Reinventing Organizations

From P2P Foundation
Jump to navigation Jump to search

* Book: Reinventing Organizations. A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness. Frederic Laloux.




"Most books on organizations are written for people hoping to find the secret key to gaining market share, beating competition and increasing profits. They offer advice on how to better play the game of success within the current management paradigm.

"Reinventing Organizations" comes from a different place. It is written as a handbook for people (founders of organizations, leaders, coaches, and advisors) who sense that something is broken in the way we run organizations today and who feel deeply that more must be possible… but wonder how to do it." (

2. Tom Nixon:

"In the book, Laloux describes a number of highly progressive organisations who have embraced three breakthroughs:

  • Wholeness: people bringing their whole self and full humanity to work, without wearing a mask.
  • Self-management: decentralised management without the formal authority of hierarchy or ‘bosses’.
  • Evolutionary Purpose: the organisation is seen as having a soul of its own, like an independent organism which evolves over time. Rather than being controlled by people, the people sense where it needs to go and follow it."



Full version of ZAID HASSAN's review of Frederic Laloux’s Reinventing Organizations:

"The question that this book explores is “What would healthy and soulful organizations look like?” Laloux’s direct answer to the question is “Teal Organizations.” The book articulates what Teal organizations are, their practices and detailed guidance for how to become a Teal Organization. Laloux makes the case for the suitability of Teal Organizations for the times we live in.

The first part (Pgs. 11-43) puts forward the theoretical foundation of the book, a “Historical and developmental perspective.” This presents a 100,000-year “history” of organizational development and the types of consciousness that gave rise to different organizational structures, leading to present times.

The notion of “Teal” is derived from the theoretical model at the core of the book, a model called Spiral Dynamics developed originally by Clare W. Graves, Professor Emeritus in Psychology at Union College in New York (1914 – 1986). Spiral dynamics was then further developed by Don Beck and Chris Cowan, is part of a body of work that has been christened “Integral Theory,” developed primarily by Ken Wilber, assisted by a small group of American academics, consultants and Organizational Development professionals.

Laloux makes the case the human consciousness evolved in stages, which are denominated by colour, each colour representing a stage of development that gave rise to an organizational culture “fit” for the epoch it arose in. Each stage of development or colour, therefore correlates with a particular time in human history and each “stage of development” then represents a certain “cognitive, psychological and moral” orientation.

The main stages the book concerns itself with are those that arose in the last 50,000 years, Red, Amber, Orange, Green, and of-course, Teal. Teal represents nothing less than “the next stage in the evolution of human consciousness.” Each stage is posited to also “transcend and include” the ones that came before, therefore a later stage does not lose the behaviours that come from earlier stages but earlier stages obviously cannot access the insights of later stages.

Laloux points out that these organizational forms did not die out with the end of each epoch but that they survive today in various organizations that operate from a “paradigm” such as Red (ie. the Mafia) or Amber (ie. Catholic Church).

In his explanation on the stages of development, Laloux explains that we “get into trouble when we believe later stages are “better” than earlier stages; a more helpful interpretation is that they are “more complex” ways of dealing with the world…Another way to avoid attaching judgment to stages is to recognize that each stage is well adapted to certain contexts.”

While Laloux (and many other SD practitioners) are at pains to point out that one stage is not “better” than another, a utilitarian judgment is being applied to each stage. The judgment is loosely based on the notion of being “well adapted” which can also be understood as “evolutionary fitness” or simply “fitness,” a central idea in evolutionary biology.

The argument is that each stage of consciousness can be thought of as one that was “fit” for it’s particular epoch and context. As the context changes, fitness means that “successful” evolution requires a shift from one stage to a different later stage more “fit” for the changed environment.

A shift of consciousness therefore allows for a range of behaviours more suited for the context or epoch we find ourselves in. Some behaviours can be thought of as “unhealthy” and some as “healthy.” Although in the book behaviours are not explicitly labeled as “unhealthy”, rather they are categorized by colour, which becomes a tacit judgment. The punch line of the argument for evolutionary fitness is that organizations embracing the most “evolved” stage of development (Teal) are more successful than ones mired in previous stages of development.

On the face of it, this argument is emotionally hard to refute. After all, who would argue for Red (Mafia, Street Gangs, Tribal Militias) or Amber (Catholic Church, Military, Most Government Agencies, Public School Systems) as a desirable destination for an organization? Try taking that to your board or staff. What is, of course, more likely to happen is that leaders determine the structures, processes and behaviours in an organization without being “aware” of what “stage of development” they are at (Like Pope Francis?).

Cutting through the layers of argument, the core argument in Reinventing Organizations is that Teal Organizations are more “healthy and soulful.” Teal is therefore the destination for any organization wishing to succeed in these complex times. Teal, in other words, is the new black.

The second part of the book (Pgs.53-225) describes the core practices and culture of Teal Organizations through a series of case studies. The twelve cases in the book consist of for-profit and non-profit organizations of various sizes from the United States and Europe (one is listed as also having 3 HQs, one being in South Korea).

The animating idea at the heart of Teal Organizations is that of “self-organization.” Laloux explains his vision, “Life in all its evolutionary wisdom, manages ecosystems of unfathomable beauty, ever evolving towards wholeness, complexity, and consciousness. Change in nature happens everywhere, all the time, in a self-organizing urge that comes from every cell and every organism, with no need for central command and control to give orders or pull levers.”

In contrast to seeing an organization as a living system would be, for example, seeing the organization as a machine (what Laloux would label as an “Orange” mindset common to many multi-nationals). The shift is therefore a shift from the organization as a machine to the organization as a “living system,” in other words to an ecosystem.

Based on his research, Laloux posits three “breakthroughs” that characterize Teal Organizations, with a chapter dedicated to each. These are (1) self-management “…a system based on peer relationships, without the need for hierarchy or consensus.” (2) wholeness “…a consistent set of practices that invite us to reclaim our inner wholeness and bring all of who we are to work” and (3) evolutionary purpose where “…members of the organization are invited to listen in and understand what the organization wants to become, what purpose it wants to serve.” Laloux uses case studies from twelve organizations to explore these three breakthroughs.

At the end of each of these chapters Laloux contrasts and summarises the “self-management” practice of Teal Organizations from Orange. So for example, the organizational structure of an Orange Organization is “hierarchical pyramid” and for Teal it’s “Self-organizing teams” and “When needed, coaches (no P&L responsibility, no management authority) cover several teams.” And so on for staff functions, coordination, (types of projects), job titles and job descriptions, decision-making, crisis management and many more. The lists are prescriptive to the point of specifying what the interior design of Teal firms should be like (“Self-decorated, warm spaces, open to children, animals, nature” with “No status markers”).

In the final chapter of this part of the book, Laloux summarizes what the organizational culture of a Teal Organization looks like, “With self-managing structures and processes in place, and with practices to pursue wholeness and purpose, culture becomes both less necessary and more impactful. The culture of the organization should be shaped by the context and the purpose of the organization, not by the personal assumptions, norms, and concerns of the founders and leaders.” (italics in original)

Finally, the third part of the book (Pgs. 235-293) extrapolates from the first two sections by laying-out a sort of “how to” guide for organizations that want to be Teal.

Paradoxically, given how the previous chapter ended (“…The culture of the organization should be shaped by the context and the purpose of the organization, not by the personal assumptions, norms, and concerns of the founders and leaders.”) the first condition required to be Teal seems to be not that different from “the personal assumptions, norms and concerns of the founders and leaders.”

The first “necessary condition” for creating a new Teal Organization is “Top Leadership” and the second is “Ownership” where “The founder or top leader (let’s call him the CEO for lack of a better term) must have integrated a worldview and psychological development consistent with the Teal development level.” And so on with owners and board members (let’s hope they’re not all male). In fact Laloux argues that, “these two conditions are the only make-or-break factors. No other parameter is critical to running organizations within the Evolutionary Teal paradigm….” (italics added).

The role however that “top leadership” plays (even though I thought there was no “top”?) is to “hold the space.” As a facilitator, I know something about what is required to “hold the space.” It requires putting one’s own beliefs about where a group goes almost entirely on the back-burner. This would mean that a “Teal-leader” leading a mostly “non-Teal” group would need to park their “Tealness”, which would mean the group probably operates from a non-Teal place.

Furthermore, Laloux recommends that for anyone wanting to grow a Teal Organization, “If possible they can strive to do without external investors, financing their growth through bank loans and their own cash flow, even if it means slower growth…or they need to carefully select equity investors who have integrated a Teal perspective.” (


Part I takes a sweeping evolutionary and historical view. It explains how every time humanity has shifted to a new stage of consciousness, it has also invented a radically more productive organizational model. Could we be facing today another critical juncture today? Could we be about to make such a leap again?

Part 2 serves as a practical handbook. Using stories from real-life case examples (businesses and nonprofits, schools and hospitals), this section describes in detail how this new, soulful way to run an organization works. How are these organizations structured and how do they operate on a day-to-day basis?

(Spoiler alert: it’s not the pyramid we know. There are no job descriptions, no targets, hardly any budgets. In their place come many new and soulful practices that create extraordinarily productive and purposeful organizations.)

Part 3 examines the conditions for these new organizations to thrive. What is needed to start an organization on this new model? Is it possible to transform existing organizations? And if so, how? What results can you expect at the end of the day?" (


Tony Chamberlain:

"Can we create organisations free of the pathologies that show up all too often in the workplace? Free of politics, bureaucracy, and infighting; free of stress and burnout; free of resignation, resentment and apathy; free of posturing at the top and the drudgery at the bottom? Is it possible to reinvent organisations, to devise a new model that makes work productive, fulfilling and meaningful? Can we create soulful workplaces – schools, hospitals, businesses and non-profits – where our talent can bloom and our callings can be honored?’

Frederic Laloux asks these questions in his book Reinventing Organisations. The answers, he suggests, are to be found partly in our history, which tells us that ‘with every stage of human consciousness also came a breakthrough in our ability to collaborate, bringing about a new organisational model’.

Laloux traces this development from 100,000 BC to the present, observing a gradual but accelerating evolution from simple ‘family kinships’ to ever more collaborative and powerful forms of organizations. He shows how at this moment we are at another historical juncture. The current management methods start to feel outdated, exhausted. And a new organisational model is emerging, a radical new way to structure and run organizations. He calls this the Evolutionary-Teal model (ET model). The ET model’s development can be seen as a response to an expanding global consciousness – a growing awareness that ‘the ultimate goal in life is not to be successful or loved, but to become the truest expression of ourselves . . . and to be of service to humanity and our world . . . [to see life] as a journey of personal and collective unfolding towards our true nature’.

Many writers and commentators refer to this expansion of global consciousness as the ‘rise of mindfulness’.

Laloux’s contribution is to have identified a dozen pioneering organizations that, responding to this shift in global consciousness, already operate on the new Evolutionary-Teal model. He has researched their ways of working, and shows how much these organizations depart from traditional management practices, and what a consistent new set of principles and practices they have developed instead For instance, the founders of these ET organisations all talk about trying to create workplaces that operate as 'living organisms' – workplaces that embrace the 'adaptive, flexible, self-renewing, resilient, learning, intelligent-attributes found only in living systems’ (Margaret Wheatley).

Laloux’s studies also revealed 'three breakthroughs' in the way that ET organisations focus on engaging their organisational community, three bold departures from management as it is told in business school today. These organizations demonstrated:

A commitment to an evolutionary purpose – collaborating with their people to unfold a future grounded in a shared purpose, Leaders in these companies assume they their organizations have 'a life and sense of direction of their own'; So rather than trying to pursue a predicted future through strategies, plans and budgets, they engage the whole organisational community to 'listening in to their organisation's deep creative potential... and understanding...the purpose it intends to serve'.

An emphasis on wholeness – an invitation for the ‘whole person’ to participate in a workplace where each person’s ‘emotional, intuitive and spiritual parts’ are welcome and respected and where the adoption of ‘social masks’ becomes irrelevant and therefore unnecessary. ET organisations create workplaces that 'support people's longing to be fully themselves at work and yet deeply involved in nourishing relationships [that build]...wholeness and community'

A preference for self-management – replacing the constraints of traditional hierarchical control systems with agile self-organising systems that are enabled by [collaborative] peer relationships. Laloux observes that 'People who are new to the idea of self-management sometimes mistakenly assume that it simply means taking the hierarchy out of an organization and running everything democratically based on consensus. There is, of course, much more to it. Self-management, just like the traditional pyramidal model it replaces, works with an interlocking set of structures and practices' to support new ways of sharing information, making decisions, and resolving conflicts.

There is much interest today in mindfulness practices in organizations. Even Wall Street banks are starting to offer their overworked bankers courses in mindfulness. Mindfulness is often used as a way to help people deal with pressure, stress and unhealthy corporate cultures. It is interesting to note that the practices for ‘evolutionary purpose, wholeness and self-management’, which characterise ET organisations, weave mindfulness deeply into the fabric of the organizations. So much so that few organizations researched by Laloux spend much time talking about the concept. Mindfulness is no longer an add-on.

The same holds true for another concept many organizations aspire to embrace: the learning organization. The evolutionary self-organising and self-managing nature of these organisations turns them into natural learning organizations. So much so that the none of these organizations spends any conscious effort to become a learning organization. This reminds us that mindfulness and learning are natural human conditions, part of our wholeness, and that organisations that evolve by listening to their communities will find these practices emerge quite naturally as part of their operating culture.

For those of us interested in how we can 'create soulful workplaces...where our talent can bloom and our callings can be honoured', Laloux's case studies provide a wealth of practical examples of how we can 'reinvent [our] organisations, to devise a new model that makes work productive, fulfilling and meaningful'.

When you read this book you will be encouraged to find that new organisations of this sort are emerging in diverse industries and across different geographies. Some organizations that Laloux researched are businesses and others are non-profits. Some are in manufacturing, others in food processing, retail, media and IT. There are hospitals, nursing organizations and schools. Some have hundreds, others thousands or even tens of thousands of employees. With all that diversity, these organizations share a great many common structures and practices, modeling new ways of engaging with their communities to unfold their future together." (

A fundamental critique from Zaid Hassan

Zaid Hassan:

"So what do I make of all this?

Unfortunately, this is a deeply problematic and flawed book.

The book is littered with instances where it contradicts itself, its contradictory stance on leadership being just one case. Take the metaphors used to describe each “stage of consciousness” – Red, with the example of the Mafia as Red organization, is “the wolf pack” and Green, with the example of Ben & Jerry’s is “the family.” It behooves me to point out that the Mafia is an organizational structure with family at its core, that wolf-packs are examples of a “self-organizing” “living system,” that are valorized in the book and that hierarchies exist in nature (ever heard the phrase “apex predator”?).

While these problems are tedious in the extreme, they are distractions from three more profound problems with the book, these are the problems of science, context and ethnocentricity." (

See the detailed treatment of these three arguments at


Beyond Hierarchy, but not a free for all

Frederic Laloux:

"Say “no more hierarchy” and everyone gets the wrong idea. We’ve grown up believing that there are only two choices. You can have hierarchy. Or, you can have a playground, a free-for-all, where everybody just does what they want.

The problem is that the equation “no hierarchy = flatland” can be, but is not necessarily, true. Holacracy and some other pioneering organizations have developed a third way. They have taken out the hierarchy of people and power (“I’m your boss so I can tell you what to do”) but kept hierarchies of purpose, complexity, and scope (one employee’s scope might be to think about the functioning of a whole factory, while an another’s scope might be focusing on one machine only).

The pyramid as a form of coherence is out, but it is replaced with other systems and practices. In most cases, the role of the boss is replaced by clever peer-based practices that allow a group of colleagues to make decisions on topics like investments, recruitment, appointments, evaluations, and compensation. Practice shows that with the right mechanisms, peers can hold each other to account very well, thank you, probably better than a boss ever could. In a team, when someone is not pulling his or her weight, will colleagues speak up? A few simple practices can help this to happen in a timely and productive manner in a group of peers. Contrast this with a hierarchical system: in most cases, colleagues are resentful of a lazy co-worker but don’t speak up and wait for the boss to figure there is a problem and do something about it.

Here is another common misperception. For some reason, many people naturally assume that “no hierarchy = consensus decision-making.” In principle, consensus sounds appealing: give everyone an equal voice. In practice, it often degenerates into a collective tyranny of the ego. Anybody has the power to block the group if his whims and wishes are not incorporated. Now it’s not only the boss, but everybody, who has power over others (albeit only the power to paralyze). Attempting to accommodate everyone’s wishes, however trivial, often turns into an agonizing pursuit. In the end, it’s not rare that most people stop caring and start pleading for someone to please make a decision, whatever it turns out to be.

Consensus comes with another flaw: It dilutes responsibility. In many cases, nobody feels responsible for the final decision. The original proposer is often frustrated that the group watered down her idea beyond recognition; she might well be the last one to champion the decision made by the group. For that reason, many decisions never get implemented or are done so only half-heartedly. If things don’t work out as planned, it’s unclear who is responsible for stepping in.

There are good reasons, then, to be suspicious of consensus. The thing is, Holacracy and a number of other organizations that have gotten rid of power hierarchies don’t work with consensus. They have found a powerful alternative—a decision-making mechanism that transcends both hierarchy and consensus. These decision-making mechanisms give everyone affected by a decision a voice (the appropriate voice, not an equal voice), but not the power to block progress.

Holacracy calls this mechanism “integrated decision-making” and uses it during “governance meetings,” which are meetings where people don’t talk about business issues, but only about roles and responsibilities. Anybody who feels that a role needs to be created, amended, or discarded (called the proposer) can add it to the agenda. Each such governance item is discussed in turn and brought to resolution. Governance meetings follow a strict process to ensure that everybody’s voice is heard and that no one can dominate decision-making. " (

The Paradox at the heart of the book: leaders are crucial in leaderless organizations

Tom Nixon:

"Laloux describes a paradox in these organisations. As they become more decentralised, the CEO or ‘top’ leader exerts less and less formal authority in developing strategy, and managing its people and operations. However, simultaneously they have to play a vital, centralised role in ‘holding the space’ to ensure its progressive, decentralised practices do not regress back to a more traditional organisational model. Further, there appears to be clear evidence that the CEO in all the progressive organisations are highly visionary leaders and play a key role in setting the vision at the highest level.

On the one hand, Laloux describes these organisations as being like ecosystems such as rainforests, where ‘there is no single tree in charge of the whole forest.’ But clearly, the role of the founder or CEO is quite unlike any other, and the task of holding the space is vital for the health of the entire system. So in fact they aren’t truly decentralised. It’s an awkward paradox that doesn’t quite fit Laloux’s model of the next generation of organisations.

The book contains two examples of formerly highly progressive companies which regressed to more traditional forms. In both cases, the original visionary founder or CEO who championed the progressive break-throughs had stepped away from the vital role of holding the space. One — from a software company — sold the business and gave up their authority to a new owner. The other — from an energy company — had been succeeded by a new CEO who was not able to fend off attacks to its practices by shareholders when relatively minor difficulties emerged.

Laloux’s most shining example of the three breakthroughs in action is in the healthcare organisation Buurtzorg in the Netherlands. The founder, Jos de Blok, has a critical role in the company. He exerts practically no formal power or control over the decentralised teams who deliver the services and innovate new ideas. It works incredibly well and Buurtzorg easily outperforms its traditionally structured counterparts in the healthcare sector.

However, de Blok’s presence is clearly strongly felt by all. Without even needing to codify a ‘mission statement’, there is a powerful energy in the organisation around his founding vision of transforming community healthcare by operating with a very different organisational model. De Blok is holding the space for his vision to emerge, yet allowing the thousands of employees to have all the power they need to make it happen, sometimes in ways de Blok would never have conceived himself.

Without de Blok’s direct control, they develop more and better ways to realise and expand his vision, growing Buurtzorg’s impact over time in ways he could never orchestrate as a traditional top-down leader. But he still appears to be holding the vision for the whole, at the very highest level. This is most evident through his practice of personally participating in the induction new recruits, so they truly understand the purpose (which is to realise the vision) of the organisation. Yvon Chouinard of Patagonia does this too. These founders know that if they have made the overall high level vision clear, they can set their people free to realise the vision autonomously, using all of their creativity.

Perhaps the third break-through is not quite ‘evolutionary purpose’, since the overall vision is being held by one individual, like Jos de Blok. What’s happening is more like evolutionary strategy— where the organisation does evolve like an organism to find ways to deliver on the vision and get better and better at what it does without the need for centralised formal control. It organically grows what’s working, and rejects what isn’t. Yet there’s still one person holding the vision for the whole.

This view fits with Peter Koenig’s research with hundreds of founders and entrepreneurs where in every case (including highly progressive, decentralised organisations using Sociocracy and Holacracy) when you look closely there’s always one individual holding the vision for the whole. When that individual is either not acknowledged, or they are not taking responsibility for the whole, trouble invariably occurs." (

More Information