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

by Frederic Laloux

Should we respond to one instance of corporate theft by lowering the bar of trust, and in so doing treat 3,000 people as though they too might be thieves?

Several CEOs of pioneer organizations told me the most difficult pressures to deal with come from the outside world.

First and foremost, founders and CEOs of Teal Organizations must accept that their power is severely limited by the advice process. It doesn’t matter how strongly they are convinced about their point of view; they cannot make a decision without consulting people affected by the matter and people with relevant expertise.

Self-management thrives on total information transparency. What is wrong with the CEO having real-time access to the performance data of all the plants? Nothing in principle (as long as the same data is supplied to everyone else too). But self-management implies that teams monitor their own performance and don’t need other people to tell them to get their act together. In a subtle but very real way, teams’ psychological ownership is undermined when they know the CEO can look over their shoulder in real time to monitor their performance.

The most subtle, and perhaps most demanding, change for a founder or CEO in a Teal Organization is to leave behind the sometimes addictive sense that others need you to make things happen.

CEOs that role-model virtues such as humility, trust, courage, candor, vulnerability, and authenticity invite colleagues to take the same risks.

personal and collective success are both wonderful when they come as a consequence of pursuing a meaningful purpose, but that we should be careful not to pursue success as a goal in itself,

we are at our most productive and joyful when all of who we are is energized by a broader purpose that nourishes our calling and our soul.

What decision will best serve the organization’s purpose?

How will this role serve the organization’s purpose?

Will working with this client/this suppli...

organization’s ...

They can participate in a project; lead an initiative; participate in recruitment; mediate conflicts; or meet with clients and regulators. Whatever roles they choose, they have to add value, like everyone else, or their colleagues won’t entrust them with the roles for long.

The roles that founders and CEOs of Teal Organizations pick up tend to concern some of the broadest questions in the organization. Should we launch a new product line? Should we move offices, or build a new factory? Should we introduce a new compensation system? Those kinds of questions affect large groups of colleagues, sometimes every single one.

In his book The Living Organization, Norman Wolfe suggests an insightful distinction between three types of energy fields in the workplace: Activity, Relationship, and Context. With Activity, he refers to the energy of action, the “what we do and how we do it.” Relationship refers to the energy brought to the interactions; what we say, how we say it, how we relate to each other. Context in turn is the energy of meaning and purpose, of connection with a larger whole.

Two worlds collided, one of strict financial procedures combined with “check, check, double check” with one of “have trust, have trust.”

“Most board members loved the AES approach primarily because they believed it pushed the stock price up, not because it was the ‘right’ way to operate an organization.”131

But when an internal letter where Bakke shared the news with all of his colleagues was picked up by the press, investors overreacted and AES’s shares plummeted by 40 percent. In an instant, Bakke remembers, board members as well as some of his senior colleagues were ready to throw self-managing principles overboard:

In the case of for-profit companies, this means that founders need to be careful who they invite to invest in their companies.

Holacracy, for instance, has drafted a constitution that a board can adopt and that henceforth becomes binding, even to future shareholders. It gives shareholders a legitimate say in matters related to finance, but prevents them from unilaterally imposing a strategy,

The duty of directors of B-Corporations is extended to include non-financial interests, such as social benefit, concerns of employees and suppliers, and environmental impact.

HolacracyOne‘s

interpersonal politics and painful meetings throttled the flow of effective action, and drained both my own human capital and that of my friends.

Joining HolacracyOne has been utterly catalytic on all levels of my being.

The esprit de corps is very positive and sustaining—not because we’re uniquely optimistic, but because the system in which we operate is healthy and liberates our energies to flow and function.

At HolacracyOne, I’m becoming securely organizationally attached.

Organizations researched for this book found that

debates are much more fruitful when they don’t stay at the level of arguing for or against a certain management practice, but when they take place at a deeper level, discussing the often hidden assumptions underneath the practices.

people are of equal human worth; people are essentially good, unless proven otherwise; there is no single way to manage corporate issues well.

individuals shall work together with no use of force or coercion; individuals shall keep commitments.

people are systematically considered to be good (reliable, self-motivated, trustworthy, intelligent); there is no performance without happine...

The more you self-disclose, the more authentic, the more vulnerable, the more honest you are about your strengths and weaknesses, the safer others will feel to do the same.

Many organizations find it helpful to define a set of values and to translate them into concrete behaviors that are either encouraged or declared unacceptable in the community of colleagues. This is often best captured in a document,

It can be as simple as starting with a minute of silence or a round of thanking, but you can also choose a structured decision-making process, such as those practiced by Holacracy and Buurtzorg.

Start meetings by having each person write down what would make them feel excited leaving the meeting. Then share and use that to agree on the purpose of the meeting.

For some founders, the purpose seems so self-evident that they focus all their energy on getting stuff done; they forget to talk about the why,

HolacracyOne,

Dennis Bakke

Roger Naill

Developing a feeling of psychological ownership is a process; it doesn’t appear overnight just because people are given freedom to self-manage. I’ve noticed that some leaders believe that employees, once freed from rules, budgets, and managers, will somehow spontaneously start firing on all cylinders. That might happen if employees already feel a strong sense of psychological ownership. If they don’t, I wouldn’t bet much on it. When people have little emotional investment in the organization and in its purpose, when employees consider work as a burden to be minimized, then don’t be surprised that given freedom, they take the freedom but not the responsibility.

It was often after only a year, sometimes two, that they would introduce AES’s self-management practices in full.

In the best of cases, they will lose only their hierarchical power. More likely, they will have to find themselves a new job within the organization or outside it, because their function will disappear altogether.

“Joy at Work,”

Morning Star’s “Self-Management Institute” has started to give two-day training courses

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