Additional Tool: Evolution Revolution

"Evolution and Revolution as Organizations Grow" by Larry E. Greiner

Source: Mainiero, L. and Tromley, C. Developing Managerial Skills in Organizational Behavior: Exercises, Cases, and Readings (Englewood Cliffs, NJ: Prentice Hall) (2d ed. 1994), pp. 322-329. (Originally published in Harvard Business Review, 1972)

Executive Summary:

Larry E. Greiner's "Evolution and Revolution as Organizations Grow" proposes a model of organizational development characterized by alternating periods of evolution (sustained growth with minor adjustments) and revolution (periods of significant internal turmoil and upheaval of management practices). The article posits that organizational growth is not linear but cyclical, with each evolutionary stage inevitably leading to a revolutionary crisis. The key to successful growth lies in understanding these phases, recognizing the limitations of past solutions, and proactively adapting management practices to address the emerging crisis and pave the way for the next evolutionary stage. The model outlines five distinct phases, each with a characteristic management style and a corresponding crisis. Understanding these phases allows managers to anticipate and manage organizational change more effectively.

Key Themes and Ideas:

• The Importance of History: The article emphasizes that an organization's past decisions and experiences significantly influence its future trajectory. "The future of an organization may be less determined by outside forces than it is by the organization's history." Ignoring this history can lead to companies becoming "frozen" or failing.
• Evolution and Revolution: Greiner defines evolution as prolonged periods of growth without major upheaval, and revolution as periods of substantial turmoil in organizational life. Each evolutionary period inevitably leads to a revolution as existing practices become inadequate.
• Five Phases of Growth: The article identifies five phases of organizational growth, each with its own evolutionary management style and revolutionary crisis:
• Phase 1: Creativity -> Leadership Crisis: Focus on product and market creation with informal communication and long hours. The crisis arises when the founders lack the managerial skills to handle growth, necessitating a strong business manager.
• Phase 2: Direction -> Autonomy Crisis: Functional structure, formal communication, and centralized decision-making. The crisis emerges as lower-level employees demand more autonomy and initiative.
• Phase 3: Delegation -> Control Crisis: Decentralized structure with profit centers and bonuses. The crisis arises when top executives feel they are losing control over diversified operations.
• Phase 4: Coordination -> Red Tape Crisis: Formal systems, procedures, and staff personnel for coordination. The crisis emerges from a lack of confidence between line and staff, and bureaucratic processes hindering innovation.
• Phase 5: Collaboration -> ? Crisis: Emphasis on teamwork, interdisciplinary teams, and flexible problem-solving. Greiner speculates the crisis will involve psychological saturation of employees due to intense teamwork, suggesting a need for structures that allow for rest, reflection, and revitalization.
• The Cyclical Nature of Solutions: Solutions that effectively address a revolutionary crisis eventually sow the seeds of the next crisis. "Companies therefore experience the irony of seeing a major solution in one time period become a major problem at a later date."
• Contingency Factors: The speed at which an organization moves through these phases depends on factors like the age and size of the organization, the growth rate of the industry, and the specific market environment.
• Limitations on Solutions: Each revolutionary stage can only be resolved by specific solutions, different from those applied in previous revolutions. Returning to old solutions prevents further growth.
• The Need for Proactive Management: Managers should be aware of their organization's current developmental stage, anticipate upcoming crises, and be prepared to implement new structures and practices proactively. Ignoring this can cause severe consequences.

Key Quotes:

• "The future of an organization may be less determined by outside forces than it is by the organization's history."
• "Companies fail to see that many clues to their future success lie within their own organizations and their evolving states of development."
• "As a company progresses through developmental phases, each evolutionary period creates its own revolution. For instance, centralized practices eventually lead to demands for decentralization."
• "Companies therefore experience the irony of seeing a major solution in one time period become a major problem at a later date."
• "Each phase results in certain strengths and learning experiences in the organization that will be essential for success in subsequent phases."
• "Realize that solutions breed new problems. Managers often fail to realize that organizational solutions create problems for the future (i.e., a decision to delegate eventually causes a problem of control)."

Implications for Managers:

• Understand Your Organization's Stage: Managers must accurately assess their organization's current stage of development to anticipate future challenges and opportunities. "Every organization and its component parts are at different stages of development. The task of top management is to be aware of these stages; otherwise. it may not recognize when the time for change has come, or it may act to impose the wrong solution."
• Anticipate and Prepare for Revolutions: Rather than avoiding revolutions, managers should recognize them as necessary catalysts for change and proactively prepare solutions.
• Adapt Management Styles: Be willing to adapt management styles and structures as the organization evolves, even if it means stepping down from leadership positions.
• Don't Revert to Old Solutions: Recognize that past solutions may not be applicable to current problems and be open to implementing new and innovative approaches.
• Consider the Long-Term Consequences: Understand that current decisions will have implications for the organization's future and plan accordingly.
• Be Willing to Dismantle Existing Structures: Evolution isn't guaranteed, so it is important to be willing to dismantle current structures for needed structural adjustments.

Conclusion:

Greiner's model provides a valuable framework for understanding the complexities of organizational growth. By recognizing the cyclical nature of evolution and revolution, managers can proactively address emerging challenges, adapt their leadership styles, and guide their organizations towards sustained success. While the model is not without its limitations (as Greiner himself acknowledges), it offers a powerful lens for analyzing organizational dynamics and making informed decisions about the future.

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