Business

Study Notes

Greiner's Growth Model

Level:
A Level
Board:
AQA

Greiner's Growth Model attempts to predict the six phases and five crises that businesses may experience as they grow.

The phases of the Greiner Growth Model are illustrated below:

Greiner's Growth Model

The five predicted crises of growth according to the model are:

Growth Phase: Direction - Crisis of Leadership

  • Informal communication starts to fail
  • Business now too big for leader to get involved in everything

Growth Phase: Delegation - Crisis of Autonomy

  • Business now has functional management
  • But founder / leader still struggling to let go

Growth Phase: Coordination - Crisis of Control

  • More formal management structures in place
  • But new layers of hierarchy needed to keep control

Growth Phase: Collaboration - Crisis of Red Tape

  • A dangerous growth in organisational bureaucracy
  • Slowing decision-making & missing external changes

Growth Phase: Alliances - Crisis of Growth

  • Growth slowing as business runs out of ideas
  • Alliances are sought (including new business owners)

Key Messages from Greiner's Growth Model

What can we learn about the challenges of growing a business if, for a moment, we assume that Greiner's Growth Model is valid?

  • Growth is hard
  • Growth poses many management and leadership challenges (crises)
  • Leadership and organisational structure have to evolve to reflect the growth of a business
  • Businesses that don’t adjust as they grow will experience lower growth than those that do

Criticisms of Greiner's Growth Model

  • Like most models – it is simplistic
  • Not every business will suffer crises as it grows – many adapt easily without suffering any obvious panics or crises
  • The model doesn’t really take account of the pace of growth, particularly in an increasingly dynamic external environment

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