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Relevance of larry greiner s developmental phases

Crisis of 1 Creativity: In this early stage, there are only few people in the company. They know each other well and share their experience, knowledge, and information. All relevant issues are discussed among all people.

This is the typical creative start-up culture. As the company gets larger, it gets increasingly difficult to do everything in a mutual effort. They have problems to distinguish important from unimportant issues, since there are few or no organizational structures that allow allocating work to certain persons.

The company needs a strong leader who holds the team together and establishes appropriate systems and structures. Now the company is able to direct certain issues and tasks to certain people.

Normally, directives and control are highly centralized at this stage. If the company continues to grow, this leads to an extremely high workload for the manager or the management team. They have to handle nearly everything in the company.

They are responsible for assigning tasks, controlling results, acquiring work, solving problems, motivating people etc.

The Greiner Curve

As the company reaches a certain size, management will relevance of larry greiner s developmental phases be able to continue this way. They have to give up some of their autonomy and to share some tasks. Management delegates some tasks, functions and authorities to other people in the company. Departments emerge and develop their own dynamics. If management now fails to control the activities of these departments, they would start to handle tasks more from their own view than with the whole business in mind.

At its extreme, departments would work against each other. Projects and tasks are coordinated between all parts and departments of the company so that they are well in tune with each other. This coordination can lead to a high level of bureaucracy. Fine-tuning requires high efforts that make it difficult for the company to adapt to changes in the external environment. The co-operation between all parts of the company is so well organized that they really can work together effectively in whatever situation.

Nevertheless, doing business is never easy and the next crisis is waiting for sure. Each of these phases of growth, evolution and revolution is marked by particular experiences of the members of the organization. In the beginning of each phase, all processes work smoothly.

Than, the organization develops on. Very few businesses initiate change processes before they reach a really unacceptable situation.

  • Plan and take preparatory actions that will make the transition as smooth as possible for you and your team;
  • This phase ends with a Leadership Crisis, where professional management is needed;
  • Than, the organization develops on;
  • Stages of corporate citizenship:

In such a situation of crisis, it is time for change. These changes have to be implemented, controlled, and modified in order to achieve a new fit between organizational needs and its structures and processes.

Relevance of larry greiner s developmental phases

That means, however, that all members of the organization have to go through these phases of learning and development. A corporation that started the year with 10 people and that has 250 people at the end of the year has to go through three to four phases within twelve months! It is questionable, if really all processes, structures and skills including leadership skills and mindset of the management team can keep up with that speed.

  • As workloads increase exponentially, approaches which have worked well in the past start failing;
  • Growth Through Direction Growth continues in an environment of more formal communications, budgets and focus on separate activities like marketing and production;
  • The company needs a strong leader who holds the team together and establishes appropriate systems and structures;
  • Incentivize and reward you team differently?

Due to the several crises of growth, the implications of extreme growth on costs are enormous. Many once ambiguous Internet-start-ups who suffer from extreme costs are evidence for this.


Managers must keep in mind that growth in itself is not necessary equal to shareholder value. Shareholder value comes from profits, not from increasing revenues. The following factors determine a healthy and sustainable growth: