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At What Stage of Growth Is Your Organization?

In a previous article I wrote (How Do We Understand the Growth Maturity of Our Organization?), we discussed the 5 dimensions of organizational maturity:

1. Age of the Organization
2. Size of the Organization
3. Stages of “Evolution”
4. Stages of “Revolution”
5. Growth Rate of the Industry

Let’s take this concept further and see how these dimensions translate to an actual Growth Maturity Model (AKA, the Greiner Growth Model). In the Greiner Growth Model, we define 5 stages of growth. From youngest to most mature, the organization achieves growth through…

1. Creativity
2. Direction
3. Delegation
4. Coordination
5. Collaboration

As we will soon discuss, at the end of each stage, there is a crisis, which provides the impetus for the following stage (if the organization successfully survives the crisis). As such, each stage is at once a result of the previous stage and a cause for the next stage.

The table below provides a great snapshot of how each stage of growth maturity differs, based on various organizational practices (e.g. strategic focus, management style, organizational structure, etc.). From this, we can see clearly how the same strategies and management approaches cannot be easily applied from one stage to the next. Having a clear understanding of these nuances at each stage is critical to Strategy Development and for anticipating growing pains.

Let’s delve a bit deeper into each stage now, shall we.

1. Growth through Creativity

In the organization’s inception, growth is driven by the creativity of the founders and early employees. When an organization is formed in its startup, the emphasis is on creating both a product and a market. All the individualistic and creative activities are essential for a company to get off the ground.

However, as the organization grows, those very creative activities become the source of problems. The company’s founders find themselves burdened with unwanted management responsibilities. They long for the “good ol’ days” and try to act as they did in the past, when the organization was in much less mature state.

As conflicts among leaders emerge and grow more intense, a crisis of Leadership emerges. This crisis represents the first critical choice in an organization’s development: Can we locate and install a strong business manager who is acceptable to the founders? One who can pull the organization together?

2. Growth through Direction

In this next stage, growth is driven by direction set by a more capable, directive leader. Those organizations that survive the first phase by installing a capable business manager usually continue forth on a period of sustained growth under this new Leadership. It is very possible that the startup founder can also remain the leader, but we must recognize the situation when this is not the case and the organization has outgrown its founder’s managerial capabilities and style.

The new directive techniques channel employees’ energy more efficiently into growth. However, eventually, again, this method of management becomes inappropriate for controlling a more diverse and complex organization. This results in the crisis of autonomy.

3. Growth through Delegation

At this stage, we move from a centralized to decentralized organization. Now, growth is through delegation. This stage allows companies to expand by means of the heightened motivation of managers at lower levels. Managers in decentralized organizations, who have greater authority and incentives, are able to penetrate larger markets, respond faster to customers, and develop new products.

Eventually, top-level management realize they are losing control over such a highly diversified field operational structure. Autonomous field managers prefer to run their own shows without coordinating plans, money, technology, and personnel with the rest of the organization. The organization thus falls into a crisis of control.

4. Growth through Coordination

In this stage, formalized systems, procedures, and programs are implemented. Unfortunately, eventually, the many systems and programs introduced begin to exceed their usefulness. This leads to the crisis of “red tape.”

5. Growth through Collaboration

Whereas the last stage was managed through formal systems and procedures, the fifth and most mature stage emphasizes spontaneity in management action through teams and the skillful confrontation of interpersonal differences. This stage sees collaboration across the organization. Now, we have a more flexible and behavioral approach to management.

The crisis of internal growth emerges from the psychological saturation of employees who grow emotionally and physically exhausted from the intensity of teamwork and the heavy pressure for innovative solutions.

Want to learn about stages of growth in much greater depth? Take a look at our strategy and management framework, Greiner Growth Model: Stages of Evolution and Revolution.

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About David Tang

David Tang is an entrepreneur and management consultant. His current focus is Flevy, the marketplace for business best practices (e.g. frameworks & methodologies, presentation templates, financial models). Prior to Flevy, David worked as a management consultant for 8 years. His consulting experience spans corporate strategy, marketing, operations, change management, and IT; both domestic and international (EMEA + APAC). Industries served include Media & Entertainment, Telecommunications, Consumer Products/Retail, High-Tech, Life Sciences, and Business Services. You can connect with David here on LinkedIn.

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