Growth and crisis (Greiner)

Greiner’s growth-and-crisis model helps leaders anticipate the management tensions that can emerge as an organisation becomes older and larger. It frames growth as a sequence of relatively stable evolutionary periods interrupted by transitions that demand a different leadership approach.

When to use it

• Use it when growth is straining the organisation’s existing leadership, structure or coordination practices, and a transition could become a crisis.

Origins

Larry Greiner introduced the model in a Harvard Business Review article in 1972. The article first appeared in 1972 and linked organisational age and size to recurring periods of evolution and revolution. Greiner later revisited it and extended the sequence, while emphasising that the model is a diagnostic lens rather than a universal timetable.

What it is

Organisations can enjoy sustained development within one management logic, yet discover that the practices that enabled one period of success constrain the next. Greiner’s model describes six broad growth phases and the characteristic tension associated with the transition from each.

The six phases are hypotheses to test against the organisation’s circumstances:

Creativity – Founders and early employees concentrate on creating an offer, winning customers and surviving. Informal communication and entrepreneurial energy support speed. As complexity rises, the organisation encounters a LEADERSHIP CRISIS: hands-on founding skills are no longer sufficient for consistent management and prioritisation.

Direction – More formal leadership introduces strategy, planning, functional roles and financial controls. Central direction creates focus but eventually produces an AUTONOMY CRISIS as capable managers closer to operations seek decision authority and recognition.

Delegation – Decision rights move outward through functions, business units and middle management. Local responsiveness improves, but a CONTROL CRISIS can follow when senior leaders lack visibility, units diverge or autonomous decisions no longer support the whole enterprise.

Coordination – Reporting systems, shared planning and integrating mechanisms bring independent units back into alignment. Over time, accumulated controls and layers can create a RED TAPE CRISIS in which procedures slow work and cooperation becomes overly bureaucratic.

Collaboration – Flatter relationships, cross-functional teams, trust and shared goals replace excessive formalism. Rewards support enterprise outcomes rather than isolated units. The organisation may then meet a GROWTH CRISIS when internal collaboration alone cannot deliver further expansion without overload.

Alliances – External relationships, mergers and acquisitions offer routes beyond constrained organic growth. Greiner added this sixth phase in his 1988 revision amid the active M&A market of the mid-to-late 1980s. These arrangements introduce their own integration, dependency and financial risks rather than a predetermined “Debt Crisis.”

Age of organisation

How to use it

Diagnose the dominant management logic rather than assigning the business a label solely by age or headcount. Which practices currently enable growth? Where are they generating friction? Does the pattern resemble one of Greiner’s transition tensions, and would the practices associated with the next phase address the actual cause?

Look for observable warning signals: decisions bottlenecking at the top, inconsistent local choices, procedures obstructing frontline work, meetings displacing customer attention, perceived unfairness in rewards or rising unwanted turnover. Validate the diagnosis through data and conversations across levels.

Design a transition that covers decision rights, delegation, specialisation, communication, motivation and incentives. Remove controls that no longer add value, but retain the governance needed for the organisation’s risks. Sequence changes and watch for the unintended tension that the new arrangement may create.

Top practical tip

Identify the capability that the next phase requires before changing the organisation chart. Decision rights, leadership behaviour, information and incentives must reinforce one another.

Top pitfall

Do not treat the sequence as a law of organisational development. Firms can combine phases, skip patterns or face several tensions at once; use evidence to test the model’s fit.

Further reading

• Greiner, L.E. (nineteen seventy-two). “Evolution and Revolution as Organizations Grow.” Harvard Business Review.
• Churchill, N.C. and Lewis, V.L. (nineteen eighty-three). “The Five Stages of Small Business Growth.” Harvard Business Review.