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manager takes responsibility for
direction, mid-level supervisors or
managers act more as functional
specialists, but after a while they
begin to demand more freedom
to make decisions, leading to the
second crisis: “autonomy.” This crisis
can be solved by freeing the mid-
level managers from bureaucracy
and allowing the company to
achieve “growth through delegation”
—Greiner’s third stage of growth.
Unburdened by the need to manage
day-to-day issues, senior
management can shift its attention
to strategy and long-term growth.
Stay small or grow?
At this point a start-up faces
perhaps the biggest crisis of all: a
crisis of control. The founders or
senior management may find it
hard to give up responsibility for
decision making, even to trusted
boards. When this happens, the
founder may decide to remain
small—in essence, to limit growth
to the extent of their own control.
Such decisions are laudable. Not
all companies can be global and all-
conquering, and in fact, small- and
medium-sized enterprises dominate
the business landscape. Some
entrepreneurs start a small company
to escape the stresses, politics, and
office-bound purgatory of corporate
life and so, for them, it may make
sense to limit growth at this stage.
Other entrepreneurs—such as
Virgin chief, Richard Branson—are
enthused by the early phases in the
life of a new business, but become
bored as the bureaucratic demands
increase. Branson likes to guide a
business through its start-up phase
then hand it over to professional
managers, so he can move on to
new, more exciting, projects.
Choosing to remain small does not
mean that a business will be crisis-THE GREINER CURVE
free. All businesses, of all sizes,
and regardless of growth aspirations,
will face uncertainties and
challenges. It does mean, however,
that the business will avoid the
requirements of the next stage:
“growth through coordination.”
During this fourth stage,
increasing centralization is
common. By this time the company
may be relatively large, with
operations controlled through a
head office. The company may
appoint executives with experience
of managing large, diverse
businesses and introduce standard
operating procedures.
However, the introduction of
standard policies eventually leads
to the next crisis: a “red-tape
crisis,” in which increasing
bureaucracy stifles operations,
and growth falters as a result.A return to informality
Paradoxically, the fifth stage,
“growth through collaboration,”
requires, in part, a return to the
earlier days of flexibility. Systems
allow greater spontaneity,
teamwork is introduced, and matrix
(network) structures are used to
recapture the collaborative nature
of a start-up—in other words, the
organization tries to operate like a
lean, creative company once again.
Once this has been attained,
the next crisis relates to the limits
of internal growth. Under pressure
from shareholders to continually
improve returns, further growth
can only be achieved by developing
partnerships with complementary
organizations. By this sixth stage
a company is already big, possibly
very big. “Growth through
alliances” therefore suggests that
expansion will continue through
mergers, outsourcing, or joint
ventures—the company needs
to look beyond its own internalLarry Greiner
Larry Greiner is a professor of
management and organization
at the University of Southern
California, US. He received a BA
degree from the University of
Kansas, and an MBA and
doctorate from Harvard
Business School.
Greiner is the author of
numerous publications on the
growth and development of
organizations, management
consulting, and strategic
change. His 1972 article,
“Evolution and Revolution asOrganizations Grow”, is regarded
as an all-time classic. Greiner
has acted as a consultant to
companies and government
agencies in the US and abroad,
such as Coca-Cola, Merck,
Andersen Consulting, Times
Mirror Company, and KinderCare.Key works1972 “Evolution and Revolution
as Organizations Grow”
1998 Power and Organization
Development
1999 New CEOs and Strategic
Change, Across IndustriesOne can choose to
go back towards safety or
forward towards growth.
Abraham Maslow
US psychologist (1908 –70)