Q: What would healthy and soulful organizations look like?
A: Teal Organizations.
Q: What is Teal management?
A: Historically, human consciousness evolves as time passed by and if given different colors to represent the development stages, each color can signify certain “cognitive, psychological and moral” orientation, which is equally applied to organizations. And Teal management ranks the highest level of consciousness and will be promising in the coming years.
We try to share with you the part of the chapter in the book below. Welcome to see a video co-made with my colleague.
Transcript for Prezi presentation
Today we are going to talk about chapter 3.1 of the book Reinventing Organizations: Necessary conditions. Now we know that the organizations are moving forward along an evolutionary spectrum, and that the Teal organization is the future of the management, but what are the conditions for creating such a new organization with the evolutionary teal principles?
Let’s start with a quote from Dennis Bakke:
“Today, there is almost too much focus on leadership, mainly because it is widely thought to be the key to economic success, in fact, the degree to which a leader can actually affect technical performance has been substantially overstated…
On the other hand, the importance and impact of moral leadership on the life and success of an organization have been greatly underappreciated.”
So, when we are trying to apply a brand-new principle into an existing organization, what are the major concerns according to you? Business activity? Size? Culture background? Are there any critical ingredients without which we don’t need to bother trying? The research behind this book suggests that In Teal management, none of those seem to matter, as the Teal organization has achieved success almost simultaneously across various business sectors, including healthcare, manufacturing, retailing, no matter what the sizes they are, no matter where they come from.
There are two – and only two – necessary conditions, in the following two spheres: Top leadership and ownership.
Let’s dig a little deeper in the first necessary condition.
So why just Top management? Why not middle management or someone outside the company, like a coach or a consultant? Can a middle manager put Teal structures into practice in the department he is responsible for?
The answer is no and no.
Experience shows that efforts to bring Teal practices into subsets of organizations bear fruit, at best, only for a short while. If t he Top manager still sees the world through Amber of Orange lenses, the pyramid will ultimately get its way and reassert control.
From all we know, climbing the development ladder is a complex, mysterious, spiritual process. It happens from within and cannot be imposed on somebody from the outside, all the efforts would ultimately fail, as the level of consciousness of an organization cannot exceed the level of consciousness of its leader.
Vertical transformation is a lost battle, but that still leaves horizontal transformation as an option: Creating a healthy version of the existing, dominant paradigm, has a much higher chance of succeeding, and the example could easily spread from your unit to the entire room.
So how can the CEO look at the world through an Evolutionary-Teal practices? As you might have noticed a major paradox: CEOs are both much less and much more important in self-managing organizations compared to traditional ones. The roles of the CEO in a Teal organizations is, subsequently, radically different.
One role remains the same: the CEO is often the public face of the company to the outside world. On the other hand, the research into the pioneer organizations suggests there are two new and critical roles a CEO needs to play: creating and maintaining a space for Teal ways of operating, and, role-modeling of Teal behaviors.
Teal operating principles run deeply against the grain of accepted management thinking, and so a critical role of the CEO is to hold the space for Teal structures and practices. In an organization, whenever a problem comes up, rules and policies tend to be created. On the other hand, trust is so countercultural that it needs to be defended and reaffirmed every time a problem arises. The role of the Top Management is to ensure that trust prevails and that traditional management practices don’t creep in through the back door.
Experience shows that time and again, a creative solution can be found to uphold the Teal way of functioning, but it requires energy and dedication.
The leader of the self-managing organizations don’t have hierarchical power, but they can carry much more moral authority. For good or bad, the behavior a CEO models ends up shaping the organization in profound ways.If they are keen to see their organizations work along Teal practices, they need to role-model the behavior associated with the three breakthroughs of self-management, wholeness and purpose.
Fighting the inner urge to control is probably the hardest thing the a CEO has to do in a self-managing organization. Over and over again, they must remember to trust. First and foremost, founders and CEOs of Teal organizations must accept that their power is severely limited by the advice process. It doesn’t matter how strongly they are convinced about their point of view; they cannot make a decision without consulting people affected by the matter and people with relevant expertise. Even as they follow the advice process, founders and CEOs must also be careful with the way they initiate actions.
There is little chance that people will take the risk of showing up with the fullness of who they are if the founder or CEO is hiding behind a professional mask. In his or her own unique way, each of the founders and CEOs of the Teal organization carry strong moral authority. They can invite their colleagues into wholeness by acting from wholeness themselves. CEOs that role-model virtues such as humility, trust, courage, candor, vulnerability and audacity invite colleagues to take the same risks. Admitting mistakes and showing vulnerability shows another beautiful Teal paradox: vulnerability and strength are not in opposition, but polarities that reinforce each other.
What Teal leaders recognize – but need to remind themselves and others of – is that personal and collective success are both wonderful when they come as a consequence of pursuing a meaningful purpose, but what we should be careful not to pursue success as a goal in itself, careful not to fall back into competitive drives that serve our ego and not our soul, that serve the organization but not its purpose. Teal paradoxical thinking invites us to think this way: we can be both fully ourselves, and be working toward achieving an organization’s deeper purpose. We don’t need to reject parts of ourselves to be in service. It’s just the opposite: we are at our most productive and joyful when all of who we are is energized by a broader ouroise that nourishes our calling and our soul.
The simplest and most powerful way for CEO’s to role-model the pre-eminence of purpose is to ask questions:
- Every decision offers the opportunity to ask the question: What decision will best serve the organization’s purpose?
- When a change of the role is duscussed, it begs the question: How will this role serve the organization’s purpose?
- A new client or supplier can trigger the question: Will working witnh this client/this supplier further the organization’s purpose?
So what do CEOs in Teal Organizations do then? You must wonder. The two specific roles we discussed – holding the space and role modeling behaviors – consume some of their time. As for the rest, like any other colleague, they can take on roles that help manifest their company’s purpose. They can participate in a project; lead an initiative, participate in recruitment; mediate conflicts; or meet with clients and regulators. Whatever roles they choose, they have to add value, like everyone else, or their colleagues won’t entrust them with the roles for long.
On the other hand, in traditional organizations, CEOs make such decisions in top-down fashion, and then rely on managers to cascade the decision downwards. In teal organizations they must abide by the advice process, which implies that a very large group of people be consulted. In small organizations, CEOs can simply walk around and talk to their colleagues. When organizations grow into the hundreds or thousands and have dispersed geographical locations, walking around is no other a viable option. At Buurtzorg, for instance, the CEO Jo De Blok found an answer both simple and powerful. He has turned his blog on the company’s intranet into a leadership instrument. He writes posts regularly, straight from the heart, without PR polish. Given the respect he enjoys in the company, his posts are widely read. His blog helps the entire group of colleagues grow in awareness about how they assess current reality and future possibilities, and also allow for some fast decision-making.
Having going through basic roles Top leader can undertake in Teal management, we are going to look at the second key condition–Board & ownership.
Essentially, founders should bear well in mind that: Well-chosen board membership matters a lot.
Basically, three concerns should be well-considered in real practice.
First,In both for-profits and nonprofits, boards have the power to appoint and remove the CEO. Board members who view the world through any other lens are unlikely to tolerate Teal structures and practices for long because they simply make no sense to them. Sooner or later, they will appoint a CEO who operates from Amber or Orange to get things back under control.
Second, a common-shared worldview with the CEO should be put into agenda when choose board membership. Only a shared direction can resolve Interest conflicts among stakeholders within shareholders, managers, employees, and the external environment.
Third, Limiting legal framework. Understanding the necessity and key to choose the board members, then come to the measures to put into reality before conflicts can be heated up.
Now follow me to have a deeper understanding of the board and ownership issue.
As mentioned above, definitely, the power given to the boards determine their level of authority to appoint a CEO. In this case, although the boards are seemingly to share the common sense of Teal management at present, it does not mean in the long-term they are consistent to stand on your stance, especially when they are not fully in aligned with the Teal practices.
For this matter, real motivation of the board members are worthy to pay attention to.
In the book, a case study of AES, the energy generation and distribution powerhouse cofounded in 1982 by Roger Sant and Dennis Bakke, is under discussion.
AES witnessed tremendous growth from a two-person firm into a global energy producer employing 40,000 people in plants located in more than 30 countries. For years, board members were supportive of AES’s radically decentralized and trust-based decision-making.
But later on, things changed. The suspicious concern came to reality.
« Most board members loved AES approach primarily because they believed it pushed the stock price up, not because it was the right way to operate on organization. »
So, here you can imagine in the year of 1992 when an unexpected accident popped up , investors happened to overreacted and AES’s shares plummeted by 40%.
Instantly, board members as well as some senior directors began to say no to self-management.
The AES’s story illustrates that Teal organizational practices are vulnerable when investors and board members don’t share in the paradigm. For them, wearing Amber or Orange lenses, the Teal structures stand out as foolish or even dangerous.
Let’s go into what are exactly Amber and Orange lenses.
Amber Organizations brought about two major breakthroughs: planning for the medium and long term, and creating organizational structures that can scale.
Amber Organizations are still very present today: most government agencies, public schools, religious institutions, and the military are run based on Conformist-Amber principles and practices. They commonly use formal titles, fixed hierarchies, and organization charts.
Planning and execution are strictly separated: the thinking happens at the top, the doing at the bottom. The underlying worldview is that workers are mostly lazy, dishonest, and in need of direction.
Modern global organizations, including Walmart, Nike or Coca-Cola, are the embodiment of Orange Organizations.
Orange Organizations achieved huge results thanks to three additional breakthroughs: innovation, accountability and meritocracy. They also invented departments that didn’t exist in Amber Organizations: research and development, marketing, and product management.
In a worldview where people are driven by material success, Orange Organizations invented a host of incentive processes to motivate employees to reach the targets that have been set.
Where Amber relied only on sticks, Orange came up with carrots. Leadership at this stage is typically goal oriented, focusing on solving tangible problems, putting tasks over relationships.
To apply Teal structures, you should know for sure what your board members are really thinking about. Here are key messages to work with.
First, the maximization of the interests both for the organization as a whole and the self-interests of the board members is their ultimate goal. In this case, board members are more likely to protect the organization with traditional, control-based mechanisms.
Especially in critical moments, board members will look to appoint leaders who share their worldview, who look at the problems and solutions from the same angle.
So founders when choosing investors, should be aware of this issue.
Second, we talked a lot about board members. But here let’s rethink about this question: does the organization needs external or internal financing?
If possible, founders of the organization can strive to do without external investors, financing their growth through bank loans and their own cash flow at the sacrifice of lower growth rate.
Otherwise, we say “Yes” to embrace external financing sources, but the selection of equity investors should be considered: do they share a Teal perspective?
Third, today’s corporate world tells us: shareholders own the company. As owners, they can choose what to do and how to do with it. To counter the super-authority model, limitations can be loaded by the say given to other stakeholders.
Sharing the pizza means more factors are involved: employees, customers, suppliers, local communities, and the environment.
Another initiative called B-Corporation can equally contribute to the goal. What does it mean? Basically, the duty of directors of B-Corp is extended to include non-financial interests.
Finally, we should know the simple truth: get it does not mean make it. Having a CEO and a board get the point is definitely necessary, but only limited to such basic conditions are far more sufficient to put Teal management into reality.
As the author Frederic Laloux puts down at the end of the chapter: “That notion is too simplistic; enlightened leaders don’t automatically make for enlightened organizations, unless they also embrace structures, practices, and cultures that change how power is held, how people can show up, and how the organization’s purpose can express itself…”
Thank you for watching