Magazine article Teaching Business & Economics

Greiner's Model of Growth

Magazine article Teaching Business & Economics

Greiner's Model of Growth

Article excerpt

With the change in specification due to take effect from September many teachers are busy preparing. This article looks to the new AQA specification as an example and looks to explain this new topic and hopefully will provide helpful ideas on how to deliver it to your students.

In 1972 Larry Greiner published an article in the Harvard Business Review (Evolution and Revolution as Organizations Grow) that summarised his theory.

The Theory

Greiner reviewed previous research into organisational change and proposed that organisations spend too long and too much money analysing the external environment and should consider moving the emphasis back to looking at their organisations and processes - their history, where they are now and what their objectives are - in order to for them to manage change more effectively.

He professed that organisations should consider five dimensions as part of this process:

* Age;

* Size;

* Stages of evolution;

* Stages of revolution; and

* The growth rate of its industry.

The chart (top right) illustrates the five phases that Greiner theorised organisations tend to go through in the pursuit of growth. At the start of each phase the organisation goes through a period of evolution with employees enjoying the new environment and this being demonstrated with steady growth. However, at the end of each phase there is a "revolutionary period of substantial organizational turmoil and change" and it is the management of this period that is critical to an organisations continued growth.

A great strength of business studies is being able to use real life examples such as Tesco to help students understand theories. Tesco is a great current example of the difference between evolution and revolution in the context of this theory. Tesco has enjoyed a substantial period of evolution - the business has continued to grow over a long period of time, without significant setbacks to its growth. However, at present, it is undergoing a period of revolution - the introduction of new leadership and a changing dynamic of the market it operates within being two indicators that link to Greiner's five dimensions.

By using such dimensions an organisation should be able to accurately identify its current growth phase (see below) and therefore plan to effectively manage the revolution stages of the crisis.

Tesco of course is a mature organisation that is going through a period of revolution. Using 'Business Case Studies' (http://businesscasestudies. co.uk/#axzz3QVn9a3N7) we can see that Tesco has become centralised, with managers being responsible for their branches, but having to justify their decision making to head office. Thus this can be identified as the prelude to the 'red tape' crisis - communication is impersonal, with allowances for local conditions being downgraded. Tesco's main issue is that the market has changed (e.g. the growth of discount retailers such as Aldi) and it can be implied that Tesco's size (number of branches and the large number of different sectors it is targeting) has impeded its own reaction.

Since January Tesco has taken the initial steps of closing loss making stores, selling off none core businesses and has started a new partnership with regard to market research. However, it is the internal policies and processes that are developed to meet current needs that will determine how Tesco manages this crisis. From our perspective this is the difficulty with Greiner - how do we and our students find out how an organisation really effectively manages a revolution stage?

One answer may be to use local entrepreneurs as guest speakers. …

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