This is the first in a series of 14 articles based on the Teal Organisational Model. The model is designed to help leaders understand and apply teal principles in practice. The series, which summarises each topic on the link above, covers teal leadership, organisational design, team culture, hiring, training, performance management, promotion and compensation.
Overview
This first article introduces evolutionary teal organisations and explains what makes them different from traditional hierarchical models. It explores the shift towards self-management, wholeness and evolutionary purpose, and why many organisations struggle to transition. It also sets the foundation for the full Teal Organisation Model series.
Introduction
In his book Reinventing Organisations, Frederic Laloux outlines the stages of organisational development. He touches on all the aspects that categorise organisations to fall mainly into one or another stage of development. He also provides extensive detail in comparing the most common stages of organisational development today. This is, namely, orange – and the most evolved stage of organisational growth – namely teal. This post focuses on the Human Resources staff function. It discusses how teal organisations operating primarily from a teal paradigm grow their people to close the gap towards becoming fully evolved teal.
If you’re not familiar with this groundbreaking work, read the review of the book here, a teal manifesto and finally a more in-depth analysis of what this concept of teal organisations looks like in software development companies here.
A Brief History
Compared to childhood development, Frederic Laloux analysed organisations and categorised them into one of a handful of main development stages, each corresponding to a colour on the rainbow. At the bottom of the spectrum is magenta, followed by red, then amber, orange, green, and finally teal, which is the most evolved state available to us today.
The book describes each organisational development paradigm using a descriptive term and a metaphor, outlining the main improvements or breakthroughs that each stage of development brought to society as a whole.
He emphasises the importance of each stage. How earlier-stage organisations are not inferior to more mature organisations. Just as a toddler is not superior to a teenager or an adult, it is merely an objective analysis of the described behaviours and traits. These help you know where you are and help you get where you want to be. One stage is not more important than any other stage; just as a child cannot fully develop if they don’t go through all the different stages of development.
Orange – Achievement
Inherited from the scientific thinking that revolutionised industry at the turn of the previous century, the keyword associated with organisations mainly operating from an orange paradigm (or an orange organisation, for short) is achievement.
Breakthroughs and Guiding Metaphors
Compared to the earlier stages of organisational development, orange organisations introduced innovation, meritocracy and accountability.
The guiding metaphor that best describes this development stage is the machine. In earlier development stages, only those born into leadership or positions of power were allowed to lead. In orange organisations, meritocracy was introduced, suddenly giving everyone an equal opportunity to rise to leadership based on their achievements. This was a significant improvement for the general population and had a profoundly positive impact on society.
The orange organisation, roughly formed during the industrial age more than 100 years ago, views business as a complex and intricate machine. It’s all about efficiency and the ability to outdo the competition, with its primary goal being growth.
The terminology used shows exactly how deeply this machine metaphor is embedded in organisations today. They include terms like “…units and layers, inputs and outputs, efficiency and effectiveness. They say things like pulling the lever and moving the needle. Alternatives are accelerating and hitting the brakes, addressing problems and scaling solutions, managing information flows and bottlenecks, and reengineering and downsizing. Leaders and consultants design organisations. Humans are resources that must be carefully aligned on the chart, rather like cogs in a machine.”
Any defining brand of our time, for example, Nike, Coca-Cola, Microsoft, Facebook, and Google, are an example of an orange organisation. They focus on growth and gaining market share, or winning the competition for global market share. Although size is not the deciding factor for categorising an organisation, most large organisations can be classified as operating from an orange paradigm.
Staff functions
1. Structure
In terms of staff functions, orange organisations have centralised staff functions for HR, IT, finance and others. The central hub, or head office, makes the decisions while the branches and departments merely follow suit with little bargaining power. They are handed a budget, staff allocation and resources decided by the centralised hub.
2. Recruitment
A descriptive job description serves as the basis for recruitment. The rather specific role is then filled through a sometimes lengthy and intensive interview process conducted by trained HR personnel and managers. The focus is on whether the person will fit the job description outlined.
It’s rather like looking for a very exact piece of clothing when you go out shopping with a predetermined list of requirements. You specify the colour, style, fabric and price, and only buy a piece that fits all your requirements. Similarly, you’ll only appoint people who match the majority of your checklist.
3. Performance management
Performance management is typically based on individual performance. An individual is measured based on KPIs established by their hierarchical superior. The appraisal reviews the past year’s performance against these objectively set targets. The emphasis is on organisational goals and how the employee contributed to the organisation’s success.
Teal – Evolutionary
The keywords associated with organisations mainly operating from a teal paradigm (or teal organisation for short) are wholeness and evolution. The guiding metaphor that best describes this stage of development is that of a living organism.
A teal organisation is much like the human body. It has various organs and systems, including the respiratory and cardiovascular systems. Each has a unique and special function. It cannot, however, be separated from the whole. This is not like a machine where a part can be easily replaced if it is not functioning properly.
A living organism is more complex and intertwined than a machine and requires equilibrium to remain in an optimal state of health. When one part grows too much, it becomes cancer. When another part does not function optimally, it harms the entire organism, gradually decreasing its overall ability to function. Organisational health requires the wellbeing of all these parts and the interaction between them.
Purpose and Wholeness
In a teal organisation, everything happens organically, driven by a desire to remain in balance with the changing environment around it. There is a level of integration that is new compared to all the previous stages. Roles, functions, and even personalities are blended and unique rather than clearly defined and similar. There are no dress codes or formal rules; these ‘policies’ are instead driven by mutual respect and shared goals. Teal companies have distinct personalities, whereas their orange predecessors aimed to be anonymous.
In teal organisations, the health of the organisation is the critical currency of success. They prioritise long-term growth over immediate returns. This means that growth is slower than that possible in an orange organisation, but it is much more long-lasting and sustainable. The teal organisation doesn’t compete to win; it uniquely co-creates, understanding that no two organisations need to solve the same problem in the same way. When there’s no competition, the available resources can be used much more productively. There are no losers when there’s no competition. Everybody wins.
Creating Communities
Purpose, rather than growth, defines the primary goal of teal organisations. It is a deep-seated passion among people who choose their community based on their beliefs. Teal organisations employ or partner with people who want to contribute to a cause. It’s not just a job. It’s a calling.
People are motivated by their ability to solve the problems they feel strongly about. It is the Ethereum developers who are building an entire financial ecosystem in their free time because they truly believe and want to see decentralised finance. It is the Blizzard game developers who want to work at Blizzard because they want to build the games they enjoy playing themselves.
Where the typical orange organisation’s employee works to satisfy their basic material needs and care more about the reliable pay cheque than the products they’re building, in teal organisations, the need to have a positive impact on the world is met by the ability to contribute to something they use and believe in.
Small is beautiful
Although most teal organisations are on the smaller side, there are larger organisations that operate from a teal paradigm. Toyota, in its early days, was likely one of the first organisations to move towards a teal paradigm. The popular Spotify, too, during its initial years of operation, is moving towards a teal paradigm.
The majority of brands included in the book as representative case studies, however, are not well-known to most, clearly showing the difference in primary goal. Where orange organisations’ vision mostly includes “global” or being the most widely used brand, a teal organisation aims to solve problems people care about with a smaller, but niche, market.
Staff functions
1. Structure
In terms of staff functions, teal organisations decentralise staff functions for HR, IT, finance, and project management to be included in self-managing or autonomous teams. Any centralised functions merely serve as a vision or guide to coordinate different parts within the whole, maintaining equilibrium and harmony.
The Ethereum Foundation is a good example of this, where Vitalik Buterin shares his vision for the foundation while providing an infrastructure that allows self-organising teams to build their own solutions. Each month, a themed hackathon is held, where hundreds of developers build solutions. Each solution is presented and judged, and some win a cash prize while others continue to build their products based on the feedback they gained during the hackathon. The culture is one of helping each other with open-source code and tools.
The foundation doesn’t own any of the products that make up the foundation. They merely provide the environment for people to create a world they envision without any say as to what or how people build it. This makes it easier to manage and scale much more easily.
2. Recruitment
In teal organisations, the team, rather than HR or management, drives recruitment. The team decides when they need someone, then collectively interviews candidates, understanding that it is ultimately the team that knows their problems and culture best and is thus best equipped to find a good fit.
Continuing with the fashion shopping metaphor used earlier, the purpose of shopping is to find something comfortable to wear to work. It can be any colour, style, fabric or price, but it needs to fit well, be comfortable and easy to maintain. Finding a suitable match is much easier with these more loosely defined goals than with the very specific shopping list in the orange example.
3. Performance management
Performance management in teal organisations shifts from KPIs and performance appraisals to peer-based discussions and coaching. Appraisals are viewed as personal inquiries to uncover an individual’s personal learning journey, with a focus on personal development. It’s about making people great so that they can build great solutions.
Crucial tools for performance management include the use of appreciative inquiry and individual and team coaching. Performance management occurs in conversations, not spreadsheets.
Growing People
Growing an organisation requires growing the people within the organisation. When you develop your people and help them succeed, they, in turn, will help you succeed. Win-win.
Growing towards an evolutionary teal organisation means developing the people, not the system. Growth becomes infinite when a single leader or manager no longer restricts you. When you tap into the collective intelligence of the group and allow them the freedom to create, the impossible suddenly becomes possible.
Do you have the courage to trust your people? Are you ready to let go and cross the gap between where you are and where you want to be?
If you’re ready to take your organisation to the next level, ask yourself this one question:
How can you make your people awesome?
The Second article discusses how people are better engaged in Teal Organisations.
