An organization is a group of people who work together with coordinated efforts to achieve certain objectives or goals. Organisations are established by individuals or groups of individuals. During their formation, there is usually very little to talk about by the owner(s) and too much for them to do. Just like human beings, organisations need to grow so as to enable the owner or owners realize their objectives. If the aspect of growth is removed, then it becomes almost impossible for an organisation to exist beyond its formation stage. The signs of growth are expansion and increase in financial base. It also includes increase in the number of employees and diversification of a business as well as the separation of the owner from the business. Organisations also grow through mergers and acquisitions, all in the spirit of attaining their mission and vision.
Business management commentators have described various models of organisational growth. All of them vary in terms of how they conceptualize growth but they have one thing in common, that is, they all focus on the importance of creativity, resilience and innovativeness in the business. Examples of growth models include the Five stages of small business growth model by Neil Churchill and Virginia Lewis, The stages of growth model by Richard Nolan and the Scarf model by David Rock.
1. The Five Stages of Small Business Growth Model by Neil Churchill and Virginia Lewis
This growth model was developed by Neil Churchill and Virginia Lewis in 1983. The model identifies five stages of growth namely existence, survival, success, take off and resource maturity.
The existence stage entails the establishment of the business and is majorly characterized by domination by the owner. The major worry at this stage is whether to move to stage two or quit the business. In the survival stage, the business has survived the threats associated with establishment of new business ventures. The owner appoints a foreman to act as a supervisor of the few employees. During this stage, the business has acquired for itself some customers and a position in the market. If the owner is able to be innovative enough and be ready to do some sacrifices, then the business moves to stage three of success which is sub divided into success-disagreement and success- growth.
Success disagreement majorly involves a disagreement between the owner and the managers as to whether the business has reached a ceiling or whether it has the potential to grow further. If the disagreements persist, the business does not grow any further and it may stagnate. If the owner does not disagree with the managers, he or she collaborates with them to develop a strategic plan for the organisation outlining where it has come from, where it is and where it wants to go and after how long. This is the sub stage of success – growth. When this happens, the business moves to the take off stage. At this stage, a business has grown significantly and acquired a position in the national and global market. It has also diversified following the implementation of the strategic plan developed in sub stage three of success- growth. At this stage, the owner is almost separate from the organisation.
The organisation is fully decentralized in terms of planning and management. Many corporations are at this stage. The owner can decide to sale the organisation to a willing buyer if he or she feels like doing something different. Stage five of resource maturity is a stage which describes an organisation as ‘having arrived’. As the name suggests, the organisation has actually matured. It is staffed by experts in various fields. It is also fully decentralized and in most cases listed in a stock exchange market. The organisation also consolidates its resource base to open other avenues for further growth. Ideas and innovations form the criteria for the sustainability of the achieved growth.
2. The Stages of Growth Model by Richard Nolan
This is a six stage model developed by Richard Nolan in 1970. It is based on the application of Information Technology (IT) in business as a change agent.
In the first stage of initiation, emphasis is given to cost reduction achieved through functional applications. It is also characterized by creation of awareness about a business. The contagion stage comes in second, characterized by intensified use of IT. Various IT applications emerge and come with increased probability of problems, which leads to stage three known as control. Data is managed so as to avoid losing possible gains made in the previous stages. It is done using a centralized system. Stage four is integration of the various technologies available and in use by an organisation. At this stage, there is no further expenditure on IT infrastructure. Nolan determined that four stages were not enough to describe the proliferation of IT in an organization and added Stage Five, namely Data administration in 1979. Stage Five features a new emphasis on managing corporate data rather than IT. Stage six is the maturity stage, which entails the use of all the technologies developed by the organisation to exercise a high degree of control on various processes of the organisation and the process of production in general.
3. The Scarf Model by David Rock
This is one of the most recent business growth models developed by David Rock and published in the neuroleadership journal in 2008. Scarf is initials for Status, Certainty, Autonomy, Relatedness and Fairness. The model is basically based on collaboration and influencing other people in order to bring change or growth to an organisation.
The focus of the model is integration of rewards and prevention of threats to a business in the growth strategy, growth majorly seen from the perspective of collaboration of an organisation with its stakeholders and influencing employees through motivation. Organisations, just like human beings have the need of feeling important to others. They need to be important stakeholders in a certain area.
According to the model, organisations grow through collaboration with others. Through such collaborations, they get to know their status and work to improve it if it is poor and maintain it if it is good. High status motivates organisations to scale up their growth efforts.
Certainty is about predicting the future. It is about looking at where an organisation has come from, where it is and where it wants to go. It is done through analyzing the business environment to understand the major weaknesses and threats to a business, then developing a strategy of transforming the threats and weaknesses into strengths and opportunities.
Prediction also has to do with allocating resources in risk management so as to cushion the organisation from any risks and developing a strategy to position the organisation in a strategic position for the future.
Autonomy is the ability of an organisation to control events surrounding it. In other words, management of an organisation must take charge of events, both in the internal and external environment with a view of guiding the events in the direction which inspires growth. Events to be controlled include things like economic recession, security threats, growth spurts, employee turnover, change management and employee motivation.
Relatedness has to with developing a good relationship with others, a relationship based on friendship rather than on enemity occasioned by business rivalry. Organisations focus on creating an environment in which they are loved by all stakeholders, including their competitors.
This has the advantage of organisations helping each other to grow through learning together, which avoids duplication of business ideas. Lack of duplication enables organisations to place themselves in competitive positions in the market thus stimulating growth.
Fairness has to do with being fair to business stakeholders. Organisations need to stick to business ethics and engage themselves in fair practice. Fairness also has to do with engaging in corporate social responsibility activities such as care of the environment and engaging in charity work to help the marginalized in the society.