Frederic Laloux is a Galileo for our time. And he’s definitely deep, deep teal.
Not every idea threatens change to the status quo, but those that do are met with a fairly predictable response: attention, which can diverge into derision or fascination; resistance; and sometimes, acceptance. I just finished reading a book that’s bound to trigger all three, with plenty of fireworks along the way.
Frederic Laloux’s Reinventing Organizations (Nelson Parker, 2014) has the attention-grabbing subtitle, “A guide to creating organizations inspired by the next stage of human consciousness.” Luckily for me, by the time I paid sufficient attention to that, I’d already been hooked by the book’s premise. Otherwise, I’d probably have veered off along the derision path and missed the “exhilarating and deeply hopeful” reaction the book has inspired during its few months of existence.
It really is a guide, and “reinventing” is putting it mildly. A former associate partner with global management consulting firm McKinsey & Co., Laloux has spent the last couple of years researching companies that have dispensed with a top-down management structure and flourished in the process. Purposely, he sought out organizations from different sectors, with disparate functions and goals. This was no mission to fit facts to theory. He’s not selling anything (I downloaded my copy from Amazon, but skeptics can buy the book on Laloux’s website and pay what they think it’s worth).
No, what we have here is the real McCoy: investigation, synthesis, and reporting. As a beautiful bonus, he writes well. This is his first book.
Laloux, a former associate partner with global management consulting firm McKinsey & Co., believes we’ve gotten all the benefit we can from traditional top-down pyramidal management structures. (photo by Paul Downey)
Laloux is good at anticipating readers’ unvoiced questions, and I certainly found myself wondering how the model could work in gritty old reality. While acknowledging that “modern organizations have brought about sensational progress for humanity,” he believes we’ve gotten the most that we can from typical pyramidal models. A big part of workplace angst comes from a restless sense that we could do so much more if we weren’t constrained by corporate structures.
“The hierarchical pyramid feels outdated, but what other structure could replace it?” he asks. “How can we make purpose central to everything we do, and avoid the cynicism that lofty-sounding mission statements often inspire?” Looking for practical answers to those questions is what prompted him to write the book.
During his investigations, Laloux visited a parts factory in France, a healthcare service provider in Germany, a global energy producer based in the United States, and a tomato processor in California, among others. Companies ranged in size from 100 employees to 40,000. All told, he reports on nine for-profit companies and three nonprofits. Each one is a successful operation without a traditional CEO at its helm, and although the solutions they devise to deal with this vary, all share three elements, around which Laloux built the book’s practicalities. These elements are:
Self-management: No more top-down hierarchy.
Wholeness: Bring all of yourself to work.
Evolutionary purpose: Treat the organization as a living entity and learn to “hear” what it wants.
Regarding this third item, Laloux lays out an introductory section explaining the rudiments of developmental psychology. It’s a necessary setup for what follows, though impatient readers might be tempted to flip ahead to the case studies. Basically, he makes the reasonable assertion that organizations evolve in much the same way people do, toward maturity and wisdom through time and experience. He emphasizes that, as with human development, one organizational stage isn’t necessarily better than another. “All have their peak usefulness under certain circumstances,” he says. “All have their dark side.”
Here’s his color-coded summary:
In Laloux’s view, businesses and other organizations “evolve in much the same way people do, toward maturity and wisdom through time and experience.” (photo by Wesley Fryer)
Red organizations. Constant exercise of power by the chief to keep others in line. Fear is the glue of the organization. Highly reactive, short-term focus. Thrives in chaotic environments. Example: a wolf pack.
Amber organizations. Highly formal roles within a hierarchical pyramid. Top-down command and control (what and how). Stability valued above all through rigorous processes. Future is repetition of the past. Example: an army.
Orange organizations. Goal is to beat competition; achieve profit and growth. Innovation is the key to staying ahead. Management by objectives (command and control on what; freedom on how). Example: a multinational company.
Green organizations. Within the classic pyramid structure, focus on culture and empowerment to achieve extraordinary employee motivation. Example: a family.
Many organizations fall into the orange category, although Laloux is quick to note it’s the rare company that operates purely as a single color. Most are mixes.
So-called teal organizations are the new evolutionary breed whose methods are detailed in the book. They tackle self-management through multiple teams of a dozen or so people, a size that experimentation has proven to be the most effective. Most teams in teal organizations are responsible for all aspects of their job; Laloux cites “budgets, workload, safety, schedules, maintenance, hiring and firing, working hours, training, evaluations, compensation, capital expenditures, purchasing, quality control, long-term strategy, charitable giving, and community relations.”
Three practices are essential for companies comprised of self-managed teams. These are described in detail, using examples from teal organizations, but briefly they are:
Teams in teal organizations are responsible for all aspects of their job; Laloux cites “budgets, workload, safety, schedules, maintenance, hiring and firing, working hours, training, evaluations, compensation, capital expenditures, purchasing, quality control, long-term strategy, charitable giving, and community relations.” (photo by Emilie Ogez)
The advice process. All members of the organization can make any decision, as long as they consult with the people affected and the people who have expertise on the matter. Nobody, not even the founder, “approves” a decision in a self-managing organization.
A conflict-resolution mechanism. Teal organizations strive to solve conflicts within the team, beginning with a one-on-one discussion. If that doesn’t work, mediation by a trusted peer is tried, followed, if necessary, with mediation by a panel.
Peer-based evaluation and salary processes. Laloux spends some time examining these, since they can easily create unwanted hierarchies and divisiveness. On the salary issue, he discovered that teal companies “give the potential hire information about other people’s salaries and let the person peg his own number, to which the group of colleagues can then react with advice to increase or lower the number.” Similar peer-based processes are used for hiring and performance evaluations.
Thought-provoking as the theory might be, it’s the case studies that really pull. Maybe that’s because these teal companies solve the boss-less puzzle in different but successful ways, all of which are fascinating. Maybe it’s because Laloux is a skilled narrator, highlighting approaches without banging on about his own opinions.
Quotes from company members (few of these outfits call them “employees”) and the author’s obvious respect for what they’ve accomplished generate a subtle excitement that keeps you turning pages. You think, “How can this possibly work?” and then read a matter-of-fact explanation from a team leader or seasonal worker. You’re reminded, indirectly, that we humans are a pretty adaptable bunch, and that all things being equal, we like to give our best effort as often as possible. We’d prefer not to have to fight the system to do good work. This applies to everyone, of course. Even people in the C-suites.
So what happens to the bosses? They’re still around in these companies, just no longer at the top of the heap, no longer so isolated or dependent on channeled information. They’re busy helping teams achieve the company’s purpose, whether it’s making something or providing a service.
So what happens to bosses in Laloux’s brave new self-managed world? Paradoxically, they are both less important and much more important than in more traditional organizational structures. (photo by TassieEye)
In fact, the CEO has arguably the most important role of all: championing the new model into existence. Without this person’s active participation, it’s futile to even consider moving the company out of its entrenched SOP, says Laloux. He talks about one company that changed to the self-managed model under one boss, with positive results, but retreated to an older model, and lower profits, when that boss left the company. When the CEO isn’t engaged, it would be better to apply the ideas on a smaller scale, to one department, for instance.
“You might have noticed a major paradox: CEOs are both much less and much more important in self-managing organizations compared to traditional ones,” says Laloux. “They have given up their top-down hierarchical power. The lines of the pyramid no longer converge toward them. They can no longer make or overturn any decision. And yet, in a time when people still think about organizations in Amber, Orange, and Green ways, the CEO has an absolutely critical role in creating and holding a Teal organizational space.”
In his introduction, Laloux talks about Galileo’s difficulty getting people to look through the newfangled telescope to see alternate worlds out in space. Medieval minds balked at the idea of stepping outside accepted geocentric reality. Similarly, looking through this book’s lens and seeing entirely new ways to do business might seem strange and even unnecessary. But I strongly recommend it. Get a copy, read it, then buy the copies you’re going to want to give others, and read it again.
Taran March is a former director of Up the Road. She currently serves as editorial director of Northern California’s own Quality Digest magazine. A 25-year veteran of publishing, March has written and edited for newspapers, magazines, book publishers, and universities. When not plotting the course of Quality Digest Daily with the team, she usually can be found clicking around the Internet in search of news and clues to the human condition.
What Color is Your Organization?
Frederic Laloux is a Galileo for our time. And he’s definitely deep, deep teal.
Not every idea threatens change to the status quo, but those that do are met with a fairly predictable response: attention, which can diverge into derision or fascination; resistance; and sometimes, acceptance. I just finished reading a book that’s bound to trigger all three, with plenty of fireworks along the way.
Frederic Laloux’s Reinventing Organizations (Nelson Parker, 2014) has the attention-grabbing subtitle, “A guide to creating organizations inspired by the next stage of human consciousness.” Luckily for me, by the time I paid sufficient attention to that, I’d already been hooked by the book’s premise. Otherwise, I’d probably have veered off along the derision path and missed the “exhilarating and deeply hopeful” reaction the book has inspired during its few months of existence.
It really is a guide, and “reinventing” is putting it mildly. A former associate partner with global management consulting firm McKinsey & Co., Laloux has spent the last couple of years researching companies that have dispensed with a top-down management structure and flourished in the process. Purposely, he sought out organizations from different sectors, with disparate functions and goals. This was no mission to fit facts to theory. He’s not selling anything (I downloaded my copy from Amazon, but skeptics can buy the book on Laloux’s website and pay what they think it’s worth).
No, what we have here is the real McCoy: investigation, synthesis, and reporting. As a beautiful bonus, he writes well. This is his first book.
Laloux, a former associate partner with global management consulting firm McKinsey & Co., believes we’ve gotten all the benefit we can from traditional top-down pyramidal management structures. (photo by Paul Downey)
Laloux is good at anticipating readers’ unvoiced questions, and I certainly found myself wondering how the model could work in gritty old reality. While acknowledging that “modern organizations have brought about sensational progress for humanity,” he believes we’ve gotten the most that we can from typical pyramidal models. A big part of workplace angst comes from a restless sense that we could do so much more if we weren’t constrained by corporate structures.
“The hierarchical pyramid feels outdated, but what other structure could replace it?” he asks. “How can we make purpose central to everything we do, and avoid the cynicism that lofty-sounding mission statements often inspire?” Looking for practical answers to those questions is what prompted him to write the book.
During his investigations, Laloux visited a parts factory in France, a healthcare service provider in Germany, a global energy producer based in the United States, and a tomato processor in California, among others. Companies ranged in size from 100 employees to 40,000. All told, he reports on nine for-profit companies and three nonprofits. Each one is a successful operation without a traditional CEO at its helm, and although the solutions they devise to deal with this vary, all share three elements, around which Laloux built the book’s practicalities. These elements are:
Regarding this third item, Laloux lays out an introductory section explaining the rudiments of developmental psychology. It’s a necessary setup for what follows, though impatient readers might be tempted to flip ahead to the case studies. Basically, he makes the reasonable assertion that organizations evolve in much the same way people do, toward maturity and wisdom through time and experience. He emphasizes that, as with human development, one organizational stage isn’t necessarily better than another. “All have their peak usefulness under certain circumstances,” he says. “All have their dark side.”
Here’s his color-coded summary:
In Laloux’s view, businesses and other organizations “evolve in much the same way people do, toward maturity and wisdom through time and experience.” (photo by Wesley Fryer)
Red organizations. Constant exercise of power by the chief to keep others in line. Fear is the glue of the organization. Highly reactive, short-term focus. Thrives in chaotic environments. Example: a wolf pack.
Amber organizations. Highly formal roles within a hierarchical pyramid. Top-down command and control (what and how). Stability valued above all through rigorous processes. Future is repetition of the past. Example: an army.
Orange organizations. Goal is to beat competition; achieve profit and growth. Innovation is the key to staying ahead. Management by objectives (command and control on what; freedom on how). Example: a multinational company.
Green organizations. Within the classic pyramid structure, focus on culture and empowerment to achieve extraordinary employee motivation. Example: a family.
Many organizations fall into the orange category, although Laloux is quick to note it’s the rare company that operates purely as a single color. Most are mixes.
So-called teal organizations are the new evolutionary breed whose methods are detailed in the book. They tackle self-management through multiple teams of a dozen or so people, a size that experimentation has proven to be the most effective. Most teams in teal organizations are responsible for all aspects of their job; Laloux cites “budgets, workload, safety, schedules, maintenance, hiring and firing, working hours, training, evaluations, compensation, capital expenditures, purchasing, quality control, long-term strategy, charitable giving, and community relations.”
Three practices are essential for companies comprised of self-managed teams. These are described in detail, using examples from teal organizations, but briefly they are:
Teams in teal organizations are responsible for all aspects of their job; Laloux cites “budgets, workload, safety, schedules, maintenance, hiring and firing, working hours, training, evaluations, compensation, capital expenditures, purchasing, quality control, long-term strategy, charitable giving, and community relations.” (photo by Emilie Ogez)
The advice process. All members of the organization can make any decision, as long as they consult with the people affected and the people who have expertise on the matter. Nobody, not even the founder, “approves” a decision in a self-managing organization.
A conflict-resolution mechanism. Teal organizations strive to solve conflicts within the team, beginning with a one-on-one discussion. If that doesn’t work, mediation by a trusted peer is tried, followed, if necessary, with mediation by a panel.
Peer-based evaluation and salary processes. Laloux spends some time examining these, since they can easily create unwanted hierarchies and divisiveness. On the salary issue, he discovered that teal companies “give the potential hire information about other people’s salaries and let the person peg his own number, to which the group of colleagues can then react with advice to increase or lower the number.” Similar peer-based processes are used for hiring and performance evaluations.
Thought-provoking as the theory might be, it’s the case studies that really pull. Maybe that’s because these teal companies solve the boss-less puzzle in different but successful ways, all of which are fascinating. Maybe it’s because Laloux is a skilled narrator, highlighting approaches without banging on about his own opinions.
Quotes from company members (few of these outfits call them “employees”) and the author’s obvious respect for what they’ve accomplished generate a subtle excitement that keeps you turning pages. You think, “How can this possibly work?” and then read a matter-of-fact explanation from a team leader or seasonal worker. You’re reminded, indirectly, that we humans are a pretty adaptable bunch, and that all things being equal, we like to give our best effort as often as possible. We’d prefer not to have to fight the system to do good work. This applies to everyone, of course. Even people in the C-suites.
So what happens to the bosses? They’re still around in these companies, just no longer at the top of the heap, no longer so isolated or dependent on channeled information. They’re busy helping teams achieve the company’s purpose, whether it’s making something or providing a service.
So what happens to bosses in Laloux’s brave new self-managed world? Paradoxically, they are both less important and much more important than in more traditional organizational structures. (photo by TassieEye)
In fact, the CEO has arguably the most important role of all: championing the new model into existence. Without this person’s active participation, it’s futile to even consider moving the company out of its entrenched SOP, says Laloux. He talks about one company that changed to the self-managed model under one boss, with positive results, but retreated to an older model, and lower profits, when that boss left the company. When the CEO isn’t engaged, it would be better to apply the ideas on a smaller scale, to one department, for instance.
“You might have noticed a major paradox: CEOs are both much less and much more important in self-managing organizations compared to traditional ones,” says Laloux. “They have given up their top-down hierarchical power. The lines of the pyramid no longer converge toward them. They can no longer make or overturn any decision. And yet, in a time when people still think about organizations in Amber, Orange, and Green ways, the CEO has an absolutely critical role in creating and holding a Teal organizational space.”
In his introduction, Laloux talks about Galileo’s difficulty getting people to look through the newfangled telescope to see alternate worlds out in space. Medieval minds balked at the idea of stepping outside accepted geocentric reality. Similarly, looking through this book’s lens and seeing entirely new ways to do business might seem strange and even unnecessary. But I strongly recommend it. Get a copy, read it, then buy the copies you’re going to want to give others, and read it again.
Taran March is a former director of Up the Road. She currently serves as editorial director of Northern California’s own Quality Digest magazine. A 25-year veteran of publishing, March has written and edited for newspapers, magazines, book publishers, and universities. When not plotting the course of Quality Digest Daily with the team, she usually can be found clicking around the Internet in search of news and clues to the human condition.