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

by Frederic Laloux

(The Postmodernists utterly fail to distinguish between dominator hierarchies, which are indeed nasty, and actualization hierarchies, which are the primary form of natural growth, development, and evolution in the world—atoms to molecules to cells to organisms, for

You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete. Richard Buckminster Fuller

They are therefore well adapted to chaotic environments (in civil wars or in failed states) but are ill-suited

Effectiveness replaces morals as a yardstick for decision-making: the better I understand the way the world operates, the more I can achieve; the best decision is the one that begets the highest outcome. The goal in life is to get ahead, to succeed in socially acceptable ways, to best play out the cards we are dealt.

Adolescence is such a wild time, not just because of sexual blossoming, but because possible worlds open up the mind’s eye—it’s the “age of reason and revolution.”

In Orange, we effectively live in the future, consumed by mental chatter about the things we need to do so as to reach the goals we have set for ourselves. We hardly ever make it back to the present moment, where we can appreciate the gifts and freedom the shift to Orange has brought us.

Experience shows that unfortunately, Orange Organizations don’t always deliver on the promise of management by objective. The fears of the ego often undermine good intentions.

In the process, budgets fail to deliver on one of their key objectives: making

According to the research, the trigger for vertical growth always comes in the form of a major life challenge that cannot be resolved from the current worldview. When we face such a challenge, we can take one of two approaches: we can grow into a more complex perspective that offers a solution to our problem, or we can try to ignore the problem, sometimes clinging more strongly to our existing worldview (or even shifting back to the reassuring simplicity of an earlier worldview).

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.

In Evolutionary-Teal, we shift from external to internal yardsticks in our decision-making. We are now concerned with the question of inner rightness: does this decision seem right? Am I being true to myself? Is this in line with who I sense I’m called to become? Am I being of service to the world? With fewer ego-fears, we are able to make decisions that might seem risky, where we haven’t weighed all possible outcomes, but that resonate with deep inner convictions. We develop a sensitivity for situations that don’t quite feel right, situations that demand that we speak up and take action, even in the face of opposition or with seemingly low odds of success, out

Recognition, success, wealth, and belonging are viewed as pleasurable experiences, but also as tempting traps for the ego. In contrast with previous stages, the order is reversed: we do not pursue recognition, success, wealth, and belonging to live a good life. We pursue a life well-lived, and the consequence might just be recognition, success, wealth, and

“a person who has ambition, but is not ambitious.”

We trade in judgment for compassion and appreciation. Psychologists talk about a shift from a deficit to a strength-based

When life is seen as a journey of discovery, then we learn to deal more gracefully with the setbacks, the mistakes, and the roadblocks in our life. We can start to grasp the spiritual insight that there are no mistakes, simply experiences that point us to a deeper truth about ourselves and the world. In previous stages, life’s roadblocks (an illness, a bad boss, a difficult marriage) are seen as unfair rolls of the dice. We meet them with anger, shame, or blame, and these feelings disconnect us from others and ourselves. 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. In earlier paradigms, we often convince ourselves that everything is all right until a problem has snowballed and hits us like an avalanche, forcing change into our life. Now, we tend to make frequent small adjustments, as we learn and grow from problems we encounter along the way. In previous stages, change on a personal level feels threatening; as of Evolutionary-Teal, there is often an enjoyable tension in the journey of personal growth.

Another cognitive breakthrough is the ability to reason in paradox, transcending the simple either-or with more complex both-and thinking. Breathing in and breathing out provides an easy illustration of the difference. In either-or thinking, we see them as opposites. In both-and thinking, we view them as two elements that need each other: the more we can breathe in, the more we can breathe out. The paradox is easy to grasp for breathing in and out; it is less obvious for some of the great paradoxes of life that we only start to truly understand when we reach Teal: freedom and responsibility, solitude and community, tending to the self and tending to others.

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

The concentration of power at the top, separating colleagues into the powerful and the powerless, brings with it problems that have plagued organizations for as long as we can remember. Power in organizations is seen as a scarce commodity worth fighting for.

This situation invariably brings out the shadowy side of human nature: personal ambition, politics, mistrust, fear, and greed. At the bottom of organizations, it often evokes the twin brothers of powerlessness: resignation and resentment. Labor unions were born from the attempt to confederate power at the bottom to counter power from the top (which in turn tries to break the power of unions).

The widespread lack of motivation we witness in many organizations is a devastating side effect of the unequal distribution of power. For a few lucky people, work is a place of joyful self-expression, a place of camaraderie with colleagues in pursuit of a meaningful purpose. For far too many, it is simply drudgery, a few hours of life “rented out” every day in excha...

Pluralistic-Green Organizations seek to deal with the problem of power inequality through empowerment, pushing decisions down the pyramid, and they often achieve much higher employee engagement. But empowerment means that someone at the top must be wise or noble enough to give away some of his power. What if power weren’t a zero-sum game? What if we could create organizational structures and practices that didn’t need empowerment because, by design, everybody was powerful and no one powerless? This is the first major breakthrough of Teal Organizations: transcending the age-old problem of power inequality through structures and practices where no one holds power over anyone else, and yet, paradoxically, the organization as a whole ends up being considerably more powerful.

For a solution to be adopted, it is enough that nobody has a principled objection.

fluid hierarchies of recognition, influence, and skill (sometimes referred to as “actualization hierarchies” in

I had to free myself from previous ways of working, when I was trained to manage and control. I have to let go of that here. The big difference is that, really, I’m not responsible. The responsibility lies with the teams and Jos

A team should not grow larger than 12 persons. Beyond that number, it should split. Teams should delegate tasks widely among themselves. They should be careful not to concentrate too many tasks with one person, or a form of traditional hierarchy might creep in through the back door. Along with team meetings, teams plan regular coaching meetings where they discuss specific issues encountered with patients and learn from each other (using a specific group coaching technique). Team members must appraise each other every year, based on competency models they can devise themselves. Teams make yearly plans for initiatives they want to take in the areas of client care and quality, training, organization, and other issues. The target for billable hours in mature teams is 60 to 65 percent.34 Teams make important decisions based on the specific decision-making technique outlined earlier.

from the perspective of headquarters, rules and procedures always make sense; one must be in the field to experience the counterproductive and dispiriting results they often produce and to realize how often people find creative ways around them or simply ignore them.

workers are proud of their record of not a single order delivered late in over 25 years.

The joke goes that in most organizations, people low in the hierarchy work, while people higher up do meetings. But think of it: in functional pyramidal structures, it could hardly be otherwise. The higher you go, the more lines converge. It is only at the very top that the different departments such as sales, marketing, R&D, production, HR, and finance meet. Decisions are naturally pushed up to the top, as it’s the only place where decisions and trade-offs can be informed from the various angles involved. It’s almost deterministic: with a pyramidal shape, people at the top of organizations will complain about meeting overload, while people below feel disempowered.

At FAVI, there are no middle managers that fight for budgets, and Zobrist refused to play the role of the father who would decide how to divide up the candy among his children.

Just like Denis and Frank, the teams at FAVI that offer staff-like support—maintenance and quality, for instance—have no decision-making power over the shop floor teams. They can only rely on their powers of persuasion. Mostly they act upon request from the shop floor. The general philosophy is one of reverse delegation. The expectation is that the frontline teams do everything, except

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.

When you ask them why, they say that their self-image has changed: they used to work for the paycheck; now they feel responsible for their work and they take pride in a job well done.

When trust is extended, it breeds responsibility in return.

Ultimately, it comes down to this—fear is a great inhibitor. When organizations are built not on implicit mechanisms of fear but on structures and practices that breed trust and responsibility, extraordinary

Project teams form organically and disband again when work is done. Nobody knows if projects are on time or on budget, because for 90 percent of the projects, no one cares to put a timeline on paper or to establish a budget. A huge amount of time is freed by dropping all the formalities of project planning—writing the plan, getting approval, reporting on progress, explaining variations, rescheduling, and re-estimating, not to mention the politics that go into securing resources for one’s project or to find someone to blame when projects are over time or over budget. When I discussed with Kirsten Regal, one of Sun’s leaders, how little their meeting rooms seemed to be used, she quipped, “We don’t waste time being busy.”

If no one picks up a certain problem or opportunity, it probably means it is not important.

purpose was necessary to make work meaningful,

And yet millions of customers throughout the world were supplied with energy produced by self-governing teams responsible for such crucial matters as safety and maintenance. With 40,000 people scattered across different continents, AES only had about 100 people working at headquarters in Arlington—hardly a number that could claim to control what was happening in faraway places like Cameroon, Colombia, or

“The more you increase individual responsibility, the better the chances for incremental improvements in operations,”

The company came up with the “80-20 rule“: every person working at AES, from cleaning staff to engineer, was expected to spend on average 80 percent of their time on their primary role and make themselves available for the other 20 percent in one or more of the many task forces that existed around the company.

the

Every role people take on is a commitment they make to their peers.

There is no adolescent posturing, no competition of cool. The school claims in its founding principles that all children are unique, that they all have talents to contribute, that they are valuable, valued, and needed.

students have a class called “Challenge” (the beautiful German word “Herausforderung” literally means “being called to grow from the inside out”).

Every school can replicate ESBZ’s success, because more money or resources are not the decisive factor. All it takes, really, is to look at children, teachers, parents, and education with fresh eyes.

Self-organization is not a startling new feature of the world. It is the way the world has created itself for billions of years. In all of human activity, self-organization is how we begin. It is what we do until we interfere with the process and try to control one another. Margaret J. Wheatley and Myron Kellner-Rogers

Almost all organizations in this research use, in one form or another, a practice that AES called 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.

community, humility, learning, better decisions, and fun

Attempting to accommodate everyone’s wishes, however trivial, often turns into an agonizing pursuit; in the end, it’s not rare that most people stop caring, pleading for someone to please make a decision, whatever it turns out to be.