In business, products and even companies as a whole participate in some general permutation of this cycle. A business or product will debut, will grow, and will hit their initial peak. From that point, they can adapt and make changes which will bring them to a new, higher plateau, or they can be allowed to decline until they no longer exist. Where you are on that cycle determines what kinds of decisions you will make - whether to invest in R&D, whether to make capital improvements, etc.
In baseball, however, all 30 teams exist and will continue to exist regardless of their success or failure. One look at the Pirates or Royals will assure you that no matter how bad you are and for how long, you won't go out of business (contraction talk aside). What does remain true, however, is the fact that teams are better or worse equipped to "make a run" at the playoffs or to "rebuild" depending on factors as plentiful as the ages of their star players, the condition of their facilities, changes in ownership, changes in the economy of their surrounding area, and the relative strength or weakness of their farm system.
As far as the success cycle and baseball goes, it appears the most prominent article on it was written years ago by Jonah Keri over at Baseball Prospectus. Although he never explicitly defines the success cycle, he takes an in-depth look at the 2002 Pittsburgh Pirates and discusses the importance of determining your place on it:
The cycle is a baseball continuum on which every team resides. To measure a team's place in the cycle, assess its talent in the majors and minors. Can the players in the organization, mixed with a few trade acquisitions and free agents the team could reasonably sign, yield a competitive team? More precisely, can the team expect to compete while its current core of major-league players remain productive and under contract?
