In this two-part blog series, we will answer the question - Why would I care about managing change when my organization won’t undergo change initiatives? Last week, we explained the background of why companies change and introduced the Grenier model. This week, we will explain how the Grenier model applies to organizational growth in six phases. To read last week’s blog post, click here.

Regardless of industry, we would expect organizations to encounter the phases and crises on the Greiner curve in roughly the same order. Each crisis presents a unique demand to change, and each change initiative must be properly managed to move the organization into its next phase of growth. Change projects that fail endanger the organization’s future success.

  • The first stage is growth through creativity, where the organization is in its very beginnings. Communication between a small number of individuals is informal, and employees work in multiple roles. Long hours of hard work are required with a promise that when the company begins to prosper, so will the employees.

    • This stage begets a crisis of leadership. The scaling of the company requires the hiring of talented professional management; management with the knowledge and skills to pull the organization together and direct it in a prosperous direction. This can lead to conflict with founders of the organization, who are often (though not always) temperamentally not suited to move the organization forward.

  • The second stage is growth through direction, where the complexity of the organization begins to increase as functional organizational structure is developed to separate manufacturing/service provision from marketing activities. Accounting systems, incentives, budgets, and work standards are introduced. Communication becomes more formal.

    • As the scale of the work becomes too large for the new management to directly monitor, the company encounters the crisis of autonomy, where delegation of work and authority must begin in order for the company to continue to grow. It can be difficult for upper-management to give up responsibility to lower-level managers, who in return might not be familiar with new direction-setting responsibilities.

  • The third stage is that of growth through delegation. A decentralized organizational structure emerges, in which greater responsibility is given to management overseeing plants or a given territory. The organization grows through the motivation of managers at lower levels, who, with their greater authority, can penetrate larger markets and manage a broader scope of work. The organization begins to acquire outside enterprises which align with its goals.

    • As the organization diversifies, and decentralized units begin to operate by coordinating less with the rest of the organization, top-level executives encounter the crisis of control. This can be an especially precarious moment for an organization, as the re-imposition of a strictly centralized management structure can undermine the benefits the company enjoyed through delegation. Companies that survive this crisis find innovative ways to coordinate among the decentralized units.

  • The fourth stage is growth through coordination. Specialized technical functions are centralized in a headquarters, though daily operating decisions remain decentralized. Decentralized units are formed into product groups, and each product group is evaluated by ROI, with these measures allocating funds across the company. New procedures continue to be implemented and formal planning is adopted, allowing the company to more efficiently allocate its resources.

    • This new coordination leads to the crisis of red tape, where bureaucracy becomes burdensome, and the rigidity of these new coordination systems undermine innovation. Formal procedures are unable to manage the size and complexity of the organization.

  • The fifth stage entails growth through collaboration. The rigid processes and formal controls are relaxed, and emotionally intelligent leaders use their good judgement to promote a culture of collaboration. A range of flexible, scalable, and agile systems allow the organization to continue with high performance while experimenting with new practices.

    • As the fifth stage is the last of the “observable” phases, it results in the company reaching the crisis of internal growth where additional growth can only come by developing partnerships with complementary organizations. If these partnerships or alliances are not created, the company risks overloading its existing systems.

  • The sixth and final stage is growth through alliances, where the organization turns to alliances, mergers, outsourcing, and other solutions involving extra-organizational entities for growth. All of these strategies can independently entail high levels of change.

So, in short, all organizations will undergo large change initiatives within their lifespan. Some might encounter them frequently, and others might not encounter them more than once or twice a decade. But change is inevitable, and is a crucial component to every organization’s survival.

Food for thought:

  • What stage of the Greiner Curve is your organization in?

  • Are you in a high-growth or low-growth industry? How does this affect your anticipated rate of changes?

  • What’s the next crisis ahead of your organization on the Greiner Curve?

  • What changes will your organization need to undergo to successfully reach the next stage of growth?

  • How will you support these changes? Is there preparation you can begin now? What risks and rewards can you see from making the change?

To find out more about how we can help your organization manage change, contact us.

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