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

by Frederic Laloux

One worker said, “This month, why don’t we all work only three weeks and get three weeks’ pay, and we keep the temp workers? If we need to, we will do the same thing next month as well.” Heads nodded, and the proposal was put to a vote. To Zobrist’s surprise, there was unanimous agreement. Workers just agreed to a temporary 25 percent salary cut. In less than an hour, the problem was solved and machine noise reverberated around the factory again.

Zobrist’s ability to keep his fear in check paved the way for a radically more productive and empowering approach and showed that it is possible to confront employees with a harsh problem and let them self-organize their way out of it.

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.

Several leaders of Teal Organizations have found it useful, therefore, to talk often and explicitly about the assumptions underpinning self-management and to contrast them with the assumptions made by traditional hierarchies.

Workers are lazy. If they are not watched, they will not work diligently. Workers work primarily for money. They will do what it takes to make as much money as possible. Workers put their own interest ahead of what is best for the organization. They are selfish. Workers perform best and are most effective if they have one simple repeatable task to accomplish. Workers are not capable of making good decisions about important matters that affect the economic performance of the company. Bosses are good at making these decisions. Workers do not want to be responsible for their actions or for decisions that affect the performance of the organization. Workers need care and protection, just as children need the care of their parents. Workers should be compensated by the hour or by the number of “pieces” produced. Bosses should be paid a salary and possibly receive bonuses and stock. Workers are like interchangeable parts of machines. One “good” worker is pretty much the same as any other “good” worker. Workers need to be told what to do, when to do it, and how to do it. Bosses need to hold them accountable.45 These assumptions sound harsh when they are put into words, and yet they are the basis for the structures and practices we have in organizations today. If this view of employees is true, leaders are prudent to build in controls, rewards, and punishments; only a fool would trust workers to make decisions using the advice process. Because the assumptions are often implicit, or ...

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.

People are systematically considered to be good. (Reliable, self-motivated, trustworthy, intelligent) There is no performance without happiness. (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) Value is created on the shop floor. (Shop floor operators craft the products; the CEO and staff at best serve to support them, at worst are costly distractions)

At the core, this comes down to the fundamental spiritual truth that we reap what we sow: fear breeds fear and trust breeds trust.

People are trusted to deal with good and bad news. There is no culture of fear, and so teams with bad results are not deemed to need the protection of anonymity.

Of course, not all news is pleasant to hear. The practice of sharing all information puts everyone in the same situation as the CEO of a traditional organization. It forces people to grow up and face unpleasant realities. In the 2002 recession, Sounds True, a media publishing company we will meet in the next chapter, was for the first time in its history facing a difficult financial situation. Its founder and CEO, Tami Simon, remembers that some people were then experiencing the other side of total transparency: There is a certain kind of anxiety introduced in an environment where people know all about the business and its accompanying uncertainties. In companies where the executive team acts like parents who withhold difficult information from workers, people are protected from this anxiety. But I think that approach gives people a false sense of safety. Here, employees may feel anxious about finances more of the time, but at least everyone knows where they stand.

In a first phase, they sit together and try to sort it out privately. The initiator has to make a clear request (not a judgment, not a demand), and the other person has to respond clearly to the request (with a “yes,” a “no,” or a counterproposal). If they can’t find a solution agreeable to both of them, they nominate a colleague they both trust to act as a mediator. The colleague supports the parties in finding agreement but cannot impose a resolution. If mediation fails, a panel of topic-relevant colleagues is convened. The panel’s role, again, is to listen and help shape agreement. It cannot force a decision, but usually carries enough moral weight for matters to come to a conclusion. In an ultimate step, Chris Rufer, the founder and president, might be called into the panel, to add to the panel’s moral weight.

Conflict resolution is a foundational piece in the puzzle of interlocking self-management

When Jack Nicklaus was competing, was he concerned about becoming an executive senior vice president golfer? No. He knew that if he got good at it, he would achieve what everyone longs for: a sense of accomplishment. He also knew accomplishment would give him an income to enjoy the life he wanted. Moving up is about competency and reputation, not the office you hold.

Think about it as an operating system for an organization. Not a technology, not a piece of software, but a social technology. Your computer has an operating system … [that] controls how communication happens, how power works, how applications share resources and information, the flow of work through that computer. Everything else is built on top of that operating system. And likewise in our organizations today, we have an operating system that often goes unquestioned. Right now there is a bit of a monopoly on the organizational operating system market, so to speak. We pretty much have one way we use to structure and run a business, ultimately. There are some variations of course, but it really comes back to the same basic underlying structure for how power works and how work gets done in the company.

Present proposal: The proposer states his proposal and the issue this proposal is attempting to resolve. Clarifying questions: Anybody can ask clarifying questions to seek information or understanding. This point is not yet the moment for reactions, and the facilitator will interrupt any question that is cloaking a reaction to the proposal. Reaction round: Each person is given space to react to the proposal. Discussions and responses are not allowed at this stage. Amend and clarify: The proposer can clarify the intent of his proposal further or amend it based on the prior discussion. Objection round: The facilitator asks, “Do you see any reasons why adopting this proposal would cause harm or move us backwards?” Objections are stated and captured without discussion; the proposal is adopted if none surface. Integration: If an objection is raised, the facilitator leads an open discussion to craft an amended proposal that would avoid the objection while still addressing the proposer’s concern. If several objections are raised, they get addressed in this way one at a time, until

when employees are empowered to make all the decisions they want, the

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.

Are we collectively doing a good job contributing to the organization’s purpose

in self-managing organizations, it seems that almost universally, people choose to leave before they are dismissed.

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)

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

Clouds form and then go away because atmospheric conditions, temperatures, and humidity cause molecules of water to either condense or vaporize. Organizations should be the same; structures need to appear and disappear based on the forces that are acting in the organization. When people are free to act, they’re able to sense those forces and act in ways that fit best with reality.

Because they are spread widely, not narrowly, it can be argued that there is more management and leadership happening at any time in Teal Organizations despite, or rather precisely because of, the

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.

These are hierarchies of influence, not position, and they’re built from the bottom up.

No one can kill a good idea Everyone can pitch in Anyone can lead No one can dictate You get to choose your cause You can easily build on top of what others have done You don’t have to put up with bullies and tyrants Agitators don’t get marginalized Excellence usually wins (and mediocrity doesn’t) Passion-killing policies get reversed Great contributions get recognized and celebrated71

Employees, for their part, fear that if they were to show up with all of who they are, they might expose their selfhood to criticism and ridicule and come across as odd and out of place. It is deemed much better to play it safe and to hide the selfhood behind a professional mask.

have come to believe that something deeper is at play: we have found safety in showing up with just a narrow part of ourselves in the workplace. We might not at first like the thought of having babies or animals in the workplace precisely because it’s so difficult, in their presence, not to show a whole different part of ourselves to our colleagues—a part that is deeply loving and caring.

Other expressions of hostility—”negative triangulated messages,” “threat of abandonment,” “disconfirming the other person’s reality,” and “intimidation/explosion”—are defined in an equally precise manner.

Going bowling together can be a fun break from work, but such activities are generally “more of the same”: they keep to the surface and don’t really foster trust or community at any deep level.

The more you know about another person’s journey, the less possible it is to distrust or dislike that person. Want to know how to build relational trust? Learn more about each other. Learn it through simple questions that can be tucked into the doing of work, creating workplaces that not only employ people but honor the soul in the process. This is how to weave a fabric of communal relationships that has resilience in times of crisis, resourcefulness in times of need. It’s a fabric that must be woven before the need or the crisis arrives, when it’s too late for community to emerge in the stress of the moment. So let’s make sure, in our language and in our practice, that we’re building collegial communities around persons as well as tasks, around

more often than not, meetings in companies turn into playfields for the egos that push the souls into hiding.

The absence of real kitchens in our organizations is a powerful revealer of how we think about our workplaces. They are transient and somewhat lifeless places, where we rent out our labor for a few hours, but not places we invest in, in the way we invest in our homes.

Too often we self-censor, too often we fail to fight for our concerns, for fear of being branded a dreamer, an activist, or

Striving for wholeness is no easy task. With every unsettling event, we are tempted to seek refuge in separation. Our soul goes into hiding and the ego takes over, doing what it feels it needs to do to make us feel safe. But it’s a safety that comes at a cost: we now relate to others and ourselves with fear and judgment, no longer with love and acceptance.

When we are asked what we do professionally, we all tend to answer, I am a … (shift supervisor, head of sales, vice president of human resources). Part of us believes that is really who we are, and we start thinking and behaving accordingly. In the absence of job titles and job descriptions, we are more likely to see ourselves and others first and foremost as human beings that happen to put our energy into specific work roles during a period of time.

I know few executives who would dare to cancel an important meeting for their child’s school play or because a good friend needs their help. The few that do feel they need to invoke some false pretext. We work in corporate cultures that invite us to disown some of the things we care most about.

They don’t work because most performance appraisal systems are a form of judgment and control.

Sadly, this fear-based fixation on competition plays out even when the self-preservation

My view of business is that we are coming together as a community to fill a human need and actualize our lives.

profits are a byproduct of a job well done.

Yet business can produce food, cure disease, control population, employ people, and generally enrich our lives. And it can do these good things and make a profit without losing its soul.

Trust We relate to one another with an assumption of positive intent. Until we are proven wrong, trusting co-workers is our default means of engagement. Freedom and accountability are two sides of the same coin. Information and decision-making All business information is open to all. Every one of us is able to handle difficult and sensitive news. We believe in collective intelligence. Nobody is as smart as everybody. Therefore all decisions will be made with the advice process. Responsibility and accountability We each have full responsibility for the organization. If we sense that something needs to happen, we have a duty to address it. It’s not acceptable to limit our concern to the remit of our roles. Everyone must be comfortable with holding others accountable to their commitments through feedback and respectful confrontation. WHOLENESS Equal worth We are all of fundamentally equal worth. At the same time, our community will be richest if we let all members contribute in their distinctive way, appreciating the differences in roles, education, backgrounds, interests, skills, characters, points of view, and so on. Safe and caring workplace Any situation can be approached from fear and separation, or from love and connection. We choose love and connection. We strive to create emotionally and spiritually safe environments, where each of us can behave authentically. We honor the moods of … [love, care, recognition, gratitude, curiosity, fun, playfulness …]. We are comfortab...

through practices that support corresponding behavior, through role-modeling by colleagues with moral authority, and by creating a space where people can explore how their belief system supports or undermines the new culture.

Today, there is almost too much focus on leadership, mainly because it is widely thought to be the key to economic success. In fact, the degree to which a leader can actually affect technical performance has been substantially overstated. … On the other hand, the importance and impact of moral leadership on the life and success of an organization have been greatly underappreciated. Dennis Bakke

assumption that control mechanisms make us safe. No matter how many corporate scandals keep happening in organizations full of control mechanisms, we hold on to this assumption. 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.

Trust is so countercultural that it needs to be defended and reaffirmed every time a problem arises.

Fighting the inner urge to control is probably the hardest challenge for founders and CEOs in self-managing organizations.

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.

One of the challenges and opportunities of Holacracy is: now I get to be a hero just like I did before, but now everybody else gets to be a hero too. Instead of me saving the day for everyone else, for a bunch of mostly powerless folks who are looking at my leadership to pull them forward, now everybody gets to lead their role … while nobody gets to be a hero and save the day for others. That’s an interesting struggle. It removes some of the addictive quality of power, of being that guy at the top … and yet … how great is that for the organization when it’s full of heroes instead of resting on just one at the top.