As your company has grown it has gone through multiple different phases. Now that it is mature things are relatively stable but along the way to the top there were issues that constantly appeared. When innovating whether within a venture company or launching the venture as a separate or new business these issues are going to appear – they’re systemic in growth.
They were laid out in 1972 by a man named Larry Greiner in something that became known as the Greiner curve. It looks as follows:
Let’s go through each of the crises and look at how they can affect an innovative firm.
In the early stages of any venture there is plenty of uncertainty. This uncertainty is solved through creativity and indeed that’s how firms grow in their earlier stages. In the early stages of any firm things are often informal and no formal communication strategy really occurs. When you are venturing with only a handful of people on your team you’ll find exactly this will occur.
The problem then is the leadership shift that must occur later on. Once the team grows professional management is required and the style of dealing with employees will have to change as well.
Now that the venture has succeeded in the market and additional levels of support are needed the venture will grow through direction in a world of more formal communications and budgets.
However, this is where the concept of a manager or two no longer fits the bill. There are so many processes to manage that one person simply cannot do the job and therefore another new structure is called for. The venture will need more delegation. As additional delegation comes in the crisis will be solved and the next phase will be entered.
This is a challenging phase to make it through since the initial stern directive management style of phase two is no longer necessary but mid-managers won’t yet be used to their positions. This is why the third crisis is one of control.
Despite the fact that things are going well from a market and sales perspective a better top management structure is required to provide superior control for a venture of this size. Corporate venturers may in fact find this phase the easiest of all since their firm has so much top management capability and is able to hire experienced middle managers.
Corporate venturers will probably find this crisis eerily familiar. Many of them will have had to fight through red tape to get to a venture position and here is the red tape back again within your own business unit.
Luckily, as long as this is a business unit and not a separate firm the red tape won’t have as much of an impact since the finances from the unit will be fed up and the most important type of innovation is the relatively simple and easily approved incremental innovation.
For the firms who are stand-alone this will be a difficult crisis to manage. The very thing so many corporate venturers have to fight though has now become your firm’s reality as the stern top-management locks down the former flexibility of the firm.
Now that the company is large internal growth becomes the crisis where only through innovation or partnerships is the firm able to expand – the product has saturated the market and while it can compete for a larger share in order to expand it’s going to have to look to new solutions.
While this model is useful note that not all firms will go through all of these crises. Like all models they’re only an approximation (usually in aggregation) and not necessarily specific to your firm. Crisis 3 in particular will not be experienced by all firms due to their own capabilities and ability to quickly add skilled middle management and embrace top management direction.
The Greiner Curve applies to both firms as well as new ventures. The purpose of this article was to give innovation managers an overview on what they can expect as their innovations grow. If you’re interested in learning more Larry Greiner’s original paper in the Harvard Business Review can be seen here: http://www.korealabor.ac.kr/upload/board_data/Greiner(1972).pdf. It goes into considerably more detail on the subject and is certainly a recommended read.
