Understanding Your Business Model and The Stages of Organisational Growth.

Larry Greiner in 1972 identified the growth phases for organisations. In his model Greiner suggests that organisations go through 5 (6) stages of growth and need appropriate strategies and structures to cope at different stages of their development.

It is a descriptive framework that can be used to understand why certain management styles, organisational structures and coordination mechanisms work and don't work at certain phases in the development of an organisation.

The 1972 model of Greiner describes five (six) phases of organisational development and growth:

Growth through creativity (start-up company, entrepreneurial, informal communication, hard work and poor pay) [ending by a leadership crisis].

Growth through direction (sustained growth, functional organisation structure, accounting, capital management, incentives, budgets, standardized processes) [ending by an autonomy crisis].

Growth through delegation (decentralised organisational 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].

Growth through coordination and monitoring (formation of product groups, thorough review of formal planning, centralisation 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].

Growth through collaboration (new evolutionary path, team action for problem solving, cross-functional task teams, decentralised support staff, matrix organization, simplified control mechanisms, team behaviour education programs, advanced information systems, team incentives) [ending by a internal growth crisis].

Growth through merger and shared services .More recently Greiner added a sixth phase to his growth phases model: • extra-organisational solutions (mergers, holdings, networks of organisations).

Which stage are you at? BDA can help you improve board, executive, governance and performance at each stage of your development.

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