a massive company to run (maybe even a public one), but your investors, your customers and your employees all want more. More profit, bigger markets, new products, flashy acquisitions. Skipping past the morass of actually running the business, let’s focus on what to do with the endless possibilities for “more.”  

On the one hand, you will continue to expand revenue and drive out cost from your existing business, your now highly tuned performance engine.  However, you will also see opportunities for new products, disruption, or innovation. Let’s call these options “diversification,” emphasizing that the shiny new thing is also a different thing, which helps you understand how to understand and nurture it. Diversification differs from a Stage 2 pivot, as you should not be giving up your previous Product/Market fit. Rather, the Maturity Stage “ends” at the time when you ought to take the risk of starting a new concept while maintaining your successful operation, this time inside the warm cocoon of an existing mature business that you have grown thus far.   

Starting a business within a successful business is loaded with advantages: Access to customers for concept development, strong network for talent and introductions, access to varied sources of capital, corporate capabilities (finance, legal, HR, etc.), and infrastructure to do business quickly. These are all the advantages you wished for while in your concept stage. However, the caveat with doing this now is that you’ve just tinkered, refined, iterated and innovated your company all the way from an idea to a highly tuned performance engine that is amazing at what it does, but fairly resistant to doing anything different.  As such, when you have the business now try to do something else, antibodies emerge to (wisely) protect what has already been demonstrated to work. Despite the best attempts of senior leadership, the organization will set strategy, assign budgets, prioritize work and allocate rewards based on guarding their reputation for success in the existing business, leaving any would-be innovator with the feeling that the new thing “isn’t what we do here.”  

This challenging balance between supporting the existing performance engine and diversifying into new businesses is beautifully captured by Vijay Govindarajan and Chris Trimble in their brilliant pair of books, the easily accessible fable How Stella Saved the Farm and the rigorous guidebook The Other Side of Innovation.  If you find yourself with the unique opportunity to lead diversification from an existing business, study and share these books to prepare the organization for what is to come. Three key lessons to save you a little time:

1. Dedicate a team to diversification explicitly, with intentionally designated and allocated shared services from the larger organization. Allow the team to hire outside capabilities that fit the work, rather than forcing them to use the best of what’s around. 

2. Hold that team accountable for disciplined learning rather than achieving predictable results, wholly inappropriate for the stage.  Govindarajan goes deeply into disciplined learning, but it is: effectively stating firm hypotheses, mapping assumptions of cause and effect, then updating this map with successive iterations to better reflect reality.

3. Remember that the performance engine funds the innovation, which in turn will build the next performance engine.  Therefore, restating why diversification is an important mechanism of the business as well as reinforcing a culture of humility and empathy (rather than infighting and disdain) will win the day. 

And now the cycle begins again, a little bit different than the last time. They say that Ka is a wheel. 

Thanks for reading this series and I hope you’ve found it helpful.  I’ve already had one person reach out because they realized they were stuck in Product/Market fit with no way out!  Nevertheless, if you apply the correct framing for the correct stage you will continue to focus on what matters most and block out distractions. Good luck!