Business Strategies

Facing the Strategic Challenges of Growth: The Churchill and Lewis Growth Model

Written by Samuel Muriithi for Gaebler Ventures

According to the Churchill and Lewis growth model a business goes through six stages of growth/development. These six stages involve conception/existence, survival, profitability/stabilization, profitability/growth, take-off, and maturity.

The Churchill and Lewis growth model focuses on how the entrepreneur's role evolves with growth and what skills are required at each of the six stages.

Conception/existence

At conception the business owner is in actual sense the business and he/she is responsible for ensuring that everything happens. This stage is defined by the sole intention of survival and features minimal levels of formal planning and defining of systems. It is at this stage that many businesses fall and are thus unable to reach stage 2.

Survival

Here the business has grown into a workable entity but the lead agenda is still survival. The Churchill and Lewis growth model provides that the business will have a simple organizational structure under the leadership of the owner who is still the face of the business. The few persons employed, including perhaps a sales manager or foreman, don't have the power to make decisions and will do according to what the owner sees fit. The level of formal planning is still limited. Many businesses will remain at this stage and another good number will also see profitability and progress to stage 3.

Profitability and stabilization

At this stage the business is large enough and the owner will need to hire some managers to take over some of his/her responsibilities. The owner will work through this management team and will develop strategies intended to have him/her maintain control over operations. This sort of control will however not be possible in the event of further growth and subsequent hiring of more managers. The Churchill and Lewis growth model posits that the owner and the business will begin to acquire separate identities and will no longer be synonymous with each other.

Profitability and growth

Many firms will dwell at the previous stability stage for extended periods until such a time when the owner decides to strengthen the business by marshalling enough resources to take it to this growth stage. The owner will now be forced to tackle the twin agendas of ensuring profitability and finding worthy managers who can help take the business to the next level.

Take-off

At this stage the Churchill and Lewis growth model posits that many owners end up being unsuccessful in their quest to manage the business. A pivotal stage, failure at take-off normally occurs due to attempts at growing the business too rapidly or the inability to have effective delegation. Some owners who realize the magnitude of the challenge in time will resort to selling off the business. Alternatively, investors and creditors with a stake in the business will move to replace the owner. The business may move forward if appropriate actions are taken in time but failure to do so may see a relapse to stage 4.

Maturity

Here the owner and the business are completely distinct. The business has a decentralized structure and appropriate structures in place. There are enough resources to sustain profitability and the main agenda is to ensure that a twin-pronged combination of an entrepreneurial spirit and response flexibility is embraced for the achievement of more growth. According to the Churchill and Lewis growth model, failing to do this will result in ossification which features the unhealthy traits of risk avoidance and absence of innovation.

Samuel Muriithi is a business owner in Nairobi, Kenya. He has extensive international business experience in the United States and India.

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