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Key Takeaways
- The Greiner Curve is a powerful tool for senior leaders to understand the six key phases of growth that organizations typically go through – from start-up to multinational corporation.
- These stages are: growth through creativity, direction, delegation, coordination and monitoring, collaboration, and extra-organizational solutions.
- After each growth stage, organizations tend to hit a crisis. The Greiner Curve can help leaders to anticipate these turning points and plan ahead so that they are better equipped to overcome future challenges and continue to grow.
Leading a growing organization can be exhilarating. More sales, more people, more profit. What more could you want?
But under the pressure of rapid growth, the approaches that got you here may no longer be fit for purpose. Growing pains are inevitable and they demand strategic foresight to avoid chaos.
As a leader, your ability to adapt and proactively manage change is a key factor in maintaining healthy momentum.
That’s where the Greiner Curve comes in. It’s a useful tool for leaders to anticipate the crises that lie ahead.
In this article, we’ll learn about how you can use it to understand the problems that you’re likely to face in a growing business, and how to tackle their root causes.
What Is the Greiner Curve?
The Greiner Curve (shown in figure 1, below) describes the typical phases of organizational growth. All kinds of organizations experience these, from design studios to manufacturers, from tech companies to professional service firms.
Each growth phase is made up of a period of relatively stable growth, followed by a "crisis," when major organizational change is needed if the company is to continue growing.
Figure 1. The Greiner Growth Model
Growth can be painful but you can make it easier by being prepared.
Reprinted by permission of Harvard Business Review. From "Evolution and Revolution as Organizations Grow" by Larry E. Greiner, May 1998. Copyright © 1998 by the Harvard Business School Publishing Corporation; all rights reserved.
Note:
Although the word "crisis" is often linked to a state of panic, it can also mean "turning point." While companies certainly have to change at each of these points, if they properly plan ahead, there is no need for panic, and so we will call them "transitions."
Note 2:
We have produced a free, downloadable checklist that leaders can use to anticipate challenges, align strategies, and ensure that their leadership approach evolves alongside their organization’s growth. Download your copy here: Checklist: Navigating Growth Transitions With the Greiner Curve.
Greiner’s Six Phases of Growth
Larry E. Greiner originally proposed the Greiner Curve (also known as the Greiner Growth Model) in 1972 with five phases of growth. In 1998, he added a sixth phase in an updated version of his original article. [1]
The six growth phases are described below:
Phase 1: Growth Through Creativity
Here, the organization’s founders are busy creating products and opening markets. There aren't many staff, so informal communication works fine, and rewards for long hours are probably through profit share or stock options.
However, as more staff join, production expands and capital is injected, there's a need for more formal communication.
This phase ends with a Leadership Crisis, in which leaders seek professional management. They may choose to change their style and take on this role themselves, but often someone new will be brought in.
Phase 2: Growth Through Direction
Growth continues in an environment of more formal communications, budgets and focus on separate activities like marketing and production. Incentive schemes replace stock as a financial reward.
However, there comes a point when the products and processes become so numerous that it’s not feasible for one person to manage them all.
Just as your organization is changing rapidly, so too is the digital landscape.
Note:
Rapid digital transformation and technological advances have altered growth dynamics. But digital tools (e.g., AI-driven analytics, remote work software) can help in managing growth crises by enhancing communication across organizational levels.
The aspect noted above can affect your business’s goals, priorities and processes at short notice. And leaders will likely struggle to keep on top of these technological advances, particularly compared to more junior team members.
This phase ends with an Autonomy Crisis in which new structures based on delegation are needed.
Phase 3: Growth Through Delegation
With mid-level managers freed up to react faster to opportunities for new products or new markets, the organization continues to grow. Meanwhile, top management focuses its efforts on monitoring and dealing with the big issues (perhaps starting to look at merger or acquisition opportunities).
Many businesses flounder at this stage because senior leaders struggle to relinquish the control that they assumed at the end of Phase 1. This can lead to a power struggle between mid-level and senior managers.
This phase ends with a Control Crisis. A much more sophisticated organizational design is required, so the separate parts of the business can work together more effectively.
Note:
Modern leaders are increasingly focused on sustainable and socially responsible growth. They can prioritize sustainability as the organization grows by:
- Integrating sustainability into strategy by embedding environmental, social and governance (ESG) goals into the organization's mission, while ensuring it aligns with core objectives.
- Adopt sustainable practices like reducing waste, conserving energy, and sourcing materials ethically, while harnessing technology to minimize environmental impact.
- Engage stakeholders by collaborating with employees, customers and suppliers to foster a culture of sustainability.
Phase 4: Growth Through Coordination and Monitoring
Growth continues with the previously isolated business units reorganized into product groups or service practices.
Investment finance is allocated centrally and managed according to Return on Investment (ROI) and not just profits. Incentives are shared through company-wide profit share schemes aligned to corporate goals.
Eventually, though, work becomes submerged under increasing amounts of bureaucracy, and growth is stifled as a result.
And in the age of remote and hybrid working, leaders need to think about strategies for maintaining cohesion in a distributed environment and consider that they may struggle to support their distributed teams.
This phase ends on a Red-Tape Crisis: a new culture and structure must be introduced.
Phase 5: Growth Through Collaboration
The formal controls of Phases 2 to 4 are replaced by professional good sense, as staff group and regroup flexibly in teams to deliver projects in a matrix structure.
This is supported by sophisticated information systems and team-based financial rewards. Flexible schedules and clear lines of communication bring cohesion to remote and hybrid teams.
This phase ends with a crisis of Internal Growth: further growth can only happen by developing partnerships with external, complementary organizations.
Phase 6: Growth Through Extra-Organizational Solutions
Greiner's recently added sixth phase suggests that growth may continue through mergers, outsourcing, networks, and other solutions involving external companies.
Growth rates will vary between and even within phases. The duration of each phase depends almost totally on the rate of growth of the market in which the organization operates.
The longer a phase lasts, though, the harder it will be to transition to the next phase of growth.
Tip:
This is a useful model, however not all businesses will go through these crises in this order. Use this as a starting point for thinking about business growth, and adapt it to your circumstances.
How Can Leaders Apply the Greiner Curve?
As a leader, the Greiner Growth Model helps you to think about your own organization's growth trajectory, and create a plan to tackle each likely transition.
To apply this model, use the following five steps:
1. Based on the descriptions above, think about where your organization is now.
2. Consider whether you’re reaching the end of a stable period of growth and nearing a “crisis” or transition. Some of the signs that a crisis is occurring include:
- People feel that managers and company procedures are getting in the way of them doing their jobs.
- People feel that they are not fairly rewarded for the effort that they put in.
- People seem unhappy, and there’s a higher staff turnover than usual.
3. Ask yourself what the transition will mean for you and your team. Will you have to:
- Delegate more?
- Take on more responsibilities?
- Specialize more in a specific product or market?
- Change the way you communicate with others?
- Incentivize and reward your team differently?
By thinking this through, you can start to plan and prepare yourself for the inevitable changes and help your people to do the same.
4. Plan and take preparatory actions that will make the transition as smooth as possible for you and your team.
5. Develop your leadership style. Leaders must be prepared to evolve at each new growth stage. For example, leaders in the Coordination phase may need training in digital project management or wish to prioritize sustainable and socially responsible growth, while those in the Collaboration phase should develop skills in cross-functional team dynamics.
6. Revisit Greiner's model for growth again every 6-12 months, and think about how your organization's current stage of growth is affecting you and others around you.
Frequently Asked Questions
What are the six key phases of the Greiner Curve?
Phase One: Growth Through Creativity – ends in a Leadership Crisis.
Phase Two: Growth Through Direction – ends in an Autonomy Crisis.
Phase Three: Growth Through Delegation – ends in a Control Crisis.
Phase Four: Growth Through Coordination and Monitoring – ends in a Red-Tape Crisis.
Phase Five: Growth Through Collaboration – ends in a crisis of Internal Growth.
Phase Six: Growth Through Extra-Organizational Solutions.
What is a Growth Crisis?
A crisis proceeds a period of stable growth. It is a signal to you as a senior leader that change is required to continue scaling up your business. Proactive change management – such as adjusting team incentives or developing senior managers – can limit this period of instability and guide you into the next growth phase.
How do I know if my organization has reached a crisis?
The telltale signs of a crisis in action are: people struggling to do their jobs because of managers or processes “getting in their way,” team members feeling overworked or underappreciated, and low morale coupled with high staff turnover.
How can leaders use the Greiner Curve effectively?
The Greiner Curve offers a view of what the future of your organization could look like, the potential obstacles you may face along the way, and how you, as a leader, can utilize these crises as a force for positive change.
The best leaders don’t fear or run away from growth crises. They tackle transitions head on and embrace the start of a new chapter for their business.
Infographic
See our Greiner Curve infographic.
References[1] Greiner, L. (1998).
Evolution and Revolution as Organizations Grow [online]. Available
here. [Accessed November 22, 2024.]
