The critical factors to sustainable growth of a new company: the example of Oracle

Oracle doubled its sales eleven of the first twelve years of its existence; this amazing growth went through various stages illustrated by the following graph; it should not be read as a linear process from Phase I to VII, but rather as a permanently evolving cycle: what comes after Phase VII could be “Survival” or “Growth Orientation” or “Decline”…

 

Phases I & II: “Existence and Survival” – 1977 sees the creation of Oracle; the key factor are the drive of its founder, Larry Ellison and the financing secured by a few loyal customers (CIA, Navy Intelligence)

Phases III & IV: “Profitability, Stabilization and Growth orientation” – The “Go for the Gold” strategy; in order to win crucial market shares, sales are pushed beyond any control.

Phase V: “Rapid Growth” – The 1989 receivables panic: the entrepreneur’s ability to act is becoming a liability; planning, structures and systems are then crucial: only a seasoned manager can create and implement them. Larry Ellison has to delegate its power to Ray Lane.

Phase VI: “Maturity and Decline” – The 90’s see the explosion of the market capitalization of Oracle; Larry Ellison becomes one of the richest person on Earth.

Phase VII: “Regeneration” – 1999, Larry Ellison is taking control again and Ray Lane leaves the company. Oracle enters new markets and unpredictable future; it needs again an entrepreneur, i.e. Larry, to lead it in the future. The structures and systems are in place and the cash flows are stable; a new orientation is to be found.

 

 

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