From Creativity to Direction

The first evolutionary phase is called creativity. During the creativity phase the organization is born and creating its products and markets.  The organization is small compared to what it will be, and young.  This creativity period is characterized by managers-founders who are managerial, technically oriented, disdain management activities, prefer frequent but informal communication, and react quickly to beneficiaries’ reactions to the product.  Organizational energy is focused on making and selling the product-service.   People in this phase of the organization are all expected to work long hours and be rewarded with modest salaries with the promise of future ownership benefits. 

The creativity phase ends with the crisis of leadership.  As the organization grows the individualistic managerial technical leaders of the creativity phase need to change or be replaced with more efficiency-minded managers willing to establish formal communications, control, product manufacturing, and performance management systems.  The people who join the organization at this time may not be as motivated by intense dedication to the product, the organization, the founders, or the survival of the organization.  The key task during this crisis is to find a strong project/programme purpose oriented manager who is also acceptable to the founders and the original organizational members.

The second evolutionary phase is called direction.  In the direction phase a functional organizational structure is established with increasing specialization for tasks, numerical control systems are installed, work becomes standardized, budgets are set up, communication is characterized by information flowing up and centralized decisions cascading down the hierarchy.   The focus of the organization in the direction phase is operational efficiency.  The reward emphasis is no longer the promise of ownership, as in the creativity phase, but rather salary and merit increases associated with performance according to system metrics. 

The direction phase ends with an autonomy crisis.  As the organization becomes more complex and diverse, lower level members of the organization feel restricted by the bureaucratic systems.  Managers need to delegate and empower more but this is often challenging for directive style managers to do.  Many organizations start to stagnate at this stage, if their managers cannot figure out how to shift to a more participatory and flexible style.

 Delegation, Coordination and Collaboration

The delegation stage follows the autonomy crisis.  In the delegation phase there is a more decentralized organizational structure, more empowerment at all levels in the organization, a shift from cost centers to profit centers, and bonuses tied to profit performance are used as rewards.   The focus of organizational attention in this phase is growing the market and market share.  Often there is a shift from an internal to a beneficiary focus.  The crisis of control occurs to end this phase as managers feel they are losing control of an increasingly diverse field and then seek to regain control.  The organization is larger and more complex, and if they successfully navigate this crisis, they move into the coordination phase.

In the coordination phase the focus of organizational attention is consolidation of the organization – again a shift back to the internal focus.  The coordination phase is characterized by the merger of departments into more coherent groups, mergers and acquisitions with other entities to make sense of market and financial positions, the sale of divisions that do not make sense, review and centralization of all the information and financial systems.   Daily operational and staff performance review systems stay decentralized.  Each entity becomes an investment center – a miniature operating unit.  Stock options and profit sharing are used to encourage identity with the organization.   Field-unit managers become adept at the use of the key organizational buzz words.  Eventually the coordination phase bogs down in the crisis of red tape.  Essentially, the red tape crisis is a conflict between the headquarters and the individual units – often the local vs. global organizational issues are at the heart of this crisis.

In the fifth phase of growth, collaboration, there is more use of cross-organization teams, more skillful use of local and global perspectives, increased ability to confront and resolve differences about organizational direction and more use of interdisciplinary learning.  Greiner did not develop a crisis for the last phase. 

Like Tuckman’s team development model, organizations may not successfully develop through every phase.  Some organizations fold during the crisis of leadership at the end of the creativity phase.  Others fail to survive the crises that end subsequent evolutionary phases.  So this model is developmental but not inevitable.