Start-up, Growth, Maturity & Innovation
Question: How do we develop a predictable and accurate forecast of the business environment?
Let's talk about the business lifecycle. Business lifecycle, in its simplest form, is about time and money. Time is years, months, or even decades. Money can be measured in different ways like profit, revenue, cash flow, and also time, opportunity, etc. As with business, products follow the same trajectory, in its most simplistic form.
The company begins with its launch. It experiences growth. Sometimes rapid growth, like a firecracker on a short fuse. As it approaches the expansion phase, competition may become more aggressive and growth may realize a slow-down. This may also exert a much-needed shake-up or restructuring for a company revival. At the maturity stage, this is the reached pinnacle point. As its peak, the cycle turns downward. The decline begins. The signs are apparent and recognized as either a decrease in sales or cash flow. It is at that time, the company would inject a recovery mechanism or move towards closure. This is the classic business life cycle.
The company begins with its launch. It experiences growth. Sometimes rapid growth, like a firecracker on a short fuse. As it approaches the expansion phase, competition may become more aggressive and growth may realize a slow-down. This may also exert a much-needed shake-up or restructuring for a company revival. At the maturity stage, this is the reached pinnacle point. As its peak, the cycle turns downward. The decline begins. The signs are apparent and recognized as either a decrease in sales or cash flow. It is at that time, the company would inject a recovery mechanism or move towards closure. This is the classic business life cycle.
At the various stages of this life cycle, the financial aspects look very different. The first and most obvious is sales or revenue. At launch, it is zero. Typically, it grows very rapidly during the growth phase. There is a peak to the sales growth as competition enters and following that peak, is the decline. The industry becomes mature and eventually declines.
When profit comes into the company, it may be a negative profit. The overhead to create the business generated debt to be paid back from the profit from sales. The break even point would be adjusted and once met, the company gains positive profit. The profit cycle lags the sales cycle. There's a time delay between the sales growth and the profit growth. Any funding goals would need to incorporate these theories into its financial modelling.
The third part of the cycle is cash flow. The actual cash of the business. Cash will lag profit. Consider the upfront costs to start the business. Many would be capitalized and not reflected in profit. It might not impact cash flow. In the early phases of the launch, cash dips, and perhaps more negatively than profit, then rises higher than profit in later phases when capital spending to drive the business is largely depreciated. Therefore, cash generation is higher than profit on the income statement.
The cycle can be repeated over and over again. There are so many examples. As the company lifecycle matures and goes into a decline, businesses do experience a life cycle extension by reinventing themselves, reinvesting in technology, growth through acquisition or by extension. Depending on the paradigm shift, it would begin the process and cycle again. Important to note, the business management team may be very close to the events to recognize the timing. It might call it too soon or too late. For this, clients of ours have been very resilient by connecting us to the challenges early.
When profit comes into the company, it may be a negative profit. The overhead to create the business generated debt to be paid back from the profit from sales. The break even point would be adjusted and once met, the company gains positive profit. The profit cycle lags the sales cycle. There's a time delay between the sales growth and the profit growth. Any funding goals would need to incorporate these theories into its financial modelling.
The third part of the cycle is cash flow. The actual cash of the business. Cash will lag profit. Consider the upfront costs to start the business. Many would be capitalized and not reflected in profit. It might not impact cash flow. In the early phases of the launch, cash dips, and perhaps more negatively than profit, then rises higher than profit in later phases when capital spending to drive the business is largely depreciated. Therefore, cash generation is higher than profit on the income statement.
The cycle can be repeated over and over again. There are so many examples. As the company lifecycle matures and goes into a decline, businesses do experience a life cycle extension by reinventing themselves, reinvesting in technology, growth through acquisition or by extension. Depending on the paradigm shift, it would begin the process and cycle again. Important to note, the business management team may be very close to the events to recognize the timing. It might call it too soon or too late. For this, clients of ours have been very resilient by connecting us to the challenges early.
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“It's easier
to hold your principles 100% of the time than it is to hold them 98% of the time.” Clayton Christensen |
Solutions
Innovations
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Counseling entrepreneurs on the 'how to's' and the essential business guidance to unravel the various logistics, funding and revenue issues faced by nascent entrepreneurs yielded a launch of 1,600 new companies and skills development training for over 10,000 entrepreneurs educated through a succinct series of programs teaching the nuances and elements for each stage of the business cycle, from launch through maturity.
Directed the marketing and built out new venues and segmentation attracting over 10,000 attendees and over 1,000 exhibitors, with accredited conference speakers breathing new life into these long running global pharmaceutical events.
For this NYC ventures program, (first of its kind), supported start-ups at incremental stages with products in Digital, Tech, Data, BioSciences, BioTech, and LifeSciences. Advising scientists and engineers, physicians and post-doc students from in and around New York City's pedigree schools with the 'how to's' to navigate the world of life science and health tech business start up. Addressing the business skill needs and essential posturing for a selected venture capitalists community, commercialization opportunities through big pharma, or other innovation institutions by supporting hundreds of entrepreneurs in the NYC eLab programs, from the program inception through present day.
Business Model and Tactics:
Using data resources and A.I. technology to make analysis faster and more accurate for clients. With our clients and colleagues, we envision a holistic, HIPAA compliant, 360-degree view of a patient population, or individual, used to research new advancements, reduce costs, and even cure or prevent the onset of diseases. Ultimately, this improves care personalization and efficiency while augmenting value-based models. By using trusted data resources and A.I. technology to make analysis faster and more accurate for clients.
Business Model and Tactics:
Pharma communicating with HCPs using IP-addressed, account based marketing. For pharmaceutical manufacturers, reaching multiple stakeholders, KOLs, decision makers and committees inside Integrative Delivery Networks (IDNs) is challenging pre-, during and post- COVID-19. As we identified accounts that matter most for this long-standing diabetes drug (with FDA- approval for additional indications), this program was most effective using IP-addressed, account based marketing.
Business Model and Tactics:
Chosen in 1st round of ACOs and later developed into the Medicare Shared Savings Program (MSSP). With its inception, this hospital enterprise was chosen as the US first round of ACOs. It was developed into the Medicare Shared Savings Program (MSSP), a program developed by the Centers for Medicare and Medicaid Services with the goal of encouraging providers to improve the quality of care provided to Medicare fee-for-service beneficiaries, while reducing the total costs of caring for such patients.
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"No Sales Reps"
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To distinguish brands inside IDNs and get the message in front of the Rx decision makers while augmenting the ‘No Sales Reps’ rule, targeted messages are delivered specifically inside the employee IP address.
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Case Studies
Key People of Influence
Clayton M. Christensen
As the foremost authority, Clayton Christensen's 'Jobs Theory' creates a predictable metric for disruptive innovation. It is to understand a simple premise' what is the job the product or service is being hired to do? By understanding what causes customers to "hire" a product or service, any business can create products that customers not only want to hire, but that they will pay premium prices to bring into their lives.
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Clayton Magleby Christensen was an American academic and business consultant who developed the theory of "disruptive innovation", which has been called the most influential business idea of the early 21st century.
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Establish an innovation community Execute communication plans Facilitate innovation progression Foster collaboration Go-to-Market strategies Handle insights, ideation, development, operations and R&D Handoff to operationalization innovation initiatives Hypotheses testing for delivery, pricing, technology and market fit Influence key cross functional partners Innovation portfolio aligned with strategic focus Lead large initiatives Management experience Market testing and feature prioritization Minimum viable product and sprints Monitor industry trends Negotiations New product development New product initiatives Operating recommendations P&L Responsibilities Partnership relations PMO experience Proactively contribute Prototype build Senior leadership and cross-functional teams Share learnings Strategic direction Strategy, finance, operations collaboration Strong management and leadership Understand critical path Value add Vision creation |
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