“REINVENTING ORGANIZATIONS” by Frédéric Laloux

On the advice of a friend working in a “freedom-form company”, I read “REINVENTING ORGANIZATIONS” by Frédéric Laloux.

Today, we all know people who are tired of their jobs, who want to avoid “burn out” or “bore out” and to do something that “make sense”, something that provides them with fulfilment in their daily jobs. The various ways we run companies have not adapted to the complexities of the world and do not fit people’s aspirations. We are increasingly disillusioned by organizational life.

Through this book, F. Laloux makes us explore a new organizational paradigm based on concrete examples and opens our mind on what can be done. This book provides a breath of “fresh air” that supports the feeling that “we can do better”: “it is time for change!”

What is beyond us? Are we living a new organizational paradigm?

Based on his research, F. Laloux highlights four main organizational steps the society has evolved through and details the emergence of a fifth paradigm

All these organizational stages coexist today, each addressing different situations and stakes. The Teal paradigm exists in some companies and is addressing more complex challenges of our actual world.

12 companies (diverse in terms of size, sector and country) have been deeply analyzed by F. Laloux. Their organizations are very inspiring as it is a success for employees while ensuring high financial results.

How are these organizations structured and how do they operate on a day-to-day basis? What is needed to start an organization on this new model? Is it possible to transform existing organizations and how? What results can you expect?

Structures and practices of Teal organization

The Teal organization relies on 3 key principles:

Self-management:

  • Relationships are based on Trust leading to Responsibility. As a consequence, time control systems disappear, reporting is reduced, company cars or supplies are available for all who need them, no time is wasted to control
  • Each employee is autonomous and should take decisions according to the organization perspective
  • Information is available for all to allow appropriate decisions
  • The decision making process is decentralized, based on the principle of collective intelligence. Decisions are taken through an inclusive process: all persons who may be impacted by the decisions are consulted before the validation of a decision. This process can also be applied for wage rise
  • Intermediary management and part of centralized support functions are removed. If there is regional management, it is acting as coach / advisor but does not decide / dictate. The absence of hierarchy does not prevent existence of a structure but it relies only on roles fulfilled and natural leadership.
  • Each employee fulfils technical, operational but also management and support functions roles (recruitment, training, budget monitoring, quality, security…), split between the different members of the team
  • No more executive committee meetings; meetings are organized on an ad-hoc basis, when required.
  • System is based on peer relationships (for individuals appraisals, salaries increase…)
  • The activity is monitored according to the needs, directly by the concerned stakeholders. There is no longer a need to plan / produce long term roadmaps or budgets. People share information and adjust the organization according to the needs as a living organism will do (project management is simplified…)
  • When the teams are not on the same geographical place or within big companies, social networks and collaborative systems can be very helpful. Their usage is not imposed or controlled but is spontaneous

Illustration:

  • Buurtzorg is organized in teams of 10-12 nurses working without a manager. Regional coach is supporting 40 to 50 teams but does not have hierarchical power. Meeting with DG is every quarter. Support function only represents 30 persons for 7000 nurses
  • In FAVI, the whole 500 employees are structured into 21 autonomous teams called « mini-factories » without any intermediary between them and the director. Representatives of each team meet regularly to analyze the workload and some volunteers can change temporary from team and support another. This coordination is very efficient and allows very quick adjustment
  • In AES, only 100 persons out of 40 000 employees are in charge of support function
  • In Morning Star (first tomatoes transformation company in the world), employees decide themselves of their wage rise according to what they think they deserve based on their peer feedbacks
  • Sun Hydraulics is leading hundreds of projects at the same time without predefined budget / roadmap / KPIs / reporting. Projects are managed on an organic way, with real time decision according to the needs and means / priorities are adjusted on a continuous basis.

Wholeness:

We are all equal but the value of a group is based on the diversity of its members. The workplace is richest if all members can contribute in their distinctive way, according to their differences in education, backgrounds, interests, skills… In Teal organization, everybody is encouraged to develop his authentic part, to express themselves without a mask, with all their characteristics (rational / cognitive / physical / intuitive / emotional) allowing more creativity, energy and better use of talent

This requires clarifying collectively the vision of people at work to set-up a protective, safe and caring environment. Examples:

  • Absence of job titles and descriptions to allow individuality to shape roles
  • Corporate values translated into explicit ground rules, focus on culture building
  • Individual and collective reflexive spaces (ex. one minute silence at the beginning of a meeting, day of silence, meditation, collective intelligence methodologies…) to access to the humanity of each of us and implement common language and empathies
  • Adaptation of certain practices such as meeting conduct and conflict management. All employees need to implement listening technics to understand the reasons of tensions and as a consequence find how to resolve them
  • Integration of storytelling practices to invite people reveal what is important for them
  • Problems are an invitation to learn and grow, failures are discussed openly and everyone can learn from them thanks to feedbacks and respectful confrontation

This eases highly the relationship as the person does not need to please, to dominate or prove something to the others. The freed energy is used to pursue the fundamental objective of the company

Illustrations

  • RHD has formalized a Bill of Rights and Responsibilities for Employees and Consumers, developed collectively, making difference between conflicts related to constructive confrontation and hostility demonstration which is unacceptable
  • In Buurtzorg, before each meeting, somebody is designated to « hold the bell ». When somebody is hostile and not constructive, the appointed person can ring the bell. The meeting can resume when the bell is not ringing anymore. Today, the bell is almost not used anymore as people have changed their attitude

Evolutionary purpose:

The objective is to switch from “predict & control” to “sense & respond” logic considering the organization as a living organism

As the future is uncertain, trying to predict and control is pointless. Strategy emerges organically from collective intelligence of self-managing employees. The objective should be clear but the plans are not designed for long term success

Within a lot of organizations, the fear is leading the choices and decisions. In Teal organization, the decisions are led by the fundamental purpose of the organization. When the organization follows the fundamental purpose, the life brings opportunities. Profits become a consequence and not a driving force. The strategy is no longer defined by senior management but it is being defined on a continuous basis through all the decisions taken by the teams and the experimentations done. The final decision-maker is reality

Accordingly, instead of defining long term budgets and roadmaps, the role of leaders is to observe where the organization is heading towards and adjust progressively

As the evolution is an integral part of the daily functioning of each entity of the organization, change management is no longer required

Illustrations

  • In Buurtzorg, when a team of nurses decided to do a preventive action with a physiotherapeutic to prevent older people to fall and that other teams were interested in this experience, the director did not decide if it was aligned with the plan and did not ask for a roadmap and a forecast but he told the team to develop this project with other interested teams to see if it was working 

Orange organizations mainly focus on objectives, tangibles aspects of the organization (structure, procedure, practices…). Green organizations focus on subjective aspects as corporate culture, motivations, and beliefs of individuals. Teal organizations reconcile all these aspects leading to stability of the system allowing constant adaptations to a complex environment.

If this organization is so awesome, then why aren’t all organizations “Teal”? What are the conditions supporting creation and sustainability of such organization?

Conditions of emerging Teal organization

Two conditions are required:

  1. Consciousness degree of the CEO. She/he needs to embody the Teal approach and to be the model, get rid of her/his ego, be humble, trustful and authentic to convince colleagues to take risks
  2. Adoption of a Teal vision by the shareholders so that they do not oust the CEO when faced with the first crisis

Then, work has to be done on culture, mentality (or mindset), and behavior so that the vision becomes tangible. Employees need to adapt themselves to the organization which requires effort and support. Transition is particularly difficult for intermediary managers who lose their control on the others and should reinvent themselves to be less controlling or power hungry

To switch to this new organizational model, four main approaches have been identified once the awareness is raised. This approach can leverage techniques of collective intelligence (e.g. Appreciative Iniquity, U theory) to increase positive energy

  1. Test and Learn: deploy within a department, adjust according to the results and deploy in the whole company after having generated interest
  2. Develop an ad-hoc entity and allow people to be transferred to this entity. The idea is to develop this new entity and progressively remove the other entity
  3. Redesign from the bottom to the top based on volunteering to define new structure and functioning ways
  4. Introduce one new practice within the whole company to create the momentum and facilitate adoption, seeking consistency, not perfection

And now? 

Examples of Teal organization show outstanding results highlighting that new perspectives are possible. F. Laloux concludes with projections and speculations on social topics such as education, social link, conception of work to name a few.

All these companies can inspire us to create a better environment to live in. This book gives insights but as every organization is unique they will need to find the path that best suits them. And we, as consulting firms need to support companies to take part to this evolution towards the new paradigm.

In banking industry, this organization model may be very difficult to apply to the whole structure as these companies have relied for decades on very strict compliance/risk rules and legacy systems/processes/organizational mindsets. Therefore, it may be easier to develop a new bank based on this model rather than completely revolutionizing the existing ones. However, we can help spreading practices within some specific and relevant departments / teams, in particular through collective intelligence methodologies.

 

Don’t hesitate to comment or provide feedbacks following your reading

Note: If you don’t have time to read the full version, an illustrated summarized version was also published