teal organizations

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You may or may not have read about a company called Zappos.  When I was first introduce to the company, it already seemed to have an awesome culture.  I believe the piece that featured them was talking about startup gurus.

At the time I heard about them, the company already seemed to focus on their employees’ happiness, but in more recent news it seems that the company decided to go a step further and adopt Holacracy as their company structure.

From a conventional standpoint, this was a very controversial move.  Most people, especially those working at the bottom of the corporate ladder, would see the appeal easily, but many still think of the idea as too fantastic and impractical.

What is so controversial about Zappos adopting the Holacracy constitution?

Companies that operate on Holacracy are Teal Organizations.  The term “Teal Organizations” comes from a book by Frederic Laloux entitled “Reinventing Organizations.”

From an uninformed view, Teal Organizations flatten out the company structure by getting rid of middle management and making the workers at the bottom of the pyramid manage themselves. Of course, it is certainly more complicated than that.

Before one can begin to understand Teal Organizations, you have to look at the different types of organizations that Frederic Laloux talks about in his book.  The infographic below shows a snapshot of the different organizations according to Frederic Laloux.

Frederic Laloux: The Different Organizations

Frederic Laloux’s Different Organizations

Laloux considers Teal Organizations the next evolution of organizations.  Different from the violence of Red, the strict roles and hierarchy of Amber, the profit driven and highly managed Orange, and the all-inclusivity of the Green, Teal Organizations take things to the next level.

Instead of a top down or leveled out structure, Teal embraces a more organic approach.  It takes away middle management and instead empowers the “lower level” workers to manage themselves.  The role of the CEO also changes.  Instead of having all the power and pretty much making all the decisions, the CEO becomes more concerned with serving the company and its employees and being the ultimate role model for the company’s values and culture.  Teal Organizations can also be governed by what Laloux calls the Advice Process where individuals are empowered to make their own decisions regarding their work and their needs to get that work done, but in return they must seek out the advice of concerned parties and take their input into consideration before taking action.

The category of Teal is not without its downsides.  Not all organizations can operate as Teal.  The minimum requirement is for the CEO to have the right mindset and be willing to let go of control and trust those around him or her.  An organization will also not last long as Teal without its board members also in agreement with the CEO.  Also, some companies try to convert to Teal by using Holacracy One’s pre-made constitution, but find it difficult to learn the new way of doing things.  Laloux says that without these, companies should not even try to convert to Teal as it would result in wasted time and disappointment.

So why should normal people be interested in Teal Organizations?

First of all, these companies are less concerned about the bottom line.  Similar to Green, they care a lot about their company values, but there is more emphasis on Trust.  Rather than having to wait for a consensus or having an issue be brought up the ranks up to the upper management before a decision can be made from afar about the problem below, whoever is in the front is given the trust and responsibility to decide what is the best solution for their problem.  Workers are no longer treated as mindless drones or as people who cannot be trusted.

In the book, Laloux illustrates how these companies operate and how regular employees have been trusted with very important decisions and A LOT of money without having much need for hampering bureaucracy.  Teal Organizations tend to weather out financial crisis much better than other companies and are more transparent with their operations.  They also tend to give themselves high standards concerning their environmental impact and fair treatment of their employees.

Teal Organizations also encourage its employees to come to work whole.  When coming to work, there is no need to keep up appearances and leave other parts of your life at the door when coming to work.  Workers are encouraged to share of their personal lives, problems and triumphs.  In some companies, pets and children are even welcome in the workplace.  If you need extra help because you are struggling, others will be there to help you as you will be for them, and if you have other interests and ideas on a different way of serving the company, you are encouraged to pursue it.  How many companies do you know of that truly strive to care for their employees in this way?

Operating as Teal is a novel idea that has been successfully implemented by many thriving companies.  You may still be skeptical about this working in the real world, so let me end this post with just some examples of thriving Teal Organizations:

  1. Holacracy One
  2. Zappos
  3. Buffer
  4. Buurtzorg
  5. ESBZ
  6. FAVI
  7. Heiligenfeld
  8. Morning Star
  9. Patagonia
  10. Resources for Human Developement (RHD)
  11. Sounds True
  12. Sun Hydraulics


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