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A business model to recognize phases of company growth

Larry Greiner developed his organisational growth model and published an article entitled Evolution And Revolution As Organizations Grow in the Harvard Business Review in 1972. His theory is based on the belief that organisations go through a sequence of stages at the end of which there is a crisis.

Greiner recognised companies suffer growing pains and developed a model that helps anticipate the problems so leaders can prepare accordingly. Understanding where a company stands at any point of time within these different stages of development is important. If leaders of companies are aware of which stage they are in, the will know the right way to act. 


His framework assumes phases of growth which are relatively stable. This stability doesn’t last for ever and towards the end of each phase the organisation begins to sow the seeds of its own decay which leads to another period of revolution.

Greiner identified six phases of growth that most companies are likely to face. Each of these phases has a dominant management approach which eventually becomes ineffective, leading the company into a period of crisis. The faster a company grows, the shorter the phase of growth. As the company deals with its crisis, it moves into a new phase and carries on growing.


The six phases identified by Greiner are:

Phase 1: Growth through creativity (crisis of leadership)
Phase 2: Growth through direction (crisis of autonomy)
Phase 3: Growth through delegation (crisis of control)
Phase 4: Growth through coordination (crisis of red tape)
Phase 5: Growth through collaboration and cooperation (crisis of identity)
Phase 6: Growth through alliances

Greiner's growth model.JPG

The model recognises that growth involves pain. If managers can spot the pain, they can prepare for the next phase of growth. Pain becomes something that they should embrace because it is an indicator of a growth opportunity.

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