Wednesday, November 26, 2014

Growth, maturity, and decline

A common sequence studied by change managers -- particularly business change managers -- is the so-called growth-maturity-decline triad.

PMs experience the effects of this sequence more in the business case than in the actual project. After all, it takes a good deal of time to go through the business cycle; and it's not inevitable that the entire sequence ever comes about since managers intervene to redirect the business.

And, the public sector is not immune: Agencies can go out of business, declining as constituent demands declines or gives up; and agencies can re-invent themselves for new constituent demands (it's not your grandfather's motor vehicle department, or bus line, etc).

And, of course, there can be new agencies born of necessity of a changing public demand -- who remembers that in the U.S. conservative Republicans invented the Environmental Protection Agency in the Nixon administration, or the liberal Democrats invented the CIA, in the Truman administration? Now, How the world turns, etc and so on....

So, how does growth-maturity-decline look when viewed through the lens of projects?

Business case: Low cost of ownership
The real test between maturity and decline is whether or not there is new investment going into the business. In the decline stage, the emphasis is on cost control, efficiency, and getting the most out of existing product with existing customers; there's little or no investment beyond required maintenance.

Over time, product will obsolesce and customers will move on.

Business case: New customers for existing product base
If there's investment going into finding new customers with existing product, that's probably a mature organization surviving. 

Business case: New product, but directed to new customers
Growth investment is going into both customers and product, keeping both fresh and competitive.

And, here's a challenge question: when is an expenditure a cost and when is it an investment? Sponsor attitudes are usually quite different depending on the view point.

My answer: It's an investment when it goes toward making the future different from the present; that is: it's aimed at strategic differentiation -- to wit start-up and growth. Else, it's a cost required to keep things moving along as in the present for maturity and decline.

People and things
And, you can extend the argument to people: the CFO carries people on the liability side of the balance sheet -- creditors (they provide time & talent) to whom we owe benefits, salary, etc.

But, what if you're out to hire the one best person to do a task and make a strategic difference toward growth? Investment (asset) or cost (liability).  If an investment, hopefully you've got their scorecard set up to reflect the ROI demand.

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