business growth curve model

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.

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When Your Business Needs a Second Growth Engine

• James Allen

Traditionally, the most reliable way for a firm to find its next wave of growth was to apply the capabilities of its core business in an adjacent market. But recently a new pattern has begun to emerge. More firms are learning the art of building large second cores—what Bain’s Zook and Allen call engine twos. Given that in the past five years, 60% of big public companies have seen their growth stall out or stagnate—often because of technological disruption—finding an engine two has become increasingly imperative.

What does it entail? Successful engine twos have four factors in common: They target markets where the profit pool is sizable and growing or shifting, as Amazon’s cloud computing business did. They have a differentiated competitive advantage, which is often built up through acquisitions, as happened at Disney+. They adopt entrepreneurial approaches, like Bradesco’s digital unit, Next, and leverage the scale and assets of the original core, as the industrial cleaning company Ecolab’s new water-purification business did.

In combination these four elements magnify one another’s effects, often creating businesses that have much greater potential than firms’ original cores.

Here’s how to build one.

Idea in Brief

The opportunity.

While new technologies continue to upend industries and shorten the lives of corporations, there has never been a better time for companies to search for new growth engines.

How to Tap It

Half of successful “engine two” businesses are found by entering a fast-growing adjacency, as Ecolab, a provider of industrial cleaning products and services, did when it moved into the industrial water purification business. About a third are next-generation versions of the core business—like Netflix’s move from DVD rentals to streaming. The rest involve building or buying a business totally separate from the core.

Keys to Success

Companies need to identify markets with expanding profit pools, ensure that their offerings are differentiated, and instill an entrepreneurial mindset in the new business while harnessing the skills and assets of the original engine of growth.

In a series of forums we held recently with chief executives of large companies around the world, we uncovered a preoccupation with obsolescence and renewal. When we surveyed them, 65% of the CEOs predicted that in five to seven years their firms’ main competitors would be different from their main competitors today, and 63% said that new competitors with new business models would pose a major threat to their firms’ core business. The CEOs projected that in the next decade 40% of the value their companies created would come from entering new markets and launching new business models. Clearly, the business landscape feels highly unstable to them—which is understandable, given that new technologies continue to upend industries and wipe out businesses at a remarkable rate.

The good news is that there has never been a better time for companies to try to build new engines of profitable growth. We are in the longest period of low interest rates in modern history. Besides being cheap, money is abundant: One study by Bain & Company estimated that global investment capital had tripled in the past three decades and stood at 10 times global GDP. In addition, high-growth industries today don’t require as much investment as they once did; disruptive businesses can scale up faster in size and power with less capital.

In the past the most reliable way for businesses to find their next wave of growth was to mine their one or two strongest core businesses and apply their most distinctive capabilities in adjacent markets. Classic adjacency strategies included moves into new geographies (IKEA’s launch of stores in China in 1998 and in India in 2018), new products (Apple’s entry into the wearables business in 2015 with the Apple Watch, which now outsells the entire Swiss watch industry), and new customer segments (Porsche’s foray into the suburban family market in 2002 with an SUV line that now outsells its classic sports cars in the United States by two to one). Many successful companies have been propelled for decades by strategies based on adjacencies. We estimate that in the past 30 years nearly 75% of the companies that grew revenues and profits by at least 5.5% annually for 15 years or more did so by regularly adapting a repeatable business model to related segments, applications, or product categories or new geographies.

Yet recently, we have seen the success pattern begin to change. More businesses with strong, growing cores are learning the art of building large new cores—what we call engine twos. The top eight value-creating companies in the world—Amazon, Google, Apple, Microsoft, Tencent, Ping An, Reliance, and Samsung—have aggressively channeled their capabilities and cash flow into developing new cores. From 2008 to 2018 as much as one-third of the growth in the market value of large public companies could be traced to the prospects of their engine twos.

To be sure, the old playbook of expanding from the core into adjacencies will remain durable for many companies. But change and disruption now happen so fast that it’s very difficult to be certain that your company will be one of them. The risk of inaction is high. In the past five years more than 60% of big public companies have stalled out—experiencing a sudden large drop in growth or shareholder returns—or faced threatening levels of stagnation, underperforming their markets with low-single-digit growth. According to our studies of stall-outs and other research, after a large company experiences a downward trend in sales and profits for 10 years, the chances that it will be reversed are less than 20%.

That makes finding a successful second core an imperative. To better understand what that involves, we identified more than 1,000 companies that exhibited features of engine twos. Out of that set we built a database of 100 new initiatives that were deemed to have the potential to contribute a major share of a company’s future growth and were well-documented in company filings and media reports. We also developed case analyses of engine twos and distilled lessons from the 180 forums on growth and business building we’ve held over the past three years, which were attended by some 3,000 CEOs in 35 countries.

Three distinct archetypes of successful engine twos emerged. About a third were next-generation versions of original core businesses, or engine ones. These were separate units that often had been started in response to perceived threats from an insurgent competitor with a new business model, to a major shift in customer purchasing patterns, or to rapid technological advances that allowed companies to quickly create new offerings. Examples of this form of new engine include the digital bank that DBS founded alongside its traditional legacy bank, the digital media business that the traditional German periodical publisher Axel Springer shifted to, and the content-streaming service that Netflix built next to its original DVD-by-mail core.

A second form, accounting for nearly half the successful engine twos, involved moving into a market that historically was just minimally related to the engine one business, drawing on the first core’s assets and on new technologies. Consider the French multinational Schneider Electric: Alongside its core as a provider of heavy equipment for the transmission and distribution of electrical power, it created a thriving software and services business focused on energy management for factories and businesses. Such engine twos almost always have the additional benefit of strengthening the engine one and protecting it from market shifts or competitive threats. As part of its move into services, for instance, Schneider added internet capabilities to its equipment, which enabled the company to monitor it and offer customers invaluable “predictive maintenance” that prevented disruptions. Eventually, connectivity to the cloud could allow Schneider to shift to a new model in which it charges customers for the amount of energy they use instead of selling them equipment outright.

The third engine-two pattern, accounting for less than one-fifth of success cases, involved building a brand-new business almost completely unrelated to the engine one. Nearly all the examples in this category followed a common formula: preemptively making a major investment in a new technology, using current corporate capabilities to leapfrog into a leadership position, following up with additional heavy investments, and making acquisitions to obtain needed capabilities or build scale quickly. This was the path taken by the conglomerate Reliance, which started out as a synthetic-fiber producer, eventually expanded into oil and gas, and now is the most valuable company in India. In 2016, Reliance drew on its capabilities in raising capital for industrial projects, recruiting top management, and working closely with government agencies to launch its engine two—Jio, India’s first 4G mobile network—with an investment of $21 billion. It then spent an additional $15 billion to buy content and data service providers such as the KaiOS phone operating system and the music-streaming service Saavn. Today Jio is the leading telecom company in India, with some 400 million wireless subscribers and a 36% share of the market.

In our research we saw that four foundational elements were instrumental in the success of all three types of engine twos. They should be viewed as essential criteria for any new core a leadership team is contemplating entering at scale.

1. A Target Market with Large Profit Potential

Most successful engine-two businesses were in a market where the profit pool —the total profits earned at all points along the value chain—was sizable, rapidly expanding, or shifting. In more than 80% of successes, revenues and profits were clearly expected to rise faster in the engine two’s market than in the engine one’s. Amazon Web Services (AWS) is the most dramatic and well-documented example. By dominating the rapidly growing market for cloud computing, AWS now consistently delivers more profits than all the rest of Amazon does. (AWS has an operating margin of about 30%.)

The most common success factor in building new core businesses was a company’s ability to ride a technology adoption curve in markets where the profit pools were large or shifting quickly toward players with new forms of competitive advantage. More than 60% of the engine twos we studied had business models based on technology substitution (such as the insurer Ping An’s online medical service Ping An Good Doctor) or technology upgrades (such as Reliance’s Jio 4G network). This ability was also critical to the success of next-generation versions of engine ones (such as Philip Morris’s entry into smokeless products).

As these examples illustrate, successful second engines are often built on exciting frontiers opened up by novel technologies. Notably, we didn’t find any successful engine twos predicated on consolidating competitors across a declining industry or on acquiring and rejuvenating an underperforming leader in a lagging industry.

2. A Proprietary Source of Competitive Advantage

Businesses make money by being sustainably different and better, not just by pursuing growth. This is the cold truth of hot markets. Most of the time, more than two-thirds of the profit pool in a clearly defined competitive arena is captured by the top two players, with the rest barely earning more than their cost of capital. When we recently studied the distribution of economic profits across a wide range of industries, we found that in many the proportion was even more lopsided. The lesson is clear: If you don’t possess or can’t see your way to developing a strong competitive advantage that will be hard for others to replicate, then think twice about pursuing an engine two.

This lesson was well understood by the management team of the Belgian company Umicore, a global leader in the reclamation of specialty metals, whose core business is two centuries old. Seeing an opportunity in the advent of electric vehicles and clean energy, the company started an engine two, Umicore Rechargeable Battery Materials, to focus on the essential products for batteries and catalysts. Because Umicore had years of experience working with lithium, nickel, cobalt, and manganese, which are all used in batteries for electric cars, and refining them into precise, high-quality formulations, its leadership team was confident that it could build a new business with a clear technical differentiation and advantage. To fund the engine two, in 2017 the company divested some older assets, including its zinc business, which had begun with a mine granted by Napoléon Bonaparte in 1805. In short order the engine two revenues eclipsed those of the reclamation business and became a major source of growth.

Successful second engines are often built on exciting frontiers opened up by novel technologies.

In some cases the differentiated asset or capability of a successful engine two was a product or service built to support the engine one. Ant Group, now one of the top financial technology companies in the world, began in 2004 when Jack Ma, the founder of Alibaba, created a service called Alipay that online shoppers could use to pay for purchases on his company’s e-commerce sites. In 2011, seeing that the online payment market was growing rapidly and that many adjacent markets were forming around it, Ma spun off Alipay as a separate company. Today it is the leading payment service provider in China, used by more than 80% of Chinese consumers. Alipay’s differentiation was not only its link to the Alibaba e-commerce businesses, which fed it tens of millions of customers, but also its approach to the market. Unlike other online payment methods—and thanks in part to a conducive regulatory environment in China—Alipay invested in service both to consumers and to vendors of all sizes (in the form of data on their businesses and methods for lowering financial risk). As a multisided platform, it has been able to tap even larger opportunities for growth.

When an Engine Two Isn’t Right for You

We have argued that it makes sense for more companies to consider building a second engine of growth. This perspective is based on the abundance of opportunities, historically low interest rates, the widespread availability of investment cash, new approaches to creating a culture of entrepreneurship, and the many ways to acquire or access strong new capabilities. However, any investment in an engine two carries risks, including to the momentum of the core business itself.

Here are five reasons to consider backing off from an engine two:

Risk of losing focus.

If the original core business is not close to reaching its full potential and needs a lot of attention and resources to do so, the premature pursuit of a new core could derail the company.

Lack of commitment.

Building an engine two requires a willingness to act fast and make major investments. Senior management must be committed to pursuing market leadership for the second core, not just trying to participate in the market.

Leadership void.

Engine twos can’t succeed if they can’t find leaders with the right passion, skills, and commitment.

Hostility from the original core.

Leveraging the scale and capabilities of the core is central to building a new growth engine within a large corporation. If a firm’s most powerful business is resistant and controls key assets, then the time may not be right for an engine two.

Hot market but uncertain advantage.

If you are not confident that you have a truly differentiated offering, then you probably don’t have the basis for success, no matter how explosive the market’s growth could be.

Looking at Ant Group and at Umicore’s rechargeable battery business, one might conclude that an engine two initiative can be pursued only if all the elements necessary to create the new core already exist in the engine one. That is not the case. We found that only about one in four successful engine twos was built organically end to end; the remaining three did a lot of acquisitions to assemble the pieces needed to quickly scale up.

For engine twos that were next-generation versions of a core business, we saw several patterns of acquisitions. One was a “string of pearls.” Take the Danish company Ørsted. Originally founded to extract offshore oil and gas resources in the Danish sector of the North Sea, it decided to leverage its strong government relationships and engineering capabilities to start a renewable energy business. It bolstered this successful move by buying a series of wind farms, quickly gaining scale. Today wind energy accounts for more than two-thirds of the company’s revenues and a much larger share of its value creation.

Another pattern was a “big bang” acquisition that formed a major part of the new core and gave it significant market share, which the buyer then worked to enhance. A dramatic example is Dell’s $67 billion purchase of EMC, the leader in computer storage software and equipment. Note that this is far different from the “catch and kill” approach incumbents often use to squash insurgent competitors by buying them only to shutter their operations.

Acquisitions were also often used surgically to add assets and capabilities and quickly magnify the power of an engine two that had begun organically. A recent example of this is the founding of Disney+ in 2019. This high-profile entry into the streaming business was called the “highest priority” of Disney by former CEO Bob Iger, who stepped down from that position and into the executive chairman role to focus on creating this new core for the company. (Iger retired at the end of 2021.) While Disney+ began with a strong brand and a unique entertainment library, the acquisition of the capabilities of BAMTech, a media-streaming company, and the purchase of the content creator 21st Century Fox were central to its strategy. The venture is off to an explosive start and, if successful, will be the quintessential engine two, expanding the audience for Disney’s content while increasing follow-on sales of products based on its characters and shows—the biggest profit generator of the Disney model.

The bottom line is that acquisitions were crucial to creating a differentiated advantage in more than half of the successful engine twos, either by enabling the quick formation of a new growth core or by giving companies world-class technical capabilities.

The first two criteria for a successful engine two—a robust profit pool and the ability to form a differentiated core—are fundamentally market-facing conditions. The second two elements are quite dissimilar but no less important, and they relate to the internal characteristics of the company.

3. An Entrepreneurial Mindset

Building a second growth engine requires a way of thinking that doesn’t come naturally in large incumbents. In past research (described in our book The Founder’s Mentality ), we defined the attributes of this mindset: a strong sense of insurgent mission, an obsession with the front line, and an ownership attitude. We found that companies that had those attributes accounted for 87% of second engines that were home runs, 66% of those that performed reasonably well, and just 12% of the failures. This mindset emerged as the strongest of the four success factors in our research.

How did companies with these traits overcome the bureaucracy that drags down most large organizations? They didn’t have to. Instead, they set up stand-alone engine-two units. For instance, the Brazilian bank Bradesco’s digital venture, Next, was a separate entity with its own target market of tech-forward customers, culture, brand, and ways of working. Ørsted made each of its wind farms an individual unit and gave the manager in charge the latitude to shape the local culture and strategy, creating a “mini-founder” experience. Jio was separated from Reliance and given a capital structure that allowed outside investors to buy shares of it, while still drawing on corporate assets that accelerated its growth.

The need to give start-up enterprises within a company freedom is not a new concept. Robert Burgelman wrote about the challenge of using assets from the original core to build new businesses in his book Strategy Is Destiny, comparing the established core to a creosote bush, which discharges sap to kill any new plants that grow around it—an analogy first used by former Intel CEO Craig Barrett. Clayton Christensen’s book The Innovator’s Dilemma documented the many factors that prevent companies from putting new ventures in separate units. What is new is how many large companies are finally beginning to crack the code by giving internal start-ups the ability to make decisions independently, empowering their leaders with the incentives of owners, and enabling faster, more-entrepreneurial ways of innovating.

4. The Ability to Leverage the Scale and Assets of Engine One

It’s easy to focus on the disadvantages that large, often-bureaucratic companies face in launching new businesses, but incumbents have advantages too—primarily, not having to start from scratch.

Ecolab, for instance, built a successful engine two in water purification by drawing on the capabilities, channels, sales force, and customers of its engine one. Founded in 1923 by a salesman who noticed stains on his hotel carpet and created a cleaning solution, Ecolab grew to be the leader in industrial cleaning products and services and more than twice the size of its nearest competitor.

But when the growth of Ecolab’s markets started slowing a decade ago, its leadership looked for new opportunities and determined that its customers’ greatest need would be securing access to clean water. The company predicted that the water purification market would require highly advanced technology and would rapidly expand, presenting clear engine-two potential. Ecolab jumped into the business in 2011 by acquiring Nalco, a leader in industrial water purification.

Acquisitions were crucial to creating a differentiated advantage in more than half of the successful engine twos.

To fund more than a dozen acquisitions and equity investments in water-purification-technology companies, Ecolab then sold off its noncore assets in chemicals and energy. It also leveraged its cleaning sales force and purification and antimicrobial technologies to cross-sell water-treatment products and services to its core customers. Since 2010, Ecolab’s revenue has climbed from $6.8 billion to $11.8 billion, its enterprise value has increased by a factor of five, and its stock market value has jumped 465%, outperforming the overall stock market by more than 50%.

The sharing of capabilities, customer access, or distribution systems between an established engine one and a fledgling engine two doesn’t come naturally or happen on its own. Tensions and trade-offs inevitably arise. The key is to anticipate some of them early in the process, creating agreements that mitigate them in advance. In addition, it’s critical to regularly hold a standing group meeting, attended by leaders of each business and the CEO, to resolve conflicts, remove bottlenecks quickly, and identify further synergies.

The Power of Combining All Four Elements

Each of the success factors magnifies and reinforces the effects of the others. The more potential the market and its profit pool (element one) have, the more important it is to harness the assets of the original core (element four) to capture share ahead of competitors. The stronger the differentiation of your entry strategy (element two), the more important it is to have an entrepreneurial mindset (element three) in order to test that differentiation and continually find ways to improve it, so you can remain a step ahead of the competition.

The combined power of all four elements can be seen in the hypergrowth of the Covid-19 PCR testing division launched by Thermo Fisher Scientific, which provides diagnostic, life sciences, and laboratory products and pharmaceutical services. During the pandemic the company built a new lab-based testing business that went from producing zero tests to 10 million weekly in six months. After only 10 months the new venture was on track to account for 25% of company revenues. Thermo Fisher then moved into rapid testing by acquiring Mesa Biotech, a small maker of PCR testing devices for hospitals, physicians’ offices, and urgent care clinics, and immediately scaled up its manufacturing and commercial capabilities, increasing sales volume for those products by 10 times in less than a year.

The company leveraged its engine one capabilities by shifting nearly 1,000 employees to the new business—notably, more than 100 R&D scientists who were given new six-month contracts. It promoted an entrepreneurial culture by temporarily walling that workforce off with a companywide message: “The Covid teams are doing something important for us and for the world. Please leave them alone to do it.” The company also formed executive teams devoted to slicing through bureaucracy, tossing out typical finance-enforced spending limits and speeding the hiring of more than 1,300 new employees, which doubled the division’s workforce. Thermo Fisher’s long-term ambition? The leadership position in testing in the world beyond the pandemic. Today the business boasts more than 20 SKUs developed from its first Covid test.

Engine two businesses are certainly not for every company or every situation. However, the environment today is more conducive to their success than it has ever been before. The financial conditions are uniquely ideal. Market turbulence is generating a burst of opportunities—as Thermo Fisher’s story dramatically demonstrates. As digital technologies continue to come of age, they’re unleashing new business models, redrawing market boundaries, and shifting profit pools. And perhaps most important of all, evolving management practices are making it easier to foster entrepreneurship within incumbent corporations and create the kind of flexible, innovative culture that will keep them strong for years to come.

• JA James Allen is a partner in Bain & Company’s London office and a member of the firm’s global strategy practice. He is a co-author of a number of bestselling books including Profit from the Core and The Founder’s Mentality: How to Overcome the Predictable Crises of Growth (Harvard Business Review Press, June 2016).
• CZ Chris Zook is a partner in Bain & Company’s Boston office and has been a co-head of the firm’s global strategy practice for twenty years. He is a co-author of a number of bestselling books including Profit from the Core and The Founder’s Mentality: How to Overcome the Predictable Crises of Growth (Harvard Business Review Press, June 2016).

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What Is a Growth Curve?

Understanding a growth curve, the bottom line.

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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.

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.

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Guide to Greiner’s Growth Model

Where do you sit on the growth curve and what risks do you face…🌱

Table of Contents

Growing your company is exciting, stressful, at times tiring, but always fun! During the growth you’ll encounter numerous crises that will jeopardise the success. As with most of life’s business problems, there’s a framework to explain or help map out this scenario…

So, let’s take a look at Greiner’s Growth Model.

What is Greiner’s Growth Model?

Greiner’s Growth Model is a framework that shows the different phases a company goes through to achieve growth and the different types of crisis that may occur during those milestones.

The graph shows time on the X axis and size of the business on the Y axis, with both increasing as the company goes through the different phases.

The model is helpful in showing companies the different approaches to growth, as well as highlighting the different challenges. It is commonly used by businesses to self-identify obstacles they are facing that will hamper their efforts to achieve their full potential.

What are the phases of growth in the Greiner’s Growth Model?

Let’s firstly look at the different phases a company goes through based on this model.

Growth Through Creativity

All businesses start from a spark of an idea, one that is fostered and developed over time. It’s a truly creative stage of a company’s life as they attempt to develop a new product or service, pull together a team, a route to customers, and get that sometimes elusive ‘product-market fit’.

There are some common traits of companies at this stage:

• They are small, responsive and agile
• They are creative and working to find their product-market fit
• They’re informally structured with strong communication between teams

Growth Through Direction

At this point in a company’s life the owner/founders begin to hire managers, releasing some of the control of the resources and direction of the business. This is normally a ‘growing up’ period of a company’s life, when processes become slightly more formal, departments may be developed, and a culture is set within the business. That’s not to say the founders/owners aren’t still actively involved, they are indeed ultimately running the company, but it’s a collaboration of managers that drive the direction.

A company can be considered in the Growth Through Direction phase if:

• They have recently hired managers as the team grows
• Decisions are no longer solely made by the founder/owners
• Processes have started to be created within the company (e.g. HR, operations)
• A culture is embedded within the company
• Things are getting bigger and more complicated!

Growth Through Delegation

The Delegation phase of growth occurs when key staff members are given accountability and responsibility to deliver in areas where they are better equipped to than the manager. At this point in a company life there will be specialist employees, focused on specific roles.

Delegating jobs to more specialist, skilled employees means you’ll get a better result, with the added benefit that the executive team have time to focus on the market data, their strategic decisions, and business planning.

A company may be in this phase if:

• Specialist skilled employees are increasingly being hired
• Accountability for key tasks is shared down the company
• Leadership teams spend less time doing jobs they aren’t good at or don’t like

Growth Through Coordination

This is now a mature stage of growth, one that focuses on the company core competencies and all departments working in line with each other to output a product or service. Growth comes from the whole business being greater than the sum of its parts.

• They are mature in a marketplace
• Teams work with each other internally for the best outcome
• There are set processes and functions within the business
• Workflows and communication tools are present within the business
• Roles and responsibilities are clearly defined

Growth Through Collaboration

The final stage of growth in this model is deemed to be Collaboration. This is an evolution of Coordination, one where all parts of the company work together in a trusted, effective manner. Systems are simplified for efficiency, learning and development is prominent, and all aspects of the business contribute towards ways to continue success.

• They are a mature company
• There is a positive culture around problem solving
• There’s little ‘red tape’
• Reward is shared on the basis of team performance
• Processes are simple and teamwork is good
• Employees feel they can contribute ideas for growth
• Everyone knows how they impact the company with the work they do

Growth Through Alliances

The final stage of growth is a new one introduced more recently to the curve, and it focuses on strategic alliances. The idea being that companies may merge, acquire, partner or work with other companies in order to grow themselves.

Are the phases of growth linear in the Greiner’s Growth Model?

The model suggests that is the case, but in real life it is not necessarily always linear. For example, a start-up company focused on Direction may also embark on Strategic Alliances. It’s important to note the real importance and value of this model lies in the crises that may impact a company at the different stages… so let’s take a look at those.

What are the crises in the Greiner’s Growth Model?

Each phase in the Growth Model has an associated potential crisis that may disrupt the trajectory of growth.

Crisis of Leadership occurring during Creativity

This is a common issue for start-ups and young companies that find themselves growing via creativity and innovation. Initially with a small and informal team it’s possible for founders to manage the business in a relaxed manner, but over time this becomes a challenge.

Growth will lead to increasing difficultly around coordinating processes, communicating and motivating the team, or driving the company forward. This can be fatal for a business as it can result in key people departing (remember, people leave managers as much as they leave jobs) and founders becoming increasingly frustrated.

At this point a more defined management style is required in the company to take it to the next level.

Crisis of Autonomy occurring during Direction

This is a really interesting crisis. As a company develops in direction then managers may become more interested in their own unit than the business as a whole. This can result in conflict between management where a decision may be good for one department or area but bad for another.

The balance to strike is giving managers and employees autonomy but ensuring everyone is on the same page around decision that are best for the business as a whole. Ensuring everyone is on the same page around their strategy is key in that balance.

Crisis of Control occurring during Delegation

The crisis around the Delegation phase can be summed up with two factors:

• Founders and managers can find it difficult to let go and give others full control over certain aspects of the business.
• Communication may be difficult. At this point in a company’s life there can be problems between management or employees about what is trying to be achieved in each job and how to get the best result.

The latter can sometimes be a reason to reinforce the behaviour of the former, with founders citing concerns that if they do not do something it won’t be done well. It ultimately will result in a sub-par outcome though, with founders struggling to ‘do everything’ and teams feeling unmotivated.

Crisis of Red Tape occurring during Coordination

Another very relatable crisis within the life of a company is that of ‘Red Tape’ or bureaucracy. The addition of extra reports, processes, functions, all of which contribute to additional work for employees and can risk the wider culture of the business.

This can slow down decision making, resulting in a less agile company that cannot respond to market changes while also suffering a wider loss of efficiency/reduced margins.

Of course, this is a risk at all points in a company life, but it has more chance of arising when coordination is required and thus processes are needed within a company.

Crisis of Growth occurring during Collaboration or Alliances

The final crisis is one of how to grow. In the framework we’ve moved through each phase, so the company is now successful and mature. The question becomes how does it continue to grow, given the success?

If you’re in Collaboration, then perhaps Alliances are your way forward. If you are already developing partnerships then perhaps diversification is the route to growth? There are lots of potential options here, it’s a good point to evaluate your industry and develop a new strategy.

What are the advantages of Greiner’s Growth Model?

There are lots of advantages to this model including:

• It provides a number of identifiable challenges companies may face
• It’s simple to understand and shows a way forward for growth
• Different phases for a company to identify their current position are highlighted
• It provides a good discussion piece for management teams
• It reinforces change is needed for growth

What are the disadvantages of Greiner’s Growth Model?

The few limitations of this model include:

• It’s simple and in real life the lines blur between phases
• Not all companies follow the curve in a linear way
• The crises may not always occur in each phase

What frameworks go well with Greiner’s Growth Model?

As a company using Greiner’s Growth Model you may also want to use a SWOT Analysis, which should include strengths & weaknesses from this model.

Who invented Greiner’s Growth Model?

The Greiner’s Growth Model was invented by Larry E. Greiner in 1972 with the five phases of growth. In 1998 he updated the model to add the sixth phase around Alliances.

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Business Life Cycle

The five stages of a business' life

What is the Business Life Cycle?

The business life cycle is the progression of a business in phases over time and is most commonly divided into five stages: launch, growth, shake-out, maturity, and decline. The cycle is shown on a graph with the horizontal axis as time and the vertical axis as dollars or various financial metrics. In this article, we will use three financial metrics to describe the status of each business life cycle phase, including sales , profit , and cash flow .

Image: CFI’s FREE Corporate Finance Class .

Phase One: Launch

Each company begins its operations as a business and usually by launching new products or services . During the launch phase, sales are low but slowly (and hopefully steadily) increasing. Businesses focus on marketing to their target consumer segments by advertising their comparative advantages and value propositions. However, as revenue is low and initial startup costs are high, businesses are prone to incur losses in this phase.

In fact, throughout the entire business life cycle, the profit cycle lags behind the sales cycle and creates a time delay between sales growth and profit growth. This lag is important as it relates to the funding life cycle, which is explained in the latter part of this article.

Finally, the cash flow during the launch phase is also negative but dips even lower than the profit. This is due to the capitalization of initial startup costs that may not be reflected in the business’ profit but that are certainly reflected in its cash flow.

Phase Two: Growth

In the growth phase, companies experience rapid sales growth. As sales increase rapidly, businesses start seeing profit once they pass the break-even point. However, as the profit cycle still lags behind the sales cycle, the profit level is not as high as sales. Finally, the cash flow during the growth phase becomes positive, representing an excess cash inflow.

Phase Three: Shake-out

During the shake-out phase, sales continue to increase, but at a slower rate, usually due to either approaching market saturation or the entry of new competitors in the market . Sales peak during the shake-out phase. Although sales continue to increase, profit starts to decrease in the shake-out phase. This growth in sales and decline in profit represents a significant increase in costs. Lastly, cash flow increases and exceeds profit.

Phase Four: Maturity

When the business matures, sales begin to decrease slowly. Profit margins get thinner, while cash flow stays relatively stagnant. As firms approach maturity, major capital spending is largely behind the business, and therefore cash generation is higher than the profit on the income statement .

However, it’s important to note that many businesses extend their business life cycle during this phase by reinventing themselves and investing in new technologies and emerging markets. This allows companies to reposition themselves in their dynamic industries and refresh their growth in the marketplace.

Phase Five: Decline

In the final stage of the business life cycle, sales, profit, and cash flow all decline. During this phase, companies accept their failure to extend their business life cycle by adapting to the changing business environment. Firms lose their competitive advantage and finally exit the market.

Corporate Funding Life Cycle

In the funding life cycle, the five stages remain the same but are placed on the horizontal axis. Across the vertical axis is the level of risk in the business; this includes the level of risk of lending money or providing capital to the business.

While the business life cycle contains sales, profit, and cash as financial metrics, the funding life cycle consists of sales, business risk, and debt funding as key financial indicators. The business risk cycle is inverse to the sales and debt funding cycle.

At launch, when sales are the lowest, business risk is the highest. During this phase, it is impossible for a company to finance debt due to its unproven business model and uncertain ability to repay debt. As sales begin to increase slowly, the corporations’ ability to finance debt also increases.

As companies experience booming sales growth, business risks decrease, while their ability to raise debt increases. During the growth phase, companies start seeing a profit and positive cash flow, which evidences their ability to repay debt.

The corporations’ products or services have been proven to provide value in the marketplace. Companies at the growth stage seek more and more capital as they wish to expand their market reach and diversify their businesses.

During the shake-out phase, sales peak. The industry experiences steep growth, leading to fierce competition in the marketplace. However, as sales peak, the debt financing life cycle increases exponentially. Companies prove their successful positioning in the market, exhibiting their ability to repay debt. Business risk continues to decline.

As corporations approach maturity, sales start to decline. However, unlike the earlier stages where the business risk cycle was inverse to the sales cycle, business risk moves in correlation with sales to the point where it carries no business risk. Due to the elimination of business risk, the most mature and stable businesses have the easiest access to debt capital.

In the final stage of the funding life cycle, sales begin to decline at an accelerating rate. This decline in sales portrays the companies’ inability to adapt to changing business environments and extend their life cycles.

Understanding the business life cycle is critical for investment bankers, corporate financial analysts, and other professionals in the financial services industry. You can benefit by checking out the additional information resources that CFI offers, such as those listed below.

Additional Resources

Thank you for reading this guide on the 5 stages of a business or industry life cycle. To help you advance your career, check out the additional CFI resources below:

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• Careers in Corporate Development
• Diffusion of Innovation
• M&A Process Overview
• See all valuation resources
• See all commercial lending resources
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What Is the S Curve in Business?

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The Disadvantages of Diversified Business

Growth stages of industry, what does reorganization mean in a corporation.

• What Is the Importance of Surplus?
• What Are the Dangers of Benchmarking?

The very best businesses understand the concept of growth, and they apply ideas formed by this concept so that they can anticipate and counter growth challenges as they come up. In fact, the process of growth for business, any business, is so predictable that there is a special name for it: The S Curve of Business. Of course, we can find the S-curve in economics and lots of other fields as well. But what, exactly, is this curve and what does it mean for your business?

What Is the S Curve of Business?

The ‘S’ in the ‘S-Curve’ definition stands for ‘Sigmoidal’, which is a mathematical term related to the way the curve is derived. You can, however, think of it as an S-shaped curve that predicts how a business will grow over its life cycle. It’s pretty easy, in retrospect, to see how your business grew following the S-curve. However, it can be a bit more challenging to navigate this curve as you’re moving through it.

The most challenging points in the curve are the so-called inflection points, where your growth stagnates. In the moment, you might feel like your competitors are overtaking you and everything might look hopeless. You might want to make some appealing but bad decisions that would potentially take your company under.

With a good understanding of the S-curve and of the general process of growth, however, you will be able to navigate such times and you will push your business toward new heights and better times.

The Stages of the S-Curve

Every business starts the S-curve model at the bottom. The new business has a new product or service, and they try to sell it to the mass market. As their product gains traction in the market, the business begins to grow. At first, the growth is slow, and then it develops more rapidly, as consumers begin to warm up to the product. As the business expands, that growth continues. Eventually, a host of factors, both internal and external, cause the growth rate to decline and then gradually, they taper off. It could be anything, really; it could be competitors that have begun to adjust and target your customers; it could be that you have saturated the market and that there are no more markets to grow into with your product; it could be that your company has internal issues that affect its ability to move forward.

That tapering-off point is also a turning point. It leads to a slight decline in growth, with growth actually being negative for a while. This is a critical point for the business. If the business innovates afresh and finds a way to stay relevant, the growth curve turns back up and growth becomes positive again. It will be a true inflection point. If the company makes some bad decisions and does nothing to renew its relevance in the market, then the turning point will be a permanent one and the company will find itself plunging for the depths of the ocean.

The success of your business depends on your ability to recognize these inflection points and take the right steps to put your business back on track with the right kind and amount of momentum to fuel further growth.

If you don’t recognize when your business is at an inflection point, you could put it in jeopardy. Not only will your business be denied the opportunity to develop strategically, but you will also be unable to meet an important need. The best solution is to prepare for the inflection points before they happen and make sure you know how to recognize one when you see it.

One thing you should note is that an inflection point isn’t necessarily an indicator of crisis. What it simply means is that your business is faced with an important decision, and the kind of decision you make will determine what happens at that inflection point.

What Contributes to an Inflection Point?

There are countless factors that affect growth. However, in the initial stages of a company’s growth, some common factors can be found to almost always lead to the first inflection point. These can be subdivided into internal and external factors.

Internal Factors

A lack of sense of ownership among the founders: The founding members of a business, including the initial employees, usually have a very strong sense of belonging when it comes to working to meet the objectives of the company. However, as the organization grows and more levels of management are added, or when external investors come in with different mindsets, this sense of ownership is lost and the initial goals of the company can get blurry.

A shortage of talent: The companies that grow the fastest in the initial stages often face a problem with scaling their teams fast enough to keep up with the pace. The growth of your revenue can only really happen when you have enough skilled employees to support the growth of your company.

A ceiling for founders: The zeal and passion of a founder can be enough to get a new company to grow exponentially. However, if the founder does not adapt his or her leadership style to scale with the company, and tries to get involved in every single company decision, it can cause bottlenecks to the growth of the company.

The customer becomes silenced: Small organizations tend to be effective in responding quickly to the needs of their customers. This is usually what makes them grow so fast in the early stages. However, as they grow, a greater gap appears between the executives at the top and the employees that deal directly with the customer. Innovations related to the customer, therefore, may not get communicated fast enough to the top executives to be implemented in time. In fact, they may not be implemented at all.

Issues with innovation: In order to grow, you must focus your strategy around the customer and innovate effective and efficient solutions to their problems. This is what gets most businesses growing in the early stages. However, when an organization grows too large, it has a tendency to get caught up in the details, such as perfecting the processes that occur in production lines and departments, rather than driving innovation by using data obtained from the consumers.

External Factors

The economy: Whether locally, regionally, nationally, or even globally, the economy affects all businesses to different extents and a recession can make a dent in the growth curve of the most promising company.

Financial issues: Every company needs some financial institution or other to succeed. These institutions are involved in transactions, control interest rates, credit, and even the loans the consumers can access. Their solvency and stability of the finance sector will affect all businesses.

Infrastructure: Businesses that rely on physical locations to attract talent or new customers or to improve their operations will be affected by zoning laws, housing developments, and construction activity.

The political climate: Any change in laws and regulations at whatever level can have an effect on a business when some service or product of theirs is affected or even becomes illegal.

Public trends: While it would be unfortunate, it is possible for a business to spend vast amounts of time and money, just so they can position themselves, but then they discover that they are on the wrong side of public trends.

How to Survive an Inflection Point

The short answer is simple: Innovate and optimize.

When you reach a saturation point, you need to make your processes more efficient so that you can deliver more efficiently to your customers, or you need to innovate by expanding your product and service offering, so that you can give your organization further room for growth.

You can also look for a solution for some of the internal issues that your company might be facing or that you can find ways to turn external factors into opportunities for your company's growth. It is only when you adapt quickly to changing circumstances that you can maintain the momentum of your company, so that it will continue to grow long term.

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Nicky is a business writer with nearly two decades of hands-on and publishing experience. She's been published in several business publications, including The Employment Times, Web Hosting Sun and WOW! Women on Writing. She also studied business in college.

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Insights On The Five Stages Of Small Business Growth

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Even during the best of times, starting a small business is tough. During the Covid-19 pandemic, it became a quest for survival. While roughly one-third of small businesses were closed amid the lockdowns, many have reopened their doors or launched anew as consumer demand roars back.

Each of the 31.7 million small businesses in the U.S. has its own unique flavor, challenges and path to success. Some never expand beyond a single founder; others could scale to become the next unicorn. Along the way, many founders will face common sets of challenges as they reach new levels of success.

For that reason, we’ve decided to bring you some real-life examples that illustrate the five stages of small business growth: existence, survival, success, take-off and resource maturity.

We didn’t invent this model—it was developed by researchers Neil C. Churchill and Virginia L. Lewis in 1983. Our goal is to bring each stage to life and start a conversation around the opportunities and experiences that business leaders encounter.

Every day this week, we’ll bring you insights from our contributors on each stage of growth. Today, we start at the beginning: the initial stage of launching a business and figuring out everything from product fit to customer acquisition.

Stage 1: Existence

Idea validation and commercialization of research

Product market fit

Being agile

Stage 2: Survival

Customer service and building customer loyalty

Profitability and growth

Stage 3: Success

The founders dilemma

Incentivizing word of mouth

Securing funding for expansion

Stage 4: Take-off

Scaling operations

Hiring and growth

Resilience, business continuity and contingency planning

Stage 5: Resource Maturity

Maintaining customer service while scaling

Lean marketing for businesses

Unicorn entrepreneurs and financing

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A beginner's guide to the business maturity model framework

Business Process Management

Maturity models are representations of capability for continuous improvement in a particular discipline. Here's an example of how to implement a maturity model for your SaaS organization.

A maturity model can be a great tool to help you assess the effectiveness of a current group or individual. Maturity models describe known states of being at various levels for given disciplines. Likewise, they provide examples companies can use to implement process improvement.

In other words, a maturity model is a tool for a business to actualize, grow, and reach its potential.

What is a maturity model?

Maturity models are simplified representations of capability for continuous improvement in a particular discipline.

The model judges how well your company or system improves itself from a given state. It assesses a company’s maturity level in the discipline's quality or resources.

In general, maturity models consider qualitative information when examining people, culture, processes, structures, objects, and technology.

For instance, in a data technology maturity model, we identify the maturity levels around a company’s data use. Each maturity model level describes a business's growth when it uses data in a specific way.

Why maturity models are essential for business

Overall, using a maturity model as a foundation for improving practices, performance, and processes provides your company with the ability to

Benchmark internal performance.

Benchmarking helps you determine where the organization is in its improvement journey. You can then set clear objectives for future investments in performance improvement.

Catalyze performance improvement.

The model can produce action plans to close performance gaps and improve maturity, as it reflects industry best practices.

Create and evolve a common language.

Maturity models help ‘knowledge domains,’ like data science grow into disciplines. Then, this common language can translate into consistent, repeatable, and predictable performance over time.

In short, a business maturity model tells you where you can improve in a given area. It can benefit companies pushing for digital transformations because the models help you identify problem areas to reach your business goals.

Maturity models can also tell you what steps to take next when improving your maturity level, i.e. the business ‘maturity curve.’

This improvement, in turn, helps your business reach new maturity levels. So the more significant the maturity, the greater the chances that events or failures lead to improvements in your organization.

How are maturity models used for improving businesses?

Businesses use maturity assessment models to learn about themselves. Models help companies learn their maturity level. Then, they inform them how to improve by asking questions and developing action plans.

Maturity models also help organizations make better investment decisions. Maturity models can generalize progress estimates by determining what resources it will take to ascend to the next level.

Companies use maturity curve models to generate timing estimates. An example use is determining how long it takes the IT department to implement new SaaS products.

Then, using finished work as a reference, the model helps structure generalizations. For instance, it measures projects completed and how long it took to complete each project.

Types of maturity models

One of the first models developed is the business capability maturity model (CMM). The Software Engineering Institute (SEI) created this model to measure software development processes.

Next came the capability maturity model integrated (CMMI), which developed maturity models like project management maturity models and others.

CMM provided these five core model levels, which most other models could use as a foundation to measure business growth:

• Initial: Beginner stage
• Repeatable: Proficient stage
• Defined: Savvy stage
• Managed: Expert stage
• Optimizing: Mastery stage

The most popular model is the business process maturity model (BPMM). It’s popular because of its ease of adoption, ease of use, and ability to boost productivity and lower costs.

This model has a few variations. They include the agile ISO maturity model (AIMM), which uses agile business process management tools to attain ISO-level standards. Another variation is the business process management capability framework (BPM-CF).

In all, there are nine known models to measure maturity in business:

• Business process management capability framework (BPM-CF)
• Business process maturity model (BPMM-FIS)
• Business process maturity model (BPMM-HR)
• Business process maturity model (BPMM-OMG)
• Business process orientation maturity framework (BPO-MF)
• Business process orientation maturity model (BPO-MM)
• Process and enterprise maturity model (PEMM)
• Process management maturity assessment (PMMA)
• Value-based process maturity model (vPMM)

Which business process maturity model is the best?

Most academic literature references the Business Process Orientation Maturity Model and the Business Process Management Capability Framework. However, that doesn’t necessarily mean they’re the best or most popular in practice.

Researchers relied on academic literature for data since the use of existing BPM maturity models is limited.

Researchers think it is uncommon to put BPMMs to use in practice, and that they are mainly designed for descriptive purposes. So, no single model is widely applied in practice. There is no conclusive evidence that one BPMM is the best.

Maturity model example for SaaS

Software companies might use many maturity models to measure their business processes. For instance, SaaS firms may need to measure how effectively they manage their data organization.

Data maturity is the degree to which a company uses its data, often measured in stages. It’s a partnership between IT and the business to expedite using data to make a decision.

For businesses, the vision of a maturity model looks like analyzing data and looking for insights. It asks questions like, “how can we leverage data to discover new insights and innovations?”

In other words, a company’s data maturity management level indicates its ability to focus on turning ideas into reality.

How do you measure data maturity?

According to CIO, there are “ Four Stages of the Data Maturity Model .” In another article , Scott Castle of Towards Data Science adds the fifth stage.

We’ve compiled all five levels to measure your data maturity here. Then, you can apply these models to other technological disciplines within your organization.

Businesses take a manual approach to compile reports from various systems to standardize reporting. Their challenges include needing more data and app integration, developing ad-hoc reports, and distrusting those reports.

Data-proficient

Organizations begin tracking key performance metrics and indications (KPIs). Then, they can interrogate the data’s quality. In this stage, they may start to understand limitations like having many databases, incomplete data warehouses, or limited app integration.

Challenges may also include lacking executive support or not knowing how to handle unstructured data.

Companies now use data to make crucial decisions for key ambitions. This improves the business-IT partnership up by breaking down organizational and data silos.

Challenges include integrating all applications and data sources for better on-demand service and using unique data within the business.

Data-driven

Business and IT partnerships reach the ultimate stage of data maturity, working together as a cohesive unit. IT integrates apps and data sources and installs an advanced analytics program. The organization identifies business processes to embed analytics. Their challenges include scaling the data strategy while reducing costs and maintaining competitive advantages.

Data-predictive

Data scientists use machine learning, statistical technologies, and predictive capabilities to optimize operations at scale. Organizational challenges can include relying on data scientists and predictive technologies to deliver value. Another challenge is the investment of time and money into these resources.

How to use the 5-stage data maturity model for organizational impact

Data must be deeply ingrained into making decisions. But what do you do if you’re behind the competitive curve, and how can you “level up” quickly?

Castle writes, “Significant investments in machine learning may or may not be what’s right for your firm. A good hard look at the maturity curve is the best way to a path forward.”

Key questions to determine your maturity level

Determining your maturity level requires an honest self-assessment to create a realistic view of your current state.

The five-stage data maturity model can help you assess your company's level of maturity by asking important questions.

Here are some examples:

• Do you have different platforms reporting on other business functions?
• Is your system of record siloed across different divisions, or is reporting integrated across your various business tools?
• What percentage of data does your business incorporate into a single source of truth?
• How well are you moving toward your goal?
• Can you blend model data with raw data from many sources?
• Does the data blending occur before or after it arrives at the warehouse?
• Does your data comprise all customer journey phases , or does it favor specific areas?
• How many within your company have access to data, and at what levels?
• Does your firm have model management capabilities ?
• Have you deployed machine learning systems, and are they used in your products or analytics?
• Does your analytics workflow include machine learning models?

After answering the questions, you can chart a path to achieving the next level. You can start this process by identifying the gaps in skills, knowledge, tools, and practices that can get your business there.

How to follow a maturity model

Your company must go through the maturity model step-by-step. Otherwise, it might bypass some fundamental capabilities, potentially limiting the organization from achieving results from advanced analytics.

Castle summarizes:

“Firms that follow this curve are better positioned for long-term competitive advantage. Building this connective tissue that lets an entity operationalize insights for real business value.”

How Vendr helps your organization implement growth-oriented best practices

Regardless of what business process or discipline your company aims to improve through a maturity model framework, Vendr can help.

Vendr offers a complete SaaS management solution that organizes and focuses your technology stack.

With centralized visibility and control, Vendr helps the whole organization become more efficient with its software stack.

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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:

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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Shaping individual development along the S-curve

Learning and development (L&D) leaders are charged with helping individuals weave together the experiences that support their continued development. And of course those experiences take place throughout the organization, not just in formal learning programs provided by L&D.

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Given the variability of when and where learning takes place, it can be extremely challenging for L&D leaders to meet individual learners when and where they need support. Furthermore, career development is not a linear proposition for the vast majority of the 21st-century workforce. Careers today progress in widely diverse ways. As a result, most L&D functions struggle to determine how to support the personal and professional growth and satisfaction of their learners over time.

To navigate this new age of learning and provide the best possible learning experience, L&D professionals must make connections between the “what” (the kind of support to provide, whether emotional or intellectual) and the “how” (ways to deliver that support). They also need to understand where a learner is in his or her individual journey.

The S-curve framework—used in various disciplines to represent the beginning, rapid growth, and maturity of something via an S-shaped curve—can help L&D leaders understand the what and how for individual learners in a given role. These insights can help them design and tailor learning for various audiences, improve the learner experience, and ensure that once employees attain mastery of their role, they are primed to make the leap to the next.

How the S-curve can enable learning at the speed of business

The S-curve framework is not a new concept. The management thinker Charles Handy first applied it, also known as life cycle thinking or the “sigmoid curve,” to organizational and individual development in the mid-1990s. 1 Charles B. Handy, The Empty Raincoat: Making Sense of the Future , first edition, New York City, NY: Random House, 1995. Applying this thinking to the L&D context, however, is a new, innovative, and powerful way to describe cycles of learning and development and link them over time.

In a September 2012 article in Harvard Business Review , author Whitney Johnson uses the S-curve to illustrate the development of competence in a new domain of expertise—the very essence of professional learning. 2 Whitney Johnson, “Throw your life a curve,” Harvard Business Review , September 3, 2012, hbr.org. Johnson also wrote a book that discusses the topic: Disrupt Yourself: Putting the Power of Disruptive Innovation to Work , Routledge, 2016. During the initial phase of a personal learning curve, she writes, progress is slow. With further practice, though, “we gain traction . . . accelerating competence and confidence” (Exhibit 1).

This middle phase can be followed by a phase during which we plateau, becoming too comfortable with our processes. When we do our jobs in the same way over and over, tasks become automatic, and we often forget the importance of learning new things and keeping up with new developments. Eventually, our skills become out of sync with organizational or market needs. That is when it becomes crucial to leap to the beginning of a new S-curve.

If the S-curve illustrates how a particular competence might develop over time, then it stands to reason that one’s portfolio of competencies is simply the cumulative or serial sum of specific S-curves of development. Johnson encourages readers to disrupt themselves—to jump from one learning curve onto another and string together a series of S-curves to navigate a long-term journey of development and professional impact. However, each time we make a jump, it can be one of the most challenging and risky professional maneuvers we make. The next S-curve might involve changing your role or function within an organization—or changing companies altogether. And we can never be assured of a successful outcome.

It is important to note that moving from one S-curve to the next does not necessarily involve a hierarchical progression in the organization. S-curve leaps can also mean broadening a skill set or moving between functional areas (for example, expertise areas within the function) while staying at the same level of hierarchy.

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It may seem safer, easier, and more comfortable not to make those leaps. But to grow beyond our comfort zones and develop sustainable careers, employees must—and L&D has a key support role to play.

Encouraging development with opportunities and rewards

We have identified four elements that determine whether professionals will successfully navigate from one S-curve to another. The L&D function has more influence over two of these elements, providing opportunities and recognizing and rewarding performance. The two remaining elements, mastering the skills of lifelong learning and developing the confidence to approach challenges in a constructive way, are up to the learner to embrace. 3 For a detailed examination of lifelong learning and the role of authentic confidence, read Nick van Dam, 25 Best Practices in Learning & Talent Development , second edition, Raleigh, NC: Lulu Publishing, 2008.

Providing opportunities

Companies create both formal and informal processes for growth and development. In addition to formal, structured classes, organizations can provide employees with development opportunities across functions or geographies, temporary placements in another department or function, and job shadowing, networking, and mentoring.

The degree to which L&D leaders are involved in the development of these various types of offerings can vary among—or even within—organizations, but they should be involved. Of course, to create these opportunities, organizations need effective collaboration among related functional areas. In addition to leading formal learning, the learning function can also can support, inspire, and advocate for individual and organizational investment by increasing learners’ awareness of opportunities, fostering self-reflection, and serving as a forum for helping employees find the opportunities that are right for them, at the right time.

L&D professionals can achieve greater impact by taking a thoughtful approach, with the S-curve in mind. But at the same time, learners also have to be in the proper mind-set to make the most of their opportunities.

Rewarding performance

The more opportunity for professional growth, the more growth there will be—as long as a complementary reward system is in place. Like opportunities, rewards vary in type and are managed and influenced by several functional areas across an organization. The L&D leader’s role in contributing to the creation and maintenance of reward systems is perhaps less direct, but no less significant, than in the development of opportunities.

Business line managers within an organization’s talent system may be primarily responsible for rewards that motivate performance—such as compensation, ratings, and promotions. But in many cases, it’s the acquisition of new skills that enables the performance improvement that entitles people to the rewards. For this reason, it is extremely valuable to have regular conversations with people to discuss where they are on their S-curve and what can be done to help them continue to learn and grow. That is where learning leaders come in. They support the talent system by helping line leaders become better coaches and managers. They can also help learners develop greater self-awareness and get motivated to do the work that is most fulfilling to them and enables them to reap rewards. By being aware of how the talent systems in the organization work, L&D leaders can better design and develop solutions that support these systems.

Promoting a learning culture

If we think about an individual’s progressive series of S-curves over time as linked cycles of a professional’s L&D journey, opportunities and rewards are what encourage movement along and among those curves. Opportunities support the learner’s individual progress, and rewards provide motivation for making progress. An organization’s learning culture can, in fact, be described quite handily with reference to how widely these two factors are made available (Exhibit 2).

If a learner has reached the top of his or her S-curve and there’s no next curve visible on the horizon, he or she may become bored and lose momentum, resulting in mediocre performance and the types of attitudes described in the bottom boxes of Exhibit 2.

Even when further opportunities are available, learners at the top of an S-curve might choose to forgo the leap to the next, staying in their current roles even though they are technically ready to move on. All kinds of factors can play into the decision to stay too long in a role, including a lack of opportunities elsewhere, inadequate rewards, and intolerance for risk. In some cases, this is not a problem as long as the employee continues to perform.

If the employee is stagnating and the work suffers as a result, however, L&D leaders must collaborate with their colleagues across the organization’s talent system to find solutions. When those solutions are found, benefits accrue to both the learners and the organization. Learners are fulfilled, personally and professionally, and the organization benefits from having more capable and engaged employees.

S-curves in action: Learner archetypes

The implications of “S-curve based thinking” for L&D are perhaps best illustrated by looking at tangible archetypes and examples, each covering different attempts to move along a role-based S-curve—or across curves.

Archetype 1: Starting a new S-curve

Rae joined a highly regarded professional services firm 18 months ago, and now she’s been promoted from consultant to project leader. While excited, Rae is also anxious. She knows the promotion means that she’ll face higher expectations. Although she’s read the competency grid for her new role and has a general sense of the job from observing project leaders in the past, she’s not sure how to make the transition. Moreover, her new role is a lonely one: project leaders don’t usually work in the same vicinity, and although Rae technically has a boss, the two of them won’t work closely together over sustained periods.

How L&D can support Rae

Rae has made the leap from her previous S-curve and now sits at the bottom of a new one. L&D’s role is perhaps obvious in this case, but a deliberate application of S-curve thinking can significantly sharpen the L&D strategy for supporting employees who are starting a new role compared to the “here’s a crash course” approach, by:

Offering experiential learning that lets Rae practice the role in a risk-free way. It is not sufficient to hand Rae a description of the new role’s responsibilities. L&D can offer all new or promoted hires the opportunity to practice new responsibilities through highly experiential live workshops and immersive simulations.

Shifting mind-sets and mental models—not just building skills. As L&D professionals know, any role change or move up the corporate ladder requires more than skill development—it requires a change in mind-set. In a move to management, for example, the technical skills that helped Rae succeed as an individual contributor are less important than the ability to think strategically, see the bigger ecosystem, and develop her team. Simulations, again, are useful in encouraging reflection, as are techniques such as reverse role plays and small-group discussions with peers.

Mapping role requirements to Rae’s existing strengths and weaknesses. L&D can make a huge contribution to launching Rae into her new S-curve through honest, one-on-one conversations about which skills she needs to develop and what she might need to leave behind. Rae has reached a new level where the attributes that helped her succeed in her prior S-curve no longer apply. She may have previously underused strengths that L&D professionals can now help her to emphasize.

Archetype 2: Ascending the current S-curve

Gustavo supervises a team of claims adjusters for a large property and casualty insurer—a position he’s held for the past nine months after spending four years as a claims adjuster. After some initial struggles, Gustavo feels increasingly confident in his role and is performing it competently. However, both he and his manager recognize that he has untapped potential—and a chance for Gustavo to exhibit truly distinctive performance in the role in the year or two ahead.

How L&D can support Gustavo

Conventional L&D approaches often underserve people like Gustavo on this part of the S-curve—partly because learners themselves may not express much need, and partly because the employee is not explicitly changing roles. But employees at this juncture are often in need of more tailored, on-the-spot support as they seek to consolidate gains and fully apply what was learned at the start of the S-curve. Specific, S-curve-aligned L&D strategies to support employees like Gustavo include:

Providing robust on-the-job performance support. As a dedicated discipline of L&D, performance support—learning aids available at the point or moment of need while someone is performing a job—is burgeoning. The “front-middle” part of the S-curve is an ideal point for performance support and working to offset the forgetting curve—described by psychologist Hermann Ebbinghaus as exponential memory loss during the 30 days following learning. 4 Maggie Meacham, “Don’t forget the Ebbinghaus Forgetting Curve,” Association for Talent Development, January 20, 2016, td.org L&D can also employ tactics to change behavior in many ways, including digital platforms that seamlessly integrate with the claims-processing applications on Gustavo’s mobile device, stand-alone apps or chatbots, or lower-tech means such as laminated placards offering step-by-step help, job aids, and pointers to reference material.

Elevating Learning & Development: Insights and Practical Guidance from the Field

Activating and strengthening the informal learning ecosystem. Increasingly, L&D’s role is not only to support the learner directly but also to elicit a higher level of informal learning support from managers, coaches, and peers. This support is especially useful for employees such as Gustavo who have completed initial orientation and new job training and are now expected to perform. Specific L&D actions include doubling down on coaching and leadership training for managers, creating internal marketplaces for coaching support and help, and providing flexible platforms for employees to engage with people in similar roles and with subject matter experts for social learning and knowledge sharing.

Offering Gustavo opportunities to define a vision of himself in the role. It is only after Gustavo has weathered the initial transition to his supervisor role that he can define what his peak performance in the role could look like. At this point, Gustavo is no longer focused on simply keeping his head above water; he has enough experience to determine how his existing strengths fit with role requirements. L&D can help Gustavo work through the necessary reflection, accompanied by tools and forums to help gather feedback from others and to create an action plan that complements formal reviews. These tools can increase individual commitment to learning and accelerate ascension up the S-curve.

Archetype 3: Preparing to leap to the next S-curve

For the past six years, Julia has been distinctive in her role as a process engineer for a global technical services firm serving the energy industry. She knows through conversations with leaders in her office that she’s seen as a terrific candidate for a senior management role in the coming 12 to 18 months—which in her company would mean taking on new responsibilities related to business development, as well as a likely move to another continent.

How L&D can support Julia

L&D can play a vital role in helping employees like Julia, who are at or near the top of their current S-curve, explore and then transition to new roles and paths. As L&D professionals, we often make the critical mistake of either leaning in too late—when the person has already been thrust onto their next S-curve via promotion or transfer—or not engaging at all. In either case, the result is increased risk that the employee plateaus, grows bored, and even regresses in performance.

The reality is that if employees get continual support while navigating their current curve—especially when it complements other talent-management levers such as rotations or mobility programs—they will experience fewer growing pains when they transition to the next.

As previously noted, L&D should create shorter learning journeys to support various stages of growth: an S-curve covering a longer period of time (for example, five years) can be built out of a series of shorter S-curves (for example, six months or a year). These journeys consist of a mix of group learning programs and individually tailored learning solutions that meet at-the-moment needs of the employee. These journeys can also be supported with digital learning solutions that learners can access at their own pace. This strategy helps to minimize the gaps between one S-curve and the next and makes the transition as smooth as possible.

One example of an L&D strategy that can help smooth transitions between S-curves is focusing on building the specific skills and capabilities an employee will need in the future. Learning can provide risk-free opportunities for employees like Julia to begin developing these skills; and offer advice for how to hone them in her current role. For example, a program might specifically focus on topics such as gravitas, empathy, and team-based problem solving—some of the most common stumbling blocks facing new managers. Taking this program 6 to 18 months prior to making the transition to manager would give them time to practice these skills in the context of their current position.

The S-curve, in conjunction with an organization’s talent system, offers a simple but effective framework for supporting learners at every stage of their careers. L&D has a crucial role to play at each step—but leaders must understand existing (and ideal) rewards and opportunities, know where each learner stands, and offer the right support at the right time. Simultaneously, there is huge value for learners in understanding their own learning journeys and taking responsibility for their learning and development.

This new dynamic also requires L&D professionals to develop new skills. Conceptualizing learning and development through the lens of S-curves means thinking about learning as a journey and designing solutions as such.

A version of this chapter is included in Elevating Learning & Development: Insights and Practical Guidance from the Field , August 2018.

Jacqueline Brassey is director of Enduring Priorities Learning in McKinsey’s Amsterdam office, where Nick van Dam is an alumnus and senior adviser to the firm as well as professor and chief of the IE University (Madrid) Center for Learning Innovation; Gene Kuo is director of Consultant Learning in the Houston office; and Larry Murphy is an alumnus and president, Custom Solutions—Executive Education and Lifelong Learning, University of Virginia Darden School.

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