As the business word is exponentially increasing in size and complexity, it becomes harder and harder to deal with the challenges that come along with expansion. A model that addresses this model is Greiner’s model and it looks into how companies can grow and overcome the challenges that they face as they evolve as a business. The model was developed in the 1970s and is becoming more and more relevant to today’s chaotic business landscape. Greiner’s model was originally compromised by five phases; but a sixth phase was later on added.
As organizations initially grow bigger through the creative direction of their founders, it is highly likely that they will soon face a leadership crisis in which a management structure is deemed vital. In order to advance to the next phases, the organization will need to create a clearly-defined management structure by hiring talented leaders to lead the team.
Moving on, as the organization continues to expand and objectives are becoming more well-defined, it is probable that a crisis of autonomy will come along the way. At this stage, a clearer structure needs to be laid out and hierarchies need to be highlighted. Here, delegation of tasks is crucial and top management focuses on more important matters rather than daily operations.
An expansion through delegation will lead to the crisis of control in which top tier management lose their involvement in day-to-day operations and therefore communication with lower organizational levels is lost. In order to progress to the fourth phase, the business will need to standardize some of its procedures and follow a more sophisticated approach in which the various organizational areas work well together.
In this phase, new procedures and policies are brought into play. Although they help to create structure and ensure consistency across the organization, they often lead to the crisis of red tape in which a bureaucratic system is developed. To advance to stage five, the company needs to allow more autonomy by investing in highly talented team leaders and managers.
At this stage, the company attempts to overcome the red tape crisis by allowing flexibility and versatility within the organization. Here, it is important that complex systems are simplified and that increasing importance is placed in the team’s collaboration. While this approach is successful to begin with, it later leads to the crisis of internal growth in which the company needs to look in the external environment for new opportunities.
In this final phase, the company can seek for new opportunities outside of the organization through alliances and partnerships with other organizations. This many include mergers, acquisitions or outsourcing. This phase runs the risk of the crisis of identity, and if this happens the organization must refocus its mission and align its strategy back to its original vision.