Reinventing Organizations

Summary of Reinventing Organizations. A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness by Frédéric Laloux. This book offers a theory, many examples and several pathways about how to evolve organisations towards a new stage of complexity and well-being at every level. In a very short time, this book has become a classic in the field of management theory!

Frédéric Laloux, 2014, 384 pages.

Chronicle and summary of Reinventing Organizations. A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness by Frédéric Laloux.

Frédéric Laloux and Reinventing Organizations: a few words about context

This book has sold over 250,000 copies worldwide. It is a management literature bestseller! Frédéric Laloux designed it progressively, over several years, relying on various studies and his own experience working for the consulting firm McKinsey.

You can also buy a summarised and illustrated version of the book. It is an easier read.

Introduction

Humans evolve and their world views change. For years, they believe in something that turns out to be untrue. This is not a criticism or judgement about the level of intelligence of our predecessors. We should honour those who contributed to helping us see the world in a different, more enriching way.

Organisational models (companies, as well as administrations and organisations working in the charity sector) that still work for us today, could well no longer be adapted to our situation. Despite the enormous progress made in terms of prosperity, life expectancy and education in particular, something is not right.

In every sector of activity, the workplace has increasingly become a place of suffering. Whether at the bottom or at the top of the ladder, ill feelings set in and they can turn ugly. This crisis can make us wonder – could a more worthwhile, more sensible model emerge?

It is first and foremost a practical question that leads to a host of questions about how to transform the ways we organise work, in a concrete manner.  The challenges of such sweeping change are beyond the scope of this book, but we can see that they are colossal in nature:

Part 1. Historical and developmental perspective

Humanity moves forward in “leaps”. These leaps can be psychological, cognitive, social, political or moral. With each leap, complexity grows. The same thing applies to organisations. Every time humanity takes a leap forward, it invents a new organisational model that is more complex than the previous one.

Chapter 1.1. Changing paradigms: past and present organisational models

Frédéric Laloux uses the work of Ken Wilber, a philosopher of human consciousness, to categorise the stages of evolution and name them using colours. Among others, his work influenced the Dynamic Spiral.

The basic idea is that everything changes at every stage: the world view, technology, power structures, and therefore the organisational model. The author insists on this point.

Another key idea is that we are on the brink of a new stage of change that we may call “evolutionary”, or in colour code “Teal”. How do we know this? Because crisis is on the horizon. Many people are suffering. The planet is suffering too. There are tensions in the face of change, but we can all feel that it is necessary.

For this new model to emerge, we must overcome our own resistance and that of those who will try to make you think that it is just a passing thing. It is possible! Just as it was possible, in it time, to develop science or democracy.

Chapter 1.2. About the stages of development

Frédéric Laloux takes five main stages that he analyses in detail in the first part of the book:

1. Impulsive or Red;
2. Conformist or Amber;
3. Achievement or Orange;
4. Pluralistic or Green;
5. Evolutionary or Teal.

Let’s look at the first four.

→ The red vision of the world or the impulsive stage

The chief is the guardian of social order. Raw power dominates everything, not the law. The chief’s wishes are orders and transform into rules for everyone. In short, there is one law – that of the strongest! You either dominate or you are dominated.

In this system, organisations are similar to packs of wolves. We can still find examples of violent organisations such as the Mafia, criminal gangs or paternalistic companies. I advise you to read the book “Reinventing Organizations” in full to benefit from all the techniques.

The innovation that is particular to this model is to have introduced division of labour into social relations (each person in their place) and hierarchical authority.

→ The amber vision of the world or the conformist stage

Historically, this model appeared around 4,000 years ago, in Mesopotamia. From then on, the primary impulsiveness was controlled and turned inwards, thanks to the Law, which applied to everyone. Those who broke the law felt guilty and ashamed.

This model created hierarchical organisations; positions were stable (in terms of duties) and this security was assured by belief in the Law. Predictability and conformism were values shared by everyone. How about some examples? There are so many: Church, the Army, Administrations, etc.

What progress is related to this stage? Processed can be reproduced (rituals, work) and hierarchies are stable. These two characteristics led to the growth of Empires, agriculture and architecture, for example.

→ The orange vision of the world or the stage of achievement

Now comes the time of the Industrial and Scientific Revolution. And the time of liberal democracy too! The Law, that set good against evil and made individuals conform and feel guilt when they did not, is swept aside by innovation and the desire for Progress.

Logic and discovery are the order of the day. At management level, too, perhaps most importantly – profit. It involves creating and generating increasing amounts of income.

If we need to use a metaphor here, it would be that of the machine. To ensure efficiency (and therefore profit), everything has to work mechanically and automatically. Multinationals today, Business Schools and Wall Street banks are all caught up in this model.

The main advancements at this stage are:

• Innovation (new products, new profits, new market share, etc.) ;
• Responsibility (incitement to work, performance assessment, etc.) ;
• Meritocracy (the most intelligent and most agile people are in charge).

But where is the meaning in all this? The materialistic approach of the Orange stage depletes “resources” (a word that comes from its own vocabulary), both human and natural. “Always more” is like a cancer eating away at contemporary societies.

→ The green vision of the world or the pluralistic stage

From the 18th and 19th centuries onwards, this world vision took shape with the advent of anti-slavery and feminist movements among others. From the second half of the 20th century, it would be expressed more clearly and comprehensively. The green vision of the world inspires post-modernist academic thinking, as well as civil society organisations.

The family is an adequate metaphor. Why? Because it is about reforging the community links that were broken during the Orange stage. Happiness is not just an individual thing; it has to be for everyone, a collective sentiment.

Some modern companies are built on the basis of a pluralistic model: it is the case, for example, with Southwest Airlines or Ben & Jerry’s (yes, the ice-cream!). They apply what is known as “soft management”, where the hierarchy is no longer in place and commands are replaced by the contribution to a shared vision.

Profound organisational changes at this stage are:

• Empowerment (motivate rather than lead, and avoid hierarchical relationships);
• A culture of values (at the heart of the strategy, allowing each person to recognise that they are part of a group);
• Respect for all stakeholders (the shareholders are no longer the only ones that count, but all those who care about the company).

In reality, green companies often retain orange type structures. It is a stage that has some difficulty finding itself.

Note that in conclusion to this chapter, the author confirms that everyday life is in fact multi-coloured. No organisation is “just” Orange, or Red, or Green. There are blends of colour at every level! In addition to this, no world vision is truly “better” than another one; it is simply more complex.

Chapter 1.3. The evolutionary stage – Teal

Abraham Maslow, the famous American psychologist who created a hierarchy of needs, uses the term “self-actualisation”. In parallel, or further to this, others studied the emergence of this new stage from both a psychological and a social point of view. What are the characteristics?

The world here is designed to be a place to discover your unique potential, where the individual can believe and become a complete Self, in harmony with others. It involves the following:

• Controlling the ego (in particular fears, needs, desires, etc.);
• Encountering the “inner rightness” (specific and personal) that should guide us;
• Representing life as a place of personal unfolding (developing this singularity);
• Focusing on inner strengths (no judgement, patience and self-confidence);
• Acceptance of adversity (humility and an attitude of learning);
• Wisdom beyond the rational (favouring intuition, among other things);
• A quest for wholeness (fully authentic in relation to oneself, to others and to life in general. Among other things, this involves reconciling traditional oppositions, such as the feminine and the masculine, etc.).

Does this make sense in the context of organisations and companies? Yes it does! It may appear to be quite remote from management, but it is not. In fact, individuals who have found their calling are naturally more efficient. Beside, imagine a company in which everyone controls their ego… But to find out more and move on from hypotheses, we need to get to the second part of the book!

Part Two The structures, practices and cultures of Teal organisations

The second part of the book uses abundant empirical material to analyse how Teal organisations work. Twelve organisations were selected, precisely because they already implement new management principles. They are like “aliens” or foreign bodies hiding in the midst of their peers, but these aliens are in fact innovators with super powers!

The author examined these organisations, using a comprehensive 45-part questionnaire about every aspect of management, from the guiding processes to practical everyday details (meetings, conflict resolution, etc.).

Chapter 2.1. Three breakthroughs and a metaphor

While the Orange paradigm happily used the metaphor of the machine and the Green paradigm could be more easily related to the image of the family, the Teal paradigm develops differently.The living system appears as an appropriate metaphor.

Furthermore, like every organisational stage, the Teal stage introduces revolutions in how management is designed. What are they?

1. Self-management: no hierarchy or search for consensus, but horizontal functioning.
2. Wholeness: no “professional side” that favours one facet of the self (masculine, rational, etc.), but a work practice that is wholly representative of the person you are.
3. Evolutionary purpose: no preconceived and controlled future, but a process of becoming that involves listening deeply to needs and desires.

These three breakthroughs in the Teal world view applied to management are the subject of the following chapters. Frédéric Laloux put his questionnaire to the following companies to more precisely determine the implications and issues related to these three fundamental points:

• AES (energy sector, global group, 40,000 employees, for profit company);
• BSO/Origin (IT consulting, global group, 10,000 employees, for profit company);
• Buurtzorg (Health, Netherlands, 7,000 employees, not for profit);
• ESBZ (Middle School and High School, Germany, 1,500 people, including parents and children, not for profit);
• FAVI (Metal manufacturing, France, 500 employees for profit company);
• Heligenfeld (Psychiatric hospitals, Germany, 700 employees, for profit company);
• Holacracy (Organisational operating model);
• Morning Star (Food processing, United States, from 400 to 2,400 employees, for profit company);
• Patagonia (Apparel, United States, 1,350 employees, for profit);
• RHD (Human services, United States, 4,000 employees, not for profit);
• Sounds True (Media, United States, 90 employees and 20 dogs, for profit);
• Sun Hydraulics (Hydraulic components, global group, 900 employees, for profit).

I advise you to read the book “Reinventing Organizations” in full to benefit from all the techniques.

Chapter 2.2. Self-management (structures)

Do we really need a leader who makes decisions? Does a company really need a hierarchical power structure? The answer to these two questions is a resounding “no”! The experience of these companies shows that it is possible — and even desirable — to manage complexity without resorting to these forms of management.

→ Hierarchy does not know how to manage complexity

At the top of the hierarchical pyramid, the leaders are overwhelmed. Too much responsibility, too many things to consider; there are time pressures when it comes to making decisions.

And yet, from the global economy to the eco-system of a forest, from the human brain to a flock of birds flying in formation, the history of nature shows us that non-centralised forms of organisation exist, and they work very well!

Let’s draw the consequences: human organisations can work without using the old model. Burrtzorg compte 9,000 employees and has no managers and no boss. But before we go any further, let’s clear up some misunderstandings. Is self-management…

1. Anarchy? No! The members coordinate, and respect certain roles and processes.
2. An endless need for consensus and meetings? Again, no! There are in fact fewer meetings.
3. Experimentation that is too immature as yet? This is false. Two self-managing companies have existed for decades and have proven their efficiency and resilience in the face of crises.

→ Self-management demands an update to almost every basic managerial practice

The age old pyramid structure cannot be abandoned overnight. The replacement system must be considered in advance and in detail. The main practices and structures need to be reformulated:

• Structure of the organisation;
• Management duties;
• Information routes;
• Decision making;
• Meeting architecture;
• Project management;
• Investments;
• Budgets;
• Goals;
• Performance management;
• Salary and bonuses;
• Conflict management;
• Crisis management;
• Redundancies.

→ Structure of the organisation

Let’s take two examples.

1. Buurtzorg operates based on units of 10 to 12 people who work autonomously. There is no boss above them, but a regional coach who has no authority over the coached teams (40 to 50). He or she can help them if they express the need for this. The head office is composed of 28 people who handle administrative questions. There is no HR, no Executive Committee… It is so simple, and it works!
2. FAVI operates through mini factories dedicated to a particular client. One simple case: to manage orders, the salesperson speaks directly to the workers, who plan the task themselves. In 25 years, there has never been a late delivery!

Chapter 2.3. Self-management (processes)

→ Decision making

We are used to authoritarian decision-making, consensual decision-making and majority decision-making. But there are other ways to do things, and one in particular: ask for advice.

According to this system, everyone can make decisions, including those who commit the company’s money. But there are rules:

1. Consult someone with expertise in the field;
2. Consult the people who will have to live with the consequences of this decision;
3. The decision maker makes the decision after thorough examination and mature reflection.

Every member of the company can be both a decision maker and an advisor. The strengths of this system are that it takes other people into consideration and it creates bonds.

The bigger the decision, the more people should be consulted.

→ Compensation and incentives

Is it possible to do without a bonus system, or even goals? Yes it is! This may seem surprising, but it actually works. In reality, money is a poor motivator. Why? Because it offers a pessimistic view of workers. We picture people working exclusively for money and not for self-fulfilment.

Rather than offer individual incentives, it is possible to share some of the profits among everyone. For the basic salary, the solution in place at Morning Star (US tomato giant) is well worth a look. It consists of allowing everyone to ask for the raise they think they deserve. A commission of colleagues reads the proposal and offers an opinion, without imposing a decision. Nevertheless, if a colleague makes an unreasonable request, a conflict resolution procedure can be proposed.

→ Performance management

Pressure from above (associated with financial rewards) to maintain employee motivation is an illusion. Most often, this leads to total loss of motivation. To offer genuine intrinsic motivation to members of a company, you should count on other things:

• Emulating colleagues (the desire to do as well as another team, mutual assistance and supervision);
• Market demands (employees know the market realities).

→ Multiple natural hierarchies

While there is no longer a hierarchical authority established by standards inside Teal organisations, there are natural hierarchies, born from the skills and qualities of each person. One person is good at listening, another good at communicating… One person is expert in cutting-edge techniques, another is brilliant at resolving conflicts.

“The point is not to make everyone equal; it is to allow all employees to grow into the strongest, healthiest version of themselves. Gone is the dominator hierarchy (the structure where bosses hold power over their subordinates). And precisely for that reason, lots of natural, evolving, overlapping hierarchies can emerge – hierarchies of development, skill, talent, expertise and recognition, for example. […] How high you reach depends on your talents, your interests, your character, and the support you inspire from colleagues.”

(Reinventing Organizations)

Chapter 2.4. Striving for wholeness (general practices)

→ Being wholly yourself in the workplace

Sometimes we forget it. But we often wear a mask when we are at work. We seek to respond to what the organisation expects from us. In doing so, we bury our own aspirations.

They are not really welcome in the professional space. On the other hand, the ego can express itself in a limited way. Ego is firstly the desire for recognition, to be right, to have success and to make a good impression. Can we turn this on its head?

Affirming what you truly are (deep aspirations) seems risky. Sometimes it genuinely is risky; you could lose your job if you are too honest. But fear also comes from the management of the company itself. It considers that an organisation that gives everyone free rein to express their individuality will quickly become unmanageable.

In this situation, ego games are all that is left to us. We develop a cold and hard attitude, rational and disconnected from all emotions. In one way, we only access our “masculine” side (the one that all these characteristics usually refer to) and sacrifice our feminine side. Qualities like caring, vulnerability, listening, intuition and spirituality are repressed.

→ The workplace as a source of wholeness

Self-management is a good way to move towards wholeness. Not having to please the boss and being autonomous in our choices helps. But it is not always enough. That is why some organisations have set up procedures to create a heightened sense of security.

Here are two examples.

1. Sounds True, for example, broadcasts messages from spiritual teachers. And also accepts dogs! Simple gestures that bring life into the company.
2. Children of Patagonia employees can play and learn at the Child Development Centre inside the company. During meals, children and parents are together. The consequence? Relationships transform, masks come off.

Many characteristics related to the organisation have to change to allow people to be themselves. They range from recruitment methods to ways of carrying out assessments. Let’s take a look at some of the practices put in place by the pioneering companies studied by Frédéric Laloux.

→ A safe space

The association RHD (Resources for Human Development) looks after people in difficulty. It operates on the basis of self-management. In addition, it has introduced caring as a core value in its business.

A “Bill of Rights and Responsibilities for Employees and Consumers” was drafted to invite each person to respect the values of integrity, respect and openness. Everyone is invited to read it and reflect on these rules. In turn, these principles are turned into concrete practice. A shared reference is created as the basis for work.

→ Reflective spaces

Heiligenfeld is a company working in the field of mental health and rehabilitation. Its founder, Joachim Galuska, seeks to integrate a holistic vision to his practice, notably adding a spiritual and collective dimension. Here:

• Employees can take 30 minutes to meditate as a group every day.;
• Individual coaching sessions are open to all employees;
• An external coach visits two or three times a year to help resolve any issues;
• Four times per year, silent days are organised, for consciousness. Patients and employees all take part;

In addition to this, every Tuesday morning, collective introspection takes place for one hour and fifteen minutes. These somewhat special working groups (no goal to achieve, no report to make) are hugely successful.

→ Storytelling

Storytelling can create a store of shared stories. In this way, confidence increases. The association Centre for Courage & Renewal, for example, proposes a hiring ritual during which the new recruit is welcomed with stories and wishes by the other employees.

ESBZ is a teaching institution that also practices storytelling. The “congratulation meeting” is organised and led by the students. In front of their parents and teachers, they tell emotional or amusing stories and thank each other. A sense of community is created!

→ Meetings

How can a space that is usually a place where egos combat each other become a place of listening? There are different techniques available, one of which consists of “banging the cymbals” when the meeting takes a wrong turn. The author explains this simple, yet fascinating technique in the book.

→ Engagement and working hours

In a self-managed company, there is no need to lie about family or personal obligations. The employees discuss replacements together, in their own small teams. Each person takes on a little more work from time to time. This way, everyone can meet their non-professional obligations.

→ Performance assessment

Fear is often a factor in these assessments! How can it be removed? One solution experimented by Sounds True consists of transforming this moment into a moment of collective reflection, during which the employee being assessed discusses things with the group.

Firstly, the employee assesses their achievements and aspirations. The group then reflects on this in silence, before answering two questions, while avoiding any form of judgement.

1. What does working with you offer me that is precious?
2. In what field do I sense that you could change and grow?

A sheet with all the answers is then given to the employee being “assessed”. Afterwards, the reflection can continue on a one-on-one basis with a colleague.

Chapter 2.5. Striving for wholeness (HR processes)

Teal companies refuse to let competition and the race to earn money to take over everything else. This is the vision of the Orange paradigm, mainly, and many companies find it very hard to abandon it. This is the case even when they openly display their “purpose” or “mission statement”!

→ Does your company have a reason to be noble?

Taking this question seriously can cause major changes. Let’s take the example of Jos de Blok from the company Buurtzorg. He helps his competitors to implement the method he created! He does not seek profit about everything else, but to install a health system in which patients can lead a rich and independent life.

→ The concept of purpose is more than a noble mission

In fact, it is mostly about getting rid of the idea of control over the future, forecasts and planning. It is the end of the logic of strategy –> execution! The company is a living being and not a machine. It has its own energy, its own goals that are revealed gradually, over the course of its existence.

Control gives way to listening. It involves guessing the direction being taken and going with its flow. We take the temperature and we respond: we stop planning/ establishing a strategy and giving orders to be executed.

→ Strategy

The companies studied by Frédéric Laloux have no 3 or 5 year strategies! Does that seem crazy to you? That is because you have forgotten the benefits of self-management. Each employee in a Teal company, is a “sensor” who can be a driver for change. There is no longer a head brain steering everything!

“Innovation is not the result of centralised, planned initiative, but permanent adaptation in the margins: an organism senses a change in the environment and seeks a response. Some do not take; other spread rapidly throughout the ecosystem. Reality is the supreme arbitrator.” (Reinventing Organizations)

Of course, the founders can also ask other employees for their opinion about making a change. But from now on, they are no longer considered to be the only people capable of steering a company.

This does not mean that strategic thinking and setting certain priorities are prohibited. They are sometimes necessary, during times of crisis or when the purpose alone is not enough to get everyone working together. Collectively, the company may decide to give more importance to normalisation than innovation, for a certain time, for example.

In this case, the key to success is to not make it an iron-clad law: indicators offer general guidance, but they do not prevent a company from responding to current circumstances on a day-to-day basis.

→ Budget

What an illusion! There are so many external events that can reshuffle the cards of your financial forecasts that are often defined absurdly. Worse still, budgets are bad for morale. They indicate that profit is the sole priority, second to none.

So, do employees not have targets to reach in Teal organisations? Not so! Employees make decisions (self-management), can be themselves and know why they are working – this is more than enough to spur them to action!

→ Change management

While consultants and managers in Orange companies think that change is hard, or even impossible, those operating in a Teal paradigm consider it to be perfectly natural. A forest is in constant change.

When you have a well-established habit, change is not simple. And yet, if you have the right people around you and feel protected, you will feel it to be a necessity inside you. This will make the change so much simpler.

In the end, we probably have most to learn from the evolutionary purpose. If self-management and wholeness are beginning to be understood and entering the collective mindset, the concept of an evolutionary purpose still has a long way to go in practice.

Chapter 2.6. A shared purpose

Once again, let us be clear: if all these different practices are implemented with the sole purpose of making more profits, then they are doomed to failure. Why? Because all the elements of the Teal world view are related. If a fundamentally Orange structures “dresses up” in Teal, you will only be adding confusion and cynicism to your company.

The pioneers introduced by Frédéric Laloux in this book acted differently. Through internal necessity, they transformed the way they ran a company. They did not want to reduce costs, or be more agile and innovative. They wanted the way they did business to match their values. Efficiency was not forgotten, but it did take second place, or even third place in the list of concerns. I advise you to read the book “Reinventing Organizations” in full to benefit from all the techniques.

Part Three The emergence of Teal organisations

After describing organisations that already work along the Teal model, Frédéric Laloux turned his attention to the way in which the model could be generalised. To do this, he asked the organisations about their emergence. How did they come into being?

Based on that, he drew useful lessons for organisations that may want to be created on the same basis, or that want to change practices that are currently based on a different existing model. This part also aims to inspire entrepreneurs to act for change!

Chapter 3.1. Necessary conditions

According to Frédéric Laloux, in the end, there are just two conditions that are absolutely necessary to create Teal structures and practices inside an organisation, and more specifically, inside a company.

1. CEO: the founder or top leader must have a Teal vision. The executives around them should also have it, but it is not mandatory;
2. Shareholders: the owners must follow their leader and understand the Teal vision too. Without this, the board of directors will take back control by one means or another (Orange, etc.) as soon as the company faces a crisis.

Let’s look at these two conditions in a little more detail.

→ The CEO

What is the role of a CEO or founder in a Teal organisation? They are of course – and this does not change – the main ambassador for the company with the rest of the world (suppliers, customers, authorities, etc.). For the rest, everything changes! They are no longer in charge of setting goals or heading up meetings, to name just a couple of traditional functions. So what do they do?

The leader of a Teal company has two other main roles:

1. Be the guardian of the space in which Teal operating methods are deployed;
2. Be an example of Teal behaviour.

The first role is not so easy to play, because old habits die hard. If there is abuse or a problem, the leader must keep course and not return to old solutions. For example, in a case of corruption, the primary reaction would be to set up a system of surveillance that would sap the overall level of trust.

Faced with this, the leader has a duty to say “No”. They must show, in clear terms, that they prefer to favour and protect a “culture based on belief in the value, dignity and honesty of each employee.” 

The author brings up a few problematic cases in the book. For example, pressure from a major client demanding the creation of a position in direct contradiction with Teal organisational principles.

In all cases, the leader must show creativity, perhaps even using a little provocation, so that the evolutionary vision of the company is respected. The ideal, of course, is that all the members of the company defend team values. It is not absolutely necessary, however.

→ Embody the three Teal breakthroughs in an exemplary way

“The founders and CEO of self-managing organisations don’t have hierarchical power, but they often carry much moral authority. Each of the founders and CEOs I spoke to during this research was keenly aware that his or her presence, words and actions carried particular weight.” (Reinventing organizations, p. 243)

The CEO must be able to role-model the three key principles:

• Self-management (repressing the desire to take control);
• Wholeness (favouring openness, sincerity and vulnerability at meetings and with respect to colleagues);
• Listening to purpose (leave your ego at the door and question the overall meaning of the company).

In addition to this, the leader cannot be overbooked! On this point, he or she is just another colleague. They can take part in all the company activities, while questioning, as any other member should, what value they are adding.

The leader is also careful to lead while asking for opinions. For example, taking a tour of the factory (if it is small) or using a blog, like De Blok, the leader of Buurtzog.

Chapter 3.2. Starting up a Teal organisation

What attracts you about starting up a Teal organisation? Is it the principle of self-management, or that of wholeness? Frédéric Laloux invites readers to think about these questions, and many others.

For example, think deeply about the purpose of your company, along with the kind of legal format it should have. Also consider choosing co-founders to support you in the enterprise.

There is no miracle recipe when it comes to creating a Teal organisation. Every situation is unique! However, you can generate healthy practices that will be fertile ground moving forward.

→ Overarching assumptions and values

It is broadly preferable to clarify the basic values and assumptions from the start and as a group. This is a requirement. Without it, decisions about operating procedures could be looked upon as absurd. You need to focus on the perception of the human being as the foundation on which all company practices are built.

In contrast to an Orange company, for example, that is based on the idea that each person is selfish and lazy by nature, set forward assumptions of goodness and the desire to give the best of oneself. Anthropology (the concept of the human being), too often left out of managerial models, is front and centre here.

→ Three practices related to self-management

If you want help with the details, you can trust Holacracy. If you want to take your own path, but have a few pointers nonetheless, make sure you keep these three points in mind right from the start of the adventure.

1. The advice process: nobody, not even you, the CEO, is there to “validate” a decision. All employees have the power to decide and ask for opinions. You can offer yours as an expert (without imposing the solution);
2. A conflict resolution system: do not settle things on behalf of the people involved. Define a clear mechanism that allows things to be done fairly;
3. Peer-based evaluation and salary processes: adopt an open and collective approach to salary negotiations, then imagine creating a peer-based evaluation procedure.

→ Four practices related to wholeness

From the start, think about working on this aspect, if it is not fully developed in you. To help you achieve wholeness in your role as CEO, brainstorm the following points.

1. The basic rules of a protective space: collectively define the values and rules that flow from this.
2. Professional premises, offices or factories: choose the decoration, layout and atmosphere together.
3. The onboarding process: establish a welcome ritual and a training plan for new recruits.
4. Meeting practices: create the appropriate protocol to incite each person to connect with their deeper self.

→ Two practices related to purpose

Embodying the values and meaning of the company does not mean that you adopt the attitude of a lonely prophet high on a mountain top. On the contrary, you should do your best to ensure that you spread the feeling that each person can achieve the company project.

“The healthy relationship is one where as a founder, you see, from the start, the organisation as having a life and purpose of its own distinct from your own wishes and desires. For a short time, you might be the main person to articulate it, but as soon as other people join you, they should be able to sense the broader purpose just as well and find their unique way to relate to it and express it.” (Reinventing organizations, p. 264)

Remember to use:

1. Recruitment, that is to see from the start whether there is a deep connection between you and the potential hire;
2. The empty chair meeting practice, in which an employee who sits in the empty chair becomes the company purpose and answers a question asked by the group, for example, “How has this meeting been useful to the company?” ).

Chapter 3.3. Transforming an existing organisation

Firstly, you will want to bring the two necessary conditions together: the will of the CEO and that of the Board of Directors. Without this, it will be very difficult, or even impossible, to implement deep change.

After that, you will need to move in stages, beginning with the three breakthroughs: self-management, wholeness and purpose. Each structure evolves at its own pace, in its own life. Try to follow that pace and perform the transformation gradually. In all cases, be open and sense what needs to be done first.

→ Introducing self-management

The “lower” levels of the company (workers, for example) are very open to self-governance. They generally welcome any proposals of this nature with open arms. Unless of course, the habits of obedience and submission are too deeply ingrained.

Be watchful that the sense of autonomy is accepted at psychological level. This can take time. The company purpose, role-modelling colleagues and market pressures can play a favourable part in this.

For middle management and executives, change may be less spontaneously welcomed. Their positions may be at stake, which will make them somewhat hostile to change. The case of  Zorbist in the book (p. 271-274) is an example of a successful transition.

How to act. You can:

• Opt for creative chaos, during which the new structures will be set up (starting with the removal of a key management tool, such as a time keeping machine, for example);
• Redefine the basic procedures, organising events to brainstorm the future of the company;
• Visit Holacracy and its “ready-to-use” model.

→ Introducing practices related to wholeness

You can take one step at a time, for example by following the company calendar. If it is annual assessment time, suggest transforming it into peer-based assessment. The learning process and the colleague’s vocation become the main concerns.

Remove your mask, as much as you can. Explain the reasons (seen above) why it is better to be sincere and grounded, even in the workplace. Encourage ambassadors and allow them to take initiatives.

If you decide to establish wholeness in one fell swoop, why not organise an entire day, off-site, during which the whole team reflects on the following question: what conditions would allow you to be wholly yourself in the workplace? The author goes into this procedure in detail on pages 278-282.

→ Introducing practices related to evolutionary purpose

There is no question of generating a superficial profession of faith. You and your colleagues need to find what really makes you passionate, the deep reason why you believe the company should exist. Something that makes you and your colleagues want to “give” to it.

Several methods are given by the author (U Theory, appreciative approach), but the most important thing for Frédéric Laloux, is to take as much time as necessary to find this deep meaning. It can appear after one meeting or thirty meetings!

Of course, this process must be a collective one, insofar as possible. Once the purpose has been found, try to make it a part of everyday life, for you and all your colleagues. To do this, no more empty rhetoric: speak plainly and express your ideas clearly. In short – communicate using whatever means appear most appropriate to you (blog, magazine, e-mails, etc.).

People want to work for a company that has meaning. Let them absorb the idea and rewrite this purpose, and they will work towards it with passion.

Chapter 3.4. Results

→ Proof by example

Once penguins hit the water, they become happy and graceful. However, when they are on land, they are awkward and inefficient. Environment has a lot to do with it!

“In Teal, people switch to intrinsic motivation – doing what feels right in relation to inner values and assumptions. […] That is not to say, of course, that effectiveness in Teal does not matter; it just matters for a different reason. When we are pursuing a purpose that we find deeply meaningful, we want to be effective!” (Reinventing organizations, p. 286)

So what are the results? Thanks to the examples from his research, Frédéric Laloux has demonstrated the financial viability of Teal organisations. The case of the growth of the Dutch company Buurtzorg speaks volumes. As does that of FAVI, the French copper foundry, that went from 80 to 500 employees in 30 years.

The authors makes no false promises. Nor does he seek to scientifically prove his hypothesis. He simply wants to offer an honest picture of something he deeply believes in: companies that are Teal can aim for results that are almost impossible to imagine otherwise.

→ Drivers of breakthrough performance

How? Because a Teal organisation releases “energies”, in the broad sense of the term, that were previously untapped (thanks to the stated purpose, better balance of power, full use of each person’s talents, etc.).

In addition to this, the energy is better channelled. This is thanks to more fluid decision-making, more fine-tuned perception of the problems and alignment with the evolutionary purpose.

“Thus far, we have run organizations in rigid templates, fearing evolution’s messy and uncontrollable nature. Perhaps we are getting ready for the big leap. Ready to give up our attempts to control life and channel it into the narrow plans we have drawn up for it. Ready to open the doors of life. Ready to invite evolution, the most powerful process life has ever released, to propel our collective endeavors.”

 (Reinventing Organisations, p. 292)

Chapter 3.5. Teal organisations and Teal society

According to research quoted by the author, just 5% of the western population sees the world from a Teal point of view. If the assumption behind this book is true, a switch could well take place in the coming years.

The pioneers studied in this book (in part 2 especially) will have “offspring”. And when this happens, it may well change society in general. Although it is risky to talk about the future, Frédéric Laloux believes in a Teal (r)evolution.

→ What an Evolutionary-Teal society might look like

Here are some traits highlighted by the author:

• Zero growth and a closed-loop economy;
• Alternative consumerism;
• Rebirthing of existing industries;
• Alternative monetary systems;
• Stewardship rather than owernship;
• More local, more global human interactions;
• The end of work as we know it;
• Evolutionary democracy towards more participation;
• Spiritual re-enchantment.

When it comes to knowing whether current society will collapse in one fell swoop (collapse theory of  Jared Diamond) or whether it will move progressively towards the Teal model remains to be seen. Frédéric Laloux is optimistic: rapid transformation is possible, without waiting for catastrophe to arrive.

→ Teal organisations in a Teal society

The line between for-profit and non-profit companies is blurred by the emergence of Teal organisations. Shareholders must reconsider their role. If a Teal society does not value ownership, how can the role of shareholders be reconsidered?

The author argues in favour of creating a rich network of management partnerships that contribute to financing companies they care about, without automatically expecting to receive dividends.

Work flexibility will be greater and the frontiers between companies more porous. When companies are guided by their purpose, competition gives way to collaboration that may or may not be temporary.

→ Creating the future

“The best way to predict the future is to create it.” 

(Peter Drucker)

By quoting the famous American consultant Peter Drucker, Frédéric Laloux wants to exhort us to have faith in the future. It is possible to build it from what we already have for the Teal stage and using the examples provided by the pioneers studied in this book.

Appendices

In the appendices, we find:

• The research questioned used for the study;
• Reflections on the evolutionary stage that will be post-Teal;
• A useful recap about the main structural elements of a Teal organisation;
• A comparison between the Teal and Orange forms of organisation:

Conclusion about “Reinventing organizations. A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness” by Frédéric Laloux.:

An essential guide for managers who aspire towards profound change:

This is an innovative, and even a provocative book. For anybody working in the field of “traditional” management, one dominated by a mechanistic view of the world, it may be a hard pill to swallow. And yet, you don’t need a doctorate to realise that the Orange organisational model is failing: depletion of natural and human resources, existence reduced to an infinite search for profit, loss of meaning, etc.

The companies working with a Green, or pluralist world vision, are more inclined to hear Frédéric Laloux’s message. They are already conscious of and have reacted to the deep problems generated by the Orange production method. Today, there are many organisations that are turning to this pluralist, open approach.

But the author goes still further. By unearthing “pioneers” in Europe, as well as the United States, he shows that they are developing an evolutionary vision of the world that breaks the pluralistic mould and its internal contradictions. In doing so, he encourages us to follow their example and discover just how much can be done with the Teal model.

What to take away from Reinventing Organizations. A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness by Frédéric Laloux:

The most important message to take away is a simple one: rapid transformation is possible. Hope is allowed (and required)! Confidence in our capacity to change things is the driver that will effectively change them. That is why the author’s work is turned towards practical application of the principles he helped to reveal in the world of these organisations.

I will quote the last two sentences of the book, that paraphrase the words of the authors that inspired him:

“These are extraordinary times to be alive. Sometimes I can’t wait to see what the future will bring. In the words of Wealthey and Kellner-Rogers, I can only wonder: If we can be in the world in the fullness of our humanity, what are we capable of?” (Reinventing Organizations)

Do you want to become a benevolent manager too? You can train using Frédéric Laloux’s book and why not visit the many other resources available on Books that can change your life!

Strong points:

• Considerable efforts to theorise this question;
• An innovative approach that shakes up certainties;
• Many examples from extensive empirical work;
• Detailed explanation about how Teal organisations work (not just the general lines, but extensive detail!) ;
• The writing is clear despite the occasional abstract theme and several parallel ideas being developed.

Weak point:

• We may question the “Western-centric” nature of the book. Is the West still at the cutting edge of evolution today?
• Yes, we can criticise and even disagree with the model on offer, but we can certainly recognise the in-depth, impressive and original work undertaken by the author. That is why it’s getting 5 stars from me!

My rating :   

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Short practical guide to Reinventing Organizations.

The five main stages of self-management:

1. Impulsive or Red
2. Conformist or Amber
3. Success or Orange
4. Pluralist or Green
5. Evolutionary or Teal

Frequently Asked Questions about Reinventing Organizations for self-management

1. What was public reaction to the book  Reinventing Organizations by Frédéric Laloux?

First published in 2014, Reinventing Organizations has been a success, and 50,000 copies have already been sold worldwide. It is among the best sellers on Amazon.

2. What was the impact of the book  Reinventing Organizations?

This book offer leaders or entrepreneurs, managers, coaches and consultants the chance to discover numerous pieces of practical advice, examples and inspiring stories to come up with the next concrete stage of their company.

3. Who should read Reinventing Organizations?

This book is for company leaders or founders, coaches and consultants.

4. What are the breakthroughs in the Teal world view as applied to management?

• Self-management 
• Wholeness
• Evolutionary purpose

5. What is the self-management process?

• Decision making
• Compensation and incentives
• Performance management
• Multiple natural hierarchies

The Impulsive stage versus Conformist stage

Impulsive stage	Conformist stage
The strongest wins	The law applies to everyone
The Mafia, street gangs or overly “paternalistic” companies	Church, Army, administrations
Division of labour and hierarchical authority	Forward planning and conformism

Who is Frédéric Laloux?

Frédéric Laloux studied commercial engineering in Brussels, and holds an MBA from INSEAD (European Institute of Business Administration). He is a graduate of the Newfield Network coaching school (Boulder, Colorado). After ten years working in an international strategy consulting firm, he worked for several years as an independent business coach. Frédéric Laloux, a former partner at McKinsey, now feels called upon to live a simple life, focussed on his family and on nature.

He is the author of Reinventing Organizations, published in February 2014, with a preface by Ken Wilber. Critically acclaimed, the book was a phenomenal success all over the world, with over 50,000 copies sold. It is part of a movement that aims to revolutionise the way companies operate.

For further reading, I can suggest checking out the articles on books that can change your life that you may find of interest and you can also follow the link to the video below about how to have a company that works for you.