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5 Stages of Growth of a Company According to Harvard


Should I create a new product or change my services? Is it time to conquer different clients? Is it a good idea to expand my operations to other countries? These are just a few questions that fill the minds of entrepreneurs.

Fortunately, knowing what to do in each of the growth phases of a company is knowledge that you can acquire. A study by Neil C. Churchill and Virginia L. Lewis, published in Harvard Business Review (the world's most influential management magazine since 1922), explains each of these steps in detail.

In this guide, you will find the concepts worked on by experts in a simple and friendly way, including:

Types of business growth

Stages of growth of a company

Tips to keep a company growing

4 types of business growth

Just as nature has different mechanisms to promote the development of plants and animals, the market has four types of business growth . Knowing the possible routes to success can help you create an assertive action plan that respects your business priorities. Check out! 

1. Organic growth

The organic growth of a company is when an organization seeks to grow based exclusively on the resources to which it has access internally . In other words, your goal is to maximize revenue from within.

To achieve the growth and expansion of a company organically, you can:

Create new products and services;

Reassign resources;

Reduce costs;

Improve operational efficiency.

The success of a company's organic growth strategy is measured by comparing year-over-year revenue.

Example of organic growth of a company

Imagine that a virtual store receives many questions about the same topics: what are the accepted payment methods, how is it possible to track an order, how to cancel a purchase, how to request a refund, among others.

To increase the efficiency of the support team, the leader decides to hire a chatbot . It is a tool powered by artificial intelligence capable of offering personalized responses to customers automatically.

In this way, it manages to reduce the number of professionals on the team and leave free agents to answer more complex questions.

2. Strategic growth

The strategic growth of a company focuses on long-term development . With the help of capital accumulated in previous periods, the organization is able to search for new markets and audiences.

Strategic growth can be achieved through:

  • The creation of specific products or services for a new buyer persona ;

  • The opening of a new physical store;

  • Increasing the delivery radius of your items;

  • Expanding your operations to new regions, locations, cities or countries.

Example of strategic growth of a company

A cosmetics brand focused on young people launches a line of products focused on older people.

3. Growth by association, merger or acquisition

Perhaps one of the best-known types of business growth refers to the union with other companies. After all, it's easier to enter a new market, produce a new product, or gain customer loyalty when you have someone you trust by your side.

In the case of association , you join another company or professional in favor of a common idea and both companies maintain their individuality.

In a merger , companies join together and become one. You can stick with one of the original names or create a completely new third name for this time.

Finally, acquisition is a more hostile strategy, where one company buys another to eliminate competition from the market or absorb its technology.

However, growth by partnership, merger or acquisition is a risky strategy if you are not familiar with the intentions of the parties involved .

Example of growth by association, merger or acquisition

Association: Imagine that you have a beauty salon where you offer hairdressing, manicure and makeup services. If you want to expand your client base, you can partner with a photography studio and offer a package of personalized services at a special price.

Merger: Following the beauty salon example, you can join other salons in the same neighborhood and create a single larger salon. In this way, you stop competing and begin to monopolize the market in the region.

Acquisition: This is what would happen if you simply bought a competitor's salon, with no interest in having it exist alongside you.

4. Internal growth

Internal growth is about scalability. Ideal for SMEs, its focus is to maximize the use of resources without spending a lot of money. And the most common way to do this is by automating repetitive tasks and implementing intelligent systems.

Examples of internal growth of a company

Set up automated messages in WhatsApp Business to save time;

Sales email automation to reach more potential customers;

Create a help center for consumers to find help on their own.

5 stages of growth of a company

According to a classic study published in Harvard Business Review , we can identify five stages of a company's growth. Whether it is an SME or a multinational, knowing the objectives and challenges of each one can help you save time and money.

1. Existence

In the existence stage, the owner usually concentrates many responsibilities and feels overwhelmed by work. His main challenge is to acquire customers and deliver the promised product or service

It is a time of instability and uncertainty, during which entrepreneurs struggle to maintain business viability. Therefore, it is common for leadership crises to occur and for people to seek to solve problems creatively .

2. Survival

In the survival stage, the company still has a simple structure : few employees, few products and few internal processes. Although people already buy frequently, the challenge is to make customer relationships more profitable.

As decisions are still highly concentrated in the owner, there is a risk of autonomy crisis . The solution is to create a business strategy , the goal of which is a more sustainable cash flow.

Do you want to evaluate the financial health of your company? Learn how gross profit margin is calculated .

3. Success

In the growth stages of a company, success refers to the moment of equilibrium. You can take advantage of your business achievements to expand your operations or decide to keep everything as is , focusing on stability and profitability.

Whichever you choose, keep in mind that these phases of a company's growth are marked by the transfer of control . That is, to continue moving forward, it is necessary to learn to delegate responsibilities .

4. Takeoff

The fourth stage of a company's growth refers to takeoff. The organization is usually decentralized and operations become more complex. The main challenge is figuring out how to grow quickly and how to finance that growth.

Therefore, strategic planning is essential to allow different areas to work in a coordinated manner towards the same common objective.

5. Resource maturity

When we talk about the stages of growth of a company, this is the level that everyone aspires to reach. It is the moment when everything is in order: management is decentralized, professionals are trained and systems work efficiently.

The owner can have a life independent of the company, without everything going down the drain. The main challenge is to consolidate and control financial profits , in addition to maintaining a consistent organizational culture .

How to keep your company growing?

The growth stages of a company are dynamic. The priorities, challenges and achievements are different at each level and you must be prepared to maintain success when you achieve it.

Below, we provide four practical tips for a growing business . No matter where you are right now, keeping these pillars in mind will help you build a solid foundation for positive results.

1. Invest in customer experience

According to Zendesk's 2023  Trends Report , 75% of customers are willing to spend more with companies that offer them a good customer experience. A figure too high to ignore!

Throughout the growth phases of a company, this can mean faster responses, personalized messages, a variety of service channels , among others.

2. Train support agents

The same study found that 49% of customers want agents to be more empathetic . And this is especially true for growing businesses: When you focus on keeping everything running, it's common to discount the stress on the people around you.

To avoid this unwanted behavior, you can train your support team with empathy phrases for customers or humanized service courses.

3. Adopt an omnichannel solution

The search for efficiency is a common point in all types of business growth. And, according to the aforementioned Zendesk report, companies that adopt omnichannel solutions achieve 50% more performance than their competitors.

With a unified view of systems and processes, it is easier to create an integrated experience inside and outside the company. Watch this video about omnichannel strategy !

4. Optimize work with smart tools

Finally, Zendesk study data reveals that most teams are experiencing new processes and challenges. However, 4 out of 10 professionals do not have the appropriate tools to do their job successfully.

Apps, integrations and software are some examples of intelligent tools that can optimize the work environment.

Boost your business growth with Zendesk

Now that you know the stages of growth of a company , you may be wondering: what to do to go further and achieve success? And the answer is simple: simplify your operations.

We explain: the only resource that we all have equally is time. There are those who waste it with repetitive tasks, some who take advantage of it by automating most of their activities.

Discovering how to do more with less is the secret to maintaining the growth and expansion of a company anywhere in the world. And Zendesk can help you take the first step.

With Zendesk's complete customer service solution , you keep your business in perfect harmony while growing at your own pace. This tool allows you:

Provide support via messaging , live chat, social networks, email or phone;

Make it easy to track, prioritize, and respond to customers with a unified workspace;

Increase support efficiency with self-service tools;

Answer frequently asked questions and reduce repetitive tasks with an Answer Bot ; 

Facilitate the work of agents with a knowledge base ;

Collect data and generate performance reports automatically.

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