The evolution & revolution of growing organisations
In July 1972 HBR published an article written by Larry E. Greiner entitled Evolution and Revolution as Organisations Grow. It laid out the pattern for modern understanding of the economic fortunes of organisations relative to their size, maturity, structure and strategies.
Businesses are called organisations due to their nature and more importantly because they require decisions to perform. This direction always impacts performance and as a result has a profound affect on the people within it. With reference to the first of the 6 phases of business growth Greiner sets his stall out with the pattern his model follows, he says:
“Creative activities are essential for a company to get off the ground. But as the company grows, those very activities become the problem.”
This making it and then breaking it method is a natural pattern for growth and applies perfectly to organisations as they scale. He describes each transition between phases as a “crisis” that the business needs to resolve before fully moving onwards and upwards.
Greiner’s Growth Model
The phases of growth
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Businesses start with an idea, a dream and energy to make it happen. Over time the dream is realised, it changes and develops if it is nurtured. This is predominantly creative, making it happen, bringing people on the journey – selling them the dream to a point where the product fits the market. A company at this stage has specific characteristics:
They are small, responsive and agile
They are creative and do what it takes to get their product to market
They are more informal and have strong, direct communication channels.
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At a certain size it is impossible for the owner or founding team to do it all, so they start to hire managers which allows others come control of the company direction and resources of the business. It feels different as the company grows up, processes begin to emerge in a formal way and rather than just being, the culture of the business forms around the activities. The owner and founding team are collaborating with others to drive the direction of the business and it looks like this:
Managers are being hired
Decisions are made by more than just the founders
Processes around operations & people are formed
Culture is something that is talked about
Things seem bigger and more complex
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This is when accountability and responsibility are passed out the team. Specialist employees focused on individual areas to get a better result, which allows the executive team to focus on strategic direction, risks and opportunities in planning their business:
Specialist team members are hired
Accountability is shared
Leadership teams spend more time working on the business
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Growth Through Coordination
This mature stage of growth focuses more on core competencies and interdepartmental collaboration to achieve the companies objectives. Growth comes from synergy:
The marketplace is mature
Team collaboration is very much a thing
Processes and functions are defined
Workflows and communication tools are present
Roles and responsibilities are clearly defined
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This is where trust is key, with all parts of the company working effectively based on experience and practice. Systems can be simplified for efficiency, learning and development is prominent, and all aspects of the business contribute towards ways to continue success:
Problem solving is actively encourage
Bureaucracy is reduced
There is a direct relationship between reward & performance
Processes are simple and teamwork is the norm
Employees ideas are encouraged and engaged
Awareness of what makes a difference is high
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In a later development Greiner added the alliance phase which focusses on strategic alliances through merger, acquisition, partnerships and associations.
Crisis of Leadership occurring during Creativity
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For start-ups and young companies creativity & innovation create growth. The typically small and informal team are manageable by the founders but scale disrupts this equilibrium. Coordinating processes, communicating and motivating the team, become more difficult resulting in frustration that can only be overcome by a more defined management style.
Crisis of Autonomy occurring during Direction
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The developing company creates independent departments which leads to conflict when strategic decisions are made centrally impacting different parts of the company in various ways. Levels of Autonomy should increase to allow key decision to be owned by the department, however ensuring that everyone is on the same page with the strategy is the key to the business success.
Crisis of Control occurring during Delegation
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As autonomy is given, founders and managers can find it difficult to let go, believing that they can do the job better, particularly with crucial decisions. Communication becomes difficult and problems can occur between management & employees about the best way to do things and even what the objectives are. If left unchecked, this leaves founders & managers feeling like they have to do everything and employees feeling untrusted.
Crisis of Red Tape occurring during Coordination
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Scale brings additional reports, processes and functions, resulting in additional work for employees and risking the wider culture of the business. Decisions are noticeably slower than they used to be and the coveted agility that made the business successful is impacted. This often affects the business commercially, as it is less able to react to the market forces.
Crisis of Growth occurring during Collaboration & Alliances
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The final crisis is one of how to grow. The success of the business becomes something that needs to be repeated, meaning growth. There are lots of potential options here, but one thing is certain. This is the time for a full evaluation and development of a new strategy.
So what?
Leverworks are experienced in helping businesses identify the phase they are in, developing action plans to address the crises and free up founders, managers and employees to grow.
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The first step of change is the discovery, which involves gathering data from all relevant sources. The process is designed to get to the root cause of the business problem/opportunity. This will include review of data, documentation, team members, managers and founders/directors. Quantitative & qualitative analysis of the data gathered is the next step to get a robust and fully-rounded view of the current position. The more accurate that this phase is, the more accurate the options and recommendations are that can be applied to it.
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To make best sense of the gathered information and insight in the discovery phase we map the information as a valuable tool to help make sense of it and identify areas of improvement. They allow for accurate and tangible improvements to be measured and monitored during later stages of the change process.
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Planning the next steps is crucial for good outcomes. Making concise and actionable plans that relate to the business strategy and objectives helps keep the project measurable and on track and acts as the basis for communications.
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Whether this is the structure of the project team, of the business in general and/or the corporate entities, we recognise the significance of ensuring the resources & capabilities are allocated appropriately to support the plans. This requires consideration and may require some changes that should be carefully considered.
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Change requires change, and members of the team respond better to change if it is coordinated with consultation, support and guidance. We work with you to support changes with suitable and adequate training packages that help the implementation and adoption within the business.
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When required we work with teams in organisations to assist the implementation of the change.
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Working with key members of the team we are often asked to continue our support of the business through periods of personal development, helping to install ownership and a spirit of continual development.