About this blog

This blog is addressed to all those who make strategy, and make strategy happen. To the thousands of strategists in organizations large and small, the quintessential knowledge workers, the dedicated project managers. To those who push for new ideas and help shape the strategic direction of their company.
This blog is also based on some fundamental beliefs: That effective strategy is more about process than about content, that incremental changes are smarter than bold leaps, and that strategy should be more bottom-up than top-down.

Saturday, March 12, 2011

Framework of the Week - 51 - Greiner's Growth Phases Model

Larry Greiner was a professor at USC focused on organizational development and growth. In the 1970s he proposed a model of growth phases for start-ups, based on the recognition that many entrepreneurial companies go through predictable cycles of growth spurts and crises. The model was originally based on five phases; he later adjusted it to include a sixth phase.

Phase 1: Growth through creativity
An entrepreneur is focused on creating new products and services. A small staff can be managed through informal communication and a shared vision. But as the firm grows, there is often a leadership crisis with the need to bring in professional management.

Phase 2: Growth through direction
With new management in place, growth continues. There is more clarity on what the objectives are. Budgets introduced, functions are more clearly defined, incentive schemes are established. This may result in a crisis of autonomy, with a need to define clearer structures and hierarchies to delegate tasks.

Phase 3: Growth through delegation
As mid level managers are freed up to pursue opportunities in their markets and improvements in their functions, growth continues. To management takes on more of a broad strategic role. The result is often a crisis of control: Managers whose directive approach was helpful at the end of Phase 1 find it hard to “let go.” A more sophisticated approach is needed to make sure the different parts of the organization work well together.

Phase 4: Growth through coordination and monitoring
Growth continues through better coordination, e.g. organizing previously independent groups along product or service lines. Ultimately, however, the complexity of the company’s bureaucracy creates a red-tape crisis.

Phase 5: Growth through collaboration
The formal control structure is relaxed to accommodate more flexibility for staff to group along the lines of specific projects or initiatives. Sophisticated information system support this new approach. This phase may well end with a crisis of internal growth, recognizing that opportunities may have to be pursued outside the firm.

Phase 6: Growth through alliances
This phase was added by Greiner later on, to recognize the fact that at some point, firms may need to pursue growth opportunities through alliances, mergers & acquisitions, outsourcing, or other partnerships.

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