Reinventing Organizations

Book review

A critical analysis of organizational development and a book on what the next paradigm of leadership within an organizational context might look like. The book draws on developmental psychology as framework to explain the development of organizations. It is an inspiring read painting a hopeful future for organizations focused on wholeness and self-managing teams.

Who is it for?

The book is a resource to help forward thinking leaders and CEO’s, team coaches, Human Resources and everyone interested in developing more self-managed organizations with less bureaucracy.

It’s an objective analysis written in an academic, yet conversational style. It analytically and objectively evaluates the structure and elements of organizations, yet touches on holistic concepts and spiritual practice. It’s for the more open-minded reader looking at the next phase of organizational development.

What’s inside?

The book consists of three parts, the first focused on drawing a comparison between organizational development throughout history and developmental psychology. The second part fleshes out what a Teal Organization looks like based on case studies from different organizations, and the final part looks at what conditions are needed for such an environment to exist and thrive.

It’s a practical handbook and analysis of how “developed” organizations looks like and how it is run.

The book starts with a history of organizational development, comparing each major shift in organizational development to a specific color, starting with red, moving on to amber, then orange, green and finally teal as briefly described below.

Red organizations are described as impulsive and mostly driven by fear, taking what is wanted as the impulse arises with not much thought as to the impact on others inside or outside the area of influence.

Amber organizations brought structure and thus repeatability to an organization, introducing roles for the first time in the history of organizations. This meant that an organization can continue operating without being dependent on a specific person or leader.

Orange, the dominant structure of organizations today, are compared to a machine, focused wholly on profits and results, viewing people as cogs in a wheel that need to be told when to do what. Even the name human resources are indicative of this perspective, viewing people as a replaceable resource to be managed. This paradigm brought accountability and the concept of meritocracy to organizations, allowing each person, regardless of their caste or background, to rise to the top of an organization.

Green organizations are typically identified in the non-profit sector, focused on values based leadership and consent by everyone in the team. They brought the concept of empowerment and diverse stakeholders rather than shareholders as the only important investor in an organization. It lifted up the importance of the workers and broke down the top-down hierarchy of the typical orange bureaucracy.

Finally, Teal organizations add an element of wholeness to organizations, balancing the orange vertical structure and green horizontal structure into a well-balanced self-managed structure where focus shifts from profit to purpose.

The book goes into extensive detail as to what the such organizations look like. It is filled with real life interviews with successful self-managing organizations of more than 100 employees and operating more than 5 years. Most of these organizations, even though their focus is on an evolutionary purpose, seems to be more profitable than the profit-focused orange industries. Case study after case study points to how accidentally the growth and profit seem to be when the focus is on something bigger than making money.

The focus of the book is comparing the structures and practices of orange organizations, our current dominant bureaucratic operating mode for managing organizations, and teal organizations, which bring an element of wholeness and self-actualization — the highest level in Maslow’s hierarchy of needs model — to organizations, reducing the layers of hierarchy towards self-managing teams with no, or at least very little, centralized support functions. Throughout the book comparisons are drawn between scientific studies and academic works, making it a believable read rather than a far-fetched ideology.

It also touches on what is needed for a transition and includes some failed transitions explaining the reason for the failure, mostly always directly related to the leadership team.

The writing style

The book is an easy and interesting read, written mostly in a conversational style, explaining concepts well and from many different angles.

Each analysis is summarized into tables, making comparisons between the different paradigms easy to comprehend and compare.

It is easy to point out what makes Teal organizations different to Orange organizations, clearly showing the additions and differences between the two and what Teal organizations add to the already successful age of Orange companies.

I like, I wish, I wonder…

The content is original, fresh and interesting. As an avid reader, it is not often that I stumble upon a book with entirely new ideas. This definitely feels “new” and unique with only a handful of organizations currently considered Teal.

The case studies and detailed recollections of the interviews with the different organizations are extremely helpful. Each section takes into account at least two or three different organizations to explain how they operate.

Similarities are drawn between different types of organizations, making the book accessible to everyone, not limiting the implementation to only a specific industry or demographic group.

The list of interview questions right at the end is an extremely useful resource, allowing anyone to evaluate and analyze the operating mode for their organization and might even be turned into a checklist.

The structure of the book is both an aid to reading and an impediment. The different functions are well-defined and broken down into different sections that are easy to find for the busy reader or someone looking for specific contents without having to re-read the entire book, yet, this also means that there are a lot of points that are repeated, making the last section of the book less interesting.

What’s missing for a more complete resource is more details on how to transition towards such an organization to enable more organizations to reach this state in the evolution of organizations. The majority of the book focuses on looking at experiences of existing Teal Organizations and although it does touch on the transitions, it is not in enough detail for organizations to action. A lot of the guidance provided is from the perspective of a leader who is already in this evolved state of leadership, making it inaccessible to a leader on a lower evolutionary state to understand what they can do differently to change.

The characteristics of a Teal leader is not explained or discussed and there are only end-states described, not a strategy for a successful transition.

Finally, I love the pay-what-feels-right model of pricing, as not only does it make the book more accessible to people who can’t afford expensive books, but more importantly, provides direct feedback to the author with regards to the perceived value of the contents. The more people are willing to pay, the more useful they find the contents.

Get the book here.

About the author

Frederic Laloux has an educational background in coaching and an MBA from INSEAD. He advises companies on how to run organizations in new ways, as explained in the book.

He is deeply fascinated with human development and it is the marriage of this fascination and his deep understanding of the inner workings of organizations as a result of years working as a consultant, that created this new paradigm in leading organizations.

Conclusion

Reinventing Organizations is an insightful, fresh read re-evaluating how organizations are structured and run. It introduces a more “whole” type of organization where there is an integration of soul and role, rather than a separation as is often the case in Orange organizations.

A must read for anyone that feels agile has reached it’s limits and looking for what is next.

The only software development company included in the case studies are Halocracy, with the difference between any agile book and this that the focus is on the organizational structure, not the method of operation.