When I was a PhD student I read a Harvard Business Review article that had great impact on my thinking about change. This article, penned by Larry E. Greiner, outlined what has become known as the Greiner Growth Model. The original article, Evolution and Revolution as Organizations Grow, first appeared in 1972 and then again in 1998. I have used this article to frame my discussions with hundreds of students and entrepreneurs over the years as they have considered the challenges of change and growth both personally and in their businesses. In particular, for entrepreneurs, his theory helps founders understand why and how they need to modify their organizational structure, systems and leadership as they move from startup to a more mature administratively managed organization.
In the 1998 reprint, Professor Greiner indicates that he drew upon the research of psychologists who suggested that the behavior of individuals is more often determined by what worked in the past rather than what lies in the future. He argued that organizations are the same. To frame his theory, Greiner demonstrates that organizational growth tends to be evolutionary most of the time. That is, for periods of 4-8 years, most organizations will grow with modest rather predictable changes in structure, systems and leadership. However, in the life of organizations there will also be periods of crisis where some major upheaval in the environment or some impact from within the organization or from among stakeholders, will require massive change. These are periods of revolution that usually require significant modification to structure, systems and/or leadership. Furthermore, and what I find most valuable about his work, is that he argues that the very structures, systems, policies, and leadership style that worked in the previous evolutionary period will be the precise reason the organization will stumble or even fail during the new normal, that is, the period following the revolutionary change. In fact, even a brief review of business history demonstrates that those organizational elements often lead to the crisis.
With respect to understanding change and interpreting it via this model, the goal of the leader is to understand where their organization is on the change path and to plan for and adopt an organizational model that will work for the upcoming period. To assist with this task, Greiner provided a framework for what might be expected in each stage of organizational growth. For example, moving from the creative to the administrative stage (the first two stages) he demonstrates that while entrepreneurial leadership is necessary to launch the company, once the company grows and requires more administrative management, directive leadership, which differs significantly from an entrepreneurial approach, is required for the organization to survive. This is why many founders are not the best choice to lead their companies once they reach a certain size and level of complexity.
As I consider Greiner’s work in light of the current period of revolutionary change to our lives and businesses being created by the Covid-19 pandemic, it occurred to me that periods of revolution are some of the most important times in our lives and our businesses. In general, periods of evolution feel easier because we can act more confidently based on data collected from the past. We have learned what works and what doesn’t and we make decisions based on that data. However, periods of revolution are often more interesting and productive. This is where the curve can increase significantly and when we are called upon to be our most creative and innovative selves.
That said, these periods of intense change are not easy. The first challenge with times of revolutionary change is that, like the organizations that Greiner discusses, we have to first accept that change is required and that yesterday’s norm will not fit tomorrow’s needs. This often requires us to act bravely and courageously, focused on purpose and mission, until we have the data (collected through both success and failure of what we try) to build the model for our next phase of evolutionary growth. Then, once accepted, we have to act, even though taking those steps will require decisions made with a great deal of uncertainty and often within a data vacuum.
During a recent conversation on Enfactor, Jason Feifer, Editor in Chief of Entrepreneur Magazine, shared a number of his thoughts on how to navigate this time of significant change. As Jason points out, “this is not wasted time – you are not on pause.” This is an extremely important time. This is a great time to prepare yourself and your company for what’s ahead. Second, he suggests that we have to be willing to embrace change, understand that change is opportunity and to keep in mind that failure is providing us important lessons. This is a time to take action and to avoid analysis paralysis. Third, to avoid being left behind, we must be attached to outcome, not process. This is where our purpose becomes our guide.
The Covid-19 pandemic is bringing very obvious and striking changes for us all. Many people are dealing with sickness, loss of loved ones and loss of employment. Unemployment is rising each day of the quarantine and the economic shutdown of non-essential businesses has left many small and large companies in a precarious situation. But in some ways it may be that the changes that are required now – especially those related to using technology – were on their way and this time period will simply accelerate our acceptance and adoption of the tools that were already available. This may even provide more support for the many companies who seemed a bit ahead of the marketplace. Industry 4.0 was pushing us all toward building up our digital assets but some companies were more prepared for this than others. Those are the companies that are ready for the new normal once we have emerged from this current crisis.
Change is inevitable. Understanding, accepting and adapting to change is important for all of us and is the hallmark of an entrepreneurial mindset. Revolutionary change gives us an excellent opportunity to build our personal and company change management skills because we don’t really have a choice if we plan to survive and thrive in the next phase. And, the positive thing about revolutionary change is that the rewards for adapting to it are often equally monumental.
