The business literature frequently features articles and books in which companies are said to resemble organisms destined to pass through the stages of start-up, scaling, maturity, and decline. Sull and Houlder suggest that this view is mistaken. A life cycle does exist but its subjects are business opportunities, not firms. Most organizations consist of multiple opportunities positioned at different stages of the life cycle. This implies that are no mature companies, only mature portfolios. Executives who understand this crucial distinction can view their organization as a portfolio of opportunities that requires constant re-jiggering to balance the demands of the present with the promise of the future.

 

The opportunity life cycle consists of four stages: experiments, scale, maturity, and decline. Opportunities consume resources in different amounts depending on their stage in the life cycle. By mapping out an opportunity portfolio, companies can see how each opportunity is positioned in relation to all the others. The map raises and helps to address crucial questions: Are resources currently in balance? Can the mature opportunities fund all startup and scaling activities currently being undertaken? Are enough (or too many) experiments running? Is a core business about to enter a period of decline?

 

The authors suggest that as executives address these questions, they should watch out for the following common pathologies: waiting too long to exit a declining business, failing to salvage usable pieces of a business that is shutdown, shunning promising new markets because of an overly conservative fiscal approach, trying to scale too many business opportunities so that none of them receives the necessary resources, applying the same management style to business opportunities at different life cycle stages, and erring on the side of loss aversion.

 

The article includes a helpful summary chart showing how opportunities at different stages in the life cycle require different management approaches. These vary in terms of the appropriate people, performance metrics, level of predictability, what motivates managers, how to secure or release resources, and the financial institutions that specialize.

 

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