Reinventing Organizations

Frederic Laloux's Reinventing Organizations is considered by many to be the most influential management book of the last decade. It has inspired thousands of organizations throughout the world to take a radical leap and adopt a whole different set of management principles and practices.

It's also a word-of-mouth phenomenon, propelled by a deeply caring and generous community of readers. Self-published with no PR, it has already sold 800,000 copies and has been translated in numerous languages.

More about the book's unusual journey in this interview with the author.

Part 1 of Frederic Laloux's Reinventing Organizations 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 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 make for 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? What results can you expect at the end of the day?

After the general election, which sorry was always going to disappoint, and against the backdrop of Greece and the Labour leadership election (written pre-Corbyn), political life feels pretty gloomy. But something pops up – hope always springs eternal. This time it is this book – and suddenly the sun comes out.  Each page radiates warmth and hope.  Here is why.

Reinventing Organisations (RO) is a cross between a spiritual self-help manual and the best of enlightened management theory – but both on steroids.  The book doesn’t say we won’t have to struggle, or that other things won’t happen - it does tell us that a different and better world is desirable and feasible – because it’s here.

The essence of RO is about the rise of self-management as the new and possibly dominant form of organizational structure, behaviour and culture.  This is not to say that self-management doesn’t have a past, rather that in a messy but obvious process of organizational evolution, self-management could now become acknowledged as the next paradigm for organizational models.

But the book isn’t just about organisation but the nature of humanity and how we think about ourselves and how we create things together.  In terms of its epochal sweep Laloux echoes Marx and others, but links what we think about ourselves and our relations to organizational form throughout history. But where Marx goes for the economic base determining the social super-structure – to which there must be at least some truth – Laloux looks at human behaviour and culture as the driving force of organizational form. There is no simple answer to how and why organisations develop as they do, but Laloux’s historic analysis is very helpful and chimes with the kind of thinking I think we are interested in.

He identifies five historic stages of development – all are present today in some form but there is a clear sense of evolution from ‘Red’ to ‘Teal’.

The issue of leadership is key – in particular the rejection of ego.  We are all leaders. It is about believing the best of people and building organisations accordingly – rather than the worse and basing the organizational form around that. It re-enforces the mantras that ‘all of us are smarter than any one of us’, the need to ‘meet complexity with complexity’ and the fact that there are ‘no short cuts to success’ – just an ongoing journey in which how we treat each other matters most. It is when we try to stop controlling each other and allow all talents and views to flourish that we reach the next stage of human development.

Laloux answers many of the obvious questions – how are conflicts, pay and quick decisions dealt with in self-organizing entities?  Most of the answers are common sense once you start to adopt the above principles. Laloux is clear though – this is not an anarchic free fall all or about reaching consensus – instead there is an ‘advice process’ – whereby any one can make a decision but it must be based on advice from all affected and any exerts in the area. All information is shared and there is no right answer – only the best answer given the context. All are obliged to intervene if they see something needs to be done. In Teal there tends to be no or few job titles.   Competitors are embraced to pursue purpose. We are guided by intuition and doing what feels right. It is about thriving in chaos.

Laloux uses a series of well-researched examples to help us understand the meaning of Teal. Buurtzorg, the Dutch community nursing organization, is now quite well known, as is the Berlin school ESBZ, which allows its pupils to be humans not exam fodder, but there are private sector exemplars such as Favi, a manufacturer in France, and Sun Hydraulics, based in the US.

The necessary conditions for being Teal is that owners and top leaders want to be or are Teal. Laloux believes that without these conditions evolution to this stage is impossible. Interesting in respect to many organisations we deal with?

The ‘benefits’ of becoming Teal are potentially enormous. Laloux uses the examples of penguins – ungainly and awkward on the land but fast and nimble in the water.  He quotes Joel Barker as saying “What is difficult or impossible in one paradigm is easy even trivial in another’.  Given the challenges we face this is the kind of leap we need to make. The fictional example that sprang into my small mind is Neot – the Keanu Reeves character in the Matrix – always a favourite reference point in Lawson’s head.

Are we on the cusp of a revolution in which we are only free to reach our potential when all are free to reach their potential too? The book dips into issues of the ‘soul’ and ‘spirituality’ – uncomfortable ground for some left rationalists – but essential terrain, I feel, to help find answers to the emptiness and anomie of modern life. As Laloux says “extraordinary things begin to happen when we dare to bring all of who we are to work’. P144

Instead of ‘hollow work’ we work with meaning to produce goods and services of meaning – the implications are transformative – the possibility of zero growth and closed loop economies, alternative consumerism and monetary systems, global communities, the notion of stewardship and the end of work as we know it.

Little if anything is said about the forces that could act against self-organising and little is said about ownership and RO in terms of whether employee, community or social ownership are preferable to for profit ownership? And frustratingly none of the organizations featured equates to membership organisation – can RO work where the affiliation is not related to work but to volunteering and activism? Laloux doesn’t tell us.

But that is being picky. I value the book for what it does do, not what it doesn’t. And what it does is give me the confidence that our instincts are right – people can be trusted and we have no choice but to let go and to cooperate, to trust, to experiment and be driven by the highest possible goals – that of the fulfilment for all humanity and the whole of the planet. A critical shard of light in a bleak world.

In striving to be more Teal than Red – I am grateful to Frederic for his work and humbled by the book’s insights and power.