Business x design: Understanding the business lifecycle

Understanding the business lifecycle can help us better understand the business we are designing.

Published on

April 23, 2024

Reading time 5min

It is no secret that designers often overlook the business lens. We immerse ourselves in the craft and taste of a project, spending hours perfecting layouts and flows and even more time defending bickering over different design disciplines. Rarely do we view our work through a business lens other than adding some business metrics to a project canvas. Yet, our potential to shape and drive business is immense, and it's time we recognise and harness it. This article is the first in a series highlighting design's role in helping a business thrive.

The business lifecycle is a concept and a handy building block for understanding the business context. It's a tool that can help us better understand the business we are designing.

Understanding a company’s current growth stage can provide valuable insights into its threats and opportunities.

The business lifecycle is a journey a business progresses through from birth to death. Understanding a company’s current growth stage can provide valuable insights into its threats and opportunities. Let's delve into these stages to gain a clearer understanding.

Aswath Damodaran is one of the best sources of finance and growth wisdom I have encountered. He is a Professor of Finance at the Stern School of Business at New York University and teaches corporate finance and valuation courses in the MBA program. He has written extensively about the corporate (business) lifecycle and will soon publish a book on the topic. You can catch him in action in this 20-minute keynote he gave on the subject. Aswath describes the business lifecycle as having six stages (see diagram below).

As designers, it is essential to know what is driving business decisions, and understanding a business’s stage in its lifecycle can give us the much-required context we require to frame our thinking.

HTML Table Generator

Stage	Description	Growth opportunities
Start up	Businesses at this stage are in the process of bringing an idea to market, typically not generating much if any, revenue yet. They focus on developing a viable product and market fit.	High-risk but high-reward opportunities in emerging markets and technologies. Can attract venture capital for rapid scaling.
Young Growth	The business model is proven, and the company starts generating revenue but may not yet be profitable as it reinvests in growth.	Expansion into new markets, scaling up operations, and continuous product development to capture a larger customer base.
High Growth	Rapid revenue growth as the company's products or services gain wider acceptance. This stage often leads to the company turning profitable.	Leveraging high revenue to invest in further expansion, new product lines, and possibly international markets.
Mature Growth	Growth continues but at a slower rate. The company has a significant market presence and optimised operations.	Strategic acquisitions, development of new business units, and exploration of new geographical regions.
Mature Stable	The company experiences stable growth, generating consistent revenue and profits. This is often seen as the peak phase.	Enhancing product features, improving customer service, diversifying product portfolio to maintain or gently grow market share.
Decline	Market saturation, technological changes, or increased competition lead to a decline in revenue and profits.	Restructuring operations, exploring new markets or products, or reinventing the business model to regain competitiveness.

I'll share two examples of where the knowledge of the company's stage in the lifecycle helped understand the context of some of the decisions:

A fast-growing company wanted to design and build a bespoke product that was widely available in the market as a SaaS. We were puzzled. Why not just pay a low-priced subscription rather than a high-priced product build? After much questioning and a chance meeting with the CEO, we found out about the company’s fast expansion plans and listing ambitions. The product was positioned as a moat, increasing the company’s valuation. With this context, we could better appreciate the otherwise seemingly bizarre decisions being made.
We mapped and analysed the business operations of a large multinational and uncovered millions of dollars in potential savings. We high-fived and were looking forward to the improvement projects. A year later, nothing was initiated. The company was in the Mature Growth phase—all the attention was on growing into new geographies. There was little attention to operations, and sales were all that mattered.

Understanding the business lifecycle allows us to strategise appropriately and forecast challenges and opportunities that arise as the business moves from one stage to another. More importantly, it gives us designers the context and vocabulary to connect with leaders and decision-makers and come to a common understanding of where and how to make progress. In subsequent articles, I'll explore more business areas.

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