Episode 3 – Evolution and Revolution
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A classic model for organizational growth was created by Greiner in his 1972 article “Evolution and Revolution as Organizations Grow”. Although the article is originally 50 years old (it was updated in 1998), I still find it an insightful read. We may tend to think of organizations as evolving continuously. This is partly due to a bias in Western thinking towards gradualism – the idea that change is slow and progressive. However Greiner suggested an alternative model.
This podcast is AI-generated based on material from the “Agile Plays” website and book.
Transcript
Alright. So today, we're diving into this whole idea of scaling organizations. Okay. But we're not just looking at it from any angle. Yeah.
We're going deep on how a company structure, like, really needs to evolve as it grows. And, you know, to help us with this, you sent over Greiner's classic HBR paper, evolution and revolution as organizations grow Yeah. Which I think is practically required reading in any business school. It's a classic for a reason. You know, Greiner's model, Even though it was published way back in 1972, it's still surprisingly relevant to how companies today are grappling with growth.
You know, it's almost like he laid out this road map of predictable crises. Okay. So so if it's a road map, let's start right at the beginning. Yeah. Greiner talks about these distinct phases of growth, each ending with, you know, a specific kind of crisis.
So where does it all begin? Well, picture a company in its infancy. You know, that very first phase, the creativity phase. It's all about the founders, their vision. Mhmm.
You know, just making something new. They're just laser focused on the product, finding that product market fit. Formal structures, probably nonexistent. It's all hands on deck, fueled by passion and long hours. So it's that classic startup energy.
Right? Everyone wearing multiple hats. Does decisions happening quickly. Not a lot of bureaucracy. But then what happens as the company starts to find success?
That's where things get interesting because the very things that made them successful in phase 1, that informality, the founder driven decisions, they start to become liabilities as the company grows. And this is what Greiner calls the crisis of leadership. The organization is getting too big. For the founders to manage everything personally, they need more structure, they need delegation, but that can often clash with the founder's control and how they've always done things. So it's like they've outgrown their initial operating system.
You can almost feel the tension building. So what's the solution? How do companies navigate this first crisis? So they move into what Greiner calls the direction phase. This is where more formal structures begin to emerge.
You'll see departments forming, the introduction of middle management, and a clearer hierarchy. Think of it like installing a basic management framework. It allows for more specialization and control. Okay. So a bit more order, a bit more delegation.
That makes sense. But I'm guessing it's not all smooth sailing from there. You're right. Because as the company grows even larger and it adds more layers of management, you get to what Greiner calls the crisis of autonomy. Now it's those middle you get to what Greiner calls the crisis of autonomy.
Now it's those middle managers who are feeling the squeeze. They have the on the ground knowledge. They see the problems and opportunities, but they're stuck waiting for decisions to trickle down from the top. It sounds like the very structure that was put in place to solve the first crisis is now creating new one. It makes me think about that idea of companies becoming too rigid, too inflexible to get up with chain That's exactly what Grainner's getting at.
Unless the company adapts, its organizational structure and its management style again, this crisis of autonomy can really stifle growth. And this isn't just a historical problem. We see this all the time in modern companies. So if we're drawing parallels to today, what are some signs that a company might be stuck in this crisis of autonomy? What should leaders be looking out for?
That's a great question. One big red flag is if decisions are constantly bottlenecked at the top, if middle managers are feeling disempowered, and there's a lack of initiative at lower levels, it could be a sign that the structure is hindering more than it's helping. It sounds like it comes down to trust, doesn't it? Trusting your people to make decisions and take ownership. But how do you balance that with maintaining control, especially as a company scales?
That's the $1,000,000 question, and it's where Greiner's model gets even more interesting. As we move into the later phases, he argues that each crisis requires a fundamental shift in how the company is structured and managed, and those shifts aren't always easy. Okay. I'm hooked. We've laid the groundwork with these first three phases, but I'm ready to hear what happens next.
Let's keep going. So we left our company teetering on the edge of this crisis of autonomy. You know, they've got this growing layer of middle management that's both crucial and increasingly frustrated. Yeah. I can imagine those middle managers feeling like there's increasingly frustrated.
Yeah. I can imagine those middle managers feeling like they're stuck between a rock and a hard place. You know? They they wanna drive things forward. Yeah.
But they feel held back by the top down decision making. Exactly. So according to Grainer, the natural progression is to move into what he calls delegation phase 4. This is where companies try to address that autonomy problem. By pushing more decision making power down the hierarchy, you'll see things like profit centers, bonuses based on unit performance, more decentralized control.
So it's almost like trying to recapture some of that early start up spirit where teams had more ownership and could move faster. But does it work? It can to a point. Delegation does allow companies to grow and become more responsive to local market conditions. But as Greiner points out, there's a catch.
This increased freedom can lead to what he calls the crisis of control. Okay. So another crisis. What does this one look like? Imagine you're the CEO.
You've delegated all this authority, but now you're starting to feel like things are spinning out of control. Different divisions are pulling in different directions. There's a lack of coordination, and you're worried about losing sight of the overall strategic vision. It's like the company has become a fleet of ships all sailing at different directions. They might be individually successful, but they're not working together effectively.
That's a great analogy, and this is where a lot of companies make a crucial mistake. They try to solve the crisis of control by clamping down, imposing stricter rules, and centralizing decision making again. But that just stifles the autonomy they were trying to foster, and it creates a whole new set of problems. It's like trying to herd those ships back together by tying them all to a giant anchor. You might regain control, but you lose all your agility and speed.
Exactly. So to move past this crisis, Granite suggests that companies need to evolve yet again into phase 5 coordination. This is where they start to build. More sophisticated systems for coordination and control, but without reverting to a purely top down approach. So what does that look like in practice?
Think formal planning processes, standardized reporting systems, centralized staff functions that support the entire organization. It's about creating a framework that allows different parts of the company to work together smoothly without stifling their individual initiative. It sounds like finding that sweet spot between autonomy and control is a constant balancing act. It absolutely is. And Greiner doesn't sugarcoat it.
He argues that even this phase of coordination eventually leads to its own crisis, which he calls the crisis of red tape. Oh, no. Not another crisis. What happens this time? All those systems or processes Mhmm.
That were put in place to coordinate things start to become overly cumbersome. There's too much bureaucracy, too many approvals needed for every decision, and the organization starts to feel slow and inflexible. It's like that fleet of ships is now bogged down by a complex web of regulations and protocols. It sounds like a classic case of good intentions gone bad. You try to create order, but you end up creating a system that's too rigid to respond to changing conditions.
That's the danger. And to overcome this crisis of red tape, Greiner proposes a shift towards what he calls collaboration, which is phase 6. Collaboration. That sounds promising. But how do you move a company from a culture of red tape to a culture of collaboration?
This is like a pretty big leap. It is a big leap, and Grainner acknowledges that. It requires a fundamental shift in mindset from relying on formal systems to embracing a more fluid team based approach. It's about breaking down silos, encouraging open communication, and building trust across different parts of the organization. This is making me think about all those articles we've been reading about agile methodologies and the importance of self managing teams.
It seems like they're all trying to address these same challenges of flexibility and responsiveness. They absolutely are. And those ideas, even though they weren't as prevalent back when Greiner was writing, they align really well with this concept of collaboration as a way to break free from those rigid structures. So are you saying that Greiner, even though he was writing decades ago, essentially predicted the need for these more agile, collaborative ways of working? I think there's a strong argument to be made for that.
Greiner understood that as organizations grow, they need to find ways to balance control with autonomy, efficiency with flexibility. And those are the same challenges that companies are grappling with today, just on an even larger scale. Okay. We've covered a lot of ground here. From the early days of a start up to this idea of embracing collaboration to overcome bureaucracy.
But Grinder's model goes even further right. There's at least one more phase. You're right. Phase 7 is alliances. But Grinder is a bit more vague about what this phase entails.
He suggests that as organizations reach a certain size and complexity, they need to look beyond their own internal structures and start forming strategic partnerships and alliances to continue growing and innovating. So it's like that fleet of ships is now so large and diverse that it needs to start collaborating with other fleets to explore new territories and achieve even bigger goals. That's a great way to visualize it, but the core principle remains the same, to keep evolving, to keep adapting to the challenges growth, and to avoid becoming trapped by the very structures that were initially created to help you succeed. This has been incredibly insightful. Grinder's model, even though it's from another era, feels surprisingly relevant to how we think about organizational growth today.
Is there anything else from the later phases that you think is particularly important for listeners to understand? You know, one thing that really stands out to me from Greiner's later phases is this emphasis on moving beyond purely internal solutions. Like, as organizations grow, they need to become much more Like, as organizations grow, they need to become much more adept at leveraging external partnerships, collaborations, even mergers and acquisitions if they wanna keep expanding their reach and their capabilities. Yeah. It's almost like acknowledging that.
No single company, no matter how large or successful, can really do everything on its own anymore. Like, they need to become part of a larger ecosystem. Exactly. And that requires a whole different set of skills and mindsets. It's not just about managing those internal hierarchies and processes anymore.
It's about building relationships, navigating those complex networks, and finding ways to create value through collaboration. This makes me think about all the challenges that large organizations are facing today. It's not just about scaling up production or expanding into new markets. It's about adapting to a world where innovation is happening at this unprecedented pace and competition is coming from all these unexpected places. You hit the nail on the head.
The companies that thrive in this environment are the ones that can embrace change, that can constantly evolve their structures and their strategies to keep pace with what's happening around them. They're the ones that can move beyond those predictable crises that Greiner outlines and find new ways to grow and innovate. It sounds like a pretty tall order. But Greiner's model, even though it's focused on these phases and crises, ultimately offers a message of hope, doesn't it? It suggests that even though growth is messy and challenging, there are ways to navigate those challenges and come out stronger on the other side.
I think that's a great takeaway. Greiner's model isn't about predicting doom and gloom for growing companies. It's about providing a framework for understanding the predictable challenges of growth so that leaders can anticipate them, prepare for them, and ultimately use them as opportunities to evolve and become more resilient. Well, this has been a fascinating deep dive into the inner workings of organizational growth. Greiner's model with its phases and crises provides a powerful lens, I think, for understanding not just the historical patterns of how companies evolve, but also the challenges and opportunities facing leaders today.
I agree. And I think one of the most valuable lessons from Briner is that there's no one size fits all solution to scaling an organization. It's a journey of continuous adaptation, experimentation, and learning. And the companies that embrace that journey, the ones that are willing to constantly question their assumptions and evolve their approaches are the ones that are most likely to thrive in the long run. So as we wrap up, what's one final thought you'd leave our listeners with?
As they think about their own organizations and the challenges of growth that they're facing? I'd say this. Don't be afraid to question the status quo. Don't assume that what worked in the past will continue to work in the future. Embrace the idea of continuous evolution and always be looking for ways to make your organization more adaptable, more responsive, and more resilient in the face of change.
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