Most of you are likely familiar with the concept of organizational life cycle stages – the idea is that organizations at different stages of existence typically face the same challenges and have similar needs, and that it would be useful to have a framework that maps this growth trajectory. Most commonly seen applied for traditional businesses, but we have seen versions applied to the nonprofit and microfinance sectors as well. There are some variations across theories, but most broadly, these lifecyle stages span: vision, startup, growth, maturity and decline.
As a funder, REDF works with a variety of employment social enterprises and has learned that social enterprises at different lifecycle stages have very different needs. We wanted an organizing principle to guide us in how to best work with ESEs at different stages of growth, and so asked the questions:
- “Does a lifecycle framework for ESEs currently exist?” and
- “How do the needs and priorities of ESEs at each of these stages differ?”
Social Enterprise Life Cycle
After some research, we didn’t really come across any lifecycle frameworks specific to employment social enterprises, so we decided it would be a useful exercise to develop one. We didn’t want to reinvent the wheel, so we first looked at frameworks used in other sectors and figured out what could work for the sector. We then drafted a framework specific to social enterprises:
Social enterprises in the vision stage are focused on pre-launch planning and feasibility testing. Newly launched, start-up social enterprises are focused on refining their model and operations. Once operations are stable, social enterprises are considered to be in the growth stage since their focus is now primarily on growth. After significant growth and the model is proven, established social enterprises are ready to replicate and scale.
The following chart has examples of some typical success factors for each category in each stage of the life cycle:
Organizations in the same life cycle share many common characteristics, needs, and success factors. However, boundaries between organizational life stages are not always obvious. For example, organizations in transition between stages may exhibit characteristics of current and next stage of life cycle. Organizations at a certain life stage will meet many, but not all, of the criteria defined for that life stage. For example, an organization may be in the established stage overall, but have outcome measurement characteristics typical of a growth stage organization. Life cycle stages refer to social enterprise, rather than overall agency. Certain milestones need to be met in order for an organization to move from one stage to the next. Advancement from one stage to the next depends on milestones rather than timing (i.e. organization age).