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

by Frederic Laloux

With processes, critical knowledge no longer depends on a particular person; it is embedded in the organization and can be transmitted across generations.

When top management asks departments to make their budgets, people play a game called sandbagging—they push for the lowest possible expectation to make sure they will achieve the targets and collect their bonuses. When the numbers don’t add up, top management arbitrarily imposes higher targets (which they make sure exceed what they promised to shareholders, to ensure they will make their bonuses too), which people lower down have no choice but to accept. Instead of frank discussions about what’s feasible and what’s not, people exchange spreadsheets with fictive forecasts driven by fear of not making the numbers. In the process, budgets fail to deliver on one of their key objectives: making people feel accountable and motivated for their outcomes.

Rationality is valued above all else; emotions, doubts, and dreams are best kept behind a mask, so that we do not make ourselves vulnerable. Our identity is no longer fused with our rank and title; instead it is fused with our need to be seen as competent and successful, ready for the next promotion.

We increasingly come to see that much of this economy based on fabricated needs is unsustainable from a financial and ecological perspective. We have reached a stage where we often pursue growth for growth’s sake, a condition that in medical terminology would simply be called cancer.

Enough to convince you to read this book? I hope so :-)

In light of the corporate scandals of the last decade, some would add that the most obvious shadow of the modern organization is individual and collective greed. A small circle of CEOs grant themselves ever higher salaries; they lobby government for favorable rules; corrupt regulators; play off governments to pay little or no taxes; and merge in a frenzy to dominate their industries and abuse their power over suppliers, customers, and employees.

Another one to convince you!

Orange glorifies decisive leadership, while Green insists that leaders should be in service of those they lead.

Growing into a new form of consciousness is always a highly personal, unique, and somewhat mysterious process. It cannot be forced onto somebody. No one can be made to evolve in consciousness, even with the best of intentions—a hard truth for coaches and consultants, who wish they could help organizational leaders adopt a more complex worldview by the power of conviction.

The limits of coaching ...

What determines which stage an organization operates from? It is the stage through which its leadership tends to look at the world. Consciously or unconsciously, leaders put in place organizational structures, practices, and cultures that make sense to them, that correspond to their way of dealing with the world. This means that an organization cannot evolve beyond its leadership’s stage of development.

That is the true genius of organizations: they can lift groups of people to punch above their weight, to achieve outcomes they could not have achieved on their own. This insight is a hopeful one in a time when we need the consciousness of Green and Teal Organizations to start healing the world of the wounds of modernity.

The most exciting breakthroughs of the twenty-first century will not occur because of technology, but because of an expanding concept of what it means to be human. John Naisbitt

In Evolutionary-Teal, we cross the chasm and learn to decrease our need to control people and events. We come to believe that even if something unexpected happens or if we make mistakes, things will turn out all right, and when they don’t, life will have given us an opportunity to learn and grow.

The ultimate goal in life is not to be successful or loved, but to become the truest expression of ourselves, to live into authentic selfhood, to honor our birthright gifts and callings, and be of service to humanity and our world. In Teal, life is seen as a journey of personal and collective unfolding toward our true nature.

With their ego under control, they don’t fear failure as much as not trying.

In Teal, obstacles are seen as life’s way to teach us about ourselves and about the world. We are ready to let go of anger, shame, and blame, which are useful shields for the ego but poor teachers for the soul. We embrace the possibility that we played a part in creating the problem, and inquire what we can learn so as to grow from it.

Taming the ego could have deep repercussions on how we structure and run organizations. Many of the corporate ills today can be traced to behaviors driven by fearful egos: politics, bureaucratic rules and processes, endless meetings, analysis paralysis, information hoarding and secrecy, wishful thinking, ignoring problems away, lack of authenticity, silos and infighting, decision-making concentrated at the top of organizations, and so forth. In Teal Organizations, less driven by ego, we can hope to put some of these corporate ills behind us. More generally, the relationship to power could be transformed in quite fundamental ways. When trust replaces fear, will a hierarchical pyramid still provide the best structure? Will we need all the rules and policies, detailed budgets, targets, and roadmaps that give leaders today a sense of control? Perhaps there are much simpler ways to run organizations when the fears of the ego are out of the way.

The basis for decision-making is not consensus. For a solution to be adopted, it is enough that nobody has a principled objection. A person cannot veto a decision because she feels another solution (for example, hers!) would have been preferable. The perfect solution that all would embrace wholeheartedly might not exist, and its pursuit could prove exhausting. As long as there is no principled objection, a solution will be adopted, with the understanding that it can be revisited at any time when new information is available.

Because there is no hierarchy of bosses over subordinates, space becomes available for other natural and spontaneous hierarchies to spring up—fluid hierarchies of recognition, influence, and skill (sometimes referred to as “actualization hierarchies” in place of traditional “dominator hierarchies”).

The vertical power transmission of traditional pyramidal organizations is taken off its hinges: the teams of nurses aren’t simply empowered by their hierarchy; they are truly powerful because there is no hierarchy that has decision-making power over them.

Mostly, though, the coach’s role is to ask the insightful questions that help teams find their own solutions. Coaches mirror to teams unhelpful behavior and can at critical moments raise the flag and suggest that a team pause to deal with a serious problem.

This opens up the can of worms of politics. Everyone jockeys for a bigger part of the pie. For middle managers, the size of the budget is often the yardstick by which their status is measured. They try, as best as they can, to influence the decision makers in the executive committee through any formal and informal channels at their disposal.

“Go do it. I believe you have what it takes to be successful in that role. But it’s not my decision. You need to show the teams that your role is worthwhile to them.”

From Buurtzorg’s inception, Jos de Blok envisioned that the “BuurtzorgWeb” would be a critical piece in the company’s self-managing puzzle. The alternative—attempting to centralize knowledge within a staff of experts—would most likely be less effective and more costly.

With no middle management and little staff, Teal Organizations dispense with the usual control mechanisms; they are built on foundations of mutual trust.

The heart of the matter is that workers and employees are seen as reasonable people that can be trusted to do the right thing. With that premise, very few rules and control mechanisms are needed.

Emulation and peer pressure regulates the system better than hierarchy ever could.

When people work in small teams of trusted colleagues, when they have all the resources and power to make the decisions they feel are needed, extraordinary things begin to happen.

self-management principles can work in all cultures and scale to an organization with tens of thousands of employees.

she created an environment in which everyone was energized, not from fear of punishment or promise of reward, but from a desire to accomplish something positive.

people are not made to fit pre-defined jobs; their job emerges from a multitude of roles and responsibilities they pick up based on their interests, talents, and the needs of the organization.

Thinking in terms of granular roles instead of pre-defined jobs creates great fluidity and adaptability. People can give up one role and take up another without needing to go through the cumbersome and often political processes of appointment, promotion, and salary negotiation.

Every role people take on is a commitment they make to their peers. They are not accountable to one boss; every one of their peers is a boss in respect to the commitments they made. And as we will see in the next chapter, which discusses the practices that bring self-managing structures to life, anybody can put on the hat of “the boss” to bring about important decisions, launch new initiatives, hold underperforming colleagues to account, help resolve conflicts, or take over leadership if results are bad and action is needed.

the “advice process.” It is very simple: in principle, any person in the organization can make any decision. But before doing so, that person must seek advice from all affected parties and people with expertise on the matter. The person is under no obligation to integrate every piece of advice; the point is not to achieve a watered-down compromise that accommodates everybody’s wishes. But advice must be sought and taken into serious consideration. The bigger the decision, the wider the net must be cast—including, when necessary, the CEO or the board of directors. Usually, the decision maker is the person who noticed the issue or the opportunity or the person most affected by it.

We often think that decisions can be made in only two general ways: either through hierarchical authority (someone calls the shots; many people might be frustrated, but at least things get done) or through consensus (everyone gets a say, but it’s often frustratingly slow and sometimes things get bogged down because no consensus can be reached). The advice process transcends this opposition beautifully: the agony of putting all decisions to consensus is avoided, and yet everybody with a stake has been given a voice; people have the freedom to seize opportunities and make decisions and yet must take into account other people’s voices. The process is key to making self-management work on a large scale.

If the advice process needs to be suspended in times of crisis, these two guidelines can serve to maintain trust in self-management: give full transparency about the scope and timeframe of top-down decision-making, and appoint someone to make those decisions who will not be suspected of continuing to exert such powers when the crisis is over.

But the really interesting thing is that the choice between trust and control is seldom debated on a rational level.

AES people: Are creative, thoughtful, trustworthy adults, capable of making important decisions; Are accountable and responsible for their decisions and actions; Are fallible. We make mistakes, sometimes on purpose; Are unique; and Want to use our talents and skills to make a positive contribution to the organization and the world.46 With this set of assumptions, self-management and the advice process make perfect sense; while control mechanisms and hierarchy are needless and demoralizing distractions.

(To be happy, we need to be motivated. To be motivated, we need to be responsible. To be responsible we must understand why and for whom we work, and be free to decide how)

At the core, this comes down to the fundamental spiritual truth that we reap what we sow: fear breeds fear and trust breeds trust. Traditional hierarchies and their plethora of built-in control systems are, at their core, formidable machines that breed fear and distrust. Self-managing structures and the advice process build up over time a vast, collective reservoir of trust among colleagues.

Why go to this extraordinary length and share all information? Three reasons make this practice compelling for self-managing organizations: In the absence of hierarchy, self-managing teams need to have all available information to make the best decisions. Any information that isn’t public will cause suspicion (why else would someone go through the trouble to keep it secret?), and suspicion is toxic for organizational trust. Informal hierarchies reemerge when some people are in the know while others are not.

Conflict resolution is a foundational piece in the puzzle of interlocking self-management practices. It is the mechanism through which peers hold each other to account for their mutual commitments. In traditional companies, when one person doesn’t deliver, colleagues grumble and complain but leave it to the person’s boss to do something about it. In self-managing organizations, people have to step up and confront colleagues who fail to uphold their commitments.

In self-managing organizations that have no managers to keep up the pressure, what prevents teams from getting complacent? The short answer: intrinsic motivation, calibrated by peer emulation and market demands.

For example, at a staff retreat, a question might find its way into the program that everyone gets two or three minutes to answer (but is always free to take a pass on). “Tell us about an elder who has been important in your life.” “Tell us about the first dollar you ever earned.” The practice is simple enough, and yet it allows people to lift a veil and share with colleagues a defining moment that has shaped them on their journey to selfhood.

The CC&R welcomes new personnel in a special meeting. Each existing team member brings an object that symbolizes a wish for the new colleague. In turn, they present the object and share their wish. The practice is a wonderful way to celebrate the newcomer and make him or her feel welcome. But in many ways, it serves existing team members as much as the newcomer, as they too get to know each other at a deeper level. Each wish is a story that reveals what the storyteller cherishes in the workplace and in their relationships with colleagues.

It’s customary for team members to join together for a meal with the departing colleague. Everybody comes prepared with a personal story about that person’s time with the organization. Of course, the stories are meant to celebrate the person who is leaving. But again, they reveal just as much about the storyteller—what he cherishes in other people, what touches him, what he prizes in relationships at work.

Several of the companies in this research start meetings with a round of check-in and finish with a round of check-out.

To bring about better organizations, we need to risk speaking the truth of our soul and learn to navigate the conflicts that might ensue.

Without conflict, we can be over-accommodating or over-protective, and in both cases, we stop being true to ourselves when interacting with colleagues.

It’s easier to ask someone to discuss a disagreement when we know there is a well-paved avenue that will get us unharmed to the other side.

all colleagues have the opportunity to learn a simple three-step process for difficult conversation: Step 1: Here is how I feel. Step 2: Here is what I need. Step 3: What do you need?