greiners-growth-model

Greiner’s Growth Model

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

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.

The model allows decision-makers to anticipate problems before they occur and, at least in theory, avoid them altogether.

What else can businesses take away from Greiner’s model? For one, growth is inherently difficult and presents many obstacles in terms of management and leadership.

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.

Key takeaways:

  • 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.

Read Next: Performance Appraisals Examples, MBO, 360 Degree Feedback, High-Performance Management, OKR, Balanced Scorecard.

Related Business Concepts

Business Development

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Business development comprises a set of strategies and actions to grow a business via a mixture of sales, marketing, and distribution. While marketing usually relies on automation to reach a wider audience, and sales typically leverage on a one-to-one approach. The business development’s role is that of generating distribution.

Marketing vs. Sales

marketing-vs-sales
The more you move from consumers to enterprise clients, the more you’ll need a sales force able to manage complex sales. As a rule of thumb, a more expensive product, in B2B or Enterprise, will require an organizational structure around sales. An inexpensive product to be offered to consumers will leverage on marketing.

New Product Development

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Product development, known as the new product development process comprises a set of steps that go from idea generation to post-launch review, which help companies analyze the various aspects of launching new products and bringing them to market. It comprises idea generation, screening, testing; business case analysis, product development, test marketing, commercialization, and post-launch review.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

User Experience Design

user-experience-design
The term “user experience” was coined by researcher Dr. Donald Norman who said that “no product is an island. A product is more than the product. It is a cohesive, integrated set of experiences. Think through all of the stages of a product or service – from initial intentions through final reflections, from first usage to help, service, and maintenance. Make them all work together seamlessly.” User experience design is a process that design teams use to create products that are useful and relevant to consumers.

Cost-Benefit Analysis

cost-benefit-analysis
A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.

Empathy Mapping

empathy-mapping
Empathy mapping is a visual representation of knowledge regarding user behavior and attitudes. An empathy map can be built by defining the scope, purpose to gain user insights, and for each action, add a sticky note, summarize the findings. Expand the plan and revise.

Perceptual Mapping

perceptual-mapping
Perceptual mapping is the visual representation of consumer perceptions of brands, products, services, and organizations as a whole. Indeed, perceptual mapping asks consumers to place competing products relative to one another on a graph to assess how they perform with respect to each other in terms of perception.

Value Stream Mapping

value-stream-mapping
Value stream mapping uses flowcharts to analyze and then improve on the delivery of products and services. Value stream mapping (VSM) is based on the concept of value streams – which are a series of sequential steps that explain how a product or service is delivered to consumers.

Read the remaining product development frameworks here.

Read Next: SWOT AnalysisPersonal SWOT AnalysisTOWS MatrixP

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