What are Teal organizations?
The coronavirus pandemic is forcing businesses across a myriad of industries to rapidly adapt, in many cases expediting modernization of capabilities central to communication and execution. Firms have pivoted to digital collaboration and distributed work systems, such as Slack, Microsoft Teams, AWS Chime, Cisco WebEx, Zoom, and, in some cases, augmented reality. Yet beyond digital retooling, the pandemic has opened reconsideration of widely held management norms, hinting at the death of the office, and bringing to the forefront discussions of purpose, empathy, and human needs.
While changes to the technology are apparent (who thought SNL could so quickly shift to Zoom!?), the deeper transformations of the pandemic pertain to acceleration of change to corporate values, structure, and process. As companies face market uncertainty and mandates of physical distancing, most are also shifting to distributed and flattened processes and architecture to enable responsiveness. Many organizations are also recognizing that their front line — nurses, delivery drivers, teachers, line operators, doctors, therapists, retail salespeople — are as critical to the success of the organization as their senior executives. In short, the shifted context of the pandemic provides an acute focus for many firms on the welfare of the individual at the same time that technology increases flow of information, individual empowerment, and a shift to a networked nature of work. So, while the shift to digital and ‘Zoom era’ has arrived like a tsunami, the tide is also quietly rising on processes that enable greater self-management, expectation of trust and empathy, and capable of tapping the inherent talent and purpose people — in, other words, more Teal.
So, What is a Teal Organization?
Coined by Frederic Laloux in 2014 in his inspiring book Reinventing Organizations, Teal represents an evolved organization characterized by self-managed teams, low ego, an evolving individual and corporate purpose. Teal organizations don’t lack structure, but unlike prior generations of organizational design, the Teal org chart steps away from a classical hierarchical ‘pyramid’ shape and accepts a more organic design based on principle, purpose, and negotiated norms. In many cases, these organizations adapting and overlapping social networks that seeks to maximize engagement of the individual while also providing agency, norms, and processes to redefine organizational structure as fit-for-purpose and based on employees opting into team structures.
Laloux took a multi-discipline approach, examining organizational designs and processes across industries and from analytical frameworks that included psychology, economics, history, and sociology. He builds on the stage models of development by psychologist Jenny Wade and theorist Ken Wilber’s (integral theory), which traces organizational evolution. Prior to the advent of Teal organizations in the last 20–30 years, modern organizations exhibit aspects of hierarchy, and each of the organizational stages inherit key characteristics from previous generations while adapting to a more dynamic, pluralized set of market conditions, information flow, and set of expectations. Teal, to some, represents an higher consciousness, one that accepts internal and external change.
Laloux observed that Orange organizations, developed since the industrial revolution and emphasizing scientific management, reflect the common form of corporation today. Orange corporations exhibit aspects of a meritocracy, but advancement is typically based on meeting a measure established by a supervisor, and there’s usually strict top-down coordination of the organization characterized by extensive meetings and use of extensive project planning across specialist organizations. Because of these characteristics, Orange organizations are characteristically static — shifts in structure & process take often herculean efforts to actually take effect (and often involve leveraging outside knowledge like management consultants). Importantly, very little consideration is extended to an individual or even to organizational purpose, or the linkage between the two and the firm or institution’s purpose and identity. Advancement requires competition for a limited number of successively more senior positions creating, as a byproduct, a number of ‘shadows’ and negative products that, ironically, serve to limit human potential. The creation of culture, discipline, and complex human resources policies serve, in part, to ensure the functioning of a just hierarchy.
By comparison, Teal organizations are guided through both a sense of organizational and individual purpose, make decisions through advisory processes, and where ‘wholeness’ — bringing individual purpose and identity to work. Processes place shared purpose at the center. Decision rights are assignable on the basis of norms, negotiation. HR processes certainly don’t disappear but are also shared responsibility across the broader workforce. Self-managed organizations are not unmanaged organizations, rather they might be idealized as the next rung of individual buy-in and group productivity to be realized.
While Teal Organizations may seem radical to some, Laloux’s conclusions share similarities with other, more widely mainstreamed studies and management practices popularized by such luminaries as sociologist Dr. Ron Westrum’s generative organizations, Google’s study of high-performing teams, the work of Amy Edmonson on psychological safety, and the focus on teams and self-management in Agile, Lean, and DEVOPS practices popularized Eric Ries, Dr. Nicole Forsgren, Gene Kim, Jez Humble. Laloux also exposes tensions around managers and workers reflected in core management theory, such as the works of the eminent Peter Drucker. The common threads of these works include enabling productivity, inclusion, and innovation through better linking objectives and the inherent talents of the workforce, achieving a balance of inner and outer forces.
That said, at the risk of oversimplification, a core difference tends to be that some of these approaches focus on a refinement of hierarchical organizations to make effective by achieving outcomes of employee empowerment, incorporating a wider range of stakeholders, and controlling the ‘shadows’ of hierarchical organizations. In truth, these organizations exhibiting these practices may represent the practices closest to an ‘ideal’ Teal. While Laloux presents several firms as Teal Organizations, including Patagonia, The Morning Star, and Zappos, most of these companies have not firmly left in their wake all aspects of hierarchy and rights devolved from shareholders. Instead, they represent companies and organizations that have opted ‘in’ for values and processes that support an evolving purpose and decision rights while enabling inclusive, self-managed teams premised on expectation of individual responsibility and empowerment — trends consistent with distributed teams. So, while the pandemic may not herald the ‘absolute’ conversion to Teal, a general principle around disruptive change (as expressed by the incomparable Clayton Christensen) is wholly dependent on human behavior; and as our working behaviors have adjusted to cope with this pandemic, we may likely see organizations adjust in the face of the confluence of an emphasis on human welfare, existential pressure, and digitalization to accelerate towards Teal-like characteristics.
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All opinions expressed in this piece are solely those of Connor Lott & Jason Turse and are in no way affiliated with AlixPartners, the US Navy, Department of Defense, or any other firm. We don’t know or understand the strategic outlook of any firm, so any information or opinions contained on this piece or on other platforms are not intended to constitute a specific recommendation. This writing is intended to share opinions, not to persuade.
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