Book Notes : Reinventing Organizations

Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness
by Frederic Laloux
My rating: 4 of 5 stars

This book looks at what it describes as the leading edge of organisational structure, what it describes as Teal organisations. For comparison it compares them against more established organisational structures which it describes as follows:

Red – Chief exercises power to keep people in line. The people are only together because of fear and thrives in chaotic environments and has a short term focus. Examples are mafia, street gangs etc. Similar to a wolf pack.

Amber – These follow a strict top-down command and control structure. Stability is values and this is implemented thought rigorous processes. As such, the future is the repeat of the past. Examples are the church, military, public schools, governments etc. Similar to an army.

Orange – The goal is to beat competitors, growing and making greater profit. Management is by objectives – allowing people control on how they do things but not on what they do. Examples are multinational companies etc. Similar to a machine.

Green – Within a classical pyramid structure but with a focus on culture and empowerment which allows people to be very motivated. Examples are culture driven organisations etc. Similar to a family.

This is in contrast to the primary focus of the book, teal organisations.

Teal – No pyramid structure, equality and a focus on individuals achieving their best. This is an evolution of the green organisation and can be clearly seen in comparison to Orange organisations.

Orange Teal
Organisation Structure Hierarchical pyramid Self Organising teams
No manager but a coach if the team need
Coordination Meetings at every level in the organisation, leading to meeting overload No executive team meetings
Coordination and meetings mostly ad hock when needs arise
Projects Heavy process to try to control and prioritise resource No project managers, people self-started projects
Minimum (or no) plans and budgets, organic prioritisation.
Staff function Lots of central staff e.g. HR, IT, purchasing, finance control, quality, safety, risk management etc Functions performed by the team or a voluntary task force
Few central staff only have advisory roles
Human Resources
Recruitment Interviews by trained HR personnel, focus is on fit with job description Interviews by future colleagues, focus on fit with organisations and with purpose
On boarding (mostly an admin process) Significant training in relactional skills and in company cuture
Rotation programs to immerse oneself into the organisation
Training Training trajectories designed by HR
Mostly skill and management training
Personal freedom and responsibility for training
Critical importance of common training that everyone attends
Job titles & descriptions Every job has a title and a description No job titles
Fluid and granular roles instead of a fixed role
Individual purpose (It’s not the organisations role to help employees identify their personal calling) Recruitment, training and appraisals used to explore juncture of individual calling and organisation purpose
Flexibility & time commitment Honest discussions about individual time commitment to work vs. other meaningful commitments in life
High degree of flexibility in working hours, as long as commitments are upheld
Performance managment Focus on individual performance
Appraisals established by hierarchical superiors
Appraisal discussions aims for objective snapshot of past performance
Focus on tema performance
Peer-based processes for individual appraisals
Appraisal discussion turned into personal inquiry into one’s learning journey and calling
Compensation Decision made by hierarchical superiors
Individual incentives
Meritocratic principles can lead to large salary differences
Self-set salaries with peer calibration for base pay
No bonuses, but equal profit sharing
Narrow salary differences
Appointments and promotions Intense jockeying for scarce promotions leads to politics and dysfunctional behaviour
Silos: every manager is king of his castle
No promotions, but fluid rearrangement of roles based on peer arangement
Responsibility to speak up about issues outside of one’s scope of authority
Dismissal Boss has authority to dismiss a subordinate
Dismissal mostly a legal and financial process
Dismissal last step in mediated conflict resolution mechanism
In practice very rare
Caring, support to turn dismissal into a learning opportunity
Daily Life
Office spaces Standardised and soulless professional buildings
Abundant status markers
Self-decorated, warm spaces, open to children, animals, nature
No status markers
Meetings (many) Specific meeting practices to keep ego in check and ensure everybody’s voice is heard
Decision making High up the pyramid
Any decision can be invalidated by hierarchical superiors
Fully decentralised based on advice process
Conflict (often glossed over, no conflict resolution practices) Regular time devoted to bring to light and address conflicts
Multi-step conflict resolution process
Everyone trained in conflict management
Culture restricts conflict to the conflicting parties and mediators; outsiders are not dragged in
Information flow Information is power and is released on a need-to-know basis
Secrecy towards the outside world is the default position
All information is available in real-time to all, including about the companies financials and compensation
Total transparency invites outsiders to make suggestions to better bring about purpose
Values (only on walls) Clear values translated into explicit ground rules of (un)acceptable behaviours to foster safe environment
Practice to cultivate discussions about values and ground rules
Reflective spaces Quiet room
Group meditation and silence practices
Large group reflection practices
Team supervision and peer coaching
Mood management Conscious sensing of what mood would serve the organisations purpose
Community building Storytelling practices to support self-disclosure and building community
Major organisational processes
Purpose (no listening process) Organisation seen as a living entity with its own evolutionary purpose
The concept of competition is irrelevant; “competitors” are embraced to pursue purpose
Practices to listen into the organisations purpose:
– Everyone a sensor
– Large group processes
– Meditations, guided visualisations, etc.
– Responding to outside prompting
Strategy Strategic course charted by top leadership Strategy emerges organically from the collective intelligence of self-managing employees
Innovation and product development Outside in: customer surveys and segmentation define the offer
Client needs are created if necessary
Inside out: offer is dfined by purpose
Guided by intuition and beauty
Supplier management Suppliers chosen based on price and quality Suppliers chosen also by fit with purpose
Purchasing and investments Authorisation limits linked to level in hierarchy
Investment budget steered by top management
Anybody can spend any amount provided advice process is respected
Peer-based challenging of tea’s investment budget
Sales and marketing Brands positioned to fit consumer segmentation (outside in)
Sales force driven by targets and incentives
Marketing as a simple proposition: this is our offer to the world (inside out)
No sales targets
Planning, budgeting and controlling Based on “predict and control”
Painful cycles of mid-term planning, yearly and monthly budgets
Stick to plan is the rule, deviations must be explained and gaps closed
Ambitious targets to motivate employees
Based on “sense and response”
No or radically simplified budget, no tracking of variance
Workable solutions and fast iterations instead of searching for “perfect” answers
Constant sensing of what’s needed
No targets
Environmental and social initiatives Money as extrinsic yardstick: Only if it doesn’t cost too much initiate
Only the very top can begin initiatives with financial consequences
Integrity as intrinsic yardstick: What is the right thing to do?
Distributed initiative taking, everyone senses the right thing to do
Change management Whole arsenal of change management tools to get organisations to change from A to B (“Change” no longer relevant because organisation constantly adapting from within)
Crisis management Small group of advisers meet confidentially to support CEO in top-down decision making
Communication only when decision is made
Everyone is involved to let the best response emerge from collective intelligence
If advice process needs to be suspended, scope and time of suspension is defined

The book highlights that the only way an organisation can transition to Teal is lead by the CEO and with support of the board – others within the organisation don’t have sufficient power to be able to achieve sufficient change to make the transition. If the support of the board or CEO stops then a traditional organisational (more Orange) process will emerge.

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