Looking to create more innovative, purposeful, and soulful businesses? Get inspired by Teal Organizations and start re-inventing yours.
Modern organizations have brought sensational progress, fighting illnesses, developing economies, and creating wealth. Yet, traditional management strategies and organizational models get outdated and fall behind. To stay on track, we need new forms of organizations that would meet the requirements of our epoch.
But the future is already here. There are organizations that have already taken a step (or rather, a leap) forward. These are Teal organizations – companies that break the old rules, take a risk to make experiments, and achieve a competitive advantage, becoming extraordinarily successful.
Below you can read what Teal organizations are about and why they’re so valuable.
Teal organizations represent evolutionary companies with an efficient organizational model that exclude traditional management elements like hierarchies, thoroughly planned strategies, and quarterly goals.
These companies are extremely human-centric. In a Teal organization, employee well-being and satisfaction are just as important as productivity and profit. Teal companies are characterized by power decentralization, self-discipline, natural hierarchies, and a high degree of employee responsibility.
The concept of a Teal organization was created by Frederic Laloux, a former McKinsey & Company executive, and introduced in his book “Reinventing Organizations”. Laloux describes organizations in the context of human development, borrowing the color paradigm of human consciousness evolution, created by the philosopher Ken Wilber.
Laloux model of organizational evolution includes 5 steps:
At this stage of consciousness development, the world functions through the use of power. If you have power, you can satisfy your needs. To do so, people resort to violence.
The key breakthrough of the red paradigm is the division of labor.
The metaphor of “red” organizations: a “pack of wolves.” A chief of such an organization is like an alpha wolf that surrounds himself with family members or buys people’s loyalty to keep his status.
Modern examples: mafia and street gangs.
People already understand the principle of cause and effect, as well as the linearity of time, seeing the future as a repetition of the past. Everyone strives for acceptance, and it means everyone highly depends on the opinion of others.
Amber organizations brought about two major breakthroughs – the ability to make middle- and long-term goals and to create stable structures, characterized by top-down command and centralized control.
The metaphor of amber organizations: army.
Modern examples: army, government agencies, and the Catholic church.
The world is seen as a complex mechanism that can be investigated. The better you can understand this mechanism, the more you can achieve.
Orange organizations are focused on profit and growth. The key breakthroughs are innovation, accountability, and meritocracy.
The metaphor of orange organizations: machine.
Modern examples: multinational companies and Wall-street banks.
The world strives for equality, solidarity, and tolerance. Cooperation is viewed as more important than competition.
The mission of green organizations is social responsibility. Within the organization, the voice of every person has value. Employee motivation has an important role.
The key breakthroughs of green organizations are empowerment and a multiple-stakeholder perspective.
The metaphor of green organizations: family.
Modern examples: Southwest Airlines, Starbucks.
“Teal” stands for the last stage of human consciousness evolution, corresponding to Maslow’s “self-actualizing” level. Laloux explains that the shift to Teal happens when people start to disidentify themselves from their ego – in other words, we realize our own fears and ambitions are not the center of the universe.
We get to understand who we really are, and this changes our purpose in life. We accept our limitations and weaknesses and develop our strengths. Finally, we come to a realization that we’re a part of something larger:
The ultimate goal in life is not to be successful or loved, but to become the truest expression of ourselves, to live into authentic selfhood, to honor our birthright gifts and callings, and be of service to humanity and our world (Frederic Laloux, Reinventing Organizations).
The metaphor of Teal organizations is “living organism”. Everything changes, and so do Teal organizations, evolving in response to inevitable changes.
Like the other stages of management development, the Teal stage brought about important breakthroughs. These are:
From an Evolutionary-Teal perspective, the right question is not: how can everyone have equal power? It is rather: how can everyone be powerful? (Frederic Laloux, Reinventing Organizations)
Teal organizations are built as structures of distributed authority where people have autonomy in their domain and are held accountable for coordinating with others. Power is not distributed from the top or from specific positions in management hierarchies - instead, these companies are built on self-management. Peer relationships, self-discipline, and communication skills are very important.
Let’s see how management processes are handled in Teal organizations:
Teal organizations create environments where people feel free to be themselves. This is indeed revolutionary – because so far, organizations have been places where we are supposed to put on a mask. We put on a robe or a uniform – and we’re no longer ourselves. But in Teal organizations, you’re treated as a whole.
We can feel vulnerable when we bring more of who we are into our awareness and into the community of our colleagues. But once we do, it is as if life has switched from black and white to full color: it becomes rich, vibrant, and meaningful (Frederic Laloux, Reinventing Organizations).
So how exactly wholeness is practiced in a Teal model?
Teal organizations are not about survival – they’re about purpose. What matters is the value they add and the personal growth of employees. Teal organizations aim to sense what the world is asking from them. They don’t focus on profits, yet, paradoxically, they outpace competitors.
We don’t “run” the organization, not even if we are the founder or legal owner. Instead, we are stewards of the organization; we are the vehicle that listens in to the organization’s deep creative potential to help it do its work in the world (Frederic Laloux, Reinventing Organizations).
So how do Teal organizations work to achieve their evolutionary purpose?
To describe the factors that set evolutionary organizations apart, Laloux picked 12 organizations selecting those which have been applying the most advanced management practices. These organizations are diverse – publicly held, private for-profit, and non-profit, working in the domains of healthcare, education, and other industries.
Let’s take a look at some of them.
Buurtzorg is a Netherlands-based healthcare organization, which got rid of traditional management strategies. It consists of self-managed teams of 10-15 nurses serving 50 people in a neighborhood. These nurses are in charge of administration, vacation, patient intake, and other important functions.
There is no single boss. The nurses on the team set priorities, make decisions, and evaluate progress. To reach a solution means no one has an objection. Decision-making is a collective process.
There is no middle management either – however, there are middle coaches, who have been selected for their coaching ability.
Staff functions are performed by a very small number of people. 7000 nurses are supported by 30 people in the headquarters.
Buurtzorg’s purpose is more than just to give shots and change bandages. It’s about helping elderly people to live a full life.
FAVI is a brass foundry in France. This company exists on three assumptions:
In FAVI, there is a wonderful community-building practice: everybody is trained in frontline skills. This means that administrative workers and engineers have been trained to operate at least one machine. So when time is limited, white-collar workers come down to the first floor to operate a machine for a couple of hours.
Morning Star is a US tomato-processing company. It’s founded on two core principles:
The company is entirely self-managing. There are no managers or fixed power hierarchies. What matters is reputational capital, based on the value you add, you can earn your status. Colleagues write contracts with each other – a so-called “Colleague Letter of Understanding,” a short document that specifies commitments an employee has made with other employees affected by their work.
Patagonia is a designer of outdoor clothing and gear for silent sports (like skiing, climbing, and snowboarding.) The company is very environmentally friendly and has a values-driven culture, trying to make a positive impact on the natural environment.
In the summer of 1994, the company started to replace all conventionally grown cotton with organic one. It was a risk because the raw material cost three times more. Yet, their program turned out financially beneficial and inspired others to do the same.
Besides its evolutionary purpose, Patagonia incorporates other Teal practices. For example, hiring is performed by peers and social and environmental initiatives can be started anywhere in the organization.
Other examples of Teal companies include ESBZ, Heiligenfeld, RHD, Sounds True, Sun Hydraulics, and Holacracy.
According to Laloux, there are two necessary conditions that determine if a company can evolve into an evolutionary Teal organization:
To transform already existing organizations into Teal companies, Laloux recommends working on the three pillars of the Teal management paradigm - self-management, wholeness, and purpose:
Frontline workers will most probably welcome the change of self-organization. At the same time, people in positions of power, like middle management, will resist the change. The change will mean they will have to quit their power.
To create a new organizational structure based on self-management, you can take up one of the two methods:
Explain why wholeness is important in the workplace. Then incorporate wholeness practices into day-to-day work – for example, establish rules for a safe place, meetings, and onboarding processes.
Think about what your organization wants to be, not what it should be. Your purpose must be at the heart of decision-making. As a boss, talk about your purpose over and over again.
In modern society, all kinds of organizations coexist – red, amber, orange, green, and teal. However, we can embrace the change and try to create more innovative, purposeful, and soulful businesses. Self-managed teams, values-driven culture, distributed authority, and a deeper sense of work - these are the main principles of Teal management. We’ve got examples to get inspired by.
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