Strategy Explore

Greiner's Growth Model

Greiner's growth model is six stages of organizational growth, and the crisis that has to be resolved before the next stage.

The questionWhich management practices has this company outgrown, and what will the replacement cost?

Also called the Greiner curve, and by Greiner himself the evolution and revolution model.

Model · Larry E. Greiner, 1972, revised 1998

1
Creativity Ends in a leadership crisis
2
Direction Ends in a crisis of autonomy
3
Delegation Ends in a crisis of control
4
Coordination Ends in a red tape crisis
5
Collaboration Ends when internal solutions run out
6
Alliances Tentative 1998 addition, growth from outside the firm

Simplified sequence of Greiner's phases of growth, each shown with the crisis the note names as ending it.

When to use it

A founder-led company has multiplied its headcount, the informal way of working is breaking, and nobody is sure who decides what.
A new layer of formal control has just gone in, and business unit heads are angry. You need to judge whether this is the typical reaction or something particular to this firm.
A board wants a plain account of why the same problems keep returning as the company grows, to frame a restructuring.
You are reviewing an organization design proposal and want to test whether it solves today's crisis or sets up the next one.

When to avoid it

You need a forecast or a timeline. The model is descriptive. Companies skip phases, stall in them, or show the pattern at different ages.
The problem is specific, such as a weak sales leader or a flawed pricing model. The stage story will make it sound structural.
You need to diagnose why a current structure underperforms. Galbraith's Star Model or the Nadler-Tushman model examines fit directly.
The client expects to read its next phase as a target. Later phases are not better ones.

Overview

Greiner’s model describes organizations as moving through stretches of steady growth, each ended by a crisis that the existing management approach cannot solve. The fix for each crisis creates the conditions for the next one. It supports diagnosis: finding which practices a growing company has outgrown, and what the likely replacement will cost.

Use it as a source of hypotheses. Greiner called it a simple outline, built mainly from industrial and consumer goods companies, and warned that it can look obvious in hindsight. Companies move through the phases at different rates, skip some, and stay in others. The sixth phase was a tentative addition in 1998.

The phases and their crises

Phase 1: Creativity

Founders build the product and find the market. Communication is informal and the effort is long hours. The crisis is leadership. The company is too big for the founders' way of running it and needs management skills they may not have, so they either learn them or hand over.

Phase 2: Direction

A functional structure, accounting systems, budgets, and standards give the company direction. Incentives replace the informal rewards. The crisis is autonomy. Lower-level managers who know their markets are constrained by a hierarchy that checks everything.

Phase 3: Delegation

Decentralized units, with profit responsibility and bonuses, give managers the freedom they asked for. The center manages by exception from reports. The crisis is control. Unit heads run their own businesses, and top executives try to regain a grip without undoing the delegation.

Phase 4: Coordination

Formal planning, product groups, central staff functions, and centrally allocated capital pull the units together. The crisis is red tape. Procedures outgrow their usefulness, and line managers and staff groups stop trusting each other.

Phase 5: Collaboration

Teams, matrix structures, and simpler formal controls replace the heavy systems of Phase 4. The crisis is that internal solutions have run out. Greiner's 1972 text speculated about psychological saturation, and his 1998 commentary says instead that no internal answer remains for restarting growth.

Phase 6: Alliances

Added tentatively in 1998. Growth comes from outside the firm through partnerships, networks, cross-ownership, or a holding company structure. Greiner wrote that such a phase may be evolving, and presented it as speculation.

What it is not

A schedule of ages. Greiner treats age, size, stage of evolution, stage of revolution, and the growth rate of the industry as separate variables, so age alone does not give you the phase.
A ladder to climb. The later phases are not goals. Each is the solution to the last crisis and the setup for the next one.
A tested prediction. It is an organized description of observed patterns, and Greiner himself said the fit may seem stronger in hindsight.

The steps

Build the history

Collect the company's size, structure changes, leadership changes, and what broke each time. Ask people who were there when the last change was made. The output is a timeline of fixes and the problems they produced.
Place the company by how it runs

Use who decides, how people are rewarded, and how the center controls units. Do not place it by age or headcount, which do not tell you the phase. Expect mixed answers, because different parts of the company may be in different phases.
Name the current crisis from evidence

State the tension in the client's terms, supported by interviews and examples, such as nine-day discount approvals. If you cannot find evidence for a crisis, the model is not helping.
Compare the textbook resolution with this company

Each crisis has a standard answer, and each answer tends to seed the next crisis. Check what is different here, such as manager skill, the market, or the owner's willingness to let go.
Design the transition

Decide what to introduce, what to retire, and what to monitor for the next crisis. The output is a proposal that names the tension it is solving and the one it is likely to create.

In practice

At a distributor that had grown from sixty people to four hundred in eight years, regional managers said the same thing in separate interviews: head office approves every discount above a small threshold and takes nine days to answer. The founders had installed those approvals in year four, after a pricing mess, and the fix had worked.

The proposal on the table was a profit-center structure for each region. Read through the model, the question changed. The approvals were a Phase 2 fix now producing the autonomy crisis, and the standard answer, delegation, leads to the control crisis. The team agreed to delegate discount authority within margin bands, with a weekly exception report to the center, instead of creating full regional income statements.

What you leave with

A short history of structure and leadership changes, with what triggered each.
A placement on the phases, with evidence on how decisions, control, and rewards work today.
The current crisis stated in the client's terms, with the people who confirm it.
A proposed resolution, with the crisis it may set up and a signal to watch for.

Failure points

Placement by headcount

The company is assigned a phase because of its size or age. A 300-person company with a founder who approves everything is in Phase 1 in practice, and the advice for Phase 3 misses it.

Every complaint becomes a crisis

Once the vocabulary is in the room, any grievance gets labeled an autonomy or control crisis. The model starts explaining everything, which means it explains nothing.

Textbook resolution applied unchecked

Delegation is recommended without checking whether the managers can run a unit. The company moves to the next stage on paper and the crisis moves with it.

Holding on to the old phase

Executives keep a structure after it has stopped working, often because it is the source of their power. HBR's summary of Greiner's article describes a retail chain doing this until it went bankrupt. The model identifies the crisis, but it does not make anyone act.

Phase 6 treated as established

Alliances are presented as the next phase every company reaches. Greiner raised it as a possibility, and the evidence is thin.

The failures above are usually Framing: the wrong problem was chosen before this framework was applied.

Origin

Larry Greiner, a Harvard-trained management scholar who later became a professor at the University of Southern California, published the model in the Harvard Business Review in 1972. It had five phases of growth, each ended by a crisis: creativity, direction, delegation, coordination, and collaboration. The 1998 version came with Greiner's own commentary. He tentatively suggested a sixth phase, built on alliances and other arrangements outside the firm, and recast the crisis ending the fifth phase as the realization that no internal solution would restart growth.

Greiner described the model as a simple outline, written mainly about industrial and consumer goods companies. He added that readers who find it obvious may be reacting from hindsight. In the 1998 commentary he also reported that professional service firms go through a similar sequence. Secondary sources name the sixth-phase crisis as one of identity, but Greiner's own wording is tentative.