The Growth Phases Theory

The Growth Phases Theory

What  is the Growth Phases model? Description

The growth phases model of Larry E. Greiner suggests that organizations   go through 5 (6) stages of growth and need appropriate strategies and structures       to cope.  It is a descriptive framework that can be used to  understand       why certain management styles, organizational structures and  coordination       mechanisms work, and why some don’t work at certain phases in  the development   of an organization. The 1972 Growth Phases model of  Greiner describes five       phases of organizational development and  growth:

  1. Growth through creativity. Start-up company, entrepreneurial,     informal communication, hard work and low earnings. Ending by a leadership         crisis.
  2. Growth through direction. Sustained growth, functional organization   structure, accounting, capital management, incentives, budgets,  standardized         processes. Ending by an autonomy crisis.
  3. Growth through delegation. Decentralized organizational structure,   operational and market level responsibility, profit centers, financial  incentives,    decision making is based on periodic reviews, top management  acts by exception,    formal communication. Ending by a control crisis.  Compare:         Centralization and  Decentralization.
  4. Growth through coordination and monitoring. Formation of product   groups, thorough review of formal planning, centralization of support  functions,         corporate staff oversees coordination, corporate capital  expenditures, accountability   for ROI at product group level, motivation  through lower-level profit sharing.         Ending by a red tape crisis.
  5. Growth through collaboration. New evolutionary path, team action         for problem solving, cross-functional task teams, decentralized support         staff, matrix organization, simplified control mechanisms, team behavior         education programs, advanced information systems, team incentives. Ending  by an internal growth crisis.

More recently Greiner added a sixth phase to his Growth Phases model:

  1. Growth through extra-organizational solutions (mergers,         holdings, networks of organizations)

Book: Larry E.        Greiner – Power and Organization Development –


Posted in English, Good Read.