Frederic Laloux, in "Reinventing Organizations", a revealing book, at least for me, invites us to rethink the way we manage companies. The age of the internet, he says, has precipitated a new vision of the world that contemplates the possibility of a distributed intelligence instead of a vertical hierarchy. According to Laloux we should be able to invent a more powerful and meaningful way of working together if we would change our belief system.
In the first part of the book, the author makes an evolutionary analysis of the way in which humans organize companies, which I found colourful and insightful, and that is why I have prepared a summary (for more details I recommend going to the tables that are at the end of chapters 1.1 and 2.3):
Red Organizations - Impulsive
Based on fear; Appropriate for chaotic situations; the strongest leads and at the same time distributes the work; Remuneration is decided by the owner; Examples: the tribes, the mafia.
Amber Organizations - Conformist
Hierarchy and formality; Stability through rigorous processes; It's scaled by acquired rights; the future is a repetition of the past; Salaries are approved by regulations; Examples: the church, the army and all the civil service organizations.
Orange Organizations - Achievement
The goal is to beat the competition and achieve benefits and growth; Innovation is the key; what is to be achieved is controlled from above, but how to do it is left to the employees; it’s scaled by merit. The organization is conceived as a machine to obtain results; Remuneration is linked to objectives; Examples: almost all companies, especially multinationals.
Green Organizations - Pluralist
Within a pyramidal structure which is more or less classical, the culture of the project, the foundational values and the employees’ empowerment predominate; The organization is perceived as a family; Decision making is usually done by consensus; It’s scaled according to the adherence to the spirit of the organization after evaluations from those above, from the peers and from those below (360º). Salaries are debated by the collective management bodies. Examples: cooperatives (Mayo Clinic could be included) and NGOs (Possible could be included).
Teal Organizations - Evolutionary
These are organizations that are based on personal growth, vocational stimulation and collective intelligence. The model focuses on getting the best out of each employee. The teams are self-managed with supporting coaching but without hierarchies. Decisions are made by the advice method (each worker can make a decision in their area of competence as long as they have previously consulted with all those affected by that decision). There is no incentive to climb because there is no organization chart. Every employee defends their salary level in front of the group. All information is available to everyone, including financial and salary data; There is a formal practice of conflict resolution; There is a minimum core staff that’s essential for legal or technical issues, their support structures are never decisive. There is an equitable distribution of benefits.
Examples: Frederic Laloux explains the result of a research carried out in 12 teal-evolutionary companies, such as Buurtzorg Netherlands with 14,000 nurses, AES from the energy sector with 40,000 workers, BSO/Origin an ICT consultancy with 10,000 employees, Morning Star from the Food sector with 2,400 workers, and 8 other companies.
In teal-evolutionary companies there is no strategic planning, at least as we know it. There is no one to determine the direction of the company. Innovations can come from any of the workers, this is how, says Laloux, nature has worked for millions of years. Adaptations to the environment don’t come from someone’s mind in a distant office, they occur when an organism perceives a change in the environment and experiments to find the appropriate answer. Admittedly, it often doesn’t work, but when it does, that innovation can be a real breakthrough for the company's purposes. Instead of predicting and controlling (typical of orange-achievement organizations), teal-evolutionary companies try to feel and respond.
The three major advantages of the teal-evolutionary companies are: a) when power is distributed, the company becomes more powerful, b) when employees become involved, power becomes wiser, and c) things make more sense when people align their power and wisdom with the vital force of the organization. Although it is not a representative sample, the 12 teal-evolutionary companies analyzed in the book are very competitive in their respective sectors, especially Buurtzorg Netherlands (see post of July 3, 2017), of which I will talk more in next week's post.
In the books prologue, Frederic Laloux recalls a quote from anthropologist Margaret Mead that says: "Never underestimate the power of a few people committed to changing the world; in fact it’s the only thing that has achieved it." Finally, a tip: don’t hesitate to read the book; you’ll find the experience disruptive.