“It feels like an amazing rollercoaster. We are doing great work, at a scale that we never imagined. I sometimes feel like we are just hanging on by our fingertips!”
This was part of a conversation we had recently with the founder of a Danish IT start up. And it wasn’t the first time we had heard something similar.
We often get asked to help founders and leaders who are building their businesses in rapid growth sectors: cyber security, artificial intelligence, fintech and others. And in these particular circumstances, the leadership challenge is not just about high performance in the technical teams, or developing strategy for an unknown future. It’s about understanding the nuances of organisational growth; the role of culture and the behaviours required to sustain long-term success.
And more often than not in these conversations, we start out by talking about Larry E. Greiner. He was a professor at the University of Southern California’s Marshall School of Business and is best known for his model of organisational growth, which was first published in his 1972 article, “Evolution and Revolution as Organizations Grow”.
Greiner’s Growth Model is a seminal theory on organisational development and even 50 years on, it still stands strong and is as relevant as ever. It provides a structured way to understand the volatile stages of growth that an organisation goes through, from inception to maturity.
And at each stage, leadership, behaviour, and culture play pivotal roles in determining whether an organisation thrives or struggles. Particularly important when your business is growing on steroids.
This article sets out how Greiner’s stages of growth align with the broader leadership challenges of behaviour and culture, drawing on our concept of Leadership Loopholes. These are the hidden behavioural gaps that leaders and organisations often overlook but which can toxically undermine performance, especially during periods of rapid growth.
It covers the following:
- Plotting Greiner’s Growth Model
- The Absolute Importance of Deliberate Leadership in Growth Phases
- Organisational Behaviour and Greiner’s Growth Crises
- Organisational Culture: The Glue That Holds Growth Together
- Case Study: Innovatex – navigating hyper-growth in tech
- A Magical Trinity: Culture, Leadership and Rapid Growth
If you don’t have the to read the whole article, these are the key points to consider:
- Greiner’s Growth Model outlines six phases of organisational growth—Creativity, Direction, Delegation, Coordination, Collaboration, and Alliances—each of which requires distinct leadership, behaviour, and cultural adaptations to successfully manage the associated crises.
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- Leadership adaptability is critical during organisational growth. Leaders must shift their styles and behaviours at each stage to ensure alignment with the company’s evolving structure and needs. Failure to adapt can result in stagnation or organisational breakdowns.
- Behavioural pitfalls, such as the Leadership Loopholes identified by People Create, quietly undermine performance by fostering dependency, avoidance of tough conversations, or fragmented focus. Recognising and addressing these loopholes is key to maintaining momentum during growth transitions.
- Organisational culture plays a central role in supporting sustainable growth. As the organisation scales, culture must evolve to prevent silos, mistrust, or misaligned priorities, all of which can erode collaboration and innovation.
- The case study of Innovatex demonstrates how failure to adjust leadership behaviour and culture can cause bottlenecks in decision-making and create cultural silos, slowing growth. By addressing these issues, Innovatex successfully navigated its growth crisis and sustained its expansion.
- Deliberate leadership is essential for guiding organisations through complex transitions. Leaders who actively engage in intentional, strategic decision-making help their organisations stay agile and focused, avoiding common pitfalls and ensuring long-term success.
Plotting Greiner’s Growth Model
Greiner identified six key growth phases that organisations experience as they scale, each accompanied by an inflection point; a growing pain or, as he described it, a period of crisis. Each crisis requires a specific leadership approach, accompanied by sensitive cultural shifts, in order to be effectively managed:
phase 1
phase 2
Growth through Creativity: in the early stages, start ups are driven by their founders’ creativity, and the culture is energetic, verging on chaotic and highly innovative. As growth accelerates, leaders must shift from hands-on problem-solving to professional management.
Growth through Direction: a more defined leadership and management structure emerges to address growing complexity. However, too much centralisation leads to a “crisis of autonomy”, where employees feel constrained and mourn the loss of their chaotic freedom.
phase 3
phase 4
Growth through Delegation: to sustain growth, leaders must now start to let go and delegate decision-making power to an emerging mid-level of management, striving to promote an empowering culture. And yet, this delegation also leads to trust issues, inefficiencies and frustrations, sparking a “crisis of control”.
Growth through Coordination: as the business evolves, the senior leadership team begins to refocus on strategic coordination across divisions. But the unintended consequence is bureaucratic sluggishness; a “crisis of red tape”.
phase 5
phase 6
Growth through Collaboration: eventually the maturing business evolves toward more fluid and collaborative structures, but challenges remain in maintaining alignment as they scale.
Growth through Alliances: at some point, the internal growth drivers begin to falter and organisations begin to form strategic partnerships or joint ventures to overcome internal constraints and continue scaling, often leveraging external resources and expertise to catapult them forward.
The key takeaway here is that the dynamic tension between structure and flexibility, and the ability of leaders to adapt, is essential. And the growing pains of expansion quickly become apparent if leaders are not in tune with what the business needs.
In our experience, leaders in high growth environments often fall for what we have identified as the Leadership Loopholes, a series of eight observable cultural pitfalls that stifle momentum.
The Absolute Importance of Deliberate Leadership in Growth Phases
It is evident that leadership adaptability is the cornerstone of success through each of Greiner’s six stages. During the “creativity” phase, founders are the heart of the organisation, but as it transitions into the “direction” stage, the leadership culture must become more process-driven and formalised.
“Leadership is about managing adaptation. It’s the ability to mobilise people to tackle tough challenges and thrive.”
Ronald Heifetz, pioneer in adaptive leadership
Research by Bain & Company found that organisations with adaptable leadership are 70% more likely to succeed in periods of growth. But they are rare and many leaders struggle to evolve their styles to meet the changing demands of their organisation.
Just look at the chart below, based on research by the Kaiser Institute, and you can see how rare it is to find leaders who have the versatility to true flex their leadership style.
One of the most significant hurdles leaders face during growth transition is what we have identified as Behavioural Paralysis. Impending transitions are periods of heightened tension for leaders because they know deep down that they need to change, but struggle to make it happen. They are usually either unaware of what to do, or reluctant to embrace the vulnerability that is needed.
Instead, they retreat to the safety of previously effective patterns of behaviour, which in this new context, is now experienced as micromanagement. Instead of empowering their teams, they are unintentionally stifling innovation and slowing decision-making. Teams feel it is futile to push back and become overly reliant on the leader’s direction; a problem that grows into a “crisis of autonomy” as the organisation scales.
And what we take from this challenge is the absolute need for leaders to treat their leadership as a deliberate act – a craft to be honed and developed over time.
Deliberate leadership is crucial because it involves intentional decision-making, clear vision, and proactive guidance, ensuring that leaders align their actions with long-term goals. By being deliberate, leaders cultivate trust, consistency, and accountability within their teams, creating a culture where strategic goals are met despite the challenges of growth.
When there is an explicit philosophy of deliberate leadership, dynamic growth businesses are much better equipped to navigate complex transitions and maintain resilience. They have created a positive context for driving sustainable performance and a culture of innovation and agility. When deliberate leadership eventually becomes a cultural norm, they can more easily address common pitfalls like toxicity, micro-management and reactive decision-making.
“Leadership is not about being in charge.
It’s about taking care of those in your charge.”
Simon Sinek
Organisational Behaviour and Greiner’s Growth Crises
Each phase in Greiner’s model demands not only a leadership shift but a change in organisational behaviour. In the “delegation” stage, where leaders start being empowered to make decisions, poor or inexperienced leadership unintentionally fosters “inadvertent blundering” – one of our key leadership loopholes.
Teams misinterpret their decision-making freedom, making ill-informed judgments with a lack of clear guidance or constructive feedback loops. Without intentional leadership behaviour, focused on building autonomy and trust, employees feel overwhelmed and begin to disengage.
In contrast, well-executed delegation fosters innovation, as employees feel more responsible for their outcomes. According to Gallup research, organisations that actively encourage behavioural flexibility in their leaders see a “30% increase in employee engagement” and a “20% reduction in turnover rates”.
Organisational Culture: The Glue That Holds Growth Together
Culture is the social glue of leadership and is critical throughout a rapid growth journey. It reflects shared values and norms, but it must evolve as the organisation scales. In the early stages, the culture is often driven by a founder’s vision, but as the start up matures, a confusing “crisis of culture” emerges if leaders fail to adapt to new realities.
Let’s give a quick example of what we mean: during the “coordination” stage, cultural misalignment occurs when teams focus on departmental success at the expense of organisational goals. Teams start to work in unchallenged silos, focussing on individual project successes rather than company-wide goals – something we would call “Cultural Selfishness”. This loophole is particularly prevalent in companies with highly charismatic leaders who prioritise their ego-attachment and personal achievements over collective success. In the longer term, they are eroding trust, damaging collaboration, and stifling innovation.
A 2022 study by McKinsey showed that organisations with strong, adaptable cultures are twice as likely to sustain high performance through periods of growth. Leaders who consciously and consistently foster a culture of transparency, aligned with a clear strategic vision, more easily navigate the red tape crisis of Greiner’s model and drive sustained collaboration across teams.
Maybe a brief case study will help bring this to life. Let us introduce you to Innovatex, a rapid growth, high tech business that we have been quietly working with in Germany (all names have been changed).
Case Study: Innovatex – navigating hyper-growth in tech
Innovatex grew from the imaginations and expertise of five passionate, self-proclaimed tech geeks, into a rapidly scaling tech firm in just six years, moving quickly through the first two Greiner stages of “creativity” and “direction”.
Without a lot of time to properly reflect on the culture that they were creating and with relatively little leadership experience, the early success of Innovatex was driven by its founder, Jens Wolff, a visionary and dynamic software engineer. However, by the time Innovatex reached 75 employees, cracks were definitely starting to show.
Jens couldn’t resist sticking with his hands-on approach, resulting in “hierarchical dependancy” amongst his colleagues and more junior leaders, who became hesitant to make decisions without approval. Inevitably, the bottlenecks in decision-making proved frustrating for everybody, including clients, and as a consequence, bright but frustrated talent was beginning to drift away.
In addition, the culture at Innovatex – originally centred around agility and open innovation – began to shift into “contextual complexity”. Teams were increasingly drawn in multiple directions with a lack of clarity about priorities or direction. Jens and his leadership team failed to address these issues early on, leading to less productive collaboration and slower response times in a super-competitive market.
Recognising the need for change, Innovatex invited us in to help them address these Leadership Loopholes and build their behavioural and cultural competencies.
We designed and introduced bespoke development programs that empowered a culture of leadership across the business and established clear decision-making processes. We coached a range of leaders across the business and ran specific inter-team workshops at regular intervals. Culturally, we emphasised shared goals and reinforced collaboration, helping to realign the organisation with its original vision.
Within 18 months, Innovatex had successfully navigated their “crisis of control” and re-established a growth trajectory.
By recognising where they were on the Greiner Growth Model and addressing the Leadership Loopholes, the leadership team at Innovatex successfully avoided stagnation and they are now well on their way to building a much more resilient organisation.
A Magical Trinity: Culture, Leadership and Rapid Growth
In the context of Greiner’s Growth Model, leadership, behaviour, and culture are deeply intertwined, with each influencing how an organisation navigates the unruly periods of expansion.
The research is clear: leaders who evolve with their organisation’s growth are the key to long-term success. By understanding the different phases of growth and recognising the subtle value drains, leaders are able to better anticipate challenges and respond with effective strategies.
Leaders who actively cultivate adaptable organisations, are mindful of Greiner’s work, and foster an aligned culture are much more likely to sustain their growth and remain competitive in a vibrant and challenging business environment.
