Evolution and Revolutions as Organizations Grow

Harvard

Business Review

July-August

Larry E. Greiner

Evolution and revolution as organizations grow

A company's past has clues for management that are critical to future success

Foreword

This author maintains that growing organizations move through five distinguishable phases of development, eacb of wbicb contains a relatively calm period of growth that ends with a management crisis. He argues, moreover, that since each phase is strongly infiuenced by the previous one, a management with a sense of its own organization's history can anticipate and prepare for the next developmental erisis. This artieie provides a prescription for appropriate management action in each of the five phases, and it shows how companies can turn organizational crises into opportunities for future growth, Mr. Greiner is Associate Professor of Organizational Behavior at the Harvard Business School and is the author of several previous HBR articles on organization development.

A

small research company chooses too complicated and formalized an organization structure for its young age and limited size. It flounders in rigidity and bureaucracy for several years and is finally acquired by a larger company. Key executives of a retail store chain hold on to an organization structure long after it has served its purpose, because their power is derived

from this structure. The company eventually goes into bankruptcy. A large bank disciplines a "rebellious" manager who is blamed for current control problems, when the underlying cause is centralized proAutbor'a note: This article is part of a continuing project on orsanization development with my colleague, ProfessoT Louis B, Barnes, and spnnsotL'd by the Division of Research, Harvard Business School.

Harvard Business Review: Iiily-August 1972

cedures that are holding back expansion into new markets. Many younger managers subsequently leave the bank, competition moves in, and profits are still declining. The problems of...