Greiner’s growth model was originally proposed in 1972 by Larry E. Greiner. In a 1998 Harvard Business Review article entitled Evolution and Revolution as Organizations Grow, he posited that companies experience six phases of growth that are punctuated by so-called “revolutions”. Importantly, each revolution disturbs the status quo and allows the next stage to establish itself.
- Understanding Greiner’s growth model
- The six phases of Greiner’s growth model
- Key takeaways:
- Related Business Concepts
Understanding Greiner’s growth model
The model allows decision-makers to anticipate problems before they occur and, at least in theory, avoid them altogether.
It’s also vital that organizations develop a leadership structure that reflects their growth stage and can be adjusted as they increase in size. Otherwise, they risk being overtaken by the competition.
The six phases of Greiner’s growth model
Greiner developed five phases in 1972 and then added a sixth in 1998. Let’s take a look at each of them below and their associated crises.
Phase 1 – Growth through creativity
In the initial phase, the company’s skeleton staff are busy creating products and seeking external investment.
Informal communication is suitable at first, but as the company starts to recruit more staff, expand production, and secure capital, communication should become more formal.
According to Greiner, the first phase ends with a leadership crisis. At some point, professional management will be required to drive the company forward. The company founders may take on this role or hire outside help.
Phase 2 – Growth through direction
Growth continues as activities such as marketing and accounting are grouped into departments that collectively comprise an organizational structure. Company culture may also start to develop in this phase.
Inevitably, the current management team will find that they cannot manage every aspect of the increasingly complex and multi-faceted business.
The second phase ends in an autonomy crisis. Upper management is actively involved in running the company but must rely on the collaborative effort of lower-level managers to pick up the slack and drive the company forward.
Phase 3 – Growth through delegation
The organization continues to evolve and expand as middle management deals with daily operations and upper management consider more significant opportunities such as mergers and acquisitions.
In any case, decision-making is based on periodic reviews, and cost centers may be introduced.
Sometimes, these cost centers start to act autonomously and service their own needs instead of the needs of the organization.
As a consequence, the company may enter a crisis of control and require a more robust organizational design so that functional units can work together harmoniously.
Phase 4 – Growth through coordination and monitoring
In phase four, the mature company is characterized by multiple departments working toward the same goal with established processes and functions. Growth continues as the whole business is greater than the sum of its parts.
In some companies, however, a red-tape crisis ensues as productivity becomes stifled under bureaucracy. The implementation of a new structure and culture can remedy this situation.
Phase 5 – Growth through collaboration
Collaboration means the organization adopts a matrix structure where product-focused teams are spread across multiple functions.
This creates a positive culture where processes are simplified, teams are rewarded based on performance, and employees feel their work and ideas are contributing to organizational success.
While this facilitates growth, the company may reach a point where it cannot grow any larger with its existing processes and resources. This is known as the growth crisis, which can only be addressed by looking to expand externally.
Phase 6 – Growth through extra-organizational solutions
Greiner’s sixth and final phase notes that company growth can continue via mergers, acquisitions, outsourcing, networking, and any other external solution.
- Greiner’s growth model, also known as the Greiner curve, describes the various phases and crises an organization may experience as it grows.
- Greiner’s growth model is not specific to any industry, instead providing a general overview of the various problems a company may encounter as its size increases. If nothing else, the model highlights the fact that growth is inherently difficult.
- Greiner’s growth model is comprised of six phases, with each comprising a different stage of company maturity. These are growth through creativity, direction, delegation, coordination and monitoring, collaboration, and extra-organizational solutions.
Related Business Concepts
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