Starting Up? Understand the Greiner Curve

By Tim Moore 4x Entrepreneur and Partner

Starting-up can be scary. So many variables, things you've never done (or had to do). At times it will seem like an impossible task. But what if I told you, that most of the unexpected is predictable? That's right. Most of the stress that your new business is going to cause can be expected and planned for..

In 1972, University of Southern California Professor, Larry Greiner outlined the 5 stages (now 6) stages of business growth. Each of these stages bring new crises or transitions to your business. At Blue Haus Group, we like to think of these as opportunities (we're all about positive and certain communication!). To get started, let's check out the stages of growth.

Stages of Growth in the Greiner Curve

• Growth by Creativity
• Growth through Direction
• Growth through Delegation
• Growth through Coordination
• Growth through Collaboration 
• Growth through Alliances

Did you notice that we didn't use numbers in that list? That's because every business may not go through the stages in the same order. Keep that in mind when you're evaluating your start-up and the specific opportunities that you encounter.

Now, generally speaking - growth is great for start-ups; with the exception of rapid growth which may challenge infrastructure and processes to quickly and slow growth which may create cash flow issues. Predictably, growth by nature, brings change/crises and opportunity. The Greiner Curve helps us predict this. With each stage of growth, a crises/opportunity is generated and the resolution allows for wait for it...more growth. Can you see the evolution? It's an unintended outcome, the more your start-up grows, the more the need for formal systems and procedures increases. Let's check out the crises/opportunities.

• Growth through Creativity gives way to Growth through Direction: Crisis Leadership
  • Founders are typically technically skilled or entrepreneurial (go figure!) They typically are not managers and lack the skills to manage their growing business. A change in leadership is typically the first crisis that a growing start-up will face.
• Growth through Direction gives way to Growth through Delegation: Crisis Autonomy
  • As qualified management begin to take responsibility for direction - they begin to demand more freedom. These staff now become Senior Management are allowed to think more strategically. This allows for Growth through Delegation to occur.
• Growth through Delegation gives way to Growth through Coordination: Crisis Control
  • This is where a breaking point occurs. Here is where companies choose to stay small or keep growing. Why here? Great question, pretty simple answer. Here is where the company has grown to a size where it will need to be dramatically more centralized and bureaucratic to achieve its next phase in growth. By remaining small, the Founder/Senior Management essentially agree to only grow to the limit of their own control.
• Growth through Coordination gives way to Growth through Collaboration: Crisis Red Tape
  • As the company continues to grow it becomes more formalized  and formalization brings red tape. (Ironically, it's why most treps started their own business! Obviously a necessary evil.) A new turnover in leadership is typically necessary - individuals with more experience managing complex business operations and procedures. 
• Growth through Collaboration gives way to Growth through Alliances: Crisis Growth
  • In this phase of growth, growth actually is the crisis. Optimizing operations becomes essential to limit internal growth and increase profitability. To pass through this crisis more flexibility is required to operate "lean" and regain the original collaborative nature of the company. Companies in this phase typically look for outside partners to aid in growth, typically by acquisitions and mergers or strategic partnerships.

One of the best way to understand what challenges your business might face, is to work with other individuals who have experience start-up phases or to utilize business mentors. Sometimes one of the most valuable assets a business can have, is an individual with an objective point of view to help navigate storms without the fog of emotional attachment.