Laloux's Reinventing Organizations: A Guide to Understanding and Implementing the Holacracy Model

Introduction 

In less than two centuries, modern organizations have had significant contribution to the progress of humanity. However, this time period represents only a small segment in the timeline of human existence. The contribution of organizations and companies in these two centuries can be attributed to advancements in the collaborative efforts of humans as well as the ability to organize and pool resources and ideas. Presently, many people feel that the prevailing ways of running organizations and companies has been stretched to the limit. The individuals at the bottom of the pyramid in the work place structure have the constant feeling that their jobs are not motivated by purpose or passion but by drudgery and dread instead. Similarly, the people at the top of the workplace pyramid do not have any satisfaction either, especially because of the common workplace politics, power games, and infighting. Throughout history, humanity has had way of shifting to a new step of consciousness by inventing an organizational model that is more radical and productive than the previous one. This lesson from history explains the current state of affairs whereby experts have developed interest in the Teal Organization Paradigm as a replacement for the current management paradigms. The interest into the Teal paradigm is mainly brought about by its characteristics such as high workplace purpose level as well as high labor efficiency. All modern organizations and companies can be characterized as Magenta, Red, Amber, Orange, Green, and Teal (Bradford & Burke, 2005).  

The premise of this memo is the transformation of organizations that are magenta, Red, Amber, Orange, or Green into Teal organizations. As suggested above, Teal, which is the new form of organization, is emerging as the natural next stage of organizational development, which is a process that is more than 100,000 years old. In this regard, there are a number of pioneering organizations that have already adopted new management practices and structures in line with the Teal paradigm. These organizations show not only the characteristics of passion and desire, but also of the promise of success. In addition to that, the organizations display the capabilities to deal with the organizational complexities of current times in new ways by showing how the workplace can become a place of personal growth and fulfillment. By doing so, these progressive organizations make the other organizations in today’s structures look outdated and stuck in time. 

Red Organizations 

Humanity began organizing itself more than 100,000 years ago in structures such as empires and chiefdoms. The shift from the magenta organizational structure was the first to happen when humanity drifted from small tribes through the invention of division of labor. The formation of small armies became the first real breakthrough in the history of the organizational development of humanity. These organizations are labeled ‘Red.’ At this stage of organizational development, people tend to perceive the world as a difficult place where only the individuals in power get their needs. Therefore, Red organizations are violent and crude people. It is believed the structure and need for authority and command originated from this organizational stage. 

In this stage, there is the constant need for the head of the group, the chief, or the alpha to inspire fear into the underlings for the purpose of maintaining order and respect. Furthermore, the leader relies on close family members and keeps them close as trustworthy individuals. To achieve the objective of constant fear, the leader resorts to cruelty and public display of authority to also ensure that the organization does not disintegrate. Although Red organizations have effective reactions to opportunities and threats, it is common for them to be poor at planning (Laloux, 2014).  

Amber Organizations 

The shift from Red to Amber organizational structure happened around 4000BC when humanity took interest in agriculture, organized religion, institutions, and states. This was an enormous leap in the history of humanity because it brought about individual self-control and discipline into society. Here, people learned to do choose right and wrong with the knowledge of the consequences that accompany each choice. According to the personal or collective choice made in this organizational paradigm, people would expect to be rewarded in this world or the next life, or be excommunicated from the organization. Amber communities thrive on hierarchy, order, and control and exist in clearly defined delineations. 

The Catholic Church is a typical example of an Amber organization because of the organizational structure that has the pope at the top of the organization and other individuals such as cardinals, archbishops, bishops, and priests occupying other defined levels. Therefore, the giving way of the fluid Red organizational structure to formal roles in a pyramid like structure was a significant breakthrough during the development of the Amber communities. Some of the notable contributions of Amber communities to the human history include the cathedrals all over the world, the pyramids in Egypt, the Great Wall of China, and irrigations systems among other feats and structures. Presently, most government organizations such as schools, agencies, and militaries are established on the basis of Amber principles. All these developments were previously un-thought of before the invention of Amber communities. 

Another major characteristic of these Amber communities is the reduction in violence compared to the previous organizational structure. For example, a bishop in the catholic organization does not scheme violence upon an archbishop who shows a sign of weakness. In addition to that, the invention of Amber communities brought with it stability in organizational processes such as annual cycles of agricultural practice characterized by activities such as planting and harvesting. Humans have an innate desire for predictability and order, and hence, Amber organizations strive for stable processes which ensure that the need for immediate change is eliminated. 

Amber organizations represent the establishment of formal hierarchies where there are formal titles and organizational charts. The execution of duties and functions within these hierarchies are strictly separated whereby the thinking happens at the top of the chart while the implementation happens at the bottom. In contract to Red organizations that are like wolf packs, Amber communities are run like an army. However, today’s fast-changing economy has rendered the Amber organizational structure inefficient because of the common wastes of energy and talent associated with it (Laloux, 2014).  

Orange Organizations 

The emergence of the Orange paradigm as the new concept of management came about due to the needs of humanity to conform to the requirements of the renaissance and enlightenment. These two landmarks of human history, coupled with the beginning of the early industrial revolution challenged the agrarian structure leading to the invention of the Orange paradigm. Here, a complex mechanism of human organizational structure emerged whereby the God-given rules, which were an absolute pillar in the Amber communities, no longer define the governance of the world. In this mechanism, morality is replaced by effectiveness as the standard for decision making processes. Therefore, the best decision is not the other that is morally appealing but the one that begets the highest reward. In an Orange organization, the objective is to succeed in acceptable fashion while using the available options. This is the perspective that has been adopted by most people in politics and business today (Lowe, Basterfield, Marsh & Petrak, 2017). 

The management breakthroughs that are characteristic of the Orange organizational structure include accountability, the concept of innovation, and meritocracy. These leaps in management led to the formulation of the modern corporation. Innovation, for example, brought about the formation of the research and development department, while accountability introduced an alternative for leaders to use when commanding people. In this concept, a leader uses rewards to motivate people to reach given targets. Modern practices such as budgets and evaluations in the human resources department were developed from this concept. Meritocracy introduced a formula for rising into higher positions according to the skills and qualifications of an individual (Pontefract, 2016).  

Transitioning to the Orange organizational structure introduced a new metaphor whereby an organization or company is a machine and not an army or a wolf pack. In the Orange organization, the leaders adopted terms that described their work. The work of the leaders included designing the company, downsizing employees, as well as using inputs and outputs. These breakthroughs have had a significant impact on humanity such as improvements in life expectancy, increased levels of prosperity, and decreased levels of plagues and famines. The downside of the Orange paradigm was experienced in the resultant overconsumption and corporate greed as well as the exploitation of ecosystems and resources because of short-term thinking. This paradigm is, therefore, not sustainable for the leaders and the employees as well. Examples of Orange organizations include Charter Schools and multinational companies (Laloux, 2014).  

Green Organizations 

The intolerable rat race of Orange organizations brought about the need for a shift into a new paradigm during the post modernity era of humanity, the Green organizations. The Green stage introduces a new focus and a switch from competition to cooperation. The emphasis here is on solidarity and equality. The Green stage has been fundamental in global issues such as gender equality, homophobia, slavery, and racism among others. Organizations in this stage include companies that are keen on social responsibilities and culture as part of their operational mission. Companies like Starbucks, Semco, and Ben & Jerrys, as well as nonprofit organizations. The focus of the service of these organizations is not only on their shareholders but also on all stakeholders. 

The aspects of business that Green leaders invest in are not in strategy and budgeting as is in Orange organizations, but include teamwork, coaching, as well as organizational values and culture. The metaphor in this color is Family. The breakthroughs that Green leaders introduced include empowerment and egalitarian style of management. The practice of Green organizations shows many difficulties in their sustenance. For example, there is evident organizational gridlock and hidden power struggles in every set up where the agenda of equality is introduced. An example of a culture-driven Green organization is the Southwest Airlines (Laloux, 2014).  

Teal Organizations 

Today, Red, Amber, Orange, and Green organizations can be found in any major city around the world. These organizations can be identified according to their nature of operations, leadership style, management processes, as well as structure. However, the shift of leaders into the next organizational paradigm beyond Green can also be identified. These leaders have the ability to tame their ego, impulses, desires, and needs in order to look good and achieve success. Here, there is a tolerance for the wisdom of others. The decision making process is built around an inner scale of integrity. 

In Teal organizations, the hierarchical structures that are characteristic of the previous organizations are replaced self-management of all employees. The entire organization here is characterized by wholeness and an evolutionary purpose. In Teal organizations, the global economy is approached as a whole and, therefore, no one is the boss of the other I the workplace. Instead of organizations having a power hierarchy, the employees work in an environment that can be characterized as a natural network. However, one has to get advice from experts and talk to people who will be affected by a decision (Laloux, 2014).  

Key Factors of Teal 

Teal organizations are tolerant of different views and opinions because the truth can be presented in more than one version. 

We can show the rational part of our ego but not our deep feelings. 

There are no mistakes in these organizations, but instead they are opportunities to learn and gain experience. 

Refrain from thinking ‘either-or’ and think ‘both-and’ instead. 

Honesty with oneself is important 

Pay less attention to failures and weaknesses but instead focus on the strengths 

Good life begets profits and success. 

The management practices that are characteristic of Teal organizations include: 

There are no staff functions 

Meetings and coordination are arranged for when needed. 

The teams are self-organized. 

There are minimum budgets and plans involved in project management. 

The decision-making process is decentralized. 

Advices from anyone and everyone are respected. 

The money provided for organizational functions or projects can be spend by anyone. 

The salaries are self-set 

There focus is on team performance. 

Workspaces do not have status markers and are self-decorated. 

Members name their own roles. 

Interviews for recruitment are conducted by future colleagues. 

Evolutionary Purposes of Teal Organizations 

Competition in the workplace is not relevant. 

The decisions made are inspired by the mission and purpose of the company. 

The collective effort of self-managed employees builds strategy of the company. 

Basic Norms in Teal Organizations 

There are no rumors or blaming of others when a problem occurs. 

Conflicts are resolved without creating more problems. 

All members take ownership for their actions and thoughts. 

The Reason for Success of Teal Organizations 

The common purpose that prevails in Teal organizations boosts the energy and zeal of the individuals. The self-management model is a major motivator for employees because they do not feel like they are working for someone and hence strive to meet their own targets and standards. Furthermore, this model provides the employees with opportunities to keep learning. Another significant factor here is the fact that members are not forced to take on roles that might not be fit for them, hence enabling them to focus on their desired tasks. Furthermore, decisions are made quickly in Teal organizations because there is wastage of time in maintaining hierarchical structures (Linkner, 2014).  

	Magenta	Red	Amber	Orange	Green	Teal
Examples of the type of organization	Tribes.	Mafia,  Street gangs,  Terror organizations.	Catholic,  Military,  Public school system.	Charter Schools,  Multinational companies.	NGOs,  Semco,  Ben & Jerrys,  Starbucks	Network organizations,  Patagonia Apparel,  RHD Human Services,  AES Energy sector.
Recruitment	You become a member by birth, relation, or marriage.	Recruitment is by ‘pull’ (one being attracted by certain feature and perceptions such as reputation and social status) or ‘push’ (perception of protection by joining organization)	Recruitment is voluntary	Recruitment is handled by human resource personnel.	Recruitment is on merit	Recruitment is by future colleagues
Selection	Tribes are all inclusive	Through association or referrals	Through merit-based recruitment	Through merit-based recruitment	Selection is done based on passion for solidarity and equality.	Selection is done according to: fit with the organization, role, and purpose.
Training	Not necessary	Through apprenticeship	Through institutional processes	Through institutional processes	Training is done by HR and is culture-based	Training focuses on personal growth and building of a common culture.
Development	Through reproductive activities.	Through increases in areas of operation	Through regular recruitment	Through regular recruitment	Mentorship by seniors	Employees are encouraged to develop their own roles
Appraisal	Based on contribution to the tribe	Based on popularity	Done through standard examinations	Based on accountability.	Based on 360 degree feedback	Self-appraisals
Recognition	Based on relation	Based on performance	Based on performance	Based on performance	Based on empowerment efforts	Recognition is achieved through the power of peer input
Promotion	Promotion is based on seniority in the tribe	Promotion is based on loyalty, dedication, and work ethic.	Based on period of service	Based on merit	Promotion is based on mindset and behavior of the candidate.	There are no job titles or job descriptions hence no need for promotions
Discipline	Shaming, use of sticks	Public punishment and demonstration of cruelty to instill fear	Self-discipline, as well as within a unit.	Self-discipline, as well as within a unit.	Any form of misconduct is disciplined	Through a mediated conflict resolution process.
Dismissal	Banishment from the tribe	Banishment	Gross misconduct leads to dismissal	Gross misconduct leads to dismissal	Gross misconduct leads to dismissal	Dismissals are rare here. When they occur, choices are respected, emotions considered, and departure treated as a lesson.

References 

Bradford, D. L., & Burke, W. W. (2005).  Reinventing Organization Development: New 

Approaches to Change in Organizations . Hoboken: John Wiley & Sons. 

Laloux, F. (2014).  Reinventing organizations: A guide to creating organizations inspired by the 

next stage of human consciousness . Brussels Belgium. 

Linkner, J. (2014).  The road to reinvention: How to drive disruption and accelerate 

transformation . San Francisco, CA : Jossey-Bass 

Lowe, B., Basterfield, S., Marsh, T., & Petrak, N. (2017). Reinventing Scale-ups: Radical 

Ideas fro Growing Companies. San Francisco, C.A: ReinventingScaleUps.com. 

Pontefract, D. (2016).  Flat Army: Creating a Connected and Engaged Organization . Boise: 

Elevate Publishing.