Organizationally, the company has grown massive enough to, in many cases, require functional managers to take over sure duties carried out by the owner. The managers must be competent but need not be of the highest caliber, since their upward potential is restricted by the corporate objectives. Cash is plentiful and the main concern is to avoid a cash drain in prosperous periods to the detriment of the company’s capacity to resist the inevitable tough instances. The organization is a simple one—the owner does everything and directly supervises subordinates, who ought to be of at least average competence.

We started with an idea of progress phases emanating from the work of Steinmetz and Greiner. We made two initial changes based mostly on our experiences with small firms. First, they assume that a company must develop and move through all phases of development or die in the attempt. Second, the fashions …