What the research shows
The published research on organisational growth is older, more consistent and less encouraging than most commentary suggests. It does not describe growth as a straight line that occasionally develops faults. It describes growth as a sequence of conditions in which the arrangements that produced success become the constraints on further success.
The foundational statement of this belongs to Larry E. Greiner, writing in Harvard Business Review in 1972 and republished as an HBR Classic with his own later commentary in 1998. Greiner’s argument was that organisational growth is not smooth. Periods of relative stability are punctuated by periods in which the existing way of operating stops working and something structural has to change. His central observation was uncomfortable and has aged well: the practice that solves a problem at one point in an organisation’s life becomes the source of the problem at a later point. Nothing has to be done badly for this to happen. The practice does not degrade. The conditions it was suited to disappear.
Why those conditions disappear has a separate and equally durable literature. Jay R. Galbraith, writing in Interfaces in 1974, framed organisational design as a response to information-processing demand, drawing on Herbert Simon’s work on the cognitive limits of decision-makers. Galbraith’s contribution was to make explicit something organisations tend to experience as vague pressure: as tasks become less certain and more interdependent, the volume of information that has to move between people rises, and the structures that were adequate for the previous volume are not adequate for the new one. Growth is one of the most reliable generators of that increase.
The evidence on what actually fails is more specific than the general language of “growing pains” allows. A multi-year study of more than 250 companies and several thousand managers, conducted by Donald Sull of MIT Sloan with Rebecca Homkes of London Business School and Charles Sull, found that only 9 per cent of managers said they could rely on colleagues in other functions and units all of the time, with around half saying they could rely on them most of the time. The same work found that vertical alignment processes in most firms were sound. The difficulty was horizontal: coordination across units, not communication down the line. That distinction matters for growth, because adding units is precisely what growth does.
A separate survey of executives at more than 350 global companies, conducted by Bain & Company and reported by Paul Rogers and Marcia W. Blenko in Harvard Business Review in 2006, found that only around 15 per cent of those surveyed said they had an organisation that helped the business outperform its competitors. Their descriptive account of where decisions stall — between global and local, between the centre and the business unit, between one function and another, and between the organisation and its outside partners — reads as a map of the seams that growth creates.
Two further bodies of work explain why these difficulties are so often invisible to the people best placed to correct them. Amy C. Edmondson’s field study of 51 manufacturing work teams, published in Administrative Science Quarterly in 1999, found that team psychological safety predicted learning behaviour while team efficacy did not once safety was controlled for. Michael Beer and Russell A. Eisenstat, writing in what is now MIT Sloan Management Review in 2000, described a set of mutually reinforcing barriers to strategy implementation — among them unclear strategy and conflicting priorities, and poor vertical communication — which they observed operating largely without senior leadership’s knowledge. Nelson P. Repenning and John D. Sterman of MIT Sloan, writing in California Management Review in 2001, described a related dynamic in which managers under pressure default to working harder rather than working smarter, and those who prevent problems receive no visible credit for problems that never occurred.
What the research does not establish is worth stating as plainly as what it does. There is no published headcount, revenue figure or growth rate at which an organisation reliably encounters these conditions. There is no evidence that the pattern arrives at a threshold. The literature describes mechanisms and consequences; it does not supply a trigger point, and any source that offers one is going beyond what has been demonstrated.
“Growth does not usually introduce a new problem. It removes the conditions that were quietly containing an old one.”
— Zoom Riddle
Growth changes the mechanism, not only the scale
The most common way of describing growth is quantitative. There are more people, more customers, more locations, more decisions. The description is accurate and it is also misleading, because it implies that the organisation is doing the same things in larger quantities. In practice, many of the things a smaller organisation does are not scalable versions of anything. They are effects of being small.
Consider what coordination consists of in an organisation of thirty or forty people. Very little of it is deliberate. People sit near each other, hear parts of conversations they were not party to, notice when someone is under pressure, and adjust. Decisions are informed by a shared background of things everyone happens to know because there were few enough people that everyone was present for most of it. None of this is a process. It is not documented, it does not have an owner, and it does not appear anywhere in the organisation’s description of itself. It works reliably, at almost no cost, and it is invisible precisely because it works.
The mathematics of that arrangement do not survive growth. The incidental overlap between any two people — the proportion of each other’s working context they happen to absorb without effort — falls as the number of people rises, and it falls faster than the headcount rises, because the number of possible pairs grows faster than the number of people. At some point the overlap between most pairs of people approaches zero. Nothing has been removed. The mechanism simply stops having anything to work with.
This is where Greiner’s argument becomes concrete rather than abstract. The organisation is not doing anything differently. It is doing the same things, with the same intent, and the same behaviours, and the result has changed. Because the behaviour is unchanged, the natural explanation is that something else must have changed — the people, the culture, the commitment, the standards. Those explanations are available, emotionally plausible and usually wrong. They are also expensive, because they direct effort at things that were not the mechanism.
Galbraith’s framing suggests why the effect compounds rather than appearing gradually. As information-processing demand rises, an organisation can respond by reducing the need for information to move, or by increasing its capacity to move it. Growing organisations frequently do neither deliberately. They continue with arrangements designed for a lower volume, and the surplus demand is absorbed by individuals, informally, in ways that do not appear in any system. This is why growth so often produces the specific experience of a group of capable people who are all working harder and achieving less collectively than they used to. The additional effort is going into holding together coordination that used to be free.
There is a second and less obvious consequence. When an informal mechanism is removed by growth, its absence is not experienced as an absence. It is experienced as a series of unrelated failures. A handover that did not happen. A decision made twice. A customer commitment that nobody downstream knew about. Each of these has a local explanation and a local remedy, and each local remedy is reasonable on its own terms. The pattern connecting them is not visible from any of the positions where the individual failures are experienced, which is why organisations often accumulate a large number of small corrections without the underlying condition changing.
In practice, organisations tend to reach for the vocabulary of decline to describe this. Standards have slipped. People have become siloed. The business has lost its edge. What is more often true is that a mechanism which was doing substantial unacknowledged work has stopped being available, and the organisation has not yet noticed that it was ever there. Recognising that is not the same as resolving it, and the two are worth keeping separate.
Growth exposes weakness rather than creating it
A great deal of what an organisation encounters during growth was already present. Growth removes the conditions under which it was tolerable.
Smaller organisations run with substantial slack, though they rarely describe it that way. A person who knows how something works can be interrupted. A decision that turns out to be wrong can be reversed before it has propagated far. An ambiguity in who owns a piece of work can be resolved by a conversation between the two people who might both own it. The organisation is not free of ambiguity, unclear ownership or weak definition. It is small enough to absorb them.
Growth withdraws that absorption in several ways at once. The distance between the point where a decision is made and the point where its consequences appear increases. The number of people who need to act on a decision they were not present for increases. The cost of reversing something rises, because more has been built on it before anyone notices. The result is that a weakness which was always there — an unclear boundary, a definition two teams understood differently, a dependency nobody had named — moves from being an irritation to being load-bearing.
This is a different claim from the one organisations usually make about themselves during growth, and the difference has practical consequences. If growth created the problem, the reasonable response is to look at what was introduced recently. If growth revealed the problem, recent introductions are the least likely place to find it. The two readings send attention in opposite directions.
The research on measurement is instructive here, because it describes the same dynamic in a specific domain. V. F. Ridgway, writing in Administrative Science Quarterly in 1956 under the auspices of what is now Cornell’s Johnson Graduate School of Management, examined single, multiple and composite performance measures and found that all three could produce undesirable consequences for overall organisational performance. His documented examples were unambiguous: public employment interviewers evaluated on the number of interviews conducted worked through interviews quickly and placed few applicants; law-enforcement investigators given a monthly case quota selected easy cases towards month end. Ridgway’s warning was against over-reliance on measures, not against measurement, and his phrase for the effect was that the cure is sometimes worse than the disease.
Steven Kerr made a related observation in the Academy of Management Journal in 1975, examining reward systems in a manufacturing company and an insurance firm alongside settings in politics, medicine, war and academia, in each of which the stated hope and the actual reward pointed in different directions. Kerr’s point was that people seek information about what is actually rewarded and then do those things, often to the exclusion of activities that are not rewarded.
Neither of these findings is about growth. Both become far more consequential during it. A measure that mildly distorts behaviour in an organisation of forty, where the distortion is visible to everyone and corrected informally, distorts behaviour at scale in an organisation of four hundred, where nobody is positioned to see the aggregate effect. The measure has not changed. The correction mechanism has gone.
Repenning and Sterman’s account of the capability trap operates on the same logic. Their work, using system dynamics modelling and more than a dozen case studies, described organisations in which pressure pushes people towards immediate effort and away from work that would reduce the need for effort later. Growth is a sustained pressure of exactly this kind. The organisation is busier than it has ever been, the work that would reduce future load is the work that can most easily be deferred, and the people who would have prevented the next problem are visibly occupied with the current one.
There is a genuine tension in all of this that does not resolve cleanly. Slack is inefficiency by another name. An organisation that preserves enough of it to keep absorbing its own weaknesses is carrying a cost, and that cost is real, and competitors may not be carrying it. An organisation that removes it becomes more efficient and simultaneously less forgiving of the ambiguities it has not yet found. Both positions are defensible. What is not defensible is holding the second while assuming the first.
The informal system is the hardest thing to see
Every organisation runs on two systems: the one it can describe and the one it actually uses. In a small organisation the gap between them is not a problem, because the same people occupy both and can move between them without noticing.
Erik Hollnagel, Robert L. Wears and Jeffrey Braithwaite made this distinction central to their 2015 white paper published jointly by the University of Southern Denmark, the University of Florida and Macquarie University. Their observation, drawn from safety research, was that everyday work is routinely adapted from how it was formally imagined or prescribed, and that things generally go well not because people follow procedures exactly but because they make sensible adjustments to the situation in front of them. The gap between the described system and the used system is not a defect. It is where a good deal of the organisation’s actual capability lives.
The difficulty during growth is that this capability is not transferable by description, because it was never described. A person who has done the work for three years knows which exceptions matter, which stated rule is honoured in practice and which is not, whose sign-off is real and whose is procedural, and what to do when the situation does not match any of the categories. A person hired last month has access to the documented system only. If the documented system were sufficient, this would not matter. It usually is not sufficient, which is why the experienced person’s judgement was valuable in the first place.
Growth therefore produces a specific and often misread effect: the proportion of people operating on the documented system rises, while the proportion operating on the real one falls. Output quality becomes more variable, not because standards have dropped but because the standard was never fully written down. The organisation looks at the variation and concludes that its onboarding is inadequate, or its documentation is out of date, or its recent hires are weaker than its earlier ones. Each of those may be true. None of them is the whole of it.
The problem compounds when the informal system is not merely undocumented but actively invisible to leadership. Edmondson’s field study of 51 manufacturing work teams found that team psychological safety predicted learning behaviour, while team efficacy did not once safety was accounted for. The practical implication is that whether a team surfaces what it knows depends on conditions that are not obviously connected to competence. Beer and Eisenstat described this at senior level, identifying barriers to implementation and organisational learning that operate largely outside leadership’s awareness, in part because the same barriers suppress the information that would reveal them.
Growth makes this worse in an unglamorous way. The number of layers between the person who knows something and the person who would act on it increases. Each layer is a point at which information is summarised, and summarising is selective. Nothing needs to be concealed for the aggregate effect to be substantial.
There is a further complication that deserves stating rather than glossing. The informal system is not uniformly good. Some of what it contains is genuine adaptive expertise. Some of it is workaround, accumulated habit, or a local convenience that imposes costs elsewhere. From inside the organisation, and particularly from inside the team that holds it, these are difficult to distinguish, because both look like “how we actually do it”. Any attempt to formalise the informal system is therefore also, unavoidably, a judgement about which parts of it were worth keeping — and that judgement is being made by people who did not build it and often cannot see what it was compensating for.
In practice, organisations frequently discover the extent of their reliance on informal arrangements only at the point when someone who held a great deal of the undocumented system leaves. The departure is then read as a retention problem. Sometimes it is. It is also, reliably, an inventory event.
Growth is not one condition
Treating growth as a single phenomenon obscures more than it clarifies. Organisations described as growing may be doing structurally different things, and the difficulties they encounter differ accordingly.
Growth in headcount and growth in organisational capability are not the same and do not move together. An organisation can add substantially to its numbers while its capacity to make and execute decisions stays flat or declines, because the additions increase coordination demand faster than they add coordination capacity. Galbraith’s information-processing account predicts this directly. The organisation is larger and can do less.
Growth in revenue without corresponding growth in complexity is a different situation again, and generally a more comfortable one. More of the same thing, sold to more of the same kind of customer, through the same channel, largely stresses capacity rather than structure. Growth that adds a new customer type, a new geography, a new service line or a new operating model stresses structure, because it introduces coordination between things that did not previously need to coordinate. Two organisations can report identical growth rates and be in entirely different positions.
Growth by acquisition compresses the timeline. What an organically growing organisation encounters over several years arrives at once, alongside the separate difficulty of two organisations that each have their own informal system and each believe theirs is the documented one.
The pace of growth changes the character of the difficulty rather than only its severity. Steady growth allows arrangements to be adjusted while they are still partially working, which means the adjustment is made under relatively low pressure and with the previous arrangement available as a reference. Rapid growth removes both. The arrangement fails before an alternative exists, and the organisation is asked to make structural decisions during the period when it has the least available attention.
Sector matters in ways that are frequently underestimated. In organisations where the work is largely knowledge-based and each engagement is somewhat different, the informal system is doing a great deal of work, because standardisation is limited by the variability of the work itself. In organisations where the work is more repeatable, more of the real system is already documented, and growth stresses different things — throughput, hand-offs, and consistency across sites rather than consistency of judgement. Rogers and Blenko’s account of where decisions stall is useful here, because the seam that matters differs by structure: the centre-versus-unit seam dominates in some organisations, the function-versus-function seam in others.
Geography introduces a variation that is often mistaken for a cultural one. Distance reduces incidental contact to zero rather than merely reducing it, removes the shared context that made brief communication sufficient, and introduces time-zone and language effects that lengthen every feedback loop. When a second location diverges from the first, the common explanation is that the new site has developed its own culture. What has more often happened is that the mechanism which kept the first site aligned — proximity — was never available at the second site, and nothing replaced it.
This is also the point at which a widely repeated claim deserves examination, because it distorts how organisations think about their own growth-related difficulties. The assertion that some large majority of change efforts fail is frequently cited with no source attached. Mark Hughes of the University of Brighton examined this directly in the Journal of Change Management in 2011, tracing five separate published instances of the 70 per cent change-failure claim and finding no valid or reliable empirical evidence supporting any of them. The figure circulates because it is repeated, not because it was established. An organisation that believes structural change during growth is overwhelmingly likely to fail is making a decision about how much effort to invest on the basis of a number that has not been demonstrated.
The honest position is that the evidence does not support either confidence or fatalism. It supports the more limited claim that these conditions are common, well-described, and not evidence of a management failure — and the further claim that misreading their cause is expensive.
How this presents in practice
Consider an organisation of forty people that coordinated informally and effectively for several years. Little of that coordination was designed. People knew what others were working on, adjustments happened in passing, and the organisation’s own account of why this worked was that it had a strong culture.
At a hundred and thirty people, coordination has become visibly difficult. Work is duplicated. Commitments are made that other parts of the organisation learn about late. Decisions that used to take a conversation now take a sequence of meetings, and some of them are revisited afterwards. The experience inside the organisation is unmistakable and is described consistently by long-standing employees: something has been lost.
The explanation that follows almost automatically is that the organisation has lost its culture. It is a reasonable inference. The people who were there at forty can point to a difference they can feel, and cultural dilution during rapid hiring is a real and documented phenomenon.
What complicates that explanation is that the culture is largely intact by most of the measures the organisation itself would use. Stated values still describe observable behaviour. Long-tenured people have mostly stayed. Newer employees describe the organisation in terms recognisably similar to those used by earlier ones. Engagement has not collapsed. If culture is what changed, it is not showing up where culture usually shows up.
What did change is more prosaic. The informal coordination depended on people incidentally overhearing things — being present, by accident, for information they were not the intended audience for. Beyond a certain size, the incidental overlap between any two people approaches zero. Not because anyone became less open, but because there is no longer a physical or organisational arrangement in which the overlap occurs.
The observation this points to is uncomfortable, because it is about what was true earlier rather than what has gone wrong now. The mechanism was never culture. It was proximity and small numbers. Culture was present, and valuable, and was also receiving credit for work that proximity was doing. Growth removed the mechanism and left the belief intact, which is why the loss registers as a loss of the thing that was believed to be responsible.
What was actually making this work when it worked?
Why this matters
The practical stake in all of this is not diagnostic elegance. It is where an organisation directs finite attention during the period when it has least of it.
An organisation that reads a coordination failure as a culture problem invests in culture. That investment is not wasted in any absolute sense — the activities are usually worthwhile — but it does not address a mechanism that was structural, so the underlying difficulty persists while the organisation believes it has responded to it. The second failure is then read as evidence that the culture problem is deeper than thought, and the effort escalates in the same direction. This is a common pattern and it is expensive in a way that is difficult to see from inside, because effort is visibly being made.
The same logic applies to the other standard misreadings. Treating a structural coordination problem as a hiring problem produces more hiring, which increases coordination demand. Treating it as a discipline problem produces more oversight, which consumes the attention of the people who were absorbing the coordination gap informally. Treating it as a systems problem produces new tooling, which changes where information sits without changing whether anyone has the capacity to act on it. Each response is defensible. Each also has a cost that is only apparent if the original reading was wrong.
There is a second-order consequence that compounds quietly. Sull’s finding that the central execution difficulty is cross-unit coordination rather than vertical alignment implies that the seams between parts of an organisation are where growth does its damage. Seams are nobody’s territory by definition. Problems located there are visible from both sides and owned by neither, which means they persist longer than problems with a clear owner and are more likely to be attributed to the other side of the seam. Over time this produces something that does look like a culture problem — units that trust each other less than they used to — arriving as a consequence of the structural condition rather than as its cause.
For leaders, the cost of misattribution is highest precisely when growth is going well. When results are strong, there is little pressure to examine why coordination feels harder, and considerable pressure not to. The difficulty is usually absorbed by individual effort until the point at which it cannot be, and that point tends to arrive during a period when the organisation is already committed to something that assumes the coordination will hold.
None of this argues for growing more slowly, and it is not an argument that growth is inherently damaging. It is an argument that the explanations an organisation reaches for during growth are systematically biased towards the explanations it can already see, and that the mechanisms doing the most work are the ones least likely to be described anywhere.
Continue reading
Elsewhere in this territory
- Why Headcount Growth Doesn’t Equal Organisational Growth
- Why Culture Becomes Harder to Protect During Rapid Growth
- How Founder-Led Businesses Change as They Scale
- Why Growth Plateaus Even When Demand Is Strong
A closer look at growth stages
Related territories
- Strategy Execution — the distance between what an organisation intends and what it does
- Operations — how operational consistency behaves as an organisation gets larger
- All perspectives
Looking for your own sector? The Other Sectors page points to the closest match.
Questions worth considering
These are open. They are not a diagnostic sequence, and they do not resolve into an answer.
- What was actually making a particular arrangement work when it worked, as distinct from what the organisation believes was making it work?
- Which arrangements that are currently described as culture, values or standards might be effects of size, proximity or tenure?
- Where in the organisation is coordination currently being held together by individual effort that appears in no system and is credited to nobody?
- Which of the current difficulties were present at a smaller size and were simply being absorbed?
- If a long-tenured person left tomorrow, what would the organisation discover it had been relying on?
- Which recent problems have been given local explanations and local corrections, and would they look different if they were considered together?
- Where does growth in numbers appear to have been treated as equivalent to growth in the organisation’s capacity to decide and act?
- Which of the seams between units is currently generating problems that both sides can see and neither owns?
Related perspectives: Strategy Execution and Operations.
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