Resolving the awkward paradox in Frederic Laloux’s Reinventing Organisations

Frederic Laloux speaking at the RSA in London on the day I first met him

Update: May 2015. This article has been shared widely in the Reinventing Organisations community. I have made a few small revisions, and added comments directly from Frederic at the end.

The confession

Over dinner earlier this year, I confessed to Frederic Laloux that his best-selling book Reinventing Organisations was the very best business book I’d ever read that I couldn’t quite bring myself to recommend to others. There was something going on for me, where the stories in the book didn’t seem to match the conclusions.

When I met Frederic, I was hugely inspired, and we found tremendous common ground. Yet we couldn’t get completely on the same page. Perhaps that’s OK. After all, there isn’t necessarily only one ‘truth’ in the world. But I’ve spent some time reflecting on it and I think I’ve made some progress. I’m sharing this in the hope it’ll be useful to Frederic and others who, like me, are hugely inspired by his work. With this article as an addendum, I’d strongly recommend the book to anyone. And I’d welcome feedback to further the dialogue.

Reinventing Organisations

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.

The paradox

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 fit Laloux’s model of the next generation of organisations.

The evidence

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 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 of the organisation. Yvon Chouinard of Patagonia does this too. These founders know that if they have made the overall vision clear, they can set their people free to realise the vision autonomously, using all of their creativity.

Evolutionary strategy

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.

Thinking beyond organisations

At first, this can be an uncomfortable and disappointing idea for those who want to believe in truly decentralised organisations which are altogether free from individual authority over the whole. It can feel like a step backwards to Industrial Age command-and-control. However, that only occurs if we limit ourselves to thinking about organisations as distinct entities. There’s an even larger, decentralised effect taking place, far more interesting than the concept of individual decentralised organisations.

The edges of a human organisation are in truth highly blurred as the people ‘within’ them of course live their lives in large part outside the organisation as well. They are members of other organisations (even a ‘full time’ employee might be a member of a sports club for example.)

In their lives, people have a number of active initiatives, some of which are within, and some of which are outside of the organisation they primarily work for. Sometimes they partly manifest an initiative at work, and partly outside, like a software engineer contributing to an open source project.

There are also many relationships which an organisation relies on which extend beyond its edges. Laloux does a great job acknowledging this in his book: he explains that customers and other stakeholders are not separate entities or groups, but represent a web of connections and relationships that extend outside the organisation.

The global human ecosystem

A more comprehensive view is to consider all of humanity as one complex, interconnected network, not a collection of separate organisations. Within this network, everyone has the potential to create and hold their own vision — to live their own calling in life. We can all build relationships and connections, asking for help and support to bring our vision to life. Each of us can move between manifesting our own vision with help from others, as we also offer help to others doing the same.

With this lens, we can look at ‘organisations’ like Buurtzorg differently. We can start to let go of the idea that Buurtzog is a distinct entity, separate from the rest of the world. It can take some mental gymnastics to do this, not least because we are used to viewing organisations as separate entities in law. But consider for a moment that Jos de Blok is actually a node in the global human ecosystem. He has a vision so compelling that it attracts thousands of people who willingly connect and help him find ways to realise it. Buurtzorg is more like a story, an oral history, describing the ongoing process of bringing de Blok’s vision to life.

In this view of Buurtzorg, we do not in any way reduce anyone else’s opportunity to realise their own vision, so it’s the very opposite of command-and-control. Sometimes people may bring their own vision to life within de Blok’s vision, as part of the Buurtzorg story. Other times, if it does not fit, they can realise it outside. De Blok has created such a strong sense of what’s in and what’s out, he has to assert virtually no force.

Is Laloux wrong?

Does this mean Laloux is entirely wrong about ‘evolutionary purpose’? Absolutely not. In fact, the evolutionary effect is an even bigger phenomenon than he describes in the book. Evolution is alive on a global scale, as all human beings sense and create what wants to manifest in the world. At that scale, without drawing artificial boundaries around ‘organisations’ we do have something exactly like a decentralised ecosystem.

Laloux’s work is a huge leap forward in organisational thinking. I’m extremely grateful for it. Perhaps if organisations work with evolutionary purpose as Laloux sees it, individuals will gradually begin to expand their thinking beyond organisations, at which point the paradox in Laloux’s thesis falls away. I believe we can build on this foundation to further our understanding of human endeavours and the innate human capacity to work together to create meaningful value in the world.

The next leap

I believe the next leap forward is to transcend organisational thinking as we currently know it, and consider all of humanity as one interconnected ecosystem. This may be the consciousness, beyond Laloux’s ‘Teal’ which will kick in when the over-simplification of seeing organisations as separate entities becomes insufficient to create human endeavours which can respond to an increasingly complex, interconnected world.

We need to cultivate a mindset of abundance of opportunity for us all to find and live our own calling in life. We can do this in a network of relationships based on deep and compassionate human connections, and a quest to create meaning.

Comments from Frederic

Frederic has given me permission to publish the comments he sent me about this article. Here’s what he has to say:

I think I’m in full agreement with everything you write. It’s funny because I’ve had quite a few readers tell me that they find I overemphasize the importance of the founders and CEOs. You are the first one so far who tells me that I have underemphasized their role!

I can see how there is an allergy in ‘Green’ of thinking that someone has a special role, and I think it’s part of ‘Teal’/‘2nd stage’ to be comfortable with that thought again, and you brought it out beautifully by changing the perspective from the organization to the web of life, and which we are constantly the source for some things and attracted followers/sub-sources for others. It’s really a beautiful perspective that takes away our fixation from the organization. In writing the book, it wasn’t easy to try and deconstruct the heroic Orange leadership without falling into Green egalitarianism.

Now, in my innermost conviction, I see it somewhat spiritually and think that some forces that want some things to manifest use us, and in this case use the founders and leaders as sources — so in my perspective it’s not a heroic leader having a great vision, but a wonderful force choosing a leader to help in the manifestation process. I think you come pretty close hinting at something like this yourself.

Now that I’ve encountered Peter Koenig’s thinking, I have better words for what I called “holding the space”, which includes channeling the organization’s purpose. And it is remarkable how in self-managing organizations, even that role is light touch, at least for what I have seen, and you hint to that too. In pyramidal structures, so many decisions get made at the top, so a lot of sourcing is needed from the source, so to speak. In self-managed organizations, it’s amazing how sub-sources can suddenly open up their channels wide too. (Which carries the risk, in your perspective, that we no longer see any difference and believe that everyone is a source at the same level, which isn’t the case in my experience).

It sounds to me like we haven’t just built a bridge, but stand on the same land.