The 5 Stages of Business Evolution: The STARS Model

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What are the five stages of business evolution? What are the implications of an organization’s evolution stage for its leadership?

There are several frameworks of business evolution phases. One of the most popular models is the STARS model. STARS is an acronym that stands for 1) start-up, 2) turnaround, 3) accelerated growth, 4) realignment and 5) sustaining success.

This article takes a look a the characteristic features of each of the five stages and how to apply them in your leadership.

The STARS Model of Business Evolution

STARS is an acronym used to describe five different stages of business evolution:

Start-up
Turnaround
Accelerated growth
Realignment
Sustaining success

As a general matter, they are defined as:

Start-up: You are launching a new business, product, project, or relationship and will have to organize and implement the various pieces needed for success (e.g., people, money, technology, and so on). Start-ups are often defined by a lot of energy and ambition but can be plagued by a lack of structure or focus. As a leader in a start-up, you’ll have the opportunity to shape key facets of the work but also may have limited resources.
Turnaround: The business may be a sinking ship and requires immediate action to recover or redirect. The need for change is often urgent, necessitating a “ready-fire-aim” approach that means making tough decisions earlier on and with less information than might be ideal. Coming in as a leader during this stage can often be high risk/high reward.
Accelerated growth: Things are moving forward within your company but a scale-up or plan for expansion may be needed by creating new structures, processes, or personnel. Adding these pieces while sustaining the core company culture and vision presents challenges and risks of undermining the factors that led to success in the first place.
Realignment: Perhaps your company is experiencing general success but is suffering from problems rooted in stagnation or complacency. As a leader at this stage, you’ll likely have access to structures and resources that are already in place but may struggle to instill a sense of urgency or inspire motivation for the change that’s needed to bring the business to the next level.
Sustaining success: Here a leader will be seeking to capitalize on the strong foundational success of the company but looking to help it build and grow. This will likely require cycling back through the start-up, turnaround, and acceleration phases to create a dynamic but sustainable approach to the company’s success.

Beyond understanding the business dynamics at play in each of these five stages, it’s important also to recognize how they might each embody a different kind of organizational psychology. For example, start-ups may be energized but frantic, turnarounds may be defined by low morale, accelerated growth may require imposition of new disciplines, realignment may be plagued by denial, and sustaining success may require an infusion of new motivation for learning and growth.

Remember, too, that these stages are applicable regardless of the size or type of company that you are working for or transitioning into and also that several stages might be at issue simultaneously for your company or within your role.

Applying STARS to Your Leadership Approach

You can use the STARS diagnosis to develop a greater understanding of how to manage your own leadership style. Two such styles that might be either helpful or counterproductive at different stages include:

The “hero” role whereby the leader boldly takes action and helps redefine and redirect an organization. This would be most beneficial in a turnaround that is craving new energy and hope. However, such an approach could be quite problematic in realignment or sustaining success scenarios where expectations and norms are already established and thus sudden change could be seen as a threat.
The “steward” approach, which seeks to make an impact through more subtle and diplomatic means. A company in realignment might respond well to this style as the need for change is highlighted only after patient and careful observation of the history and culture of the company. This approach would likely be totally ineffectual for a turnaround, however, as the sense of urgency there demands decisive action, not prolonged deliberation.

It’s likely that you’ll have a natural predisposition towards one of these styles over the other, and it’s important to be honest with yourself about your inclinations and strengths. Take that awareness into your new role so that you can check your tendencies and adapt accordingly.

The 5 Stages of Business Evolution: The STARS Model