5 Roadblocks to Sustained Business Growth

Author
Kim Jones
Director | High Growth Knowledge Company
22nd February 2016

Business growth can be a double edged sword. While most of us want nothing more than to see our businesses grow continually over the years, there are a whole host of inherent internal challenges that the process of growth creates within any organisation.

These challenges can be seen as roadblocks to sustained business growth and in 1972 a man called Larry Greiner created a model for not only predicting them but understanding them.

The Greiner Curve and the Evolution Revolution Cycle

Updated in 1998, the Greiner curve is used by management consultants and business leaders to understand why specific structural and managerial crises emerge and how to deal with them.

These crises, or ‘pinch points’, are entirely predictable and are brought about by the dominant management structure and organisational hierarchy that has come before.

Greiner’s model predicts that businesses will go through periods of natural and relatively stable growth before their size and dominant management style precipitates a crisis.

Each of these crises requires a reappraisal of the previous approach. This is known as the evolution revolution cycle and all businesses go through it as they grow.

Overcoming Roadblocks to Growth

There are five crises in Greiner’s model of growth and each is preceded by a period of stable evolution. Let’s look at each in turn.

1. A Crisis of Leadership

When businesses begin growth is defined by the entrepreneurship, innovation and creativity of their founders or directors.

As the organisation grows though, this hands on approach begins to experience tensions as central leadership find themselves increasingly drawn into day to day administration and management. The initial phase of growth through creativity inevitably leads to a crisis of leadership.

Solutions:

  • Professional management is brought in to give direction
  • Budgets and work standards are introduced to give more organised structure
  • More formal communication, accounting and customer management systems 

2. A Crisis of Autonomy 

With a professional management team in place a more formal structure is established, but as teams develop and grow the business becomes more complex.

The structures and processes that previously helped to focus the business and give it direction, become restrictive to employees who are becoming increasingly specialised in their respective fields. The resultant crisis is one of autonomy as the desire for the freedom to take the initiative grows. 

Solutions:

  • More decentralised management structure with operational and market responsibility delegated
  • The evolving leadership team will limit itself to management by exception
  • Business leadership will focus on key strategic work
  • Decision making from the top is less reactive and based more on periodical reporting

3. A Crisis of Control

Decentralisation and more delegation allows the business to flex more, penetrating new markets and taking advantage of new opportunities as and when they present themselves.

As the organisation grows though, the autonomy of lower level management threatens to spiral into a crisis of control, with the business leadership trying to pull back together an increasingly fragmented and diversified team.

The natural tendency here is for businesses to reintroduce more centralisation but a more fundamental shift is needed.

Solutions:

  • A fundamental review of key strategic objectives and a redesign of business structure 
  • New product groups or service lines are created and are treated as investment centres 
  • Decentralised teams are merged into these product groups / service lines
  • Capital expenditure weighed up and allocated according to ROI
  • More formal planning 

4. A Crisis of Red Tape

The revolution that a crisis of control precipitates allows the business leadership to formalise and give more structure and accountability to the business as a whole.

Eventually, however it will lead to a crisis of red tape, characterised by stifling bureaucracy and a focus on compliance, regulation and procedure over innovation and problem solving. The rigidity that helped the business overcome a lack of control now threatens to constrain the organisation and the talent that works for it.

Solutions:

  • Innovation, debate and even dissent are encouraged
  • Teams are brought together across various functions of the business to collaborate on solving specific problems
  • Matrix type management structures can be used to assemble the best teams for specific jobs
  • Educational programs to train key managers
  • Rewards introduced for teams as opposed to individual work

5. A Crisis of Identity

With the crisis of red tape headed off we now enter a period of growth through collaboration with a less rigid structure. After this stage many businesses will find that the path to more growth lies externally, through outsourcing, collaboration, acquisition or even mergers with other organisations.

Understandably this can cause a crisis of identity, with employees finding the business changing rapidly with new staff and new direction.

Solutions:

  • Training of key managers in change management
  • Inclusion of people and culture in due diligence

Conclusion

Greiner’s model for growth can’t predict every roadblock to growth that a company will come across as many of these are inherently unpredictable.

Factors like recessions, market trends and technological innovation can all hamper your businesses ability to grow.

What the evolution revolution cycle does do however is offer us a way of predicting the internal challenges that come from growth and that’s what makes it a powerful tool.


About the Author

Kim Jones is Director of Bristol based management consultancy, High Growth Knowledge Company. She has many years of experience working with established companies and organisations in a number of industry sectors, from healthcare to retail and higher education, helping directors and business leaders overcome the challenges of managing sustainable growth.

You can connect with HGKC on Twitter, Google Plus and LinkedIn or call them on 0117 332 1002.

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