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The Greiner Curve

Understanding and overcoming the crises of growth.

By the Mind Tools Content Team

Fast-growing companies can often be chaotic places to work.

As workloads increase exponentially, approaches which have worked well in the past start failing. Teams and people get overwhelmed with work. Previously-effective managers start making mistakes as their span of control expands. And systems start to buckle under increased load.

While growth is fun when things are going well, when things go wrong, this chaos can be intensely stressful. More than this, these problems can be damaging (or even fatal) to the organization.

Growth can be painful but you can make it easier by preparing. Learn how with our video and transcript .

The "Greiner Curve" is a useful way of thinking about the crises that organizations experience as they grow.

In this article, we'll learn more about the Greiner Curve, and how you can use it to understand the root cause of the problems you're likely to experience in a fast-growing business, as well as how to prevent them.

What Is the Greiner Curve?

The Greiner Curve (shown in figure 1, below) describes the different phases that organizations go through as they grow. All kinds of organizations – from design shops to manufacturers, construction companies to professional service firms – experience these.

Each growth phase is made up of a period of relatively stable growth, followed by a "crisis" when major organizational change is needed if the company is to carry on growing.

Figure 1. The Greiner Growth Model

business growth curve model

Reprinted by permission of Harvard Business Review . From " Evolution and Revolution as Organizations Grow " by Larry E. Greiner, May 1998. Copyright © 1998 by the Harvard Business School Publishing Corporation; all rights reserved.

Although the word "crisis" is often linked to a state of panic, it can also mean "turning point." While companies certainly have to change at each of these points, if they properly plan ahead, there is no need for panic, and so we will call them "transitions."

The Six Phases of Growth

Larry E. Greiner originally proposed the Greiner Curve (also known as the Greiner Growth Model) in 1972 with five phases of growth. In 1998, he added a sixth phase in an updated version of his original article. [1]

The six growth phases are described below:

Phase 1: Growth Through Creativity

Here, the entrepreneurs who founded the firm are busy creating products and opening up markets. There aren't many staff, so informal communication works fine, and rewards for long hours are probably through profit share or stock options.

However, as more staff join, production expands and capital is injected, there's a need for more formal communication .

This phase ends with a Leadership Crisis , where professional management is needed. The founders may change their style and take on this role, but often someone new will be brought in.

Phase 2: Growth Through Direction

Growth continues in an environment of more formal communications, budgets and focus on separate activities like marketing and production. Incentive schemes replace stock as a financial reward.

However, there comes a point when the products and processes become so numerous that there are not enough hours in the day for one person to manage them all, and they can't possibly know as much about all these products or services as those lower down the hierarchy.

This phase ends with an Autonomy Crisis in which new structures based on delegation are needed.

Phase 3: Growth Through Delegation

With mid-level managers freed up to react faster to opportunities for new products or new markets, the organization continues to grow. Meanwhile, top management focuses its efforts on monitoring and dealing with the big issues (perhaps starting to look at merger or acquisition opportunities).

Many businesses flounder at this stage because the manager whose directive approach solved the problems at the end of Phase 1 finds it hard to let go of the control they've assumed. This can mean that the mid-level managers begin to struggle with their roles.

This phase ends with a Control Crisis . A much more sophisticated organizational design is required, so the separate parts of the business can work together more effectively.

Phase 4: Growth Through Coordination and Monitoring

Growth continues with the previously isolated business units re-organized into product groups or service practices. Investment finance is allocated centrally and managed according to Return on Investment (ROI) and not just profits. Incentives are shared through company-wide profit share schemes aligned to corporate goals.

Eventually, though, work becomes submerged under increasing amounts of bureaucracy, and growth is stifled as a result.

This phase ends on a Red-Tape Crisis: a new culture and structure must be introduced.

Phase 5: Growth Through Collaboration

The formal controls of Phases 2-4 are replaced by professional good sense, as staff group and re-group flexibly in teams to deliver projects in a matrix structure which is supported by sophisticated information systems and team-based financial rewards.

This phase ends with a crisis of Internal Growth: further growth can only come by developing partnerships with external, complementary organizations.

Phase 6: Growth Through Extra-Organizational Solutions

Greiner's recently added sixth phase suggests that growth may continue through mergers, outsourcing, networks, and other solutions involving external companies.

Growth rates will vary between and even within phases. The duration of each phase depends almost totally on the rate of growth of the market in which the organization operates. The longer a phase lasts, though, the harder it will be to transition to the next phase of growth.

This is a useful model, however not all businesses will go through these crises in this order. Use this as a starting point for thinking about business growth, and adapt it to your circumstances.

Applying the Greiner Curve

The Greiner Growth Model helps you to think about your own organization's growth trajectory, and plan ahead so you can overcome each growth crises that affects it.

To apply this model, use the following five steps:

  • Based on the descriptions above, think about where your organization is now.
  • People feel that managers and company procedures are getting in the way of them doing their jobs.
  • People feel that they are not fairly rewarded for the effort that they put in.
  • People seem unhappy, and there is a higher staff turnover than usual.
  • Delegate more?
  • Take on more responsibilities?
  • Specialize more in a specific product or market?
  • Change the way you communicate with others?
  • Incentivize and reward your team differently?

By thinking this through, you can start to plan and prepare yourself for the inevitable changes, and perhaps help others to do the same.

  • Plan and take preparatory actions that will make the transition as smooth as possible for you and your team.
  • Revisit Greiner's model for growth again every 6-12 months, and think about how your organization's current stage of growth is affecting you and others around you.

The Greiner Curve (also known as Greiner's Growth Model) was first developed by Larry E. Greiner. It illustrates six key phases of growth that organizations typically go through – from start-up phase to multinational corporation.

After each stage of growth, organizations tend to hit a crisis, which they must adapt and overcome to in order to continue to grow.

The six phases of growth are:

  • Growth Through Creativity – ends in a Leadership Crisis.
  • Growth Through Direction – ends in an Autonomy Crisis.
  • Growth Through Delegation – ends in a Control Crisis.
  • Growth Through Coordination and Monitoring – ends in a Red-Tape Crisis.
  • Growth Through Collaboration – ends in a crisis of Internal Growth.
  • Growth Through Extra-Organizational Solutions .

The Greiner Curve can help organizations to understand their own personal trajectory of growth, and to plan ahead more effectively, so that when they reach a growth crisis, they are in a better position to overcome it and continue to grow.

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Choosing to grow: The leader’s blueprint

Growth is something every CEO and business leader aspires to deliver, but for many, it remains elusive. About a quarter of companies don’t grow at all, and between 2010 and 2019, only one in eight achieved more than 10 percent revenue growth annually. 1 Statistics in this section are based on McKinsey’s analysis of data from Corporate Performance Analytics by McKinsey and regulatory filings, S&P Global, for the period 2010–19. Sustained, profitable growth is possible, however, and it comes down to “choice.”

About the authors

This article is a collaborative effort by Michael Birshan , Biljana Cvetanovski , Rebecca Doherty , Tjark Freundt , Andre Gaeta, Greg Kelly , Erik Roth , Ishaan Seth , and Jill Zucker , representing views from McKinsey’s Growth, Marketing & Sales and Strategy & Corporate Finance practices.

Do you, as a leader, make an explicit choice to grow? Or do you pay lip service to your growth ambitions and let your resolve falter if profit isn’t immediate?

When sustainable, inclusive, and profitable growth becomes a conscious, resolute choice, it shapes decision making across every area of the business. Growth becomes the oxygen of an organization, feeding the culture, elevating ambitions, and inspiring a sense of purpose. Growth leaders generate 80 percent more shareholder value than their peers over a ten-year period. Beyond creating shareholder value, growth attracts talent, fosters innovation, and creates jobs.

With only one in ten S&P 500 companies reporting growth above GDP for more than 30 years, sustained, profitable growth may seem difficult. But the choice to grow is paramount—and it is available to every leader, regardless of industry or economic climate. Indeed, many high-growth companies, including Hewlett-Packard, Burger King, Hyatt Hotels, Microsoft, and Airbnb, to name a few, were founded during economic downturns.

Incumbents have also achieved impressive growth during downturns. US-based retailer Target managed to deliver growth during each of the last two recessions. In 2000, Target doubled down on growth investments, adding new locations, products, and partnerships that resulted in double-digit growth for sales and profits. In 2008, Target analyzed customer trends and expanded its food offerings to include more fresh meat and produce; the food category has since added billions to annual revenue. In 2020, Target achieved record growth during the COVID-19 pandemic by investing consistently in online services and accelerating its ability to use stores as distribution centers and enable online-order pickups from their parking lots. 2 Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen, “Roaring Out of Recession,” Harvard Business Review , March 2010.

The leaders who choose growth and outperform their peers not only think, act, and speak differently; they align around a shared mindset, strategy, and capabilities. In turn, they actively track leading and lagging growth indicators to tie their aspirations to clear and measurable key performance indicators (KPIs). They explore and invest in opportunities both within and outside their core business. Their commitment to growth leads them to invest in an appropriate mix of enablers at the right time and scale, and they stay resolutely faithful to their growth vision in the face of unexpected challenges in their business and operating context, even turning disruption to their advantage.

Drawing on McKinsey’s extensive research into growth and leadership as well as our experience in partnering with leaders in every sector on sustainable, profitable growth , this article explores what happens when business leaders make and follow through on a purposeful choice to grow. 3 For more, see Mehrdad Baghai, Stephen Coley, and David White, The Alchemy of Growth , Basic Books, September 1999; Mehrdad Baghai, Patrick Viguerie, and Sven Smit, The granularity of growth: How to identify the sources of growth and drive enduring company performance , John Wiley & Sons, 2007. The leader’s blueprint for growth shows how subtle changes in thoughts and actions arising from choice can make the difference between sustained standout growth and remaining with the pack.

When a business leader chooses growth, that choice begins to shape behavior, mindset, risk appetite, and investment decisions, creating a growth orientation across the organization. In fact, growth leaders across the C-suite are 70 percent more likely than peers to have growth as their top priority. 4 Biljana Cvetanovski, Eric Hazan, Jesko Perrey, and Dennis Spillecke, “ Are you a growth leader? The seven beliefs and behaviors that growth leaders share ,” McKinsey, September 26, 2019.

Growth-oriented leaders also shape their thinking and actions toward growth over both short- and long-term horizons. They react decisively to shorter-term disruptions that can be turned into opportunities—what we term “ timely jolts ”—and build organizational resilience and agility to respond to change and leverage disruption. These leaders follow a timeless blueprint for growth that flows from mindset into growth pathways and execution (Exhibit 1).

Set an aspirational mindset and culture

C-suite growth leaders share a common series of mindsets and behaviors from their communications to their willingness to learn through failure. Those who display at least three of the five key growth mindsets are 2.4 times more likely to profitably outgrow their peers (Exhibit 2).

The first part of the timeless holistic growth blueprint is to support aspirations with clear targets, milestones, and motivators—creating a North Star that feeds the broader strategic and cultural narrative of the business. Leaders are able to commit their company to action and maintain this focus in the face of timely jolts, inspiring an organization-wide culture that continually seeks out and pursues growth opportunities.

On the other hand, the leader who aspires to growth but underinvests in initiatives or removes funding from growth is one whose actions do not match their aspirations. C-suite leaders who choose growth are much less likely to yield when challenges arise, finding opportunity in headwinds and reasons to innovate where others retreat to conventional defensive playbooks.

A further differentiator of growth leaders is their ability to build organizational buy-in, including from the board and investors. They tend to directly involve the board in their growth planning and they proactively communicate with investors 5 For more, see “ Where companies with a long-term view outperform their peers ,” McKinsey Global Institute, February 8, 2017. using significant and credible targets to show how the growth plan will generate value. Growth leaders allocate the resources required to achieve goals and are more willing to change their operating model to enable growth, if that is what is needed.

Activate the growth pathways

When leaders choose growth and develop the right leadership mindsets and behaviors to support that choice, their natural position is to look for opportunity wherever it exists. Those companies that set growth strategies to address all available pathways to growth are 97 percent more likely to achieve profitable above-peer growth.

The second part of the timeless holistic growth blueprint is activating three pathways: expanding the core business, innovating into new markets and adjacencies, and purposefully pursuing opportunities for breakthrough growth through new-business building or mergers and acquisitions (M&A).

The most successful companies are able to balance and sequence these growth choices in response to their changing operating environments, advances in technology, and emerging customer needs and preferences.

Rippled effect on liquid surface caused by the touch of a iridescent sphere

Mindset to action: Imperatives for Growth

Expand the core business.

Growth begins with the core, and growth leaders understand the importance of optimizing their current core business. With more than 80 percent of total revenue growth, on average, derived from the core, achieving excellence in current operations is crucial. 6 Statistics in this section are based on McKinsey’s analysis of data from Corporate Performance Analytics by McKinsey, regulatory filings, and S&P Global, for the period 2005–19; we have analyzed the 3,000 largest public companies as of 2018 reporting revenues by segment. Total revenue growth split is derived from the summation of the respective company segment revenues in this sample. Some sectors—healthcare, for example—achieve as much as 90 percent of growth from the core business, while others, such as financial services, generate around 74 percent from the core and 23 percent or more from adjacent opportunities (Exhibit 3).

These variations are partly explained by the idiosyncrasies of different industries. For example, healthcare businesses make long-term R&D and capital investments for innovation, but their patents enable them to generate most of their growth within the core. Financial-services companies, on the other hand, tend to be more able to move into adjacent services, with many companies actively making big bets across industry sub-sectors (eg, investment banks entering wealth management, and vice versa).

Regardless of industry, growth leaders turbocharge their core through a mix of strategic shifts to higher growth pockets (for example, shifting product mix to higher growth value or premium segments and higher growth channels such as e-commerce), innovation of the core products and services, and improved executional excellence in their commercial capabilities.

Having a growth mindset is especially important for the core business. Growth outperformers almost always grow their core—either through their main products, sectors, or local market. In fact, it is unlikely that they can raise their growth trajectory without winning in their local market. 7 Defined as the largest region in the portfolio by revenue.  In fact, fewer than one in five of the companies in our sample that had below-average growth rates in their local region managed to outperform their peers in growth.

Whatever the exact mix of strategies and focus areas, growth leaders are maximizing their core through all available means. And they are twice as likely to report having identified pockets of growth within their existing business.

Innovate into adjacencies

Having a strong core is essential. Outperformers build beyond it to achieve their growth aspirations. Businesses that expand into adjacent industries or segments are 20 percent more likely to achieve greater growth than their peers.

The obvious places to look for growth are new geographies and adjacent industries where growth leaders can adapt their existing offerings to serve new customer segments. For example, CVS Health transformed into a consumer-centric, integrated health solutions company by expanding its business from pharmacy and retail to healthcare services, which accounted for 67 percent of the company’s revenue growth from 2005–19.

Growth leaders recognize the need to unlock the next wave of growth through expansion beyond the core. However, choosing the best adjacencies is critical. Growth leaders are increasingly harnessing advanced analytics to identify promising or previously overlooked opportunities that leverage core competencies and provide a good chance to establish a strong leadership position. McKinsey research shows that businesses that expand to adjacencies with high similarity to their core and exploit their unique competitive advantages are more likely to profitably outperform their peers on growth.

Outperformers use the full growth blueprint to excel in adjacencies, with a particular focus on strategies that build on core competencies. They use and refresh growth maps to consistently surface opportunities, to understand which are most achievable, and set growth strategies to capture them. They choose among the different avenues to grow adjacently, such as M&A or business building, and they evolve their operating models to support these growth choices.

Growth leaders are also increasingly building ecosystems around their core capabilities and assets and deploying new offerings into adjacent products or markets. Tencent, for instance, has become an Asian tech giant worth around $500 billion through its online platforms that include messaging, gaming, payments, e-commerce and advertising—in addition to evolving its social messaging app WeChat into an extensive “super app.” Tencent’s full ecosystem offering spans fintech , entertainment and media, cab hailing, location sharing, and more, fueling a revenue compound annual growth rate of 28 percent over the decade 2011 to 2021.

Ignite breakout businesses

According to McKinsey research on more than 1,000 business leaders, on average, executives believe 50 percent of their revenues will come from new products, services, or businesses within the next five years. Not surprisingly, many are looking beyond natural adjacencies to exploit entirely new business opportunities. Between 2018 and 2020, “new-business building” doubled its appearances among the top three items on executive agendas.

Expanding into new markets through business building can unlock new opportunities without cannibalizing existing products and services. Done right, the rewards can be well worth the risk, as illustrated by a number of growth leaders across different industries.

Amazon famously expanded beyond its e-commerce business into public cloud services through Amazon Web Services (AWS). By leveraging its core competencies of brand and commercial strength, it built AWS into a business that generated $62 billion revenue.

Science and technology innovator Danaher Corporation combatted the single-digit growth in its core industrial businesses by looking toward high-growth markets in life sciences and niche diagnostics. After testing the waters with small acquisitions and investing heavily in its platforms business, Danaher spun off its old industrial core, Fortive, repositioned life sciences and diagnostics as its new core business—and beat the S&P 500 by 3.8 times between 2002 and 2016. While core growth is critical, investments in breakout opportunities could enable a long-term shift to a new core within a higher-growth market.

Marcus by Goldman Sachs launched its first digital consumer business in 2016, allowing customers to bank from their phones. In the ensuing six years, it has attracted millions of customers, accumulated deposits of over $92 billion, and made more than $7 billion in loans via a combination of organic growth, acquisitions, and partnerships with Apple and Amazon.

Growth leaders can improve their odds of achieving growth in breakout opportunities by committing to innovation , identifying and understanding the needs and wants of valued customers, and developing the right value propositions to appeal to them. Given the accelerating pace of innovation, growth leaders also look to agile methodologies , strategic alliances, and M&A, with a willingness to rapidly test and learn, fail and iterate, and invest in scaling opportunities.

Of course, pursuing breakout growth can require longer-term investment and commitment before seeing returns. That’s why growth leaders need the mettle to stay the course and make significant investments—or the sense to know when to call it quits.

Execute with excellence

This is the critical and third portion of the timeless holistic growth blueprint, where strategy meets action, and orchestrated execution is the final step in achieving growth. Execution works hand-in-hand with strategy to empower leaders to make the right choices at the right time to drive both short-term and long-term growth.

Leaders who choose growth support their ambitions by prioritizing a critical set of execution enablers: operating model and resource allocation, ecosystems, M&A, joint ventures and alliances, and functional capabilities.

Built-for-growth operating models and resource allocation

Leaders who fully commit to growth choose these initiatives for purposeful and assertive investment and are 60 percent more likely to regularly reallocate resources from lower-return to higher-return spaces. These leaders fund more dynamically, relying less on historical budgets that can be psychologically “anchoring,” and they actively explore how to fuel growth without eroding their existing core businesses. 8 Tim Koller, Dan Lovallo, and Olivier Sibony, “ Bias busters: Being objective about budgets ,” McKinsey Quarterly , September 28, 2018; Michael Birsham, Marja Engel, and Olivier Sibony, “ Avoiding the quicksand: Ten techniques for more agile corporate resource allocation ,” McKinsey Quarterly , October 1, 2013.

Alongside this willingness to dynamically reallocate resources , growth leaders are more likely to have multiple, tailored operating models to support their unique growth initiatives and opportunities. While the core business may have a distinct, more traditional operating model, breakout opportunities may adopt a more agile, learning-driven operating approach , for example, having small, cross-functional teams with the autonomy to focus on rapidly building and testing products, features, or services with customers. They segment their product-development processes and combine standard product-development stage gates for incremental innovations while using venture-capital-inspired stage gates and funding mechanisms for bolder growth projects. This agility helps them respond robustly to timely jolts and opportunities.

In managing performance, growth leaders adopt a growth vocabulary, leveraging the adage, “You get what you measure.” They actively track leading and lagging growth-oriented metrics, such as recurring revenue, revenue per customer, and customer-acquisition cost, tying them to organizational goals and incentives.

Strengthen ecosystems, M&A, and joint ventures

Specialization in a sea of sameness is a differentiator. That’s why growth leaders often look outside of their businesses to find quick access to complementary skills and capabilities to buy or scale innovation and growth. Those who do this are 30 to 50 percent more likely to continually scan for these types of alliances, joint ventures, and M&A opportunities.

In recent years, digital M&A has become increasingly popular and effective, accounting for double the share of all M&A value from 2011–21. Businesses are becoming increasingly strategic about how they evaluate and leverage these digital transactions, from acquiring new talent and capabilities to accessing new markets and products. 9 Michael Bogobowicz, Anika Pflanzer, Leandro Santon, and Brett Wilson, “ How to find and maximize digital value in any M&A deal ,” McKinsey, November 9, 2020; CapitaIQ, McKinsey analysis. Many companies with programmatic M&A strategies (that is, steadily growing through two or more acquisitions of less than 30 percent of their own market cap per year) have added digital-investment themes to their M&A blueprints. Over almost 20 years of research, it has become clear that programmatic M&A is the only M&A strategy that delivers outsized total shareholder return (TSR) . M&A investment themes, especially those on digital M&A, should be highly specific and clearly articulate how they will add value for the acquirer.

Forming ecosystems with partners is another way to build capabilities and expand offerings more quickly, while simultaneously enhancing customer experience and enlarging reach and innovation opportunities across the ecosystem. This creates value along two dimensions—it allows participants to consolidate a range of customers, often across sectors, and to play a pivotal role in optimizing touchpoints in both B2C and B2B.

Functional capabilities

Execution is impossible without the right functional strengths and growth leaders identify which new functional capabilities are needed—or need to change—to support growth initiatives, both in the short term and over longer-term innovation horizons.

From building out AI and advanced analytics platforms to deepening their customer experience capabilities—and even enhancing or modernizing existing capabilities like pricing and marketing—growth leaders ensure the organization’s capabilities are positioned to fuel growth. While the exact blend varies by industry and company, a common cross-sectoral focus point is harnessing digital and analytics to revamp distribution, marketing returns, customer value management (CVM), 10 Customer value management is a systematic approach to working with loyal customers. It is based on personalized offerings targeted to meet particular customer needs, created using advanced analytics, and aimed at increasing lifetime customer value through raising purchasing frequency and average basket size. and dynamic pricing. 11 Rachel Diebner, David Malfara, Kevin Neher, Mike Thompson, and Maxence Vancauwenberghe, “ Prediction: The future of CX ,” McKinsey Quarterly , February 24, 2021; Ralph Breuer, Kedar Naik, Bogdan Toma, and Martina Yanni, “ Executive quick take: A guide to implementing marketing-and-sales transformations that unlock sustainable growth ,” McKinsey, September 23, 2019; Matt Deimund, Michael Drory, Daniel Law, and Maria Valdivieso, “ The five things sales-growth winners do to invest in their people ,” McKinsey, October 9, 2018; Minti Ray, Stefano Redaelli, Sidney Santos, Jared Sclove, and Andrew Wong, “ Accelerating revenue growth through tech-enabled commercial excellence ,” McKinsey, December 4, 2019.

In distribution, e-commerce is a powerful lever for collecting valuable digital customer data along the purchasing journey and ensuring effective and measurable media spend. Nike, for example, was able to increase its nike.com e-commerce platform’s contribution to sales from 7.5 percent to 24 percent, thereby fuelling a compound annual growth rate of 6.7 percent from 2017–21, a time frame that includes the height of the pandemic. 12 Statista, ecommerceDB, and S&P Capital IQ.

For customer value management, investing in greater personalization through advanced analytics and digital capabilities can improve both the customer experience and client lifetime value. American Express, for instance, leverages advanced analytics to provide customized recommendations to customers based on their location, opening additional transaction opportunities both for their partners and for their own credit cards.

Greater analytical sophistication enables companies to differentiate pricing across dimensions such as region, channel, and customer lifecycle. 13 Claus Heintzeler, Mathias Kullman, Karin Lauer, and Maximilian Totzauer, “ Pricing and promotions: The analytics opportunity ,” McKinsey, June 28, 2021. A leading Asian e-commerce company was able to increase gross margins by ten percentage points and gross merchandise value by three percentage points by developing a dynamic pricing capability. 14 Gadi BenMark, Sebastian Klapdor, Mathias Kullmann, and Ramji Sundararajan, “ How retailers can drive profitable growth through dynamic pricing ,” McKinsey, March 27, 2017.

Commercial capabilities are bolstered by investments in digital—in fact, growth leaders are 60 percent more likely to have successfully used AI and advanced analytics to predict customer behaviors and become a “sensing and predicting” organization. Growth leaders also tend to invest in expanding and deepening their customer experience capabilities to streamline and personalize customer journeys.

Beyond the commercial excellence, growth leaders map R&D and product development portfolios, balanced across incremental innovations and bolder long-term breakout initiatives with clear mapping to the capabilities needed to execute. Tangentially, it is imperative to ensure that growth leaders are investing in their people, creating a pipeline of talent that will help strengthen and broaden the tools needed to achieve their growth aspirations.

Choosing to grow: the subtle difference between success and failure

The growth blueprint defines the timeless elements on which leaders need to focus diligently once they’ve made a deliberate and purposeful choice to grow.

This blueprint prepares an organization to grow in the face of timely jolts. The blueprint encourages leaders to answer a series of clear questions:

  • Am I setting the right aspiration, mindset, and culture to encourage growth? Are my ambitions high enough, and how can I ensure my organization has the full potential to achieve it?
  • Am I actively choosing growth opportunities across my core and adjacencies?
  • Am I establishing the right enablers to execute against my growth aspirations and strategies?
  • Do I have the right operating model and resource allocation to achieve my growth ambitions?
  • And am I investing in the right functional capabilities?

The choices leaders make in response to these questions differentiate those who achieve growth from those who aspire to it but don’t get results.

Take two leaders of similar-sized businesses operating in the same market. Both see an opportunity for growth and pursue it, but their outcomes are very different. Why?

The one who made a choice to grow aligned their board and leadership team on the company’s direction and dedicated the necessary resources to growth. They adapted the operating model for the long term and understood the risk profile of the new businesses they were trying to build. They invested meaningfully in building the right functional capabilities, sometimes at the expense of a few quarters of earnings, to achieve their long-term growth aspirations.

The other leader, who didn’t explicitly “choose growth,” also did a lot of things right. They hired the right talent and took the time to understand the new businesses they wanted to build. They believed they were allocating enough resources to growth, but ultimately their focus was divided by an emphasis on quarterly earnings and short-term profitability. Though they aspired to growth, they didn’t have the long-term strategy or commitment to achieve it. They tried to protect the management team so they could meet their short-term goals but didn’t secure buy-in from the board for long-term growth initiatives.

Making the conscious choice to grow creates powerful momentum that orients the entire business toward that goal, from the C-suite to frontline employees. The growth blueprint defines the timeless elements on which leaders need to focus diligently once they have made a deliberate and purposeful choice to grow. It also prepares an organization to unlock growth opportunities in timely jolts. The clarity of purpose and vision that comes from choice is what helps leaders and their teams believe in the seemingly impossible and make it happen.

Michael Birshan is a senior partner in McKinsey’s London office, where Biljana Cvetanovski is a partner; Rebecca Doherty is a partner in the San Francisco office; Tjark Freundt is a senior partner in the Hamburg office; Andre Gaeta is an associate partner in the Sao Paulo office; Greg Kelly is a senior partner in the Atlanta office; Erik Roth is a senior partner in the Stamford office; Ishaan Seth and Jill Zucker are senior partners in the New York office.

The authors wish to thank Jaidit Brar, Luis Cerquiera, Vincent Cremers, Brian Gregg, Eric Hazan, Martin Hirt, Anna Koivuniemi, Pablo Leon, Duncan Miller, and Dennis Spillecke for their contributions to this article.

We are also grateful to the many McKinsey colleagues who contributed their industry expertise and perspectives to this research: Marco Aukofer, Matt Banholzer, Kurt Bazarewski, Dani Ebersole, Stephen Guerin, Tim Koller, Karin Löffler, Katherine Lovemore, Patrick McCurdy, Sakina Mehenni, Camille Meeùs, Bridget Morton, Michael Park, Tido Röder, Jeff Rudnicki, Manny Sasson, Balint Stellek, Marija Vukojevic, Qian Wan, and Michelle Wycoff.

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Growth Curve: Definition, How It's Used, and Example

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

business growth curve model

A growth curve is a graphical representation how how something changes over time. An example of a growth curve might be a chart showing a country's population increase over time.

Growth curves are widely used in statistics to determine patterns of growth over time of a quantity—be it linear, exponential, or cubic. Businesses use growth curves to track or predict many factors, including future sales .

Key Takeaways

  • A growth curve shows the direction of some phenomena over time, in the past or into the future, or both.
  • Growth curves are typically displayed on a set of axes where the x-axis is time and the y-axis shows an amount of growth.
  • Growth curves are used in a variety of applications from population biology and ecology to finance and economics.
  • Growth curves allow for the monitoring of change over time and what variables may cause this change. Businesses and investors can adjust strategies depending on the growth curve.

The shape of a growth curve can make a big difference when a business determines whether to launch a new product or enter a new market . Slow growth markets are less likely to be appealing because there is less room for profit. Exponential growth is generally positive but could mean that the market will attract a lot of competitors.

Growth curves were initially used in the physical sciences such as biology. Today, they're a common component of social sciences as well.

Digital Enhancements

Advancements in digital technologies and business models now require analysts to account for growth patterns unique to the modern economy. For example, the winner-take-all phenomenon is a fairly recent development brought on by companies such as Amazon, Google, and Apple . Researchers are scrambling to make sense of growth curves that are unique to new business models and platforms.

Growth curves are often associated with biology, allowing biologists to study organisms and how these organisms behave in a specific environment and the changes to that environment in a controlled setting.

Shifts in demographics, the nature of work, and artificial intelligence will further strain conventional ways of analyzing growth curves or trends.

Analysis of growth curves plays an essential role in determining the future success of products, markets, and societies, both at the micro and macro levels.

Example of a Growth Curve

In the image below, the growth curve displayed represents the growth of a population in millions over a span of decades. The shape of this growth curve indicates exponential growth. That is, the growth curve starts slowly, remains nearly flat for some time, and then curves sharply upwards, appearing almost vertical.

This curve follows the general formula:

V = S * (1 + R) t

The current value, V, of an initial starting point subject to exponential growth, can be determined by multiplying the starting value, S, by the sum of one plus the rate of interest, R, raised to the power of t, or the number of periods that have elapsed.

In finance, exponential growth appears most commonly in the context of compound interest.

The power of compounding is one of the most powerful forces in finance. This concept allows investors to create large sums with little initial capital. Savings accounts that carry a compounding interest rate are common examples.

What Are the 2 Types of Growth Curves?

The two types of growth curves are exponential growth curves and logarithmic growth curves. In an exponential growth curve, the slope grows greater and greater as time moves along. In a logarithmic growth curve, the slope grows sharply, and then over time the slope declines until it becomes flat.

Why Use a Growth Curve?

Growth curves are a helpful visual representation of change over time. Growth curves can be used to understand a variety of changes over time, such as developmental and economic. They allow for the understanding of the effect of policies or treatments.

What Is a Business Growth Model?

A business growth model provides a visual representation for businesses to track various metrics and key drivers, allowing businesses to map out growth and adjust the businesses accordingly to foster these metrics.

A growth curve is a graph that represents the way a phenomenon changes over time. It can show both the past and the future. They typically use two axes, where the x-axis is time and the y-axis is growth.

Growth curves are used in many disciplines, including sciences such as biology and ecology. They are also used in finance and economics. Businesses can use growth curves to see how a specific market is changing over time. This can help them decide whether to enter or leave a certain market or adjust their selling strategy to account for changes.

Curran, Patrick J., Obeidat, Khawla, and Losardo, Diane, via National Library of Medicine. " Twelve Frequently Asked Questions About Growth Curve Modeling: Abstract ." Journal of Cognition and Development , vol. 11, no. 2, 2010.

Sigirli, Deniz and Ercan, Ilker. " Examining Growth with Statistical Shape Analysis and Comparison of Growth Models ." Journal of Modern Applied Statistical Methods , vol. 11, no. 2, November 2012, pp. 1.

business growth curve model

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Company Growth Strategy: 7 Key Steps for Business Growth & Expansion

Sujan Patel

Published: April 17, 2023

A concrete growth strategy is more than a marketing strategy, it's a crucial cog in your business machine. Without one, you're at the mercy of a fickle consumer base and market fluctuations.

graphic showing person building a business growth strategy

So, how do you plan to grow?

Download Now: Free Growth Strategy Template

If you're unsure about the steps needed to craft an effective growth strategy, we've got you covered.

Business Growth

Business growth is a stage where an organization experiences unprecedented and sustained increases in market reach and profit avenues. This can happen when a company increases revenue, produces more products or services, or expands its customer base.

For the majority of businesses, growth is the main objective. With that in mind, business decisions are often made based on what would contribute to the company’s continued growth and overall success. There are several methods that can facilitate growth which we'll explain more about below.

business growth curve model

Free Strategic Planning Template

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  • Sales and Revenue Growth
  • Growth of Customer Base
  • Expansion into New Regions

You're all set!

Click this link to access this resource at any time.

Types of Business Growth

As a business owner, you have several avenues for growth. Business growth can be broken down into the following categories:

With organic growth, a company expands through its own operations utilzing its own internal resources. This is in contrast to having to seek out external resources to facilitate growth.

An example of organic growth is making production more efficient so you can produce more within a shorter time frame, which leads to increased sales. A perk of utilizing organic growth is that it relies on self-sufficiency and avoids taking on debt. Additionally, the increased revenue created from organic growth can help fund more strategic growth methods later on. We’ll explain that below.

2. Strategic

Strategic growth involves developing initiatives that will help your business grow long term. An example of strategic growth could be coming up with a new product or developing a market strategy to target a new audience.

Unlike organic growth, these initiatives often require a significant amount of resources and funding. Businesses often take an organic approach first in hopes that their efforts will generate enough capital to invest in future strategic growth initiatives.

3. Internal

Internal growth strategy seeks to optimize internal business processes to increase revenue. Similar to organic growth, this strategy relies on companies using their own internal resources. Internal growth strategy is all about using existing resources in the most purposeful way possible.

An example of internal growth could be cutting wasteful spending and running a leaner operation by automating some of its functions instead of hiring more employees. Internal growth can be more challenging because it forces companies to look at how their processes can be improved and made more efficient rather than focusing on external factors like entering new markets to facilitate growth.

4. Mergers, Partnerships, Acquisitions

Although riskier than the other growth types, mergers, partnerships, and acquisitions can come with high rewards. There’s strength in numbers and a well-executed merger, partnership, or acquisition can help your business break into a new market, expand your customer base, or increase your products and services on offer.

Business Growth Strategy

A growth strategy is a plan that companies make to expand their business in a specific aspect, such as yearly revenue, number of customers, or number of products. Specific growth strategies can include adding new locations, investing in customer acquisition, or expanding a product line.

A company's industry and target market influence which growth strategies it will choose. Strategize, consider the available options, and build some into your business plan. Depending on the kind of company you're building, your growth strategy might include aspects like:

  • Adding new locations
  • Investing in customer acquisition
  • Franchising opportunities
  • Product line expansions
  • Selling products online across multiple platforms

Your particular industry and target market will influence your decisions, but it's almost universally true that new customer acquisition will play a sizable role. That said, there are different types of overarching growth strategies you can adopt before making a specific choice, such as adding new locations. Let’s take a look.

Free Growth Strategy Template

Fill out this form to access your template, types of business growth strategies.

There are several general growth strategies that your organization can pursue. Some strategies may work in tandem. For instance, a customer growth and market growth strategy will usually go hand-in-hand.

Revenue Growth Strategy

A revenue growth strategy is an organization’s plan to increase revenue over a time period, such as year-over-year. Businesses pursuing a revenue growth strategy may monitor cash flow , leverage sales forecasting reports , analyze current market trends, diminish customer acquisition costs , and pursue strategic partnerships with other businesses to improve the bottom line.

Specific revenue growth tactics may include:

  • Investing in sales training programs to boost close rates
  • Leveraging technology to improve sales forecasting reports
  • Using lower-cost marketing strategies to lower customer acquisition costs
  • Continuing to train customer service reps
  • Partnering with another company to promote your products and services

Customer Growth Strategy

A customer growth strategy is an organization’s plan to boost new customer acquisitions over a time period, such as month-over-month. Businesses pursuing a customer growth strategy may be more open to making large strategic investments, as long as the investments lead to greater customer acquisitions.

For this strategy, you may track customer churn rates , calculate customer lifetime value , and leverage pricing strategies to attract more customers. You might also spend more on marketing, sales, and CX , with new customer sign-ups as the north star metric.

Specific customer growth tactics may include:

  • Investing in your marketing and sales organization’s headcount
  • Increasing advertising and marketing spend
  • Opening new locations in a promising market you’ve not yet reached
  • Adding new product lines and services
  • Adopting a discount or freemium pricing strategy
  • Tracking metrics such as churn rates, customer lifetime value, and MRR

Marketing Growth Strategy

A marketing growth strategy — which is related, but not the same as, a market development strategy — is an organization’s plan to increase their total addressable market (TAM) and increase existing market share.

Businesses pursuing a marketing growth strategy will research different verticals, customer types, audiences, regions, and more to measure the viability of a market expansion.

Specific marketing growth tactics may include:

  • Rebranding the business to appeal to a new audience
  • Launching new products to appeal to buyers in a new market
  • Opening new locations in other regions
  • Adopting a different marketing strategy, e.g local marketing or event marketing , to appeal to new markets
  • Becoming a franchisor so that individual business owners can buy franchises from you

Product Growth Strategy

A product growth strategy is an organization’s plan to increase product usage and sign-ups, or expand product lines. This type of growth strategy requires a significant investment into the organization’s product and engineering team (at SaaS organizations). In the retail industry, a product growth strategy may look like partnering with new manufacturers to expand your product catalog.

Specific tactics may include:

  • Adding new features and benefits to existing products
  • Adopting a freemium pricing strategy
  • Adding new products to the existing product line
  • Partnering with new manufacturers and providers
  • Expanding into new markets and verticals to increase product adoption

Not sure what all of this can look like for your business? Here are some actionable tactics for achieving growth.

How to Grow a Company Successfully

  • Use a growth strategy template.
  • Choose your targeted area of growth.
  • Conduct market and industry research.
  • Set growth goals.
  • Plan your course of action.
  • Determine your growth tools and requirements.
  • Execute your plan.

1. Use a growth strategy template [Free Tool] .

HubSpot Growth Strategy Template

Image Source

Don’t hit the ground running without planning out and documenting the steps for your growth strategy. We recommend downloading this free Growth Strategy Template and working off the included section prompts to outline your intended process for growth in your organization.

2. Choose your targeted area of growth.

It’s great that you want to grow your business, but what exactly do you want to grow?

Your business growth plan should hone in on specific areas of growth. Common focuses of strategic growth initiatives might include:

  • Growth in employee headcount
  • Expansion of current office, retail, and/or warehouse space
  • Addition of new locations or branches of your business
  • Expansion into new regions, locations, cities, or countries
  • Addition of new products and/or services
  • Expanding purchase locations (i.e. selling in new stores or launching an online store)
  • Growth in revenue and/or profit
  • Growth of customer base and/or customer acquisition rate

It’s possible that your growth plan will encompass more than one of the initiatives outlined above, which makes sense — the best growth doesn't happen in a vacuum. For example, growing your unit sales will result in growth in revenue — and possibly additional locations and headcount to support the increased sales.

3. Conduct market and industry research.

After you’ve chosen what you want to grow, you’ll need to justify why you want to grow in this area (and if growth is even possible).

Researching the state of your industry is the best way to determine if your desired growth is both necessary and feasible. Examples could include running surveys and focus groups with existing and potential customers or digging into existing industry research.

The knowledge and facts you uncover in this step will shape the expectations and growth goals for this project to better determine a timeline, budget, and ultimate goal. This brings us to step four…

4. Set growth goals.

Once you’ve determined what you’re growing and why you’re growing, the next step is to determine how much you’ll be growing.

These goals should be based on your endgame aspirations of where you ideally want your organization to be, but they should also be achievable and realistic – which is why setting a goal based on industry research is so valuable.

Lastly, take the steps to quantify your goals in terms of metrics and timeline. Aiming to "grow sales by 30% quarter-over-quarter for the next three years" is much clearer than "increasing sales."

5. Plan your course of action.

Next, outline how you’ll achieve your growth goals with a detailed growth strategy. Again – we suggest writing out a detailed growth strategy plan to gain the understanding and buy-in of your team.

Growth Action Plan Downloadable Template

Download this Template

This action plan should contain a list of action items, deadlines, teams or persons responsible, and resources for attaining your growth goal.

6. Determine your growth tools and requirements.

The last step before acting on your plan is determining any requirements your team will need through the process. These are specific resources that will help you meet your growth goals faster and with more accuracy. Examples might include:

  • Funding: Organizations may need a capital investment or an internal budget allocation to see this project through.
  • Tools & Software: Consider what technological resources may be needed to expedite and/or gain insights from the growth process.
  • Services: Growth may be better achieved with the help of consultants, designers, or planners in a specific field.

7. Execute your plan.

With all of your planning, resourcing, and goal-setting complete, you’re now ready to execute your company growth plan and deliver results for the business.

Throughout this time, make sure you’re holding your stakeholders accountable, keeping the line of communication open, and comparing initial results to your forecasted growth goals to see if your projected results are still achievable or if anything needs to be adjusted.

Your growth plan and the tactics you leverage will ultimately be specific to your business, but there are some universal strategies you can implement when getting started.

To expand a business and its revenue, companies can implement different strategies for growth. Examples of growth strategy include:

Growth Strategy Examples

  • Viral Loops
  • Milestone Referrals
  • Word-of-Mouth
  • The 'When They Zig, We Zag' Approach
  • In-Person Outreach
  • Market Penetration
  • Market Development
  • Product Development
  • Growth Alliances
  • Acquisitions
  • Organic Growth
  • Social Media
  • Excellent Customer Service

Growth Strategy Examples

1. Viral Loops

Some growth strategies are tailored to be completely self-sustainable. They require an initial push, but ultimately, they rely primarily (if not solely) on users' enthusiasm to keep them going. One strategy that fits that bill is the viral loop.

The basic premise of a viral loop is straightforward:

  • Someone tries your product.
  • They're offered a valuable incentive to share it with others.
  • They accept and share with their network.
  • New users sign up, see the incentive for themselves, and share with their networks.

For instance, a cloud storage company trying to get off the ground might offer users an additional 500 MB for each referral.

Ideally, your incentive will be compelling enough for users to actively and enthusiastically encourage their friends and family to get on board. At its best, a viral loop is a self-perpetuating acquisition machine that operates 24/7/365.

That said, viral loops are not guaranteed to go viral, and they’ve become less effective as they’ve become more commonplace. But the potential is still there.

Part of the appeal is that the viral loop flips the traditional funnel upside-down:

Growth strategy viral loop

Instead of needing as many leads as possible at the top, a viral loop funnel requires just one satisfied user to share with others. As long as every referral results in at least 1.1 new users, the system continues growing.

2. Milestone Referrals

The milestone referral model is similar to the viral loop in that it relies on incentives to kickstart and sustain it. But milestone referrals add a more intricate, progressive element to the process.

Companies that leverage viral loops generally offer a flat, consistent offer for individual referrals — businesses that use milestone referrals offer rewards for hitting specific benchmarks. In many cases, "milestones" are metrics like the number of referred friends.

For example, a business might include different or increasingly enticing incentives that come with one, five, and 10 referrals as opposed to a fixed incentive for each referral. A company will often leverage this strategy to encourage users to bring on a volume of friends and family that suits its specific business goals.

The strategy also adds an engaging element to the referral process. When done right, milestone referrals are simple to share with relatively straightforward objectives and enticing, tangible products as rewards.

3. Word-of-Mouth

Word-of-mouth is organic and effective. Recommendations from friends and family are some of the most powerful incentives for consumers to purchase or try a product or service.

The secret of word-of-mouth’s effectiveness lies in a deeply rooted psychological bias all people have — we subconsciously believe the majority knows better.

Social proof is central to most successful sales copywriting and broader content marketing efforts. That's why businesses draw so much attention to their online reputations.

They know in today's customer-driven world — one where communication methods change and information is available to all — a single negative blog post or tweet can compromise an entire marketing effort.

Pete Blackshaw , the father of digital word-of-mouth growth, says, "satisfied customers tell three friends; angry customers tell 3,000."

The key with word-of-mouth is to focus on a positive user experience. You need to grow a base of satisfied customers and sustain the wave of loyal feedback that comes with it.

With this method, you have to focus on delivering a spectacular user experience, and users will spread the word for you.

4. The "When They Zig, We Zag" Approach

Sometimes the best growth strategy a company can employ is standing out — offering a unique experience that sets it apart from other businesses in its space. When monotony defines an industry, the company that breaks it often finds an edge.

Say your company developed an app for transitioning playlists between music streaming apps. Assume you have a few competitors who all generate revenue through ads and paid subscriptions — both of which frustrate users.

In that case, you might be best off trying to shed some of the baggage that customers run into trouble with when using your competitors' programs. If your service is paid, you could consider offering a free trial of an ad-free experience — right off the bat.

The point here is that there's often a lot of value and opportunity in differentiating yourself. If you can "zig when they zag", you can capture consumers' attention and capitalize on their shifting interests.

5. In-Person Outreach

It might be a while before this particular approach can be employed again, but it's effective enough to warrant a mention. Sometimes, adding a human element to your growth strategy can help set things in motion for your business.

Prospects are often receptive to a personal approach — and there's nothing more personal than immediate, face-to-face interactions. Putting boots on the ground and personally interfacing with potential customers can be a great way to get your business the traction it needs to get going.

This could mean hosting or sponsoring events, attending conferences relevant to your space, hiring brand ambassadors, or any other way to directly and strategically reach out to your target demographic in person.

6. Market Penetration

Competition is a necessary part of business. Imagine that two companies in the same industry are targeting the same consumers. Typically, whatever customers Business A has, Business B does not. Market penetration is a strategy that builds off of this tug-of-war.

Market penetration increases the market share — the percentage of total sales in an industry generated by a company — of a product within a given industry. Coca-Cola, the most popular carbonated beverage in the United States, has a 42.8% market share. If competitors like Pepsi and Sprite were looking to increase market penetration, they would need to increase market share. This increase would imply that they are acquiring customers that were previously buying Coca-Cola or other carbonated beverage brands.

While lowering prices and advertising are two costly yet effective tactics to increase market share, they are part of a series of methods businesses can use for overall sales and customer retention.

7. Development

If a company feels as if they have plateaued and its current market no longer has room for growth, it might switch strategies from market penetration to market development. While market penetration focuses on a company and its current market, market development strategies lead businesses to tap into a new one.

Companies can decide to manufacture new products or find an innovative use for their project. Take Uber. Although few would say that the rideshare company has plateaued, six years after its launch in 2009, Uber launched UberEats, its online food ordering, and delivery platform. The company already had drivers set to take passengers to their destinations. Uber expanded their idea and has become one of the biggest names in the food delivery industry.

8. Product Development

For growth, many businesses need to introduce something new. Product development — the creation of a new product or the enhancement of an existing one — allows companies to attract new customers and retain existing ones.

Online fast-fashion retailers are an example of this. A company like ASOS built its brand off of clothing. To appeal to a bigger customer base, it has since added face and body products, a collection made up of ASOS products and other popular brands. If an interested customer prefers to shop for their clothes, makeup, and skincare products at once, the brand now serves as a big draw.

9. Growth Alliances

Growth alliances are strategic collaborations between companies. They further the growth goals of the involved parties. Take JCPenney and Sephora. For Sephora, it can’t hurt for the makeup retailer to have more stores across the country. JCPenney, however, needed to keep up with powerhouses like Macy’s and its fully-fledged makeup section.

In 2006, Sephora began opening stores inside JCPenney. As of 2022, Sephora Inside JCPenney is now in over 574 stores. Simultaneously, JCPenney now carries a selection of makeup to rival competitors.

10. Acquisitions

Companies can use an acquisition strategy to promote growth. By acquiring other businesses, companies expand their operations through creating new products or expanding into a new industry. One of the more obvious ideas for growth, this strategy offers significant benefits to companies. They allow for faster growth, access to more customers, lower business risk, and more.

Founded in 1837, Procter & Gamble is a consumer goods company known for its acquisitions. It initially started in soaps and candles but currently has 65 acquired companies that have allowed it to expand into different markets. The list includes Pampers, Tide, Bounty, Tampax, Old Spice, and more. Although its sales dipped between 2016-2019, Procter & Gamble’s net sales for 2021 were $76 billion, its best year within the last decade.

11. Organic Growth

As mentioned previously, organic growth is the most ideal business growth strategy. It could look like focusing on SEO, developing engaging content, or prioritizing advertisements. Instead of focusing on external growth, organic growth is a sustainable strategy that promotes long-term success.

12. Leverage Social Media

Having a strong social media presence can be invaluable to marketing and business growth. Be sure to establish brand pages on all social media platforms like Instagram, Facebook, Pinterest, TikTok, Twitter, etc. Social media can help you increase engagement with your target audience and make it easier for potential customers to find your brand. It’s also great for word-of-mouth promotion as existing customers will likely share your content with their network.

13. Provide Excellent Customer Service

It can be tempting to focus on acquiring new customers, but maintaining loyalty with your existing customers is just as important. Providing an excellent customer service experience ensures that you’ll continue to keep the customers you have, and there’s a good chance you’ll reap some referrals too.

The Key to Growing Your Business

Controlled, sustainable growth is the key to successful businesses. Industries are constantly changing, and it is the responsibility of companies to adapt to these changes.

Successful companies plan for growth. They work for it. They earn it. So what's your plan?

Editor's note: This post was originally published in March 2020 and has been updated for comprehensiveness.

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s-curve

S-Curve In Business And Why It Matters

The S-Curve of Business illustrates how old ways of doing business mature and then become superseded by newer ways. The S-Curve itself is based on a mathematical concept called the Sigmoidal curve. In the context of business, the curve graphically depicts how an organization grows over a typical life cycle.

Table of Contents

Understanding the S-Curve of Business

A key argument of the curve is that sooner or later, most businesses will reach a period of stagnation – no matter how successful they were in the past.

At the point of stagnation, the business reaches an inflection point.

At this point, it will be forced to innovate to grow and remain competitive.

For executives, understanding where their business lies along the S-Curve is crucial.

If the business has already reached an inflection point – also referred to as a “stall point” – it has less than a 10% chance of fully recovering.

In the next section, we’ll discuss these terms at various points of the life cycle in more detail.

The stages of the S-Curve life cycle

Initially, start-up companies begin at the bottom of the curve with a product or service they are taking to market. 

If they are lucky, their offering gains traction – albeit very slowly at first and then gradually quickening as more consumers become aware.

This is the first inflection point, where sales and revenue increase rapidly after an initial period of stagnation or low growth .

While growth will continue for some time, a host of internal or external factors will eventually cause growth to decrease and then taper off.

These factors include:

  • Market saturation.
  • The rising influence of a competitor.
  • Emerging technology that is more profitable.
  • A change in leadership resulting in poor management.

Here, the business encounters the second inflection point. At this point, a critical decision must be made.

For the growth curve to start anew and begin trending upward, the business must innovate and ride the wave of technological advancement.

Ultimately, a business at the second inflection point that then tries to innovate is already too late.

Inflection points must be identified before they occur so that businesses have adequate time to develop new products that have a high chance for success.

How do businesses commonly reach stall points?

External factors

Most businesses will find it hard to maintain growth during recessions since consumers are spending less.

When state or federal laws are enacted to regulate or ban certain products or services, businesses must have the ability to pivot quickly.

This is particularly prevalent in technology where trends shift quickly.

Examples of companies unknowingly reaching inflection points because of technology include Nokia, Blackberry, Xerox, and Kodak.

Internal factors

Dilution of focus.

Many start-ups have visionary leaders whose sole intent is to serve their customers well.

But when companies become larger, focus and effort can become diluted – particularly as management becomes more convoluted.

Talent shortage

For whatever reason, some companies are hindered in their growth because they cannot source the required talent to make it happen.

Examples of S-Curve

Population growth of a country.

As a country’s population grows, the growth rate typically builds momentum slowly.

Yet it accelerates during the middle of the S-curve while leveling off as the population reaches its maximum capacity.

The adoption of a new technology

When a new technology is introduced, it might take time before this technology becomes adopted by the masses.

In the initial stage of the technology adoption curve , its path it’s very steep. Yet when it does take off, it does that very quickly.

technology-adoption-curve

Thus, here the slowly then suddenly saying works exceptionally well.

business growth curve model

As the adoption rate increases rapidly, thus enabling technology to reach the masses, it eventually reaches a plateau as the technology won’t have any more market penetration.

An example is how smartphones took off and how today, they have become a saturated market, as there are billions of smartphones across the world.

The evolution of a market

Take the example of the iPhone; when it was launched, it didn’t pick up right on.

Indeed, Apple first launched the iPhone in 2007, and only when by 2008, when Apple launched the App Store in combination with the iPhone, the store worked as a jet engine for the iPhone to take off very quickly.

iphone-sales-2007-09

Yet, Apple’s iPhone success was built on the premise that the smartphone market had already been developed by other players like BlackBerry.

Thus, Apple wasn’t a first mover, but when it did enter the market, it took off very quickly.

Key takeaways

  • The S-Curve of Business allows a company to determine where it is on a typical growth life cycle, and adjust its strategies accordingly.
  • The S-Curve of Business life cycle consists of two inflection points. The second is the most critical, as it signifies that a business has reached a growth ceiling.
  • Inflection points are caused by a variety of factors relating to the economy, consumer trends, and talent shortages. Whatever the cause, managers must identify them ahead of time and develop strategies to maintain growth .

Key Highlights:

  • S-Curve of Business Overview: The S-Curve of Business illustrates the typical life cycle of a business, showing how old methods become obsolete and new ones emerge. It’s based on the sigmoidal curve and emphasizes the need for innovation to maintain growth .
  • Businesses reach a point of stagnation and inflection, forcing them to innovate to remain competitive.
  • Knowing where a business is along the S-Curve is crucial, as recovery after an inflection point becomes unlikely.
  • The life cycle consists of initial slow growth , rapid growth after the first inflection point, stagnation, and the need for innovation .
  • External Factors: Economic downturns, regulatory changes, and shifting trends.
  • Internal Factors: Focus dilution, talent shortages, and mismanagement.
  • Population Growth: Population growth in a country starts slowly, accelerates, and levels off.
  • Technology Adoption: New technology takes time to gain momentum, accelerates, and saturates the market.
  • Market Evolution: The example of smartphones, where the iPhone took off rapidly due to market development by other players.
  • The S-Curve helps businesses understand their position in the growth life cycle.
  • Inflection points are crucial, and innovation is required to overcome stagnation.
  • Factors causing inflection points can be internal or external, and managers must anticipate them to ensure sustained growth .

Case Studies

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Reinvent Your Business Before It’s Too Late

Watch Out for Those S Curves

Reprint: R1101D

To survive over the long haul, a company must reinvent itself periodically, jumping from the flattening end of one business performance curve to the rising slope of another. Very few companies make the leap successfully when the time comes. That’s because they start the reinvention process too late.

Once existing business begins to stall and revenue growth drops significantly, a company has less than a 10% chance of ever fully recovering.

Accenture’s Nunes and Breene, reporting on the results of their long-running High Performance Business research program, point to a striking difference between companies that have successfully reinvented themselves and those that failed. High performers manage their businesses not just along the growth curve of their revenues but also along three much shorter, though equally important, S curves: tracking the basis of competition in their industry, renewing their capabilities, and nurturing a ready supply of talent.

By planting the seeds for new businesses before revenues from existing ones begin to stall, these companies enjoy sustained high performance.

The Idea in Brief

High performance companies rethink their strategies and reinvent their operating models before debilitating stalls set in.

In order to successfully jump from one financial S curve to the next, they do three things differently from their less-successful peers:

Focus on the edges. They pay attention to the edge of the company and the edge of the market, to avoid the myopia that long-running success engenders.

Shake up the top team. They change the makeup of the senior team earlier, and more radically, than their competitors do.

Maintain surplus talent. When other companies are cutting staff to cut costs, they go in the opposite direction: They cultivate serious talent with the capacity to grow new businesses.

Sooner or later, all businesses, even the most successful, run out of room to grow. Faced with this unpleasant reality, they are compelled to reinvent themselves periodically. The ability to pull off this difficult feat—to jump from the maturity stage of one business to the growth stage of the next—is what separates high performers from those whose time at the top is all too brief.

business growth curve model

  • Paul Nunes is the global managing director of thought leadership at Accenture Research and a coauthor of Big Bang Disruption: Strategy in the Age of Devastating Innovation and Jumping the S-Curve: How to Beat the Growth Cycle, Get on Top, and Stay There (Portfolio, 2014).
  • TB Tim Breene is the CEO of Accenture Interactive, the company’s digital marketing initiative. They are the authors of Jumping the S-Curve: How to Beat the Growth Cycle, Get on Top, and Stay There (Harvard Business Review Press, 2011), from which this article is adapted.

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Secure Successful Growth Using the S Curve

 Model Name  : Sigmoid Curve (s-curve) Author : Pierre Francois Verhulst  Year : 1838 Purpose :  Measuring growth, creative problem solving, innovation, technology forecast, project management, strategy planning, logistic solutions, determining progress, analyzing variables, monitoring performance.

As a business person, you must be constantly wondering how leading global companies and project managers measure growth and track progress.

A project’s implementation and successful completion depends immensely on the organization’s ability to determine its progress and monitor the various variables that are at play.

Setting the targets for your project may seem easy in theory. But practically speaking, without a definite approach and adequate performance tracking, minute problems and errors can quickly turn into big issues causing a massive decline in business growth.

Naturally when you are running a company that constitutes a number of employees with multiple projects operating at once, keeping track of progress and management becomes difficult.

business growth curve model

Efficient planners and smart growth managers know full well when to strike and reinvent themselves and their business sporadically. They expand their sphere and take into account all the resources they have to recreate their potential. In essence, they opt for the most effective logistic tool, the S-Curve.

business growth curve model

Table of Contents

But what does an S-Curve do?

business growth curve model

The S-Curve enables leaders to track a project’s pace and foresee the possible risks that could emerge, allowing them to fix what is not yet out of order. It earns them the advantage to stay a step ahead and combat the obstacles that may hinder their progress.

business growth curve model

Understanding the S Curve model

A proper understanding of the S-Curve model will help you and your fellow entrepreneurs comprehend the importance of tracking the pace and growth of a project at every level.

Moving beyond the technical definition, it could be simply put that the S-Curve demonstrates the supply-demand relationship and profit rate in a fast-paced market.

The S-Curve makes use of the estimated working hours and resources to efficiently complete a project alongside the actual working hours and resources available in a fixed time frame.

The curvature in the model thus shows a simultaneous comparison of the actual time and cost alongside the estimated time and cost.

Is it important though?

Yes. As you will step deeper into the corporate world, you will notice how project managers and strategists implement S-Curves in most assessment reports and project timelines. That is because it is a tracking tool which graphically depicts comparisons of different S-Curves beside the standard S-Curve to distinctly mark the growth or progress of any project.

The statistics are simultaneously plotted in the form of a graph that represents how efficiently the team has performed and utilized the time and allotted budget.

The question, however, remains: how do S-Curves benefit an organization?

There are many ways in which S-Curves can be effective in fulfilling project management purposes. Some of these ways include:

1. Resource Management

The S-Curve can help represent utilization and consumption of resources over the given time frame.

  • Man hours v. Time S-Curve – This depicts the given labor and time utilized over the course of the project. The graph thus allows the company to adjust manpower and time in order to keep the project on track.
  • Budget v. Time S-Curve – This enables the company to track the cumulative cost conserved over the course of the project. It comes handy in forecasting the project’s cash flow and the total cost for completion.

2. Progress Evaluation

While initiating a project, some objectives are laid down for drafting the estimated resource consumption, labor, time frame, and total cost. It is known as a planned or baseline S-Curve .

Once the project has commenced, the planned outline is revised in relation to the actual progress. This changed plan which ideally should be in accordance with the baseline schedule is known as target S-Curve .

The production schedule during the project changes rapidly due to practical circumstances and an actual rate of completion for each task in the project. It is known as the actual S-Curve which exhibits the real pace at which the project is working.

By simultaneously drawing the data from these curves, you can instantly get a picture of your project’s current status on the S-Curve. It also enables you to judge your team’s performance and take steps to effectively monitor progress.

3. Establishing Product Maturity

Where the S-Curve helps determine performance in reference to labor/resources and time, it also enables the company to measure its product’s maturity .

Let me explain.

When a product is just making its way in the market, the profit is at maximum. However once the product becomes common, the profit rate declines. That’s why it is prudent to prioritize growth and innovation. An S-Curve model benefits the investors to anticipate growth and establish a premium price for their product. Because once the product matures, it remains consistently profitable in the market.

Limitations and going beyond them

business growth curve model

When we speak of growth, we speak in mathematical terms – graphs, flowcharts, statistical diagrams. Even though these are essential tools, what is more important is the practical execution to maintain progress.

Growth persists through a calculative mindset, not figures. The S-Curve stands as a focus in strategy planning, yet the model has certain limitations:

  • It does not suggest precautions in the case of market disturbance or discontinuity.
  • It does not indicate the magnitude of profit/loss from new initiatives.
  • It does not suggest when to invest in new products and do away with old ones.
  • The model is an estimation of the path the project may follow. The practical and on-ground structure of the project can vary.

In summary, the S-Curve model facilitates growth; however, it does not do much to sustain the momentum in the market.

But do these limitations diminish the efficacy of S-Curves?

Absolutely not!

The key is going beyond the figures and making use of S-Curves qualitatively to gain insights and thorough understandings.

Remember Agfa? Compaq? Blackberry? MSN? These were some companies that once were all over the market but are no more around. Why? What did they lack?

They stopped growing, yes! Still growth alone wasn’t a problem, holding the market through inventive planning was.

The market is ever-changing, and once-exquisite products tend to lose appeal impacting growth—almost every company! But what distinguishes successful companies from the ones gone in a slump is how they handle it.

More than a framework

The S-Curve is an effective framework that can be used to evaluate the growth and progress of companies at their different levels and to justify their successes and failures.

However, keeping the S-Curve of business going is only possible when the firm is designed to adapt and innovate , and has passion-driven leaders.

 References & more information

  • http://www.maxwideman.com/guests/s-curve/using.htm
  • https://hbr.org/2011/01/reinvent-your-business-before-its-too-late
  • http://studylib.net/doc/6895362/limitations-of-s-curve-model-as-a-prescriptive-tool

Tell us what you think? Did you find this article interesting?                                                     Share your thoughts and experiences in the comments section below.

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A “cheat sheet” for “Navigating the Growth Curve”

business growth curve model

Twenty years ago, James Fischer, had an ambitious goal.

The co-Founder of the  Origin Institute , a research and consulting company out of Boulder, Colorado, wanted to understand and decipher the patterns, behaviors and the characteristics in entrepreneurial enterprises – and – develop best practices to better navigate the trials and tribulations of business growth.

Six years and over 700 CEO interviews later, Jim documented his findings in the book,  “Navigating the Growth Curve: 9 Fundamentals that Build a Profit-driven, People-centered, Growth-smart Company” .

What did he find?   A road-map describing the 7 predictable stages of growth that companies travel through in their journey from start up to going ventures of 500 people or more, drawn from the collective experiences of hundreds of entrepreneurial companies across 35 different industries.

Laurie Taylor , another founding partner, introduced me to Fischer’s Seven Stages of Growth model ten years ago. She came out to Philadelphia that year to present the model – and their findings – to a group of mid-market business leaders and CEO Think Tank® members.

The CEO’s and their teams with whom we work loved it , especially for the insights the model gives them, not only into their current stage of growth but also into what the road ahead looks like.  It’s called  the 7 Stages of Growth because his research found that there were actual 7 predictable stages that companies traveled through from Stage 1 – “Start Up” with less than 20 employees to Stage 7 “Visionary” with over 160 employees.

Here are 4 key findings that every small and mid-market company should know about growth and the challenges along the way:

1)      complexity is about employees, not revenue..

“Money and processes are easy to manage compared to the dynamic impact that people bring to the table,” writes Laurie.  Although the “People” challenge shows up as the number one focus at different stages along the way, at one point delegation skills become critical while later the focus shifts to employee engagement and creating buy-in to the vision.

2)      Each stage of Growth has five overriding challenges.

Understanding the different challenges at each of the Seven Stages will help you to prioritize and focus your activities.  There are a total of 27 challenges  that companies face along the growth path, different issues at different stages.   A warning – if the Executive team doesn’t deal proactively with the challenges of each stage as the company grows, they just add up as the company adds people.  In other words, challenges don’t go away.  They just come back to haunt you.

3)      Know what “Chaos Zone” is approaching and prepare.

Just like the Google Map app, the 7 Stages model will also tell you when you’re facing a significant transition period that will require increased attention. Fischer calls these “chaos zones”, aptly named Flood Zones and Wind Tunnels.

Expect a level of confusion at these “chaos zones” as leadership and employees adjust to either increased levels of work (Flood Zone transitions) OR the need to revamp and revise methodologies, processes and procedures that no longer work and acquire new ones that will support growth (Wind Tunnel transitions) . Either way, each of these “chaos zones” need to be managed proactively or they will cripple the business.

4)      Different Leadership “rules” exist for each Stage of Growth.  

Growth isn’t just about dealing with challenges and knowing when to change your focus. Leadership styles, for both the CEO and the management team also need to change as a business grows in employees and complexity.  What’s appropriate for a “ramp up” CEO who needs to be a coach – won’t fly later as a company passes the 160 employee mark when a more visionary approach is required.

Of course there’s lots more to the 7 Stages Tool, as far as I’m concerned the best “business map app”, but hopefully this brief tour will get you thinking – and acting – differently as you plan your course for the future.

And if you’d like some help Navigating the Curves, reach out to us and set up a time to talk!

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Growth Curve - Explained

What is the Growth Curve?

business growth curve model

Written by Jason Gordon

Updated at March 10th, 2022

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Table of Contents

What is a growth curve.

A growth curve is a graphical representation of the increase in a particular quantity over time. 

Growth curves can be typically classified into two types -

  • Exponential growth curve, or, J Curve.
  • Logistic growth curve, or S Curve.

A growth curve has different applications in different fields of study. Growth curves are extensively used in finance, especially by businesses, in order to create a mathematical model to analyze the growth in sales or profits, and also to predict future sales.

Back to : STRATEGY, ENTREPRENEURSHIP, & INNOVATION

What is an Exponential growth curve ?

Exponential growth, also referred to as unrestricted growth, usually occurs in an ideal environment with unlimited resources. The growth is slow in the beginning but increases rapidly with the passage of time. 

Exponential growth curves are most commonly used to denote population growth, growth of wealth and investments, business growth, and growth in website traffic as well as followers on social media. 

A great example to illustrate exponential growth would be that of living bacteria in a petri dish in a laboratory under ideal conditions, the bacteria will reproduce by binary fission, i.e by splitting in half, roughly once every hour. Now assuming that the petri dish originally contained 1 million bacteria cells, it would end up with 2 million cells after an hour. After two hours, there would be 4 million bacteria cells. The number of bacteria cells in the petri dish would increase to 8 million cells after the passage of three hours, and so on. However, it should be borne in mind that it is usually not possible to sustain exponential growth over long periods of time since there is a limit to the availability of resources in the real world. 

What is a Logistic growth curve ? 

Logistic growth, or restricted growth, occurs when the numbers begin to approach a finite carrying capacity. The growth is typically fast in the initial stage but drastically slows down with the passage of time. 

Logistic growth patterns are most prominent in graphical representations of increase in literary skills or language proficiency, weight loss regimes and musical skills. Logistic growth also occurs in populations that begin to experience environmental resistance while approaching the carrying capacity. 

A good example of logistic growth would be that of a person partaking in mass building or strength training at the gym the initial muscle or strength gains will be quick and fairly noticeable. However, once the individual attains a certain degree of fitness, the gain will typically slow down and become much less noticeable as time passes. In business, the shape of the growth curve essentially determines the direction that the company will be required to take in the market. For many businesses, logistic growth markets are not the most desirable places for product launches because such saturated markets do not leave much room for profits. On the other hand, exponential growth markets do provide opportunities for fast growth and handsome profits, but they also typically lure in a lot of competitors.

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What Is the Greiner Curve? Greiner’s Growth Model

The Greiner Curve model was introduced in 1972. Larry Greiner came up with the model along with six phases of growth. Like, if there is a stable phase and then a quiet phase later, there might be a crisis stage. 

The company must alter its organizational structure and management style to solve the issues that the company faces.

Understanding the framework in connection with the stages that Greiner Curve shows. In those stages, it would be crucial to develop relevant solutions. 

Every organization has to go through six stages of growth. Depending on the stage, management strategies and changes in management capabilities will be applied to the situation. This is what the framework is all about.

Table of Contents

What Is The Greiner Curve?

The Greiner Curve, also known as the Greiner Growth Model, is a framework used to understand the different stages of growth that organizations go through.

It was developed by Larry Greiner in 1972, and it suggests that companies evolve through five distinct stages, each characterized by a specific management challenge.

The curve depicts a series of alternating periods of stability and growth punctuated by crises that arise due to the limits of the current management strategies.

Each crisis brings about a new phase of growth, characterized by a new management style that helps the company to overcome the crisis and continue to grow.

Business leaders and analysts often use the Greiner Curve to understand their company’s challenges as it grows and evolves.

By anticipating these challenges, companies can be better prepared to adapt their management style to meet the organization’s changing needs and continue to grow and succeed over the long term.

Overall, the Greiner Curve is a useful tool for understanding the dynamics of organizational growth, and it can help companies to navigate the different stages of development more effectively.

Why Is This Framework Useful?

As per the framework, every organization has to go through six growth phases; it is crucial to understand your organization’s growth stage. Once you identify your stage, it becomes easy to implement the relevant solutions. It also helps to predict which can be the next stage, so you can properly plan that.

The framework describes that as the organization grows, other stages will be ahead even though the growth looks stable. 

There might be a crisis point too on the way, and it’s inevitable. The organization will have to transition; hence, by understanding the framework and making the right arrangements for the future, the leaders and team will also be ready for such transformation.

The speed at which transitions in the growth phases will also vary. For example, an IT company might come across these growth phases quickly. On the other hand, a financial institution comes across these growth phases at a slower pace.

Greiner’s Growth Model

1. the first phase of growth is through creativity..

The first phase of growth is quite radical. The company has just started. The founders work more quickly to establish their name in the market. They also try to find markets where there will be better sales. 

There are a few staff members at this stage, and communication among them would be informal. The founders work to develop better products, so more creativity is involved in the entire process. 

The first phase of growth is therefore called growth through creativity. But as the company advances and passes to the next stage of development, there will be a need for more staff, more management layers, and better strategies to cope with the growth.

2. The second phase of growth is through the direction.

The organization will look structured during this growth stage, with departments like marketing, sales, finance, products, etc. The company will have teams and team leaders who can direct them. There is more investment in better and newer products. The growth is great, and the hiring process is also at its top. 

In the first phase, one person was managing many things. But in the second phase, some managers manage different departments. The hierarchy and communication are formal, and there’s a top-down approach. 

As the growth continues and moves to the next phase, there will be a need to delegate responsibilities. So, there is moving to the next stage. At the newer stage, there will be a need for better managers with high authority and responsibility.

3. The third phase of growth is through delegation.

The third phase involves more layers of hierarchy. There will be a delegation of tasks so that the top management can take care of the larger issues, and the middle managers can take care of the day-to-day business activities, goal attainment, and other vital things. Top management would concentrate more on higher goals, long-term objectives, and attainment strategies.

The organization’s size gets bigger, so there is some stress on the communication channels and policies. There are different departments, but something is lacking, creating the crisis point. 

To go to the next stage, the company should change the organizational structure and give more importance to transparency and work culture so that the different departments come together and work effectively. For this thing, there may be a need to standardize the practices.

4. The fourth phase is growth through coordination.

In the fourth phase of growth, there are standardized procedures. The organization must try to bring stability. In its path to attain stability, there is a burden on the organization’s bureaucracy. 

Their business structure is sophisticated, but to sync with the organization’s objectives and achieve a return on investment, the crisis point with the red tape becomes unavoidable. 

Perhaps this is the time when the organization must make some changes in its structure and approach. More than a bureaucratic approach, autonomy will be needed to help implement new business culture.

5. The fifth phase is growth through collaboration.

The growth is still happening at this phase as active and scalable work systems are implemented. There is no place for rigidity now. The leaders use collaboration to achieve work satisfaction and a good internal structure. 

There is better flexibility and good technological systems to assist further growth. But, now, internal growth seems to be limited. If the organization wants to grow further, it must look for alliances. If the organization is ready for further partnerships outside the organization, it can go to the next phase.

6. The sixth phase is growth through alliances.

At this stage, companies with well-established structures can look for mergers and better opportunities to grow outside. There might also be a need for outsourcing, strategic networking, and acquisitions. 

But, with expansion, there is some resource stress, and there might be a crisis point. Here, the organization must revisit its mission and vision. It must make changes in the same, as per the situation.

What Are The Predicted Crisis Points In Greiner’s Growth Model?

While talking about the growth phases above, crisis points were mentioned. So, what does that mean? Every organization will meet a crisis point at some level on its path. It doesn’t mean that things have gone wrong with the company. It means the organization’s time to make potent changes or embrace the transition.

Here are the five predicted crisis points as per the model.

Crisis of leadership 

This type of crisis comes into the picture when it becomes tough for the leader to manage everything independently.

The company is on the growth path, and now there is a need for more employees and managers.

Crisis of autonomy

This type of crisis arises when the organization has a good management system. Still, the leader finds it tough to control things.

This point of crisis is the autonomy crisis. The leader has to take action to resolve the crisis.

The control crisis

To resolve the previous crisis, the management comes up with more layers of hierarchy. Now, there are more structures in the organization. 

The top management can’t control things happening at the lower levels. Thus, there has to be a delegation, and only then will the control be better at respective levels.

The red tape crisis

Since different levels of hierarchy are added, there is more bureaucracy. This action has made the decision-making process slow.

It’s a long process when any department wants to execute an action. 

The further growth crisis

At some point, the company experiences growth saturation. Thus, the further growth will be a matter of question. The company might be short of ideas and new developments in this crisis. It should look for opportunities outside. 

Understanding that every organization has to be dynamic and embrace change depending upon the demanding situation can make the company stay smooth during every growth phase.

Key Takeaways

  • The Greiner Curve is a framework that describes the stages of growth that organizations go through and the management challenges that arise during each stage.
  • There are five stages of growth in the Greiner Curve: growth through creativity, growth through direction, growth through delegation, growth through coordination and collaboration, and growth through internal integration.
  • A specific management challenge characterizes each growth stage, and companies must adapt their management style to meet these challenges to continue to grow and succeed.
  • The Greiner Curve is a useful tool for companies to anticipate and manage growth challenges and develop a strategic plan that addresses these challenges.
  • It is important for companies to identify the stage of growth that they are currently in and to understand the management strategies that are most effective for that stage.
  • Successful companies can adapt their management style to meet the organization’s changing needs as it grows and evolves and to navigate the different stages of development more effectively.

When the organization grows to a non-specialist, it looks like consistent growth. But, the growth happens in phases. Greiner Curve provides insight into these growth phases and the need to implement different managerial strategies based on the capabilities of the relevant growth stage. 

At every growth stage, there will be some alterations in managerial strategies and some crisis points as the organization develops. But what’s more important is that the leaders must take relevant action and not react to that negatively. 

Suppose you can figure out which organizational growth stage your organization is going through. In that case, it will become easy for you to make the relevant changes in learning programs, the hiring process, and relatable solutions. 

Who developed the Greiner Growth Model?

The Greiner Growth Model was developed by Larry Greiner in 1972.

What are the five stages of Greiner’s Growth Model?

The five stages of Greiner’s Growth Model are: growth through creativity, growth through direction, growth through delegation, growth through coordination and collaboration, and growth through internal integration.

What is the purpose of Greiner’s Growth Model?

Greiner’s Growth Model aims to help organizations anticipate and manage the challenges that arise as they grow and evolve.

By understanding the different stages of growth, companies can be better prepared to adapt their management style to meet the organization’s changing needs and continue to grow and succeed over the long term.

How can companies use Greiner’s Growth Model to manage growth?

Companies can use Greiner’s Growth Model to identify the stage of growth they are currently in and anticipate the challenges they may face.

By doing so, they can develop a strategic plan that addresses these challenges and helps the organization grow and succeed over time.

Can Greiner’s Growth Model be applied to all types of Organizations?

While Greiner’s Growth Model was initially developed for businesses, it can be applied to various organizations, including non-profits, government agencies, and educational institutions.

Is Greiner’s Growth Model a linear process?

No, Greiner’s Growth Model is not a linear process. Instead, it suggests that organizations go through a series of alternating periods of stability and growth that are punctuated by crises, which arise due to the limits of the current management strategies.

More To Explore:

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“Vision, strategy, and inspiration – these three words describe me the best. I am the founder of “TheLeaderboy” dedicated to leadership and personal development. As a self-taught practitioner, I have been studying the principles of effective leadership for the past decade and my passion lies in sharing my insights with others. My mission is to empower individuals to become better leader

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Greiner's Growth Model

Last updated 25 Mar 2021

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Greiner's Growth Model attempts to predict the six phases and five crises that businesses may experience as they grow.

The phases of the Greiner Growth Model are illustrated below:

business growth curve model

The five predicted crises of growth according to the model are:

Growth Phase: Direction - Crisis of Leadership

  • Informal communication starts to fail
  • Business now too big for leader to get involved in everything

Growth Phase: Delegation - Crisis of Autonomy

  • Business now has functional management
  • But founder / leader still struggling to let go

Growth Phase: Coordination - Crisis of Control

  • More formal management structures in place
  • But new layers of hierarchy needed to keep control

Growth Phase: Collaboration - Crisis of Red Tape

  • A dangerous growth in organisational bureaucracy
  • Slowing decision-making & missing external changes

Growth Phase: Alliances - Crisis of Growth

  • Growth slowing as business runs out of ideas
  • Alliances are sought (including new business owners)

Key Messages from Greiner's Growth Model

What can we learn about the challenges of growing a business if, for a moment, we assume that Greiner's Growth Model is valid?

  • Growth is hard
  • Growth poses many management and leadership challenges (crises)
  • Leadership and organisational structure have to evolve to reflect the growth of a business
  • Businesses that don’t adjust as they grow will experience lower growth than those that do

Criticisms of Greiner's Growth Model

  • Like most models – it is simplistic
  • Not every business will suffer crises as it grows – many adapt easily without suffering any obvious panics or crises
  • The model doesn’t really take account of the pace of growth, particularly in an increasingly dynamic external environment
  • External growth
  • Organic growth
  • Growth strategy
  • Business growth
  • Greiner growth model

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