Life Cycle Concept and Management Practice in Industry

Razvigorova, E. & Acs, J. (1988). Life Cycle Concept and Management Practice in Industry. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-88-084

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Abstract

The workshop "Life Cycle Theory and Management Practice" demonstrated the widespread acceptance of the life cycle concept in the scientific community and in management practice.

Based on a summary of the main terms and the various stages of life cycles for products, processes, and industries, and an description of the relationships between these phases and various aspects of organizations, industries and products, the value of using different life cycle concepts and the importance of the managerial life cycle for a firm's strategic management was demonstrated and discussed. Examples were given from several different industries, including steel, to clarify the development, structural change, substitution and diffusion of technology within the framework of the life cycle concept. As the relevant discussions show, the life cycle concept can explain the various trends, developments, time-lags, and diffusion patterns and problems in the steel industry and others as well. A new approach making it possible to determine the end of the embryonic (or childhood) phase was also presented.

Critical remarks on the life cycle concept, presented both in papers and during discussions, have shown the need for further empirical tests and theoretical research. Some advantages in planning and realizing innovations in the steel (and other) industries based on the concept of the integrated life cycle as a tool in the management of innovations with broader time horizons were also demonstrated. The integrated life cycle includes the phases of invention, innovation, and (important for senescent industries) restructuring or liquidation. With the help of the integrated life cycle concept, the future state of a company could be simulated (in many aspects, better than by methods in use currently). Special software packages for computations are currently being developed.

Concentrating on the steel industry, its current problems and future development, possible changes in production and consumption were shown. The changing character of producer-consumer relations in the development of a company's strategy was emphasized. The improved methodology for technological forecasting was also found to be a contributing factor to the development of an appropriate strategy.

This, together with the growing importance of management issues during periods of industrial crisis based on the case of steel, as labor and social effects of technological change in this industry led to the conclusion of existing possibility to generalize management issues and tasks along the life cycle of products, processes, and industries.

Management of technological and organizational development. and duplication of the life cycle concept in new technologies show the importance of case studies in studies of process life cycles and clarified some relations between different phases and management options. Many participants stressed the importance of case studies on life cycles in various industries in different countries.

The presentations and discussions on the deeper connections of time, space, innovation management, and life cycle concepts as well as of systems approach to create a new model of innovation emphasize the inter-relationships of various sciences and necessity of inter-disciplinary approach to study the problem. In the above context, historical methodology was also discussed as a good contribution to developing an adequate management model.

Using the life cycle concept on the macro-level, the companies' behavior can be studied from the managerial and organizational points of view. Such studies could be done, not only in the steel industry, but also in other branches such as textiles or robotics. Analysis based not only on statistical data and questionnaires, but on case studies and on in-depth interviews involving companies could give useful insights for the theory and management practice of life cycles.

The role of product specialization and differentiation in the life cycle and in the companies' strategy was stressed by many participants. The problem of correct timing and the use of Foster's S-curve ought to be studied and developed as management tools. Interesting examples of how some companies prosper by switching from one obsolete technology to an upcoming one at the right time were discussed. In this connection, the timing decision was defined as an important one. Until now, there are no definite criteria available to determine the appropriate time to switch from one technology to another. At the beginning of a new development, many approaches evolve simultaneously before a winning paradigm appears.

Comparing behavior patterns in different companies within the same industry, or even between industries, was accepted as the direction of a study which could help to clarify the possible generalization of the life cycle concept as a useful management tool. An important issue in developing the possible methodologies for determining the right decisions in changing technologies Gas defined to be the use and development of proper indicators. The definition of parameters which could describe management behavior during the life cycle could deliver the necessary information for decision-making.

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