When the organization is small, the leadership personal and informal. The founders of the young business are generally actively involved at this stage. With their energetic and opportunistic leadership style, the creative potential can be channeled into growth. As the organization grows, production becomes more efficient and there comes a need for skills relating less to products and marketing issues and more to the co - organisation’s activitie. This is a crisis of leadership.
As the business expands, the organization becomes ‘structural’ with hierarchy of positions and jobs moving to greater specialism. This phase of growth exposes weakness in delegation. Management finds it more difficult to keep detailed control as there are too many activities and it is easy to lose a sense of the wider picture.
The response to the business problems of phase two is delegation. This has the advantage of decentralizing decision-making. The person at the top of the management tree gets further away from the bottom and relies more and more on systems and bureaucracy. The managers need to delegate, requiring less of a hands on approach and more of a people person and manipulator style of leadership.
During the fourth phase, the addition of internal systems and procedures helps to co-ordinate the activities and use the resource optimally. Management reward emphasizes profit share and stock options that focus on both short and long term growth. However, the increased complexity can lead to a crisis of red tape as the procedures inhibit useful action.