Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness

by Frederic Laloux

meetings are specific meetings where only questions related to roles and collaboration are to be discussed, separate from the rumble and tumble of getting work done.

all colleagues have the obligation to do something about an issue they sense,

It’s considered unacceptable to say, “Somebody should do something about this problem,” and leave it at that; if you see a problem or an opportunity, you have an obligation to do something about it, and most often that “something” is to go and talk about it with the colleague whose role relates to the topic.

People’s concerns are no longer limited to their scope of responsibility; they can take the well-being of the whole organization to heart. Of course, not all team members cheer when a colleague comes and tells them they should consider doing something about an issue. But in a self-managing organization, people have roles, not turfs, and no one can formally shut out a colleague by saying, “This is none of your business.”

Role Market Place (in holacratic language, this is an “app;” it’s not part of the basic operating system). On the company’s intranet is a file where colleagues can “rate” every role they currently fill, using a scale of -3 to +3: If they find the role energizing (+) or draining (-) If they find their talents aligned (+) or not (-) with this role If they find their current skills and knowledge conducive to (+) or limiting in (-) this role Using the same scale of -3 to +3, people can also signal their interest in roles currently filled by other people. The market place helps people wanting to offload and people wanting to pick up roles to find each other more easily.

None of the organizations in this research spends time on talent management, succession planning, or career planning.

They have found that in a self-managing context, people naturally come across so many opportunities to learn and grow that senior leaders don’t need to worry about people getting the right exposure. People who have freedom in their work are eager learners; they can be trusted to shape their own journeys. Careers in self-managing organizations emerge organically from people’s interests, callings, and the opportunities that keep coming around in a liberated workplace.

Research shows that when people pursue a meaningful purpose, and when they have the decision-making power and the resources to work toward that purpose, they don’t need pep talks or stretch targets.59

Teal Organizations measure indicators like team results, productivity, and profit, just like other organizations—except that they mostly tend to do so at the level of teams or process steps, and they don’t bother to measure individual performance

The data is made public for all to see,

In Teal Organizations, people know that information will not be used against them. No one needs to be protected from the facts, good or bad.

every year in January, teams present a self-evaluation to a group of colleagues, which comprises Chris Rufer (the founder and president) and anyone else who cares to join.

Teal Organizations are high on trust and low on fears.

At AES, Dennis Bakke installed a beautiful practice of team appraisal with his closest peers. They got together once a year, often over dinner in one of their homes to make for a relaxed, informal setting. Every person in turn shared his or her self-evaluation. Other team members commented, questioned, or encouraged each other to reach a deeper understanding of their potential and performance.

In self-managing organizations, people can more easily customize a job for themselves at which they excel. A person with “performance issues” might shed one or several roles in which she fails to deliver and take up other roles that better match her skills, interests, and talents.

it seems that almost universally, people choose to leave before they are dismissed.

the group calls in its regional coach or an external facilitator to mediate. In almost all cases, the presence of a mediator brings resolution. In some cases, the person and the team decide on some mutual commitments and give it another go. In others, after some deliberation, the person comes to see that trust is irrevocably broken and understands it is time to leave.

In the absence of bosses, the process to determine who gets to take home how much money must be peer-based. W. L. Gore, the company best known for developing Gore-Tex fabrics, pioneered self-management practices in the late 1950s. To decide on people’s salaries, it asks each employee to rank, once a year, the colleagues they have worked with. HolacracyOne uses a similar ranking method. Once a year, co-workers fill out a survey for all their colleagues, consisting of only two questions: “This person contributes (much) more or (much) less than me.” (On a scale of -3 to +3) “This person has a good basis to evaluate me.” (On a scale of 1 to 5)

Some organizations go a step further: they allow people to set their own salary. AES, under Dennis Bakke, experimented in certain areas with a radical version of a peer-based process. People set their own salary, using the advice process—they had to seek advice and recommendation from their peers around them. In that way, people were made fully responsible for assessing their own contribution and validating it in the eyes of the colleagues. Semco, a Brazilian group of companies operating in various manufacturing and service industries, has fared well for a great number of years with self-set pay.62

Morning Star has developed, to my knowledge, the most refined process: self-initiated pay with feedback from elected salary committees.

making sure everybody feels his or her contribution is fully valued, that the inner and outer perspectives (what I know and what others perceive) are in sync.

It is an exercise in openness, trust, and vulnerability.

The four partners report that invariably they go into the discussion with some nervousness and leave the meeting with a deep sense of gratitude (and spontaneous collegial hugs) for being part of a partnership th...

Once people make enough money to cover their basic needs, what matters more than incentives and bonuses is that work is meaningful and that they can express their talents and callings at work.

Self-management, just like the traditional pyramidal model it replaces, works with an interlocking set of structures, processes, and practices; these inform how teams are set up, how decisions get made, how roles are defined and distributed, how salaries are set, how people are recruited or dismissed, and so on.

What often puzzles us at first about self-managing organizations is that they are not structured along the control-minded hierarchical templates of Newtonian science. They are complex, participatory, interconnected, interdependent, and continually evolving systems, like ecosystems in nature.

Form follows need. Roles are picked up, discarded, and exchanged fluidly. Power is distributed. Decisions are made at the point of origin.

From an Evolutionary-Teal perspective, the right question is not: how can everyone have equal power? It is rather: how can everyone be powerful? Power is not viewed as a zero-sum game, where the power I have is necessarily power taken away from you. Instead, if we acknowledge that we are all interconnected, the more powerful you are, the more powerful I can become. The more powerfully you advance the organization’s purpose, the more opportunities will open up for me to make contributions of my own.

the point is not to make everyone equal; it is to allow all employees to grow into the strongest, healthiest version of themselves.

Many organizations today claim to be empowering. But note the painful irony in that statement. If employees need to be empowered, it is because the system’s very design concentrates power at the top and makes people

at the lower rungs essentially powerless, unless leaders are generous enough to share some of their power. In Teal Organizations, people are not empowered by the good graces of other people. Empowerment is baked into the very fabric of the organization, into its structure, processes, and practices. Individuals need not fight for power. They simply have it. For people experiencing self-management for the first time, the ride can be bittersweet at first. With freedom comes responsibility: you can no longer throw problems, harsh decisions, or difficult calls up the hierarchy and let your bosses take care of it. You can’t take refuge in blame, apathy, or resentfulness. Everybody needs to grow up and take full responsibility for their thoughts and actions—a steep learning curve for some people. Former leaders and managers sometimes find it is a huge relief not having to deal with everybody else’s problems. But many also feel the phantom pain of not being able to wield their former positional power.

Many leading thinkers and practitioners in the field of organizational design focus their energy today on the question of how leaders can become more conscious. The thinking goes as follows: if only leaders could be more caring, more humble, more empowering, better listeners, more aware of the shadow they cast, they would wield their power more carefully and would create healthier and ...

Wisdom traditions insist on the need for regular silence and reflection to quiet the mind and let truth emerge from a deeper part of ourselves. An increasing number of people pick up contemplative practices—meditation, prayer, yoga, walking in nature—and integrate these into their daily lives. Many organizations researched for this book have set up a quiet room somewhere in the office, and others have put meditation and yoga classes in place. This practice opens up space for individual reflection and mindfulness in the middle of busy days. A number of them go a step further: they also create collective moments for self-reflection through practices such as group coaching, team supervision, large-group reflections, and days of silence.

Every Tuesday morning, 350 employees come together for an hour and a quarter to engage in joint reflection.

The common experience also fosters community and a common language beyond what can be achieved by any other practice I know of. Colleagues are exposed repeatedly every week to a space made safe by ground rules that invites them to truly be themselves.

Parker Palmer’s Center for Courage & Renewal (CC&R) has explored how to integrate storytelling into organizational life. The nonprofit center creates soulful retreats to help teachers, doctors, clergy, and business leaders reconnect with their vocation and reunite role and soul.85 It is a small organization—around 10 staff supporting a network of 200 trained facilitators who have hosted retreats for more than 40,000 teachers and other professionals during the last 10 years.

create a space that is safe enough to reveal our selfhood, to venture into individual and collective wholeness.

is often during recruitment, even before a person has taken his first steps in the organization, that the lying starts. As candidates, we conform to who we think we ought to be in the eyes of an employer—in

Employers, too, will often try to attract candidates by putting on a mask of their own.

The recruitment process is often an uncomfortable dance of two partners wearing high heels to look taller, tight clothes to tuck the belly in, and so much make-up that you would not recognize them on a normal day.

Hierarchical structures with non-hierarchical cultures—it’s easy to see that the two go together like oil and water. That is why leaders in these companies insist that culture needs constant attention and continuous investment. In a hierarchical structure that gives managers power over their subordinates, a constant investment of energy is required to keep managers from using that power in hierarchical ways. Stop investing in culture, and the structurally embedded hierarchy is likely to take the upper hand.

Can a middle manager put Teal practices in place for the department he is responsible for? When I am asked this question, as much as I would like to believe the opposite, I tell people not to waste their energy trying. Experience shows that efforts to bring Teal practices into subsets of organizations bear fruit, at best, only for a short while. If the CEO and the top leadership

see the world through Amber or Orange lenses (Green’s tolerance allows for more hope), they will consider the Teal experiment frivolous, if not outright dangerous. They might allow it for a while until they understand what is going on. But ultimately, the pyramid will get its way and reassert control. In the process, the energy that was invested often turns into bitterness and cynicism. I wish I could offer more hope. But I simply haven’t come across a single example of a unit, plant, or department that has operated to any degree with Teal practices for a substantial amount of time to show otherwise. And while the experiment lasted, the people in those units often had to fight, again and again, with the big bosses outside of their unit to defend their unorthodox ways of operating.

Orange Organizations can be vibrant and innovative places where management by objectives gives people room to maneuver and to express themselves; or they can be stressful, lifeless places constrained by a thicket of rules, procedures, budgets, and targets. As a middle or senior manager, you can foster an environment that is as healthy as possible for your department within the Orange context.

You might have noticed a major paradox: CEOs are both much less and much more important in self-managing organizations compared to traditional ones. 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. But beyond creating and holding that space, paradoxically, there is not much a CEO needs to do; he can let the self-organizing, emerging nature of Evolutionary-Teal take over.

the CEO is often the public face of the company to the outside world.

and maintaining a spacefor Teal ways of operating and role-modeling of Teal behaviors.

The calls can come from different corners—one time it’s a board member who will call for more control, another time a colleague, a supplier, or a client. Over and over again, the CEO must ensure that trust prevails and that traditional management practices don’t creep in through the back door.

Whenever something goes wrong, whenever a colleague makes a stupid decision or abuses the system, there will be loud cries to put control systems in place to prevent the problem from happening again. And for that reason, over time, most large organizations end up with expense policies, travel guidelines, dress codes, company car policies, client entertainment policies, supplier agreement procedures, vacation policies, mobile phone and IT policies, email and Internet usage policies … and the list goes on and on. Of course, a policy is useful only if it is enforced, so some department is given authority to impose some paper trail for compliance

and to hand down punishment in case of infringement.