Business development phases - how to achieve new ones?

The stages of enterprise development are the next steps that a growing company goes through – from the creativity of the initial team, through the introduction of structures and procedures, to mature collaboration between departments. According to Larry Greiner’s model, each stage ends with its own crisis, and how the company resolves it determines whether it will move on to the next phase or remain stuck in place.

Enterprise development in a nutshell - definitions

Business development is a long-term process that accompanies every company striving to maintain competitive advantage. It is difficult to find a single, universal definition of this phenomenon, because it encompasses many different dimensions of a company’s activity. J. Beliczyński defines business development as the change in its systems and environment that allows the company to achieve and maintain competitive advantage – by introducing new elements into the company’s system, improving the quality of existing elements, and changing the structure of these systems.

R. Brajer-Marczak points out that the development of a company can affect its parts or the entire company and relate to one or all areas of its functioning. Development then means the elimination of the so-called development gap, that is, the discrepancy between where the company is and where it wants to be, or an improvement in the position the company holds in its market environment.

In their work „Determinants of the development of SMEs”, P. Prokopowicz, M. Król and G. Żmuda define enterprise development as a systemic, value-based, science-based and collaborative process of adapting, improving and strengthening strategies, structures, processes, people and organizational culture, leading to an increase in the company’s efficiency. Although there are different definitions, the common denominator is that development is not a coincidence, but the result of conscious decisions made at every stage of a company’s existence.

What is business development for you?

There are no two identical companies, so there is no single, universal direction of development either. In practice, most companies choose – consciously or not – one of the three models.

• Development is growth. The goal is to increase the value of transactions, attract new customers, increase market share, and increase the number of employees.
• Development as the utilization of market opportunities. A company either forms or changes direction to take advantage of a market moment, and its goal may be to achieve stabilization and profitable sales of the enterprise.
• Development as survival. The most popular and most general model – maintaining the chosen scale of activity thanks to a well-adjusted development strategy, without the ambition of rapid scaling.

Enterprise growth And stabilization is not mutually exclusive – they usually follow one another. The achievement of business goals is rarely possible without achieving even partial stabilization, and achieving subsequent levels of this stabilization is exactly what Larry Greiner described as the stages of enterprise development.

The second idea is to improve the quality of the company's operation. Quality improvement can be understood as improving a product or service, building professional customer service, as well as gaining trust and loyalty in relations with recipients.

The Greiner model – stages of enterprise development

Larry E. Greiner described his model in the article „Evolution and Revolution as Organizations Grow”, published in the Harvard Business Review (vol. 50, no. 4, 1972, pp. 37–46). According to Greiner, how a company develops depends on five factors: the age of the organization, its size, the stage of evolution, the stage of revolution (i.e., the crisis), and the pace of growth of the industry in which it operates.

Greiner’s key observation is that every phase of peaceful growth (evolution) ends in a crisis (revolution), and the way this crisis is resolved determines whether the company will move on to the next phase or remain in the same state. The following table organizes all five phases together with the crises that end them.

Greiner noticed that the way companies operate does not always change over time. Analyzing the activities of the 500 largest American enterprises, he concluded that the company's growth is divided into several years (4-8 years) of peaceful development (evolution), which are followed by short crises (revolutions). Taking into account this pattern, we can distinguish 5 phases of enterprise development.

5 stages of enterprise development – in detail

The creativity phase

This is the first phase of the company’s development – the company primarily monitors the market and fine-tunes its offering. Hiring more employees requires more efficient management, which leads to a leadership crisis: the current, informal way of making decisions no longer suffices. The solution is to introduce specific structures and procedures in every area of the company’s operations.

Targeting phase

This is the moment to definitively define the company’s procedures and structures. However, after a while, there are conflicts over competencies between departments. The ongoing bureaucratization and lack of decision-making freedom lead to a crisis of autonomy. The solution is to grant greater freedom to managers at lower levels, while allowing managers at higher levels to delegate authority.

Phase of decentralization

At this stage, the company delegates some of the authority of higher-level employees to lower-level personnel, which increases the freedom of individual organizational units. However, greater freedom also carries the risk that individual teams will begin setting their own goals without consulting with other departments – Greiner calls this a crisis of control. The solution is to introduce greater control over the activities of decentralized teams, without returning to centralization from the previous phase.

Coordination phase

Coordination becomes essential when the excessive fragmentation of the company’s activities becomes apparent. Formalizing most solutions lengthens decision-making processes, making communication between departments difficult. Excessive complexity of coordination can lead to a crisis of isolation – the feeling that procedures are more important than the actual results of work. The solution is to move to the phase of collaboration.

Collaboration phase

This is the final phase of the Greiner model – a modification of the company to ensure effective communication and cooperation between teams. The phase of collaboration means efficient decision-making, easier creation of new solutions, and quick response to market opportunities. However, it also involves the risk of burnout among the team. To avoid it, it is worth taking care of the atmosphere in the company, using integration at work, rationally delegate tasks and offer attractive employment conditions.

How can you recognize which phase your company is in?

The Greiner model is often confused with the division into „small, medium and large companies”, but it's not about size here – two companies of the same size can be at completely different stages of development. A few questions help determine which phase the organization is actually in:

1. Who makes the daily decisions? If everything goes back to one person (the owner, founder), the company is probably still in the creative phase or just entering a leadership crisis.
2. Are there written procedures that are actually followed? Their absence suggests an early phase, their excess and rigidity – a possible crisis of isolation typical of the coordination phase.
3. Can lower-level managers make decisions without the approval of the management board? The absence of such a possibility is a sign of a crisis in autonomy from the phase of targeting.
4. Do teams set their own goals without agreeing them with other departments? This is a typical sign of the crisis of control, which ends the phase of decentralization.
5. Is communication between departments quick and informal, or does it require many meetings and acceptance? Slow, formalized communication is a sign of the phase of coordination approaching the crisis of isolation.

Answers to these questions rarely indicate a single, pure phase – in practice, companies often find themselves at the boundary of two stages, with characteristics characteristic of both. This is normal. What is more important than precisely assigning a company to one category is recognizing which crisis is approaching the fastest and preparing for it before it starts to actually slow down development. A company that knows in which phase it is can also better tailor its communication – it talks differently to a team of ten people in a phase of creativity, and differently to an organization with several hundred people going through an isolation crisis.

What is corporate sustainable development?

Sustainable business development is an approach where a company seeks a balance between economic goals, social needs, and concern for the natural environment. It is not solely about generating profits and maintaining growth, but also about social responsibility and minimizing a company’s negative impact on the environment.

In practice, this means investing in environmentally friendly solutions, caring for the well-being of employees, and building lasting, ethical relationships with business partners. This approach is integrated with each of the five phases of the Greiner model – a company in the creative phase can implement sustainability policies just as well as a company in the collaboration phase, although the scope and formalization of these activities will be different at each stage.

The earlier a company starts to treat sustainable development as an element of its strategy, rather than an addition imposed by customer pressure or regulations, the easier it is to integrate it into subsequent growth phases. A company that only builds environmental procedures during the coordination phase has to redesign existing processes – a company that does this from the creative phase, immediately designs them with social responsibility in mind.

The most common mistakes in managing company development

• Ignoring the signs of the crisis. Treating growing competency conflicts or declining performance as a temporary problem, instead of a signal that the company needs a change in structure.
• Copying the structure from another company. A structure that has proven successful in a company at a different stage of development or in another industry rarely fits directly.
• Too rapid decentralization without control. Granting the powers to teams without setting common goals leads directly to the crisis of control described by Greiner.
• Excessive bureaucratization as a response to chaos. Introducing too many procedures at once is just as harmful as not having them at all – it leads to a crisis of isolation.
• Lack of attention to the team during the collaboration phase. Focusing solely on the efficiency of processes, without paying attention to professional burnout, costs the company experienced employees precisely when the company is already mature.
• Treating every crisis as a failure. In Greiner’s model, crisis is a natural element of development, not a sign of poor management. Companies that frantically try to avoid any organizational tension often block their progress to the next, more mature phase.

The stages of business development – how Commplace helps

Companies at different stages of development – from creativity to collaboration – need different communication, a different strategy, and other priorities. Commplace has been helping companies match their strategy to the stage they actually are at, not to the stage they would like to be at. See, how we build a marketing strategy for companies at different levels of development.

Progress of actions, tasks and indicators are visible in the cockpit on a continuous basis. Commwork®AI – regardless of whether the company is just entering the targeting phase or is facing a control crisis typical of decentralization.

It is also worth reading: enterprise growth, Development strategy – the key to the company’s success and the development of a small company.

Sources: L.E. Greiner, „Evolution and Revolution as Organizations Grow”, Harvard Business Review, vol. 50, no. 4, 1972, pp. 37–46; J. Beliczyński and R. Brajer-Marczak – definitions of enterprise development (management literature); P. Prokopowicz, M. Król, G. Żmuda, „Determinants of enterprise development in the SME sector”.