Review by Harold Jarche
What is a “Teal Organization”? Frédéric Laloux, in Reinventing Organizations, uses a colour scheme, based on Integral Theory, to describe the historical development of human organizations: from primitive Red to achievement Orange to pluralistic Green to evolutionary Teal. Laloux lists three breakthroughs of Teal organizations:
- Self-management: driven by peer relationships
- Wholeness: involving the whole person at work
- Evolutionary purpose: let the organization adapt and grow
The book describes in detail how Teal organizations work and how they can be initiated. Laloux studied many organizations and through observation and engagement deduced what makes them work. These include various organizations, such as AES, Buurtzorg, FAVI, Morning Star, RHD, Sun Hydraulics, and Patagonia.
The author suggests that the world needs more Teal organizations so we can evolve as a society, fulfill our individual needs and perform better in our work. “First we shape our structures, and then our structures shape us” attributed to Winston Churchill. Geary Rummler stated that if you put a good person in a bad system, the system wins every time. Our organizations influence our behaviours, as they compose a significant part of our social networks, and creating better organizations will give us the necessary “technology” to further develop and overcome the challenges we face.
This book is one of the most important management books to read this decade. It articulates the framework needed for better organizations that can grow and adapt to complex environments. This is not as difficult a read as The Wealth of Networks (still worth reading), but it is rich with anecdotes and descriptions of what works in creating the next level of organizational development. Here are some examples of self-management:
Job Title: No job titles
Crisis Management: Transparent information sharing. Everyone involved to let best response emerge from collective intelligence.
Role Allocation: No promotions, but fluid rearrangement of roles based on peer agreement. Responsibility to speak up about issues outside of one’s scope of authority.
Performance Management: Focus on team performance. Peer-based processes for individual appraisals.
This book opened my eyes to how well self-managing organizations can function. The examples in this book should help to change anyone’s mind about the need for command and control, or a focus only on the bottom line. These are not necessary to be successful, as proven by the examples from multiple sectors and sizes of organizations.
One of Laloux’s conclusions is on the necessary conditions for success with the Teal model. It comes down to two main factors:
- The CEO must drive the change toward self-management
- The Board must believe in the change and support the CEO
Organizations can adopt Teal practices, but they will unlikely become whole, self-managing & evolutionary organizations without meeting these conditions. So the key role of a CEO is in holding the space so that teams can self-manage. From the stories in this book, it’s clear this is a difficult task in our short-term, market-driven economy, but we are entering the network era and it is possible to use new organizational models to achieve better results.
I strongly recommend Reinventing Organizations. Read it, talk about it, re-read it. It is an excellent background resource to Organize for Complexity, explaining 21st century organizational transformation in .