This article discusses Frédéric Laloux's Reinventing Organizations and explores whether an emerging organizational model will make companies more change-ready. I present Laloux's theories and findings along with my own insights, having studied Organizational Theory and Design, Organizational Behavior, Human Resource Management, and Managing Complex Change Initiatives at the graduate level at NYU. * If you are limited on time, scroll to the Conclusions and Takeaway sections at the bottom.
BACKGROUND
While this is not a book summary, there are elements of Frederic LaLoux’s theory presented in Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness, that are important to understand for context. Laloux presents a theory that a new model of organizational structure is emerging, called Evolutionary-Teal or "Teal". The Teal model banishes the fixed hierarchical structure found in many organizations and adopts guiding principles of self-management, wholeness, and evolutionary purpose, to create a company that resembles a “living organism”. I will be focusing mostly on self-management for the purposes of this article.
First, are you wondering where “Teal” comes from? LaLoux links societal junctures throughout history with different organizational models and assigns them each a color:
Red (impulsive) is marked by the change from clans with no formal organization to the development of chiefs enforcing “social order, through brutal force if needed”. Key Breakthroughs include division of labor and top-down authority.
Amber (conformist) is marked by the “leap from proto-empires to the age of agriculture, states and empires, bureaucracies and organized religions”. Key Breakthroughs include replicable processes and a stable organization chart.
Orange (achievement) is marked by the change in worldview from a “fixed universe governed by immutable rules of right and wrong” to a complex system whose natural laws can be investigated further. Key breakthroughs include innovation, accountability and meritocracy.
Green (pluralistic) is marked by awareness of the the harm caused by the “materialistic obsession, social inequality, loss of community, and harm inflicted to nature” of the Orange model. Key breakthroughs include empowerment, values-driven culture and stakeholder value.
Teal (evolutionary)… Still emerging, it is marked by self-management, wholeness and evolutionary purpose.
[ LaLoux adds much more to this framework by way of metaphors, examples of these types of organizations in our societies throughout history, and examples of how the “archetype” manifests in different business functions (incentives and rewards, management tactics, etc.). I encourage anyone interested to read the full text! ]
Laloux presents research on 12 companies with Teal characteristics and posits that the implementation of Teal practices may be a step toward creating organizations that are more soulful, more fulfilling to the employees and to the company’s mission, and therefore, more successful.
MY QUESTION IS- WILL TEAL ALSO INCREASE CHANGE-READINESS?
Given the impact that technological advancements, globalization and trade regulations have had on business, there is a growing need for organizations to address an uncertain external environment with change initiatives. As an HR professional, it is important to approach change management by helping organizations become more autonomous in adapting to future change. So, could a new level of human consciousness facilitate the re-thinking of organizational structures and management practices to create workplace cultures that are inherently more change-ready?
In describing characteristics that differentiate Teal organizations, Laloux identifies the concept of “taming the ego”:
...we start to disidentify from ego. We learn to look at our ego from a distance and often realize how our ego’s fears, ambitions, and desires have been secretly running our lives. We can learn to minimize our need to control... (Laloux, 2016, p. 38).
Laloux’s idea of taming the ego is relevant regarding the impact of the human psyche on change-readiness. The Bridges’ Transition Model, a well-known model used for facilitating change, teaches us that more than preparing for a change itself, an organization must be prepared for the transition associated with that change. Change consultant, William Bridges, describes three stages of transition: Ending, Neutral Zone and New Beginning. The ego plays a role in all three phases and can be a significant roadblock in the Ending phase. We know that people can experience an entire emotional cycle within the ending phase alone, mirroring Kubler-Ross’s Grief Cycle. Negative emotions, such as denial, fear and anger can be barriers during a transition and ultimately can prevent change from successfully taking effect in the workplace. If the ego is responsible for these negative emotions, and Teal organizations cultivate individuals who are adept at “taming” their egos, it follows that Teal organizations would be positioned to more easily address and mitigate some of those roadblocks in the Ending phase, allowing for a smoother transition and change process altogether.
Next, Laloux explains that many organizations operating with Teal principles describe themselves as “living organisms”. This relates to open systems theory, which positions organizations as constantly interacting with a complex external environment. Laloux introduces the Teal principle/practice of self-management and its relationship to complexity by explaining that fixed hierarchies, or “pyramid structures”, fail in complex systems:
When complexity increases, the pyramid breaks down. The few people at the top, however smart they are, don’t have enough bandwidth to grasp and deal with all the complexity (Laloux, 2016).
Self-management aims to address this failure by replacing fixed hierarchies. While the specific practices and applications of self-management differ from one organization to the next, a big takeaway is that the employees become skilled at self-organizing and, importantly, are empowered to make their own decisions. Studies of effective HR management emphasize the importance of enabling employees to do their jobs successfully. This means trusting and empowering employees while providing them with tools and resources, but this can also mean getting out of the way of employees who have proven to be competent and responsible. I am confident that anyone reading this has experienced first-hand how unnecessary bureaucracy can slow down, undermine or even completely block progress on a project. A survey by Harvard business review also found:
More than a third of the U.S. labor force now works in firms with more than 5,000 employees—where those on the front lines are buried under eight levels of management, on average…Meanwhile, productivity growth has stalled. From 1948 to 2004, U.S. labor productivity among nonfinancial firms grew by an annual average of 2.5%. Since then its growth has averaged just 1.1% (Hamil & Zanini, 2018).
Self-management puts more power back in the hands of employees to seek out information they find to be crucial to their own decision-making and enables more immediate action. I believe self-management creates a culture with more trust and empowerment and has a positive impact on productivity. Together, these can lead to more employee engagement and perhaps make it easier to obtain buy-in at all levels for a change effort.
Self-management has another positive implication on change-readiness. Based upon employee interviews that Laloux references, it appears that self-management fosters a continuous learning environment. According to Laloux, organizations practicing self-management often have advice-seeking systems in place, rather than strong hierarchical reporting relationships:
I sat down with Jayla from finance, who helped me review my calculations and gave me advice from a financial perspective. And Janet has a lot of expertise in negotiations. I learned a great deal there too (Laloux, 2016).
This encouragement of advice-seeking arguably cultivates a collaborative and innovative learning environment, which, adds to an organization’s adaptive capacity (Shook, 2010).
Let us look at an example of a Teal healthcare organization. Buurtzorg, a Dutch home-care company frequently mentioned by Laloux, stands out with regard to the success achieved through the application of Teal Principles. Not only did Buurtzorg undergo a revolutionary change by adopting self-management internally, they they took the idea further by reinforcing the principles of autonomy with their customers. By applying these principles to staff and clients, Buurtzorg increased efficiency that led to better financial outcomes while improving their patients' health.
Laloux mentions that one of the first things Buurtzorg nurses do with their patients is sit and have coffee with them. The nurses at Buurtzorg create relationships with their patients that allow an assessment of where the patient is mentally and emotionally, not just physically. In my opinion, this practice provides them with the necessary context that allows the nurse and patient to be on the same page about moving forward. It seems that the nurses understand their roles to be holistic change agents in the lives of their patients, rather than just practitioners treating a specific ailment. Additionally, Laloux refers to an Ernst and Young study that found that Buurtzorg’s nurses end up needing to use less than 40% of the hours doctors recommended to patients, 30% of emergency hospital intakes are avoided and Buurtzorg saves the national social security system hundreds of millions of euros each year (Laloux, 2016). This is to say that although one might suspect having coffee with every patient is too time consuming and would take away from productivity and profits, the opposite is true.
We think a lot about responding to the external environment, but in this example, Buurtzorg is influencing the external environment rather than simply reacting to it. This characteristic undoubtedly positions Buurtzorg to be more agile, adaptive, and thus, readier for change.
CONCLUSIONS
When examining the relationship between human consciousness, organizational models and structures, and change-readiness, findings from Laloux’s studies and our knowledge of organizational behavior and theory suggest that organizations who reach a new level of consciousness described by Laloux can be more change-ready. Laloux identified 12 Teal organizations that differ in size, non and for-profit classification, and the industries they inhabit, yet they have all seen success. Some of the lessons learned from these organizations are that self-management has enabled their employees to be empowered, adept at self-organizing, proactive in interactions with the external environment and constantly learning. These factors, along with the other principles of wholeness and evolutionary purpose contribute to culture embedded with an adaptive quality. These findings lead me to believe that organizations operating with Teal principles will naturally be more prepared to take on complex change.
TAKEAWAYS FOR HR
First, it is unrealistic to think that one could walk assertively into any organization and say, “Let’s flatten the whole company, let all of the employees make their own decisions and tell everyone that they have a responsibility to be continuously learning outside of their normal job functions”. Changes of that magnitude do not successfully happen quickly. Employees tend to act in their own self-interest and resist the unknown. It is more realistic to use the lessons learned from Teal organizations as a vision or a goal to take small steps toward over time.
Organizational leadership should mentally shift toward Laloux’s ascribed Evolutionary-Teal consciousness and take incremental actions on an ongoing basis that align with that vision. The goal should be a culture where
Employees are encouraged to continually examine the external environment and learn relevant information to the organization,
Employees are trusted and empowered to independently decide what is best within their areas of expertise.
Colleagues are open resources of information
Supervisors act more as mentors than controllers
Specific applications of this theory in current organizations can be found in Frédéric LaLoux’s book, which is available in a book and eBook format, and an illustrated, abridged version for a suggested donation of any amount.
Thanks for reading!
Thank you to Thomas Thomson for introducing me to this book, and Dr. Michael Valentine for his insights on managing change.
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