GUIDES

Guide to Greiner’s Growth Model

Where do you sit on the growth curve and what risks do you face…🌱

9 min read

Growing your company is exciting, stressful, at times tiring, but always fun!
During the growth you’ll encounter numerous crises that will jeopardise the
success. As with most of life’s business problems, there’s a framework to
explain or help map out this scenario…

So, let’s take a look at Greiner's Growth Model.

What is Greiner's Growth Model?

Greiner's Growth Model is a framework that shows the different phases a
company goes through to achieve growth and the different types of crisis that
may occur during those milestones.

The graph shows time on the X axis and size of the business on the Y axis,
with both increasing as the company goes through the different phases.

The model is helpful in showing companies the different approaches to

growth, as well as highlighting the different challenges. It is commonly used by
businesses to self-identify obstacles they are facing that will hamper their
efforts to achieve their full potential.

What are the phases of growth in the Greiner's Growth

Model?
Let’s firstly look at the different phases a company goes through based on this
model.

Growth Through Creativity

All businesses start from a spark of an idea, one that is fostered and
developed over time. It’s a truly creative stage of a company's life as they
attempt to develop a new product or service, pull together a team, a route to
customers, and get that sometimes elusive 'product-market fit'.

There are some common traits of companies at this stage:

 They are small, responsive and agile

 They are creative and working to find their product-market fit
 They’re informally structured with strong communication between teams

Growth Through Direction

At this point in a company's life the owner/founders begin to hire managers,

releasing some of the control of the resources and direction of the business.
This is normally a 'growing up' period of a company's life, when processes
become slightly more formal, departments may be developed, and a culture is
set within the business. That’s not to say the founders/owners aren’t still
actively involved, they are indeed ultimately running the company, but it’s a
collaboration of managers that drive the direction.

A company can be considered in the Growth Through Direction phase if:

 They have recently hired managers as the team grows

 Decisions are no longer solely made by the founder/owners
 Processes have started to be created within the company (e.g. HR,
operations)
 A culture is embedded within the company
 Things are getting bigger and more complicated!

Growth Through Delegation

The Delegation phase of growth occurs when key staff members are given
accountability and responsibility to deliver in areas where they are better
equipped to than the manager. At this point in a company life there will be
specialist employees, focused on specific roles.

Delegating jobs to more specialist, skilled employees means you’ll get a better
result, with the added benefit that the executive team have time to focus on
the market data, their strategic decisions, and business planning.

A company may be in this phase if:

  Specialist skilled employees are increasingly being hired
 Accountability for key tasks is shared down the company
 Leadership teams spend less time doing jobs they aren’t good at or
don’t like

Growth Through Coordination

This is now a mature stage of growth, one that focuses on the company core
competencies and all departments working in line with each other to output a
product or service. Growth comes from the whole business being greater than
the sum of its parts.

A company may be in this phase if:

 They are mature in a marketplace

 Teams work with each other internally for the best outcome
 There are set processes and functions within the business
 Workflows and communication tools are present within the business
 Roles and responsibilities are clearly defined

Growth Through Collaboration

The final stage of growth in this model is deemed to be Collaboration. This is

an evolution of Coordination, one where all parts of the company work
together in a trusted, effective manner. Systems are simplified for efficiency,
learning and development is prominent, and all aspects of the business
contribute towards ways to continue success.

A company may be in this phase if:

 They are a mature company

 There is a positive culture around problem solving
 There’s little 'red tape'
 Reward is shared on the basis of team performance
 Processes are simple and teamwork is good
 Employees feel they can contribute ideas for growth
 Everyone knows how they impact the company with the work they do

Growth Through Alliances

The final stage of growth is a new one introduced more recently to the curve,
and it focuses on strategic alliances. The idea being that companies may
merge, acquire, partner or work with other companies in order to grow
themselves.

Are the phases of growth linear in the Greiner's

Growth Model?
The model suggests that is the case, but in real life it is not necessarily always
linear. For example, a start-up company focused on Direction may also
embark on Strategic Alliances. It’s important to note the real importance and
value of this model lies in the crises that may impact a company at the
different stages… so let’s take a look at those.

What are the crises in the Greiner's Growth Model?

Each phase in the Growth Model has an associated potential crisis that may
disrupt the trajectory of growth.

Crisis of Leadership occurring during Creativity

This is a common issue for start-ups and young companies that find
themselves growing via creativity and innovation. Initially with a small and
informal team it’s possible for founders to manage the business in a relaxed
manner, but over time this becomes a challenge.

Growth will lead to increasing difficultly around coordinating processes,

communicating and motivating the team, or driving the company forward. This
can be fatal for a business as it can result in key people departing (remember,
people leave managers as much as they leave jobs) and founders becoming
increasingly frustrated.

At this point a more defined management style is required in the company to

take it to the next level.

Crisis of Autonomy occurring during Direction

This is a really interesting crisis. As a company develops in direction then

managers may become more interested in their own unit than the business as
a whole. This can result in conflict between management where a decision
may be good for one department or area but bad for another.
The balance to strike is giving managers and employees autonomy but
ensuring everyone is on the same page around decision that are best for the
business as a whole. Ensuring everyone is on the same page around their
strategy is key in that balance.

Crisis of Control occurring during Delegation

The crisis around the Delegation phase can be summed up with two factors:

 Founders and managers can find it difficult to let go and give others full
control over certain aspects of the business.
 Communication may be difficult. At this point in a company’s life there
can be problems between management or employees about what is
trying to be achieved in each job and how to get the best result.

The latter can sometimes be a reason to reinforce the behaviour of the former,
with founders citing concerns that if they do not do something it won’t be done
well. It ultimately will result in a sub-par outcome though, with founders
struggling to ‘do everything’ and teams feeling unmotivated.

Crisis of Red Tape occurring during Coordination

Another very relatable crisis within the life of a company is that of 'Red Tape'
or bureaucracy. The addition of extra reports, processes, functions, all of
which contribute to additional work for employees and can risk the wider
culture of the business.

This can slow down decision making, resulting in a less agile company that
cannot respond to market changes while also suffering a wider loss of
efficiency/reduced margins.

Of course, this is a risk at all points in a company life, but it has more chance
of arising when coordination is required and thus processes are needed within
a company.

Crisis of Growth occurring during Collaboration or Alliances

The final crisis is one of how to grow. In the framework we’ve moved through
each phase, so the company is now successful and mature. The question
becomes how does it continue to grow, given the success?
If you’re in Collaboration, then perhaps Alliances are your way forward. If you
are already developing partnerships then perhaps diversification is the route
to growth? There are lots of potential options here, it’s a good point to
evaluate your industry and develop a new strategy.

What are the advantages of Greiner's Growth Model?

There are lots of advantages to this model including:

 It provides a number of identifiable challenges companies may face

 It’s simple to understand and shows a way forward for growth
 Different phases for a company to identify their current position are
highlighted
 It provides a good discussion piece for management teams
 It reinforces change is needed for growth

What are the disadvantages of Greiner's Growth

Model?
The few limitations of this model include:

 It’s simple and in real life the lines blur between phases
 Not all companies follow the curve in a linear way
 The crises may not always occur in each phase

What frameworks go well with Greiner's Growth

Model?
As a company using Greiner’s Growth Model you may also want to use a
SWOT Analysis, which should include strengths & weaknesses from this
model.

Who invented Greiner's Growth Model?

The Greiner's Growth Model was invented by Larry E. Greiner in 1972 with the
five phases of growth. In 1998 he updated the model to add the sixth phase
around Alliances.