The growth phases model of Greiner suggests that organizations go through 6 stages of growth and need appropriate strategies and structures to cope. It is a descriptive framework that can be used to understand why certain management styles, organizational structures and coordination mechanisms work and don’t work at certain phases in the development of an organization. The 1972 model of Greiner describes five (six) phases of organizational development and growth.
While growth is fun when things are going well, when things go wrong, this chaos can be intensely stressful. More than this, these problems can be damaging (or even fatal) to the organization. The “Greiner Curve” is a useful way of thinking about the crises that organizations experience as they grow. By understanding it, you can quickly understand the root cause of many of the problems you’re likely to experience in a fast growing business. More than this, you can anticipate problems before they occur, so that you can meet them with pre-prepared solutions.
- Growth through creativity; start-up company, entrepreneurial, informal communication, hard work and poor pay. This period ends by a leadership crisis.
- Growth through direction; sustained growth, functional organization structure, accounting, capital management, incentives, budgets, standardized processes. This period ends by an autonomy crisis.
- Growth through delegation; decentralized organizational structure, operational and market level responsibility, profit centers, financial incentives, decision making is based on periodic reviews, top management acts by exception, formal communication. This period ends by a control crisis.
- Growth through coordination and monitoring; formation of product groups, thorough review of formal planning, centralization of support functions, corporate staff oversees coordination, corporate capital expenditures, accountability for ROI at product group level, motivation through lower-level profit sharing. This period ends by a red tape crisis (bureaucracy).
- Growth through collaboration; new evolutionary path, team action for problem solving, cross-functional task teams, decentralized support staff, matrix organization, simplified control mechanisms, team behavior education programs, advanced information systems, team incentives. This period ends by a internal growth crisis.
- More recently Greiner added a sixth phase to his growth phases model “extra-organizational solutions”; mergers, holdings, networks of organizations.