Evolution and Revolution As Organizations Grow

Evolution and Revolution as Organizations Grow

Larry E. Greiner of the Harvard Business School wrote a noteworthy article with this title in the Harvard Business Review in July 1972, describing the growing pains that organizations go through.

Greiner proposed that organizations exhibit five predictable stages of growth called evolutions and five periods of crises called revolutions. His theory is readily applicable to many organizations.

The growth pattern consists of tightening and loosening of management reins in response to changes within the organization and the environment.

The evolution/revolution pattern, as shown by Apple Computer, is an excellent way to put a company’s history into MBA perspective. Apple Computer sprang forth from the creativity of Steven Jobs and Stephen Wozniak. Beginning in 1976, these two entrepreneurs were on a freight train of rapid growth until the company became so unwieldy that is almost jumped the tracks in 1983. Apple was faced with the leadership crisis of a growth company that didn’t have anyone who could efficiently run its day-to-day operations. Jobs was a lofty visionary making speeches, while Wozniak was the magic technician.

The company started to run out of gas as its creative fuel ran low. Apple II sales slumped and the new Lisa computer failed. John Sculley (Wharton MBA ’63) was brought in from Pepsi-Cola to give the company direction. Sculley reorganized Apple and cut costs in its bloated headquarters. Steve Jobs and his followers demanded more autonomy to develop a new breakthrough product and Sculley gave it to them. The delegation resulted in the creation of the Macintosh.

The Mac created another explosive growth period. However, Jobs could not work in a growing corporate bureaucracy, and he started a new company called NeXT. In 1989 the aging Mac faced fierce competition, and as profits declined in 1990, a new Apple crisis of control was brewing. Michael Spindler was appointed as chief operating officer to assist Sculley as chairman to take control and return the company to increasing profitability. By 1992 they had succeeded, but fell into crisis in 1995. Steve Jobs returned and led yet another recovery in 1998 with the iMac and G3 computers.

Source: Ten Day MBA (Steven Silbiger)