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Review of Frederic Laloux's "Reinventing Organizations" - Making Sense Of The Longitudinal Evidence and Counter-Evidence

Reinventing Organizations Nelson Parker (February 2014)
With Case Study Companies: 
Buurtzorg; Sun Hydraulics; Favi; RHD; AES; Heiligenfeld; 
Morning Star; ESBZ; Patagonia; Sounds True; BSO/Origin



Can Organisations Be "Reinvented To Become More Soulful"?  Making Sense Of The Longitudinal Evidence and Counter-Evidence.

Executive Summary

  • The book only provides a partial view of developmental theory, with "Teal" suggested as an ideal, risking idealistic interpretations  
    • "Orange shadow side is primarily compared to a healthy Teal". If you are ready to consider developmental theories (such as Spiral Dynamics, which Frederic Laloux's was inspired from and for which there are substantial support for - e.g. Ken Wilber's cataloguing of all developmental research and models in Integral Psychology), then you might be left with the notion that upwards development is always better. My own longitudinal research of case study organisations however revealed to me the shadow of Teal, and the need for a more holistic understanding of the turning of the developmental spiral.
      • The "upwards" is better notion implied by descriptions of Teal organisations leads to an assumption that they are more effective/productive - I was asked to comment in 2015 on plans by consultants collaborating with Laloux to create a "Teal Game", where competing teams adopted different developmental archetypes, and for the game to demonstrate that Teal is more effective/productive.
        • This type of interpretation of developmental theory has to be handled extremely cautiously, since there is no evidence to support such claims - which leads to my following points on validity claims. 
  • We've got to be clear about our claims of validity.
    • My own attempts at writing a very similar book in 2002-2008 (with research contributions from Jane Hoskisson and Craig Marsh), brought me to confront the challenges of the "validity claims" around post-industrial organisational theory of self-management, autonomous teams.
    • It is worth asking how robust the research methodology was that Laloux used, since interviewing the CEOs or culture champions in the case-study organisations opens significant potential for distortion - a CEO will reply to research questions in the way that they want to be seen to be responding (i.e. such senior interviewees can't be always reliable sources of information)
  • The arts, morals and science of the future of management cannot be mixed or collapsed together.
    • Our only hope of having a more robust debate in taking the subject of "the future of management" forward is by being far more explicit in separating our statements / observations / convictions across the three fundamental realms of validity - the Good, the True and the Beautiful (or the Morals, Science and Arts) of organisations.
      • Collapsing and mixing validity claims across these three realms (that I propose is the case in "Reinventing Organisations"), will undermine our generation in being able to deliver on our hopes of conscious improvement of our organisations (from commercial, public and even at a societal level).

...Meanwhile my challenge to Gary Hamel

As a first anecdote, I'd like to react to a recent interview with Gary Hamel, in a BBC Radio 4 In Business programme on the 30th Aug 2015 (where Frederic was also interviewed), where Gary said: 

 "[With the self-management model] you get people solving problems that no one asked them to solve, taking responsibility for helping out their peers, so the company is far more productive than any of their competitors…. They put a lot of their competitors out of business.

But they are still isolated examples.

And so we started asking ourselves why, given the enormous performance advantages of the self-managing model, are they so scarce?

And the only hypothesis I have is that we still have this residual set of beliefs that sabotages many of these things; we believe that change must be imposed; we believe that efficiency is paramount; we believe that employees are instruments simply to be managed; we believe that data rules and that there is no place for intuition and judgement.

Those values are absorbed in business school, absorbed from our peers and bosses. And so until we change those [values], however successful these companies are they are still going to be the exception rather than the rule."

"Companies without Managers": BBC Radio 4 podcast

Where I'd like to challenge Gary, is in his last comment that these companies are still going to be the exception rather than the rule. I feel that such a perspective denies what a more comprehensive and longitudinal research approach can bring to the subject of evolution in organisational design. 

Such a research perspective at a macro level can show I believe a real if gradual shift towards higher degrees of self-management (or optimised / dynamic delegation) across a very wide variety of organisations.

From my own research (see my interviews here since 2003 with the CEOs of self-management culture companies) I propose that in fact the self-management model is therefore one point along a continuum of human solutions to managing complexity, and that we have a vast wealth of examples of organisations that are experimenting with and implementing in their own way higher degrees of self-management. 

Examples can be taken from over the last 30+ years from organisations as diverse as the military (in how self-management naturally arises in complex situations - See Note 1.) to Bang&Olufsen where an anthropologist was resident in the HR department in the 1990s during a company-wide experiment with autonomous teams (Note 2.).

There are significant constraints as to how might it be possible to measure across the board the extent to which organisations over the past 30+ years have embraced greater degrees of employee self-management and complexity (what metrics to choose, and how to measure them?). Yet I suggest that self-management is far more prevalent and has gone through many cycles of application/refinement/re-evaluation than Gary Hamel's comments suggest.

Frederic presents a supporting vision to my above point that there is a tangible and diverse well-spring, supported by his use of macro historical developmental models (both individual and collective development, drawn from Clare Graves, Spiral Dynamics and in his notes Frederic mentioned the other adult developmental models such as from Jane Loevinger).

These higher levels of development evoke greater capacities to balance opposite forces such as autonomy and wholeness, that I like to think of as "stretch" or "span". 

A first word of caution however, is that we are by definition compromised in the gathering and analysis of the evidence. Organisation design research methodologies frequently rely on interviews with the top management (at a single point in time), and we collect opinions and impressions rather than data. Not that I'm suggesting that numerical data is the whole story.

One example of where a leading case-study reference of self-management can suddenly look entirely flawed, is Odebrecht of Brazil. A leading light of values and principles in self management applied in business according to IMD, the Swiss business school, named it the world’s best family firm (using innovative social software, exception culture cohesion etc.). Last year McKinsey published a highly flattering interview with Emílio Odebrecht, the chairman, which was headed: “Principles and values have helped this Brazilian family-owned conglomerate thrive.”  The company has however been caught up in a huge bribery scandal that is engulfing Brazil (see Note 3.).

This review therefore is a call for taking Frederic's work further, by exploring how our meta-thinking skills can bridge multiple schools of thought (e.g. systems, morals, aesthetics) that have tackled the subject of indsutrial organisations over the past decades. There remains a significant opportunity I believe in gathering, unifying and building on our vast knowledge of organisations (see this link for my overview of the self-managment literature over the past 30 yrs), whilst simultaneously integrating contrasting schools of thought. 

One example of the contrasting schools, is if you were to have a "dream-team" of organisational consultants, made up of an engineer (technology, systems), a priest (morals and ethics), a lawyer/economist (social rules and justice) and an artist (aesthetics, personal choice). These four perspectives I propose represent the "big four" fundamental and irreducible perspectives that we are called to coordinate across, in our next-generation organisational and societal discussions.

Taking these three contrasting perspectives is therefore an invitation to separate out where Frederic's book is making claims from his research on statements of objectively better performing "systems" (that should be evidence based), or rallying calls for morally "soulful" communities or where he is expressing his own personal aesthetic quality of life preferences (that might be associated to a certain phase in his career, post 10 years as a consultant in a highly conforming corporate world).

These four visions should help us towards a unification of our approach to understanding organisations, in the spirit of works such as Jurgen Harbermas' Communicative Action. (I had previously thought of refering to E.O. Wilson's "Consilience" The Unity of Knowledge also in this context, however it is only truly representing 3 out of the 4 perspectives).


Reading Frederic Laloux's Reinventing Organizations as soon as it came out, was a moment of joy and despair. 

A joy firstly to see someone connecting the wide variety of radical self-management case studies with the use of the Integral Theory and the developmental / Spiral Dynamics archetypes for their interpretation (the colors of which will be referred to throughout this article e.g. Red, Blue, Orange, Green, Teal/Yellow)

But despair, since "Reinventing Organizations" embodied all of my ambitions dating back to 2002 to write a book covering the most interesting case studies around the World in self-management at the time (e.g. Semco, W L Gore, Oticon, St Lukes, etc.). 

I had also found Integral Theory and the developmental archetypes a breakthrough in making sense of my interviews with these companies, which were revealing some ambiguities and contradictions. I went to visit Ken Wilber in 2008 in Denver to discuss with him an outline of my book. Hence, in the background to my review here, there is my own envy of Frederic's success in getting his message out so successfully!

I am deeply impressed not only of the detailed descriptions that Frederic provides us in the book, but also by Frederic's breadth of literature research as shown by the supporting notes section (p.333) in the book. Frederic's work stands out in integrating across a broad spectrum the theoretical and practical perspectives in emerging organisational behaviour.

There are three key areas that I propose in this article as opportunities are:
  1. Defining the developmental language more strictly as a lens and not a label (the differences will become clear below)
  2. Extending our understanding of the lens to its full spectrum - including the healthy and shadow aspects of all the archetypes (e.g. not just comparing shadow Orange with healthy Teal)
  3. A stricter separation of what are value statements and what are "truth" statements (separating the Morals, Science and Arts perspectives, alternatively referred to as the Good, the True and the Beautiful) 
All three of these critiques I am certain Frederic is well aware of. My review therefore needs to be framed within the context that Frederic likely had to make some choices in focusing / simplifying the scope, and I have not yet invited his response to my points below (which is planned for).

My own research into "2nd Tier" case studies was summarised in my article "Journies of 2nd Tier Leaders Over Time" published by the Integral Leadership Review, 2008 (plus my research material is currently compiled on this website in collecting all the case study research material, interviews and literature resources). 

During my research I encountered a range of dilema and contradictions, requiring a deeper understanding that I am still exploring and to which the above three areas of my critiques I believe can help resolve.

The key dilema I faced when analysing the results from my research were:
  • Getting behind the organisational image: 
    • My research reveled very contradictory accounts of the relevance and success of "Teal" type practices such as Frederic describes them, based on interviews with different employees in the company as these practices were put to the test over time. 
    • The marketing image of the culture of the organisation had made a great impact in the media (including books by the CEOs and speaking tours, conference key-note slots etc.), however employees' realities were on many occasions significantly different.
      • Key questions are therefore: How accurate are the descriptions of the practices, their effectiveness and adoption? Has the data on the case studies been gathered from a range of contrasting sources, and over time? To what extent can we say we respond to the challenge of producing "evidence based" research?
  • Resilience
    • How can we better understand the longitudinal insights from a range of case study companies, that no longer are so explicitly espousing a visionary autonomous team / adaptive Teal management culture?
      • A list of nine well known case study companies is listed below in the Section "Resilience" (Semco, Oticon, Visa, Harley Davidson, Herman Miller, Bang & Olufsen, St Lukes, Energeticos, AES - of whom five I have interviewed during my research) are examples of the long term challenges in how to sustain Teal practices.
    • The historical / longitudinal perspective of looking at where all those companies from the 80s and 90s detailed in books such as Tom Peter's "Liberation Management" 1992 do not seem to have been included in Frederic's research. There are some powerful stories from "inside" resident researchers (two example are of anthropologists Gideon Kunda in "Engineering Culture" (2006) at HP, and Jakob Krause-Jensen in "Flexible Firm" (2010) at Bang & Olufsen, both spending extended periods of time at leading examples of autonomous management experiments), that reveal of the some hard truths of sustaining autonomous management cultures.
  • Tensions and paradoxes
    • Through many of my interviews with the case study companies, I got to see the shadow and fragile side of open, transparent, flat organisations. There seemed to be very distinct pathologies of the "Teal" vision.
    • For example, this shadow showed itself in the formation of cliques (see the article by an ex-employee of Valve "Valve's flat structure leads to cliques, says ex-employee"), the increased stress for employees from the greater ambiguity of their "dynamic" sensing and responding roles, the paralyzing search for consensus, hypersensitivity to employees feelings, going through the motions of democracy whilst always the same people ended up making the decisions....and the ostracism of the original visionary leader.
All of the above, including in particular the shadow side of Teal organisations, I believe can be drawn upon for greater insights into the possibilities for "reinventing organisations" - or, how I would prefer to frame it, the possibilities for the "conscious evolution of our collective systems".

At the same time, I acknowledge that the above dilema encountered might be simply because in these examples of organisations "Teal" practices were implemented without the necessary skill and understanding - building our skills and understanding (e.g. avoiding certain pitfalls) are I believe a great contribution that researchers such as Frederic can contribute to. 

The Three Opportunities In Exploring Our Journey To Teal, Up and Down The Spiral

Below are the three main areas of where I believe the field of emerging organisational models, as chartered by Reinventing Organisations, can be explored futher.

1. Using The Developmental Language as a Lens and Not as Labels 
  • "Teal is not a destination (I appreciate that sounds like a cheap soundbite)"
  • A contextualization of the developmental model that Frederic uses (Red, Blue, Orange, Green, Teal...), I propose needs more emphasis as being principally a lens that we use to subjectively interpret our observations of organisations, rather than a labelling system that suggests a higher degree of objectivity than we can justifiably claim. 
    • Labeling an organisation as "Teal" holds various dangers - i.e. it implies that we can objectively call an organisation "Teal" rather than seeing the developmental language as a tool with which we interpret various observations. 
    • Such tools assist our observations principally for relativistic dialogical purposes (i.e. providing us a richer language for debate and discussion), as opposed to dialectic measurements or metrics.
    • Labeling an organisation as "Teal" assumes that the organisation has a "dominant monad" (see the discussions between Ken Wilber and Mark Edwards - Integral Naked "Parallel Theories of an AQAL Approach to Relationality. Part 3. What Does it Mean to Transform a Social Holon? • 4/17/2006"). It is more helpful perceive collectives or organisations as "tetra-arising" social holons. "Societies are not made of organisms in the same way that organisms are made of cells" (Ken Wilber, Integral Spirituality P.146).
    • As users of such a lens, we need to take responsibility as to how our own person influences the lens.
  • "So What?" you may ask! The developmental language applied to collectives has some major validity challenges - we can't back our labelling of one company as Teal and another as Orange with statistical evidence (e.g. relating to the Wilber Right Hand Quadrants). We are left therefore with using the developmental language as a lens that helps us in our "dialogical skills" when inside or interacting with organisations (Wilber Left Hand Quadrants). This is nevertheless a potentially powerful and valuable application of the language - in our depth of both observation and dialogue. 
2. Ensuring The Lens is Complete - including the healthy and shadow aspects of all the archetypes, and not skiping stages
  • In focusing on the developmental lens, the second area of importance is that our lens is as complete as possible for balanced interpretations. Frederic has concentrated on showing the shift from Orange to Teal, and compares the shadow side of Orange with the healthy side of Teal for example is his tables on Page 140-141 and in the Appendix 4 on P.327.
    • Left Hand Column = Orange Practices...........Right Hand Column = Teal Practices 
  • I suggest two clarifications based on the Spiral Dynamics model to equip us with a more complete lens, which are: 
    • i) The Stages unfold in order of increasing complexity and embrace, there where the Stage order is Orange-Green-Teal - leaving out Green misses out important clues in how Teal arises,
    • ii) We need to consider the healthy and shadow sides of each stage (lots more to be said about the examples of the shadow side of Green and Teal!).
  • Core to Teal is a compasionate appreciation of all stages and their contribution, and that there is a necessary hierarchy of capabilities (as opposed to Green's focus on equality).
    • Teal is defined in Spiral Dyanmics (equivalent to Yellow) as being defined by a deep appreciation of all of the positive and necessary sides of the archetypes (including Orange!). The question is not just rejecting the pathologies of Orange, but embracing the light and shadow of all the archetypes. (Which I know Frederic is well aware of, but it not explored in any depth in the book).
    • There is perhaps an "interpretation" by the wider audience that Teal will free us from hierarchies (again, I appreciate that this is not Fred's perspective), and this relates to audiences that have strong Green values), whilst hierarchies in terms of the "systems" perspective I speak about later are an absolutely essential aspect of organisations, in the past and in the future.
    • I have seen a tendency in dialogues relating to research such as Frederic's that focus on principally on Orange's negative stereotypes, whilst Orange's contributions to humankind's progress in poverty reduction, life-expectancy and education go almost unmentioned.
    • It is worth us asking therefore, is a practice such as The Advice Practice, a predominanty Green practice or a Teal practice (for example is the competence of the individual (from an Eliot Jaques point of view) in synthesising all the advice they seek taken into consideration?)
  • Tensions and paradoxes (between developmental archetypes) become a rich resource of collaborative energy: 
    • The tensions and paradoxes (e.g. for every upside to a Teal practice, there can be considered to be a downside), can in fact be embraced by an organisation, for raising the level and quality of debate and dialogue within an organisation. 
    • Are there some paradoxes to be considered for example when looking at Steve Jobs as an icon of leading organisations? Does Jobs embody the practices that Frederic lists in the Teal column above, from Appendix 4 on P.327? Do any of the breakthrough millenial organisations such as Apple, Google, Facebook, Amazon demonstrate Teal Practices? There is for example surprisingly little revealed as to the actual organisational design and practices in organisations such as Google from the published resources such as: "How Google Works". By Eric Schmidt and Jonathan Rosenberg, 2014....see The Economist review of the book here.
  • "So What?" you may ask! A more complete application of the individual and collective developmental archetypes model might help us understand in more subtle ways how the archetypes relate and co-depend on each other, and how the (re)cycling down the Spiral (i.e. a dynamic of communion / integration) is just as important as a movement up (i.e. and agentic differentiation)
    • This is not to ignore of course the fascinating examples of Teal practices that Frederic details in his book that represent the communion / integration dynamic, but to see that dynamic in terms of the Spiral adds potentially a greater appreciation as to what is being harnesssed.
3. Soul in the System: 

I would like to address a question as to how a large segment of the business community might be uncomfortable with the concept as to how "soulfulness" (as used by Frederic in his presentation of the book at the UK's Royal Society of Arts "How to Become a Soulful Organisation 22-01-2015) is relevant for the future of our organisations and, in a broader context, our economy.
  • A clearer separation  I feel would help avoid certain confusions of the 3rd person systems complexity analysis between the case studies (Wilber Right Hand Quadrants), from the 1st and 2nd Person values perspectives of the case studies (Wilber Left Hand Quadrants), so that terms such as "soulfulness" are not mixed or combined with concepts such as "complex/adaptive systems".
  • Many of the organisational practices that Frederic highlights (e.g. The Advice Process from AES) devalue the importance of hierarchical task complexities and individuals' capacities to meet those task complexities - the Advice Process offers the opportunity of any person at any level of competence to tackle any level of decision making. 
  • Frederic's analysis of the case studies ignores any comparisons between the level of complexities inherent in their business. For example, Buurtzorg's delivery of nursing care services and its distributed decision making process has little correlation with the complexities and risk management in building a satellite. 
  • Dealing in a structured way with the three fundamental perspectives of Morals, Art and Science, applied to the future of human economic collaboration, could help untangle the subjective and objective, and avoid people searching for the "Soul" in the "System".
    • Statements about the "Good Life" creep in when we come across descrptions such as of a "beautiful organisational practice" or in Frederic's interview with Enlivening Edge, his describing self-questioning of the quality of life of those people "in suits".
    • To put it more bluntly, do we need to be more speific in clarifying that we cannot associate greater "soulfulness" (divergent, Wilber Left Hand Quadrants) with greater efficiencies or economic performance (convergent, Wilber Right Hand Quadrants)?
  • Is there a tendency for the search for the "soul" in organisations, being a projection of the post-modern society's departure from religious traditions to seeking higher values from next-generation economic structures? 
    • In otherwords, as secular society weakens or separates more distinctly our modern urban lives from faith traditions and customs, could it be that we begin to seek "soulful" values in our work lives and commercial organisations? 
      • There is an interesting BBC Culture article on how in terms of observing habits, the Sunday crowds visiting the London Tate Modern gallery almost resemble the church going population from earlier generations "Why Museums Are The New Churches" July 2015.
  • "So What?" you may ask! I propose here that we need to make very separate "scientific" evidence based claims, separately to our value claims (which tend to have adjectives such as beautiful and soulful associated with them). The fascinating, and ever evolving quest, is seeking how these realms interact with each other.

Are we seeing a "calculus moment" of new levels of "soulfulness" emerging in organisations from these case studies?

The formulation of the above sub-title is from the opening premise of Frederic's presentation at the Royal Society of Arts in London, in January 2015

One of my immediate concerns is that the above types of message collapses the "truth" 3rd person scientific perspectives (calculus moments) onto the "good" 2nd person morality perspectives (soulfulness), and creates skepticism. And that this can ultimately undermine the chances of success in communicating on the subject area of evolution in collective systems.

An example of this skepticism I see rises from how we ultimately see values impacting organisations. One anecdote of presenting Spiral Dynamics-inspired visions for the future of organisational design (which has a value based ego and moral development foundation), was for an investor to reply to me "So when you get to Teal and beyond, the CEO becomes something like a spiritual guru?". 

Although Frederic draws on Wilber's work (Quadrants and Levels in particular), I feel that the application of the Integral lens could go further, with firstly separating the 1st, 2nd and 3rd person perspectives (the good, the beautiful and the truth respectively) in more detail with regards the data from the case studies. 

For example, we could say that the Catholic Church is a Teal organization, but, crucially, Teal principally in its values. Whilst the organisational "systems" of the Church might be better described as typical of Blue.

By applying the insights from the case study research to each of the 1st, 2nd and 3rd person perspectives, I believe we have a chance of creating a dialogue with the broadest audience with greater clarity and grounding.

The Good, The True and The Beautiful in Reinventing Organisations

There is one recurring process in human's understanding of the World and that is through iterations of differentiation (masculine archetype) and integration (feminine archetype). One framework of differentiation that has passed through the ages is that of how we can see the world through the lenses of the Good, the True and the Beautiful.

Although associated in particular with Platonism, the three lenses may have an earlier origin, appearing for example in the Bhagavad Gita to describe "words which are good and beautiful and true".

The great philosophers of the eighteenth century enlightenment were well acquainted with the group of terms. Immanuel Kant's three great books, Critique of Pure Reason (1781), Critique of Practical Reason (1786), and Critique of Judgment (1790) dealt with the problems of truth, goodness, and beauty respectively (quoted from Wikipedia Trancendentals). 

In the context of organisations, my interpretation of the three perspectives are:
  • The Beautiful (2nd person "We")
    • The cultural values, which can be in competition across politically or religiously mediated shared meaning
  • The True (3rd person "It")
    • The organisational processes and systems, that can span linear through to complex systems 
  • The Good (1st Person "I") 
    • The individual's judgement of the "good life" that is sacred to the individual - much has been written about the dangers of any state making judgments for others as to what is their definition of the Good Life. 
    • It is through the "I" that the balance between the True and the Beautiful can be integrated.
Is the notion of a "soulful organisation" a useful approach for understanding the direction of evolution of our collective systems? I feel there is a trap here of imposing a vision of The Good Life and collapsing Wilber's Left Hand Quadrants onto the Right-Hand Quadrants, and hence alienating a large section of the audience. 

As in the Zen The Ox-Herder's Journey, the return from the path to enlightenment, requires relating back to all of society. 

What We Can Say About The "System" Perspective? Is There Such A Thing As A "Teal System"?

My belief therefore around separating the 3 perspectives of the Good, the True and the Beautiful, is that we can only make reference to "calculus moments" with regards to the 3rd person "system" perspectives of organisations.

And what are we able to say in making 3rd person judgments between Teal and Orange systems for organisations? 

It would be certainly foolish to even attempt correlating evidence of financial performance with the merits of reinventing an organisation based on a Teal vision, as compared to an Orange vision...The complexity of all the contingent factors make this impossible.

One theory however that maps the trajectory of the 3rd person system perspectives includes Michael Commons' Model of Hierarchical Complexity - a phenomenological approach to observing increasing orders of perspective. This has been principally applied to looking at individual's capacities in moving from representations to abstractions to principles in how they understand their World in increasingly complex ways (and is closely related to Piaget's work).

Another approach / theory, grounded in 3rd person perspective is Elliot Jaques' concept of Requisite Organisations, which describes levels of increasing complexity of organisations and individuals (for example in terms of the scale of time horizons that an individual typically works to, related to their cognitive skills). 

Jaques would ask what are the capacities of each employee, and each level of the organisation in terms of orders of complexity (task complexities Strata from I to VII and individual capacities from Mode I to ModeVIII), so that the "system" of accountable hierarchies can function optimally? 

Jaques I believe therefore has a great deal to contribute to the concept of Teal organisations, where the notion of "Teal Systems" can be more robustly argued for and promoted in such a book, and can help us see the organisation itself as a system within an economic system with distinct rules and patterns (not to say that our Economic / capitalist systems are objective artifacts!). 

I therefore propose a tighter definition when referring to "calculus" moments (see above reference to Federic's RSA speech 2015) only in the context of the heirarchical system complexities (that are measurable steps "forward", just as the discovery of calculus was), and not with regards to the "Good Life" language references to soulfulness. 

This implies a separation of how we consider Teal Systems (as a convergent concept) from that of Teal Values (as a divergent concept).

See my blog entry for an example of where collapsing values and systems can lead us to, when taking the logical direction of Sam Harris's TED presentation "Can Science Answer Our Moral Questions?"

The Riches of the Field of Self-Management and Systems Literature - An invitation to take historical and macro-economic perspectives

There is a critical next step to take in the tradition of Frederic's book, which is to ask the question "What can learn from the longterm success, failures and evolution of the vast numbers of examples of self-management company case studies, and what is the influence of the wider economic context?"

What Happens When We Shift The Boundaries Of The "Autonomy" Analysis To The Wider Economy?

  • How the Theory of the firm (i.e. the economic boundries influenced by transaction costs) is shifting due to technology.
  • Capitalism can be considered already to be a wonderously successful example of a self-organising system, and therefore are we primarily looking at the question as to what are the optimal levels of autonomy within the boundaries of a legal company/organisation entity?
  • What are also the technological advances that are changing the parameters of the optimum definition of the legal organisation entity? 

Where next in Reinventing Organisations? 

Since 2001, I have been collecting the artifacts of the collaboration principles of the case study companies, as recorded in the database on the website. The database uses a segmentation structure of 30 columns, to cover all the aspects of the practices. policies and principles of the case study companies.

Frederic does very much the same thing in his book, and all the case studies from the Reinventing Organizations have been inputted into the database.

I propose that it is a valuable project for progress in organisational design and social collaboration in the continued curation and codification of these organisational principles, where clarity can be achieved thanks to: 
  • defining the scope of principles
  • organizing the principles
  • connecting the principles
There are fabulous examples as to how principles are becoming more explicit, as the DNA of human collaboration success, with one in particular being a list of 210+ principles written by the founder of the investment fund Bridgepoint, Ray Dalio. See this article from the Business Insider magazine from Nov. 2014 for an overview, and a link to the original document published by Dalio.

In this principles "manifesto" Dalio refers to very discreet and logical processes for implementing processes for collective decision making, sensing and learning. He refers to the organisation's machine-like qualities of running at a more sophisticated and agile level. 

Dalio refers to his e-book of the principles an evolving work, and that he'd love to connect his work with others' efforts in making explicit their operating principles, and have a more sophisticated "matrix" representation of the principles, instead of a linear list.

A 3rd person proposal for hierarchical scoring of collaboration principles

Whilst this systems analogy may appear reductionist, my proposal here is that it is thanks to the operating principles fitting into the 3rd person perspective of systems (Wilbers' RH Quadrants), that we can share, compare and communicate the comparitive merits of these principles, that help us build Teal Systems.

And so I believe it is possible to vertically score organisational principles, based on Jaques' or Commons' models.

Bill Torbert in Action Inquiry (P.126, Table 8-1) shows a good example of applying Action Logics (the hierarchical moral/ego adult developmental model based on Loevinger and Cook-Greuter's work) to organisational stages of development.

But Torbert warns of the difficulties and pitfalls in such a process...perhaps with a specific focus on systems, we might be able to allay some of those concerns.

Resilience - The imperative of learning from the case study failures as well as the successes

Going back to my earlier point on resilience, I feel there is also rich resource in learning where "Teal" organisations (as Frederic refers to them), have failed, or have not had the resilience to maintain the types of cultures that are described as being Teal.

There is I feel a moral imperative to investigate both the negative and positive sides of the case studies, to present a balanced picture. The negative side, can be illustrated by the case study companies (and many of the accompanying books) below that have experimented with many of the practices and policies in Laloux's book:
  • The Semco group (Brazil) of companies has been largely sold off, and now down to 90 people from ~3,000 in 2004
  • AES Corporation (USA) famous for its open "advice process", cited by Federic on a number of occasions, has largely done away with the more decentralized and transparent policies cited from the time of Dennis Bakke. 
    • Interview with Dennis Bakke, co-founder - Nov. 2014
  • Oticon (Denmark) a landmark case study in "spaghetti" management, reverted to a conventional matrix organisation on the departure of the visionary Lars Kolind, replaced by an alter-ego opposite personality to Lars.
  • Visa International: From an inspiring collective vision, Dee Hock's breakthrough with the creation of Visa International, has relatively conventional management practices
    • Interview in 2005 with Christopher Rodriguez, former CEO, following up on Dee Hock's Caordic Commons
  • Herman Miller (USA) famous for its open corporate culture, discovered the destructive and toxic nature of "open" unstructured communications, in their striving for consensus
    • Source: William Isaacs, Dialogue, the Art of Thinking Together 1999. P.65 
  • Energeticos (Columbia) was turned around by Peter King, its former CEO based very directly on Semco's radical emphasis on trust, autonomy and transparency (see Peter's Management Mix article describing the turnaround). However, with it's transition to becoming part of the Wood Group, the ownership imposed more explicit structures and controls that lead to a dismantling of the 
  • Harley-Davidson (USA) Featured in Carney and Getz's Freedom Inc. has been through a number of rigorous production optimization phases, since the visionary turn-around phase in the early 1990s which drew so much on the passion of the employees. The culture and structure are now is quite typical of very large high-tech production sites (as compared to the image of the case study reports of highly autonomous teams). 
  • St Lukes (UK), an advertising agency that spun off from Chiat and Day, was held up in the early 90s as a pioneering example of innovation in the workplace. The Managing Director at the time, Andy Law, wrote two books Open Minds and Experiment at Work, charting the transition and flourishing of their new management style. However, my interviews in 2002-4, showed that it had returned to a more conservative management style.
  • Bang & Olufsen: The account of how they experimented with distributed and autonomous teams in the early 90s is written with great insight by an anthropologist Jakob Krause-Jensen in Flexible Firm. With his intimate contact in being able to immerse himself in the HR department over an extended period of time, and then return to the company 5 years later revealed the inherent tensions and paradoxes of the autonomous, flat, adaptive management vision.
  • W L Gore: Les Lewis, a key figure in cultivating and maintaining W L Gore's culture (and possbily its second longest serving employee) is quoted as saying that "he sees himself as a "flag bearer" and he lamented that some of the relatively new hires didn't see the point of some of the "values", in Lewis' words, that the company's associates took for granted in the early days...And yet for all the passion that BIll Gore himself brought to this question [on the principles of keeping one's commitments, e.g. to clients on deliveries and to one's colleagues], the bean counters seemed to be gaining ground in recent years. "I am, I have been for the last fifteen years, the lone wolf on this", Les says." Quoted from P. 250 and 251 Freedom Inc. Brian Carney, Isaac Getz.
I have listed a quick summary of the top fragilities in this blog entry "Top 5 Fragilities of Autonomous-Team Organizations".

Are The Owners or Investors Convinced of Teal?

Another perspective that has fascinated me throughout my case study research over the years, is are shareholders, investors, banks (i.e. the financial backers) going to be supporters of the evolution towards Teal?

This points to another area for taking Frederic's work further, and that is in having supporting methods or metrics for showing to the external audience what Teal actually represents in terms of performance or other parameters of investment criteria.

The perspective of an investor (or mutual fund), gives a different spin to the question as to whether one is better off financially in investing in a "soulfull" organisation? 

Or...if you are giving instructions to your pension fund manager, would you instruct them to prioritize criteria of soulfulness, over that of financial performance? Not to say that there may not be a correlation between more soulfulness and better financial performance, but the onus is for the community promoting Teal organisations to have something of a response in this area.

The research from the selection of publically quoted companies that participate in "Best Places To Work" surveys reveals some very promising data:
  • published in March 2015 a report entitled "Does Company Culture Pay Off?" with the key findings that:
    • Since 2009, a portfolio of Fortune’s “Best Companies to Work For” companies outperformed the S&P 500 by 84.2 percent, while a similar portfolio of Glassdoor’s “Best Places to Work” outperformed the overall market by 115.6 percent.
    • The nature of any possible causation between employee satisfaction and stock performance still requires much closer scrutiny and research, however the correlation is a powerful finding.
  • An August 2013 report - ABetter Return on Self-Awareness - by the world's largest executive search firm, Korn/Ferry, found - following research with 7,000 people in 500 companies - that “public companies with a higher rate of return (ROR) also employ professionals who exhibit higher levels of self-awareness.”
    • The research also found that: Companies with the greater percentage of self-aware employees consistently outperformed those with a lower percentage. (Stock performance was tracked over thirty months, from July 2010 through January 2013).
    • Poor-performing companies’ employees were 79 percent more likely to have low overall self-awareness than those at firms with robust rate of return.

Notes - Bibliography

  1. The Agile Organization by Simon REAY ATKINSON, and James MOFFAT: P.55 "...the way in which this work was carried out was through an informal task-based network. The formal hierarchy of the organization tolerated this way of working due to the scale of change with which it was dealing (the sudden shift from peace to war)."
  2. Flexible Firm, The Design of Culture at Bang & Olufsen, Jakob Krause-Jensen. Sept 2010
  3. The Economist article of Aug 22 2015: "Odebrecht - Principles and values - The two sides of a construction giant facing corruption allegations"
  4. From Reinventing Organisations, Note. 11 on P.334: "Often in history we find ideas, like democracy in ancient Greece, ahead of their times, meaning ahead of the developmental center of gravity of people at that moment in time. To flourish, these ideas have to wait for evolution to catch up with them, to provide the right “cultural womb” as the American philosopher Richard Tarnas calls it: A big question here is why did the Copernican Revolution happen in the sixteenth century, with Copernicus himself, and in the early seventeenth century, with Kepler and Galileo? Why did it take until then, when a number of people prior to Copernicus had hypothesized the heliocentric universe and a planetary earth? There’s evidence of this being proposed among the ancient Greeks and in India and Islamic cultures during the European Middle Ages. I think this question shows the extent to which a major paradigm shift depends on more than just some additional empirical data and more than just a brilliant new theory using a new concept. It really depends on a much larger context so that the seed of a potentially powerful idea falls on a whole different soil, out of which this organism, this new conceptual framework, can grow—literally a “conception” in a new cultural and historical womb or matrix." Richard Tarnas and Dean Radin, “The Timing of Paradigm Shifts,” Noetic Now, January 2012.

Further Reading

  • The Tendency toward Defective Decision Making within Self-Managing Teams: The Relevance of Groupthink for the 21st Century 
    • Organizational Behavior and Human Decision Processes. Volume 73, Issues 2–3, February 1998, Pages 327–351. Gregory Moorheada, f2, Christopher P Neckb, Mindy S Westc