Greiner\'S Growth Model Sought To Establish A Basis Of Understanding PDF

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Greiner’s Growth Model

Greiner Growth Model Greiner's Growth Model sought to establish a basis of understanding of the stages a business goes through from its inauguration and possible issues the corporation comes across as it grows. Greiner (1972) initially identifies in his work “Evolution and revolution as organizations grow” five distinct phases (to which he later added a sixth phase) in evolutionary growth encountered by enterprises, similarly Lewis, Virginia L. and Churchill (1983) later concur by also identifying five distinguishable phases of development.

Greiner (1972) suggests that each phase is characterized by both an evolution (period of growth with minimal disruption in organisational practices) and a revolution (period of disturbance in organisational life). In other words, as a company moves along a timeline, assuming growth is taking place, it will eventually come across a resistance, thus relying on the enterprise to alter its practises in order to continue on its growth cycle and progress into the next stage of development. (Lester, Parnell, Crandall, & Menefee, 2008) This revolutionary phase is also referred to as ‘growing pains’. (Mulder, 2013)

Stage One: Growth through creativity. At this stage, the company is new and relatively small, generally led by an entrepreneur who takes charge of business operations. As the company grows, a leadership crisis occurs ensuing the revolutionary stage. Due to the fast-paced growth encountered in the early stages of the business, business operations can no longer be carried out efficiently by one person, thus calling for improved structure. For example, installing a competent business manager. (Greiner, 2013)

Stage Two: Growth through direction. The enterprise experiences a sustained period of growth through competent direction from appointed leadership, with the entrepreneur remaining in control of central coordination. (Mulder, 2013) Due to further growth, the entrepreneur can’t efficiently control central coordination, which leads to an autonomy crisis. In order to progress, appropriate actions must take place. For example, management must provide more autonomy to lower level management, delegation must occur.

Stage Three: Growth through delegation, this next area is achieved by the successful application of decentralized structure, it involves more responsibilities given to managers and sees less frequent communication from the top (Greiner, 1997).

Stage four: Coordination, crisis through red tape. This can be characterized as an attempt to gain better coordination through more formal structure and formal planning procedures are implemented and heavily rewarded. New admin systems implemented (Rea, 1973).

Stage five: Growth through collaboration encourages interpersonal collaborations in an attempt to combat the problem of red tape. Social control and personal control replace formal control. Focus is on problem solving through teamwork is strongly promoted (Greiner, 1997). Greiner (1997) goes on to say how a sixth phase could be developed, which would involve an extra organizational structure, for example a holding company or a network organization through alliances and cross ownership.

Critique One major critique of this tool is its assumption that every company will experience growing pains. It fails to acknowledge that some may not even be affected by some of these phases. Many companies however, may be in control and planned ahead for these crises. They may have predicted an increased workload and when hiring staff initially, considered the need for middle management when hiring. If management had split workload with a secondary management figure, they skip directly to stage three which with proper communication may not result in any signs of initial ‘growing pains’. For example, it assumes that in stage one, as the company begins to grow, that the management will struggle to focus on the entire operation which results in a leadership crisis. It assumes that they will be a need for an improved structure in order move on to stage two although an effective structure may already be in place. A drawback to using Greiner’s model is that it often fails to factor the pace of growth. It is a given that different companies will grow at different rates especially when looking across multiple industries. The model cannot predict when the “growing pains” will take effect as growth phase durations can only be calculated properly in hindsight. It is often a mistake made by businesses moreover those involved in extremely dynamic and ever-changing environments like the tech world. (Macpherson & Holt, 2007) Famously a company called XciteLogic won a rising star award in 2012 for its work in consultancy and management in the technology industry. By 2013 the company had grown over

600% and quadrupled the staff size. In the same year the company filed for bankruptcy. This failure stemmed from over confidence and they could not predict how fast they would grow and therefore could not sustain itself. Companies should remember they are always vulnerable during growth. (Patel, 2016) Further flaws we found is the assumption that all six stages have to occur and chronologically. For example, stage six tells us that a company goes through a stage of crisis when they grow through mergers or alliances. However, many companies won't ever go through this stage and so this may be seen as too much of a stereotypical stage. (Greiner, 1997). Additionally, the model comes under scrutiny for its simplicity. It assumes that an organization's issue can be categorized into one of these sections. It fails to acknowledge the complexity of many problems in today’s business environment. Similarly, Ansoff’s Matrix tool is criticized for its simplistic nature because it fails to account for the external environment. (Stickland, 2016) Also, assumptions in the revolutionary part of a stage are sometimes unlikely for certain industries. For example, in stage five we are told that employees will grow exhausted of working in teams and thinking creatively but certain industries look to employ people that are searching for these roles. People that thrive in a team atmosphere and like to think creatively surely prefer this than working on a repetitive job each working day. The same could be said about stage three where growth is developed through delegation to lower managers but a control crisis emerges. Many companies go through rigorous interview processes to choose highly capable managers and thus pass this stage flawlessly. (R.D.Galliers, 1991)

Conclusion To conclude, Greiner’s growth model is a widely recognised practical business life cycle tool enabling modern day businesses to make the right strategic decisions at different stages in its development. Although its use is undoubtedly a powerful tool at a business’s disposal, it does however have its flaws. The main critiques we found for this tool was the assumptions that every business will experience growing pains, that all six stages have to occur and in chronological order, presumptions in its revolutionary stage which are sometimes unlikely to happen in certain environments, failure to account for the pace of growth and the simplistic nature of the tool itself.

References Dodge, H.R. , Fullerton, S., and Robbins, J.E. (1994). The stage of the organizational life cycle and competition as mediators of problem perception for small businesses. Strategic Management Journal, 15, 2, 121-134. Donald L. Lester, John A. Parnell, William “Rick” Crandall, Michael L. Menefee, (2008) "Organizational life cycle and performance among SMEs: Generic strategies for high and low performers", International Journal of Commerce and Management, Vol. 18 Issue: 4, pp.313330, https://doi.org/10.1108/10569210810921942 Greiner, L. (1997). Evolution and Revolution as Organizations Grow. Harvard Business Review, 10(4), 397-409. Macpherson, A; Holt R (2007). Knowledge, learning and small firm growth: A systematic review of the evidence. Research Policy Vol. 36(2), Pages 172-192 Mulder, P. (2014). Greiner Growth Model of organizational change & evolution | ToolsHero. ToolsHero. Retrieved 8 November 2017, from https://www.toolshero.com/strategy/greinergrowth-model/ Mulder, P. (2014). Greiner Growth Model of organizational change & evolution | ToolsHero. ToolsHero. Retrieved 7 November 2017, from https://www.toolshero.com/strategy/greinergrowth-model/ R D Galliers (1991). Information systems management and strategy formulation: the ‘stages of growth’ model revisited. Retrieved 8 November 2017, from http://onlinelibrary.wiley.com/doi/10.1111/j.1365-2575.1991.tb00030.x/full Strickland, E. (2016). Business Strategy and Business Planning. Objectives Examples may include the following: Profit Maximisation Survival Market Growth Corporate Image Environmental. - ppt download. Slideplayer.com. Retrieved 8 November 2017, from http://slideplayer.com/slide/10265065/...