The path a business takes as it grows is never a smooth one. As businesses get bigger they face tough challenges that can at times seem to threaten everything they have achieved. These challenges are often logistical and managerial but they can also be cultural and at times psychological.
In this piece I want to look at some of the growing pains that businesses go through as their turnover and size increase. We’ll do this by looking at a specific model called the Greiner curve, which is used by many management consultants to prepare and coach businesses through these difficult periods.
The Greiner Curve
The Greiner Curve is a model of growth that predicts distinct phases of business growth (or evolution) each characterised by a dominant management style and hierarchy. Fundamentally, the model predicts that each of these periods will culminate in an inevitable crisis or pinch point.
Published in in 1972 Greiner’s model regards business growth as evolution, followed by a series of revolutions brought about by predictable crises. These crises are effectively ‘pinch points’ and how an organisation responds and adapts to them will ultimately determine their ongoing success.
Growth ‘pinch points’
Let’s take a look now at five crises that every business can face. These ‘pinch points’ are dependent on organisational size and age so you may have had to deal with one or two of them already.
- Crisis of leadership
Most businesses start small and are defined and shaped by the entrepreneurship of their founders or directors. As the company grows though, the workload and responsibilities of the leadership team increase dramatically, pulling them in different directions. The leadership will begin to struggle to balance executive tasks like R&D, recruitment and business development with the day to day management and administration of the company.
Tips: A crisis of leadership is the first big hurdle any business will face and one that many fall down on. The key to dealing with it is to bring in professional management who can give the company clear leadership and help create more formalised management and communication structure.
- Crisis of autonomy
With a new tier of professional management comes far more formal structure to the business. This process driven structure that helped give direction after the crisis of leadership begins to constrain lower level managers from innovating and taking the initiative, causing them to become disenchanted with the business. As growth persists, the management hierarchy becomes increasingly centralised and constrictive, inevitably leading to a crisis of autonomy.
Tips: Learning the principles of monkey management can really help you survive this crisis by delegating more responsibility and accountability downwards to individual teams and their managers.
- Crisis of control
As more delegation is introduced to combat over centralisation, a crisis can emerge in which top level executives begin to feel like they’re losing control over the company and are unable to steer it.
Tips: It’s always tempting at this stage to return to a more familiar and centralised model but this is the wrong approach. What is needed is a review of key strategic objectives and a redesigning and realignment of the business hierarchy.
- Crisis of red tape
The bureaucracy that more formal systems bring will inevitably lead to a ‘watchdog mentality’, with managers increasingly having to justify their actions to the executive. This pinch point is therefore characterised by a crisis of red tape, with rigid compliance and regulation becoming commonplace. Increasingly, pressure on managers can be from external regulators as well as business HQ.
Tips: Dealing with the stifling effects of red tape involves encouraging a culture of innovation, open debate, challenge and even dissent.
- Crisis of Identity
As businesses grow to a certain size they may find that the ability to deliver future desired growth can no longer be found internally. Leadership teams then turn externally to search for opportunities to collaborate or perhaps even to acquire other companies. This can lead to a crisis of identity where people may feel that the company culture and ‘way of doing things’ is being threatened.
Tips: Managing people in any pre-deal with another company is crucial. Try to understand the external company’s core values and culture and identify ways you can integrate that into your own company culture. Change management is key to this process, so making sure your managers are up to speed and competent to lead change is important to a smooth transition.
The challenges a business can face are of course not limited to these five pinch points. Changes in industry legislation, external competition, economic recession, as well as internal crises of mismanagement or even fraud can all present significant challenges to a business’s survival. What’s more they can occur at any time and without warning.
What Greiner’s model helps us understand are predictable structural and organisational challenges that come from the increasing complexity common to all organisations as they grow. Whilst learning to recognise and deal with them may not weatherproof your business from every single future challenge, it will help you forge a business that is adaptable and can endure long into the future.
For more information on the challenges and growing pains of high business growth, download our whitepaper.
By Peter Quintana, Director of High Growth Knowledge Company