EVOLUTION AND
REVOLUTION AS
ORGANIZATIONS
GROWManagement practices that work well in one phase
may bring on a crisis in another.BY LARRY E. GREINER
This article originally appeared in the July/August 1972 issue of HBR. For the
article s republication as a Classic, the author has removed some outdated material
from the opening sections. He has also written a commentary, Revolution Is Still
Inevitable, to update his observations.
KEY EXECUTIVES of a retail store chain hold on to an organizational structure long after it has
served its purpose because the structure is the source of their power. The company eventually goes into
bankruptcy.
A large bank disciplines a rebellious
manager who is blamed for current control problems, when the
underlying causes are centralized procedures that are holding back expansion into new markets. Many
young managers subsequently leave the bank, competition moves in, and profits decline.
The problems at these companies are rooted more in past decisions than in present events or market
dynamics. Yet management, in its haste to grow, often overlooks such critical developmental questions
as, Where has our organization been? Where is it now? and What do the answers to these questions
mean for where it is going? Instead, management fixes its gaze outward on the environment and toward
the future, as if more precise market projections will provide the organization with a new identity.
In stressing the force of history on an organization, I have drawn from the legacies of European
psychologists who argue that the behavior of individuals is determined primarily by past events and
experiences, rather than by what lies ahead. Extending that thesis to problems of organizational
development, we can identify a series of developmental phases through which companies tend to pass
as they grow. Each phase begins with a period of evolution, with steady growth and stability, and ends
with a revolutionary period of substantial organizational turmoil and change
for instance,