HR 6

Advance praise for Reinventing Organizations

“Ground-breaker! Game-changer! Brilliant! The most exciting book I’ve
read in years on organization design and leadership models. Sustain-
ability? Employee engagement? Innovation? This elegant, parsimo-
nious way of working realizes those aspirations effortlessly while
exceeding traditional bottom-line measures and infusing heart and
spirit into work without gimmicks. Like a Zen practice, learning to do
less takes discipline, and this book shows how letting go gives back—
to you, your organization, your stakeholders, and the world.”

—Jenny Wade, Ph.D., Author of Changes of Mind

“People have long asked me what a “5th order,” or “high stage” organiza-
tion would look like in the flesh. Frederic Laloux’s richly researched
book is the closest anyone has come, as yet, to answering this
question. This is a stimulating and inspiring read!”

— Robert Kegan, Harvard University’s Meehan Professor of
Adult Learning, and author of In Over Our Heads

“A book like Reinventing Organizations only comes along once in a
decade. Sweeping and brilliant in scope, it is the Good To Great for a
more enlightened age. What it reveals about the organizational model
of the future is exhilarating and deeply hopeful.”

—Norman Wolfe, Author of The Living Organization

“A comprehensive, highly practical account of the emergent world
view in business. Everything you need to know about building a new
paradigm organization!”

—Richard Barrett,
Chairman and Founder of the Barrett Values Centre

“Frederic Laloux has done business people and professionals every-
where a signal service. He has discovered a better future for organi-
zations by describing, in useful detail, the unusual best practices of
today.”

—Bill Torbert, Author of Action Inquiry

“Frederic Laloux’s ‘Teal Organization’ is as close a model to what I
call a ‘conscious organization’ as I have seen—an organization and a
culture that not only thrives in the unfolding paradigm of collective
thought but helps in the unfolding. It could serve as the mid-wife for
a new worldview that will allow humankind to consciously evolve to
a level where the world works for everyone.”

—John Renesch, futurist, founder of FutureShapers, LLC and
author of 14 books, including The Great Growing Up

“As the rate of change escalates exponentially, the old ways of organ-
izing and educating, which were designed for efficiency and repeti-
tion, are dying. Frederic Laloux is one of the few management leaders
exploring what comes next. It’s deeply different.”

—Bill Drayton, Founder, Ashoka: Innovators for the Public

REIN VEN TIN G

O RG AN IZATIO N S

A G u i d e t o C r e a t i n g O r g a n i z a t i o n s
I n s p i r e d b y t h e N e x t S t a g e

o f H u m a n C o n s c i o u s n e s s

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Frederic Laloux

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Copyright © 2014 by Frederic Laloux.

First edition.

All rights reserved. No parts of this book may be used, reproduced, stored in or
introduced into a retrieval system, or transmitted, in any forms, or by any means
(electronic, mechanical, photocopying, recording, or otherwise) without written
permission of the publisher, except in the case of brief quotations embodied in
critical reviews and certain other noncommercial uses permitted by copyright
law.

Please purchase only authorized electronic editions, and do not participate in or
encourage electronic piracy of copyrightable materials. Your support of the
author’s rights is appreciated.

Published by NELSON PARKER.
Nelson Parker is a trademark of Unfolding sprl.
54 Serbia Street, Brussels 1190, Belgium

Quantity sales: Special discounts are available on quantity purchases of the
electronic format of this book. For details, contact the publisher.

This book is published in a variety of book formats. Some material included with
standard print versions of this book may not be included in the electronic
format.

Printed on acid-free paper, partially sourced from recycled waste material.

TABLE!OF!CONTENTS!

Foreword ix
Introduction: the emergence of a new organizational model 1!

Part!1!1!Historical!and!Developmental!Perspective! 11!
1.1 – Changing paradigms: past and present organizational models 13!
1.2 – About stages of development 37!
1.3 – Evolutionary-Teal 43!

Part!2!1!The!Structures,!Practices,!and!Cultures!!
of!Teal!Organizations! 53!
2.1 – Three breakthroughs and a metaphor 55
2.2 – Self-management (structures) 61
2.3 – Self-management (processes) 99
2.4 – Striving for wholeness (general practices) 143
2.5 – Striving for wholeness (HR processes) 173
2.6 – Listening to evolutionary purpose 193
2.7 – Common cultural traits 225

Part!3!1!The!Emergence!of!Teal!Organizations! 235!
3.1 – Necessary conditions 237!
3.2 – Starting up a Teal Organization 259!
3.3 – Transforming an existing organization 267!
3.4 – Results 285!
3.5 – Teal Organizations and Teal Society 293

Appendices! 307!
1 – Research questions 309!
2 – Beyond Evolutionary-Teal 315!
3 – Structures of Teal Organizations 319!
4 – Overview of Teal structures, practices, and processes 327!

Notes 333!
Selected readings 347!
Index 351
Gratitudes 359

INDEX!OF!KEY!STRUCTURES!AND!PRACTICES!

Structure!
Organizational structure 65, 67, 69, 319
Staff functions 71
Project teams / Task forces 83, 89
Board / Ownership 251, 300

Human!resources!
Recruitment 160, 174, 219
Onboarding 176
Training and coaching 178
Team building 147, 154, 159
Working hours 181
Job titles / Job descriptions 90, 180
Objectives / Target setting 212
Feedback / Performance management 123, 125, 183
Compensation 129
Promotion / Job rotation 114, 180
Dismissal 126, 187

Daily!life!
Office spaces 86, 146, 167
Meetings 162
Decision-making 99, 103
Conflict resolution 112, 165
Information flow 110, 216
Culture / Values 147, 151, 225
Community building / Reflective spaces 154, 159

Major!organizational!processes!
Purpose / Strategy 195, 199, 202, 207
Innovation / Product development 208
Sales / Marketing 208, 212
Purchasing / Investments 106
Budgeting / Controlling 80, 209
Financing / Funding 251
Environmental and social management 169
Change management 103, 214

Foreword ix

FOREWORD!

This is a very important book, deeply significant in many ways, as
much for the pioneering research, insights, guidelines, and suggestions
that it makes as for the many equally important questions and issues
that it raises. It is, without doubt, on the leading-edge of a type of work
we are seeing more and more of at this time: namely, that concerned
with the extremely profound changes in consciousness, culture, and
social systems that we are seeing emerge, in increasing numbers, at this
point in human (and, indeed, cosmic) evolution. Frederic Laloux’s work
focuses specifically on the values, practices, and structures of organi-
zations—large and small—that seem to be driven by this extraordinary
transformation in consciousness occurring around the world. He offers a
very detailed and practical account—what amounts to a handbook,
really—for people who feel that the current management paradigm is
deeply limiting and yearn to bring more consciousness to the way we
run organizations but wonder if it is possible and how to do it.

The book is highly practical, but don’t be mistaken: it is solidly
grounded in evolutionary and developmental theory. Books describing
the broader transformation of consciousness, not just in organizations
but in society, have appeared for at least three decades now, going back
to such pioneering works as The Aquarian Conspiracy, The Turning Point,
The Greening of America, and so on. But there is a major, indeed profound,
difference: development studies continue to indicate, with increasing
certainty, that what has generally been thought of as a single major
transformation in consciousness and culture in the last four or five
decades actually contains two major transformations, emerging
successively, and known variously as pluralistic and integral,
individualistic and autonomous, relativistic and systemic, HumanBond
and Flexflow, green and teal, and order 4.5 and order 5.0, among many
others. And, as developmentalists are increasingly discovering, these
two transformations are simply the latest two in a long line of
consciousness transformations that, slightly modifying the terms of Jean
Gebser, for example, are called Archaic, Magic (Tribal), Mythic

x Reinventing Organizations

(Traditional), Rational (Modern), Pluralistic (Postmodern), and Integral
(Post-postmodern).

Each of these stages of development occurred to humanity as a
whole, and repeats itself in essentially basic ways in individuals today,
with everybody starting at stage one and proceeding essentially up to
the average level of development in his or her culture (with some
individuals lower, some higher). Each of these general stages has a
different set of values, needs, motivations, morals, worldviews, ego
structures, societal types, cultural networks, and other fundamental
characteristics. The two basic transformations that I referred to above are
the last two in the series: the Pluralistic stage, emerging in the 1960s and
marking the beginning of Postmodernism, and more recently (and still
much more rarely) the Integral stage, newly emerging, and marking the
beginning of the phase—whatever it may turn out to be—that is moving
beyond Postmodernism and its basic tenets.

The profound difference I was alluding to is this: most earlier
books heralding a transformation of society speak from a Postmodern
perspective, and have a rather simplistic view of human evolution.
Laloux’s book speaks from an Integral perspective and is grounded in a
sophisticated understanding of evolutionary and developmental theory
and what in Integral theory is called AQAL (all quadrants, all levels).

Postmodernism, as the name suggests, is that general phase of
human development that came after, and in many cases strongly
criticized, the previous general phase of Modernism, which began in the
West with the Renaissance and then fully blossomed with the
Enlightenment—the “Age of Reason and Revolution.” What Enlight-
enment’s modernity brought to the scene was a move beyond the pre-
vious mythic-literal, religious, traditional era of development—where
the Bible was the one source of literal, uncontested truth; humanity had
one, and only one, savior; and “no one comes to salvation save by
through the Mother Church,” whose dogmas delivered truth on all
subjects, artistic to normative to scientific to religious. With the
Enlightenment, representative democracy replaced monarchy; freedom
replaced slavery (in a 100-year period, roughly 1770-1870, every rational-
industrial society on the planet outlawed slavery, the first time this had
ever happened to any societal type in human history); the experimental
modern sciences replaced the revelatory mythic religions (as sources of
serious truth); and what Weber called “the differentiation of the value
spheres” (the differentiation of art, morals, and science, so that each
could pursue its own logic and its own truths outside of their fusion in
the dogma of the Church; where the Churchmen refused to even look
through Galileo’s telescope, researchers by the hundreds and eventually
thousands began to do so, with an explosion in all of what are now
referred to as the “modern sciences”—geology, physics, chemistry,
biology, psychology, sociology).

Foreword xi

So successful were the modern sciences that the other major
domains of human existence and knowledge—from artistic to moral—
began to be invaded and colonized by scientism (the belief that science,
and science alone, can deliver any valuable truth). The “dignity of
modernity” (the differentiation of the value spheres) soon collapsed into
the “disaster of modernity” (the dissociation of the value spheres),
resulting in what Weber also famously called “the disenchanted
universe.”

Such was the state of affairs for some 300 years—a mixture of
great advance and stunning discoveries in the scientific arena,
accompanied with a reductionism and scientific materialism that
rendered all other fields and areas as defunct, outmoded, childish,
archaic. “Social Darwinism”—the notion of the survival of the fittest
applied to all aspects of human existence as well—began to insidiously
invade all the humanities, ethics, and politics of humans, including the
two major new economic systems, capitalism and socialism. Scientific
materialism—the idea that all phenomena in the universe (including
consciousness, culture, and creativity) could be reduced to material
atoms and their interactions, which could be known only by the
scientific method—and the generally liberal politics that accompanied
such beliefs, set the stage for the next three centuries.

Until the 1960s, when not only the reign of scientific materialism
was challenged (as being itself largely a cultural construction, not some
deified access to universal truths), but also all of the remaining
indignities of the Mythic-religious era (some of which were addressed
by Modernism, and some of which were exacerbated by it)—indignities
such as, overall, the oppression of women and other minorities, the toxic
despoliation of nature and the environment, the lack of evenly applied
civil rights, the general reign of materialism itself—all were aggressively
attacked, and attempted to be remedied, by Postmodernism. What
developmentalists have discovered about this new emergence is that it
was driven, in large measure, by the emergence of a new and more
developed stage of human unfolding (variously referred to as pluralistic,
individualistic, relativistic, postmodern). This is not to say that
everything Postmodernism pronounced was therefore true, only that it
was based on a mode of thinking that was more complex, more
sophisticated, more inclusive, and included more perspectives than the
typical formal rational structure of the Modern era (and the Modern
stage in today’s individual development).

This new, more inclusive stage of development drove the first
wave of books maintaining that “there’s-a-great-new-paradigm-and-
major-consciousness-transformation” now underway. These books,
which began to emerge in the 1970s and 1980s, and a few of which I
already named, usually had a very conspicuous diagram with two
columns—one was the “Old Paradigm,” which was “analytic-divisive,”

xii Reinventing Organizations

“Newtonian-Cartesian,” “abstract-intellectual,” “fragmented,” “mascu-
line,” and which was the cause of literally all of humanities’ problems,
from nuclear war to tooth decay, and then another column, the “New
Paradigm,” which was “organic,” “holistic,” “systemic,” “inclusive,”
and “feminine,” and which was the source of a radical salvation and
paradisiacal freedom from virtually all of humanity’s ills. What’s more,
these two choices—old paradigm and new paradigm—were the only
basic choices humanity had. Its earlier stages (e.g., tribal) were simply
earlier versions of the new paradigm, which was repressed and
destroyed by the aggressive Modern version of the old paradigm.

In large measure, these books were simply boomer writers
documenting the transformation that they had just been a part of—
namely, where, to the remains of the Magic, Mythic, and Rational
paradigms still in existence to varying degrees, was added the
possibility of the newly emergent Post-Rational or Postmodern
paradigm, to which the boomers were the first major generation to have
access (today in Western cultures, the Pluralistic/Postmodern stage
makes up around 20 percent of the population, with 30 to 40 percent still
Modern/Rational, 40 to 50 percent Mythic, and 10 percent Magic).

All of these early books had several things in common. By
dividing humanity’s choices into just two major ones—old and new
paradigms—they blamed all of humanity’s ills on nothing but
Modernity and the Enlightenment paradigm, severely distorting the
actual situation, which is that a majority of the really nasty cultural
problems faced by humanity are the result of the Mythic-literal
structure—from ethnocentric “chosen peoples,” to female oppression, to
slavery, to most warfare, to environmental destruction. In some cases,
Modern technology was added to those Mythic motivations, thus
making them more deadly (e.g., Auschwitz—which was not the product
of Modern worldcentric morals, which treat all people fairly, regardless of
race, color, sex, or creed, but Mythic ethnocentrism, which believes in out-
groups of infidels and in-groups of “chosen peoples,” and in which
infidels, lacking souls, can be murdered or killed, and jihad in one form
or another—from missionary converting to outright crusades—is the
order of the day). In many cases, Modernity was in the process of ending
these Mythic ethnocentric insults (such as slavery, and using a specific
Modern attitude of tolerance, a previously quite rare value), but
Postmodernity blamed Modernity (and rational Enlightenment values)
for all of it, thus, in many cases, making matters considerably worse.

But in other ways, Postmodernity, with its own higher
perspectives, brought not only advances in the sciences, but gave equal
emphasis to virtually all other disciplines as well (sometimes going
overboard, and claiming that no truth at all was possible, only various
interpretations, so of course all disciplines should be included). And in
its drives for civil rights and environmentalism and gay/lesbian rights

Foreword xiii

and rights for the disabled, the higher moral fabric at least possible with
a higher stage of development came clearly to the foreground. It was
these advances that all the “new paradigm” books were celebrating.
Who can blame them for getting carried away, and assuming the whole
world was headed into this Pluralistic phase, this “new paradigm,”
instead of seeing that that phase was simply the fourth or fifth major
transformation in human history and would simply take its place
alongside the others, not completely replace them? It still shared many
characteristics with its predecessors—all of which, together, Maslow
would say were driven by “deficiency needs” and Clare Graves’
followers would call “first tier.”

But developmentalists of the time began noticing something
initially perplexing, and then outright astonishing: among those that
developed to the Postmodern/Pluralistic stage, a small percentage (two
or three percent) began to show characteristics that were literally
unprecedented in human history. Graves called the emergence of this
even newer level “a monumental leap in meaning,” and Maslow referred
to it as the emergence of “Being values.” Where all the previous stages
(Magic, Mythic, Rational, and Pluralistic) had operated out of a sense of
lack, scarcity, and deficiency, this new level—which various researchers
began calling “integrated,” “integral,” “autonomous,” “second tier,”
“inclusive,” “systemic”—acted out of a sense of radical abundance, as if
it were overflowing with goodness, truth, and beauty. It was as if
somebody put a billion dollars in its psychological account, and all it
wanted to do was share it, so full it was.

And there was something else about it, too. Where all the first-tier
stages felt that their truth and values were the only real truth and values
in existence—all the others were mistaken, wrong, infantile, or just
goofy—this new Integral stage somehow intuited that all of the previous
value structures were true and important in their own ways, that all of
them had something to offer, that all of them were “true but partial.”
And thus, as much as the Postmodern/Pluralistic stage wanted to see
itself as being “all-inclusive,” it still essentially abhorred Rational and
Mythic values; but the Integral stage actually did include them, or
embrace them, or make room for them in its overall worldview. It was
the emergence, for the first time in history, of a truly inclusive and non-
marginalizing level of human consciousness. And this, indeed, would
change everything.

Slowly, but with increasing speed, a whole second generation of
“new paradigm” books began to emerge. These included such early
pioneers as James Mark Baldwin and Jean Gebser, but then, more
recently, books by philosophers, psychologists, and theologians such as
Jürgen Habermas, Abe Maslow, Bede Griffiths, Wayne Teasdale, Allan
Combs, and my own work, to barely scratch the surface. Unlike the first
wave of new paradigm books, this second wave had a much more

xiv Reinventing Organizations

sophisticated psychological component, including at least four or five
stages of development, sometimes nine or 10 (but certainly more than
two, the “old” and “new paradigm,” as the earlier wave had it); and—in
addition to those developmental levels, a series of developmental lines,
or multiple intelligences that moved through those levels (such as
cognitive intelligence, emotional intelligence, moral intelligence, kines-
thetic intelligence, spiritual intelligence, and so on). They also found
room for an integration of science and spirituality—not reducing one to
the other (nor seeing all spirituality as explainable by quantum
mechanics or brain neuroplasticity; nor seeing all science as reducible to
a mystical ground; but both science and spirituality being irreducible
domains of major importance). And they all saw the first wave of “new
paradigm” books as describing essentially the Postmodern/Pluralistic
stage, and not a genuine Integral/Systemic stage.

Frederic Laloux’s book belongs clearly to this second wave of
books. But that is not its major claim to significance. We have been
seeing, for the last decade or two, books increasingly focusing on
business and some sort of “new paradigm” (mostly still first-wave
books, but increasingly some second-wave books as well). But more than
any other book that I am aware of, Laloux’s work covers all four quad-
rants (to be explained later), at least five levels of consciousness and
culture, several multiple lines or intelligences, and various types of
organizational structures, moving from Magic to Mythic to Rational to
Pluralistic to Integral—and, of course, focusing on the last and most
recent emergent, that of the Integral stage, and a sophisticated and fairly
detailed description of the business organizations that seem built around
Integral-level characteristics, including individual worldviews, cultural
values, individual and collective behavior, and social structures,
processes, and practices. This makes it a truly pioneering work.

A brief explanation of “quadrants, levels, and lines” is perhaps in
order. As Laloux indicates, these technical aspects are taken from my
own Integral Theory, which, as the result of a cross-cultural search
through hundreds of premodern, modern, and postmodern cultures and
the various maps of human consciousness and culture that they have
offered, has come up with what might be thought of as a
“Comprehensive Map” of human makeup, which was arrived at by
putting all of the known maps together on the table, and then using each
one to fill in any gaps in the others, resulting in a comprehensive map
that is genuinely inclusive of the basic dimensions, levels, and lines that
are the major potentials of all humans. There are five basic dimensions in
this Framework—quadrants, levels of development, lines of develop-
ment, states of consciousness, and types.

Quadrants refer to four major perspectives through which any
phenomenon can be looked at: the interior and the exterior in the
individual and the collective. These can introductorily be indicated by

Foreword xv

the pronouns often used to describe them: the interior of the individual
is an “I” space (and includes all the subjective thoughts, feelings,
emotions, ideas, visions, and experiences that you might have as you
introspect); the interior of a collective is a “we” space (or the inter-
subjective shared values, semantics, norms, ethics, and understandings
that any group has—its “cultures” and “sub-cultures”); the exterior of an
individual is an “it” space (and includes all the “objective” or “scientific”
facts and data about your individual organism—one limbic system, two
lungs, two kidneys, one heart, this much dopamine, this much serotonin,
this much glucose, and so on—and includes not only “objective”
ingredients but behaviors); and the exterior of a collective, which is an
“its” space (and includes all the interobjective systems, processes, syntax,
rules, external relationships, techno-economic modes, ecological systems,
social practices, and so on).

Not only all human beings, but all their activities, disciplines, and
organizations can be looked at through this four-quadrant lens, and the
results are always illuminating. According to Integral Theory, any
comprehensive account of anything requires a look at all of these
perspectives—the first-person (“I”), second-person (“you” and “we”),
and third-person (“it” and “its”) perspectives. Most human disciplines
acknowledge only one or two of these quadrants and either ignore or
deny any real existence to the others. Thus, in consciousness studies, for
example, the field is fairly evenly divided between those who believe
consciousness is solely the product of Upper-Right or objective “it”
processes (namely, the human brain and its activities); while the other
half of the field believes consciousness itself (the Upper-Left or
subjective “I” space) is primary, and all objects (such as the brain) arise
in that consciousness field. Integral Theory maintains that both of those
views are right; that is, both of those quadrants (and the other two
quadrants) all arise together, simultaneously, and mutually influence
each other as correlative aspects of the Whole. Trying to reduce all of the
quadrants to one quadrant is “quadrant absolutism,” a wretched form of
reductionism that obscures much more than it clarifies; while seeing all
of the quadrants mutually arise and “tetra-evolve” sheds enormous light
on perpetually puzzling problems (from the body/mind problem to the
relation of science and spirituality to the mechanism of evolution itself).

Laloux carefully includes all four quadrants and a detailed
description of each as it appears in different organizational types,
focusing, again, on the pioneering or Integral stage. As he puts it, “The
four-quadrant model shows how deeply mindsets [Upper-Left or “I”],
culture [Lower-Left or “we”], behaviors [Upper-Right or “it”], and
systems [Lower-Right or “its”] are intertwined. A change in any one
dimension will ripple through all the others.” He goes on to point out
that Mythic and Modern theories of organization focus on “hard”
exterior facts (the two Right-hand quadrants), and the Postmodern

xvi Reinventing Organizations

introduced the interiors of mindsets and culture (the two Left-hand
quadrants)—while often going overboard, as Postmodernism in general
did, and claimed that only culture was important. Only Integral
organizations deliberately and consciously include all four quadrants (as
Laloux’s book itself is one of the very few to include all four quadrants
in its research). Many Integral writers, while fully aware of all the
quadrants, focus on the Left-hand quadrants of levels of consciousness
and worldviews, and leave out the Right-hand quadrants of behaviors,
processes, and practices necessary to help the emergence of Integral Left-
hand dimensions. Laloux points out, for example, that Integral organiza-
tional culture (Lower-Left “we”) is enacted particularly by Integral role-
modeling from those in the organization with moral authority (from the
Upper quadrant), and, from the Lower-Right or “its” quadrant,
supportive structures, processes, and practices.

As for levels and lines, Laloux states that “In their exploration,
[many researchers] found consistently that humanity evolves in stages.
Our knowledge about the stages of human development is now
extremely robust. Two thinkers in particular—Ken Wilber and Jenny
Wade—have done remarkable work comparing and contrasting all the
major stage models, and have discovered strong convergence. … The
way I portray the stages borrows mostly from Wade’s and Wilber’s
meta-analysis, touching briefly upon different facets of every stage—the
worldview, the needs, the cognitive development, the moral develop-
ment.”

Laloux rightly invites us to be extremely careful what we mean by
“a stage.” As Howard Gardner made popular, and virtually every
developmentalist agrees, there is not just one line of development with
its stages or levels, but multiple lines or multiple intelligences, and each
of those lines are quite different, with different characteristics and
different stage structures. But what’s so interesting is that although the
various lines are quite different, they all develop through the same basic
levels of consciousness. For the moment, let’s simply number the levels;
or, as Integral Theory often does, you can give them a color name (for
example, red, orange, or green). But let’s say that there are, in this
example, seven major developmental levels through which move, say, a
dozen different developmental lines (cognitive, emotional, moral,
values, needs, and spirituality, among others). Each line—say cognitive,
moral, emotional—evolves through each of the levels, so we can talk
about red cognition, red morals, red values (red being level 3). But
somebody at orange (level 5) cognition can also be at a red (level 3)
conventional moral development. So talking about levels without lines is
dangerous.

All of the multiple intelligences in humans develop through
actualization hierarchies. Cognition, for example, moves from sensori-
motor intelligence, to images, then symbols, then concepts, then schema,

Foreword xvii

then rules, then meta-rules, then systemic networks. This is a point
worth emphasizing, because Laloux’s book shows that organizations
operating at the Integral or teal stage no longer work with dominator
hierarchies, the boss-subordinate relationships that are pervasive in
organizations today. But the absence of dominator hierarchy is not the
same thing as the absence of any hierarchy. Even if we look at Graves’
work, for example, one of the major defining characteristics of Integral
or teal is the return of nested hierarchies, after their almost complete
removal at green Postmodern pluralism. (The Postmodernists utterly fail
to distinguish between dominator hierarchies, which are indeed nasty,
and actualization hierarchies, which are the primary form of natural
growth, development, and evolution in the world—atoms to molecules
to cells to organisms, for example. Postmodernists toss out all hierarchies
as being sheer evil. This is a characteristic of the egalitarian Pluralistic
stage and is one of its shadow sides.)

But with the emergence of the teal altitude, hierarchies are all over
the place—they’re literally everywhere. As Elliott Jacques’ works have
empirically demonstrated, the way most organizations are structured,
those at the lower levels of this hierarchy usually work on the floor or
assembly line; those at the intermediate levels mostly work middle
management; and those at the upper levels work upper management
(including CEO, CFO, COO). What these newer organizations do is
move all of those levels—the entire hierarchy itself—into teams of
usually 10 to 15 people. Any person, in any team, can make literally any
decision for the company—and, in fact, virtually all the major decisions
in the organizations are made by team members—including sales,
marketing, hiring and recruitment, research and development, salary
decisions, dismissals, HR functions, equipment purchases, community
relations, and so on. This makes each team, and each person in the team,
much more Integral—they can operate on any level in the hierarchy they
are capable of, as long as they consult with those who will be affected by
the decision (although they don’t have to follow the advice), where
previously they had been constrained by their place in the pyramid. One
of the great findings of Laloux’s work is that actualization hierarchies
can flourish when dominator hierarchies are removed. A company of
500 individuals thus has, not one but 500 CEO, any one of whom might
have a breakthrough idea and be able to implement it, a true self-
management move that is one of the major reasons for the astonishing
success of so many of these organizations. What happens to middle and
much of upper management? Mostly, it doesn’t exist. Those hierarchies
have been relocated.

This work is, as I said, one of the most important books in the

entire second wave of “new paradigm” books. As Laloux is the first to
admit, we don’t know if all the characteristics, processes, and practices

xviii Reinventing Organizations

that he describes will end up actually describing the structure and form
that teal organizations will take. But this research deserves to be taken
seriously by every Integral, indeed every conventional, student of
organizations and organizational development. In terms of AQAL (all-
quadrant, all-level) sophistication, there is simply nothing like it out
there. My congratulations to Frederic Laloux on a spectacular treatise.
May it help many readers gather inspiration to create businesses,
schools, hospitals, or nonprofits inspired by this emerging new wave of
consciousness that is starting to transform the world.

Ken Wilber

Denver, Colorado
Fall 2013

Introduction • The emergence of a new organizational model 1

INTRODUCTION)

THE!EMERGENCE!OF!A!!
NEW!ORGANIZATIONAL!MODEL!

You never change things by fighting the existing
reality. To change something, build a new model

that makes the existing model obsolete.

Richard Buckminster Fuller

Aristotle, the great Greek philosopher and scientist, proclaimed in

a treatise written in 350 BC that women have fewer teeth than men.1
Today we know this is nonsense. But for almost 2,000 years, it was
accepted wisdom in the Western World. Then one day, someone had the
most revolutionary of ideas: let’s count!

The scientific method―formulating a hypothesis and then testing
it―is so deeply ingrained in our thinking that we find it hard to
conceive that intelligent people would blindly trust authority and not
put assumptions to the test. We could be forgiven for thinking that,
perhaps, people simply weren’t that smart back then! But before we
judge them too harshly, let’s ask ourselves: could future generations be
similarly amused about us? Could we, too, be prisoners of a simplistic
way of understanding the world?

There is reason to believe we might be. As an example, let me ask
you a simple question: How many brains does a human being have? I
imagine your answer is “one” (or, if you suspected a trick question, it
might be “two,” the often-referred-to right and left brains). Our current
knowledge is that we have three: there is of course the massive brain in
our head; then there is a small brain in our heart, and another in our gut.

2 Reinventing Organizations

The last two are comparatively much smaller2, but they are fully
autonomous nervous systems nevertheless.

Here is where it gets interesting: The brain in the heart and the
one in the gut were discovered only recently, even though from a
technological point of view, they could have been identified long ago.
All it takes to see them is a corpse, a knife, and a basic microscope.
Actually, the brain in the gut was discovered long ago, in the 1860s, by a
German doctor named Auerbach. His discovery was further refined by
two English colleagues, Bayliss and Starling. And then, something
extraordinary happened. Medical circles somehow forgot about the
brain in the gut. For a century, they completely lost sight of it! It was
rediscovered only in the late 1990s by Michael Gerson, an American
neuroscientist, along with others.

How could medical circles forget the existence of a brain? I believe
it has to do with the belief system of our times: in a hierarchical
worldview, there can be only one brain in command, just as there must
be a single boss at the head of every organization. Although popular
parlance has long used the terminology of “knowing in our hearts” and
“knowing in our gut,” having three autonomous brains working side by
side can’t be possible if we believe the world needs clear hierarchies to
function. It might be no coincidence that we discovered (or rediscovered)
the other two brains at the same time as the Internet became a dominant
force in our lives. The age of the Internet has precipitated a new
worldview―one that can contemplate the possibility of distributed
intelligence instead of top-down hierarchy. With that worldview, we can
accommodate the idea that we have more than one brain and that they
can work together in shared intelligence.

We can’t quite understand how people in the Middle Ages
believed Aristotle’s claim that women had fewer teeth than men. And
yet, it seems we can be prisoners of our thoughts just as much as they
were. Modern scientists neglected to look carefully through the
microscope because “there can only be one brain,” rather like Galileo’s
contemporaries refused to look through the telescope because it was
unthinkable that our God-formed planet would be anything other than
the center of the universe.

The limits of our current organizational models
My interest is in organizations and collaboration, not medicine or

astronomy. But the conceptual question is the same: could it be that our
current worldview limits the way we think about organizations? Could
we invent a more powerful, more soulful, more meaningful way to work
together, if only we change our belief system?

In many ways, this is a strange and almost ungrateful question to
ask. For thousands and thousands of years, people have lived on the
brink of famine and in fear of plagues, always at the mercy of a drought
or a simple flu. Then suddenly, almost out of nowhere, modernity has

Introduction • The emergence of a new organizational model 3

brought us unprecedented wealth and life expectancy in the last two
centuries. And all this extraordinary progress has come not from
individuals acting alone, but from people collaborating in organizations:
• The large and small businesses in our free-market economies have

created unprecedented wealth in the Western world, and they are
currently lifting millions of people out of poverty in India, China,
Africa, and elsewhere. We have built up incredibly intricate
supply chains, which increasingly link every human being in rela-
tionships that arguably do more for peace between nations than
any political arrangement ever has.

• A dense network of organizations―research centers, pharma-
ceutical companies, hospitals, medical schools, health insurance
companies―have meshed into a highly sophisticated medical
system that would have been unthinkable just a century ago. Over
the last century, this network contributed to adding nearly 20
years of life expectancy for the average person in the United
States. Infant mortality has been reduced by 90 percent and
maternal mortality by 99 percent. Age-old scourges like polio,
leprosy, smallpox, and tuberculosis are mostly part of history
books, even in the poorest countries in the world.

• In the field of education, a network of schools―kindergartens,
elementary and high schools, colleges, and graduate
schools―have brought education that was once the privilege of
the very few to millions of children and youth. Never before in
human history have there been free public education systems
available to every child. The high degrees of literacy that we now
take for granted are unprecedented in history.

• All around the world, the nonprofit sector has grown spectac-
ularly for several decades, creating jobs at a faster pace than for-
profit companies. An ever-increasing number of people donate
time, energy, and money in pursuit of purposes that matter to
them and to the world.
Modern organizations have brought about sensational progress for

humanity in less than two centuries―the blink of an eye in the overall
timeline of our species. None of the recent advances in human history
would have been possible without organizations as vehicles for human
collaboration.

And yet, many people sense that the current way we run
organizations has been stretched to its limits. We are increasingly
disillusioned by organizational life. For people who toil away at the
bottom of the pyramids, surveys consistently report that work is more
often than not dread and drudgery, not passion or purpose. That the
Dilbert cartoons could become cultural icons says much about the extent
to which organizations can make work miserable and pointless. And it’s
not only at the bottom of the pyramid. There is a dirty secret I have

4 Reinventing Organizations

discovered in the fifteen years I have spent consulting and coaching
organizational leaders: life at the top of the pyramids isn’t much more
fulfilling. Behind the façade and the bravado, the lives of powerful
corporate leaders are ones of quiet suffering too. Their frantic activity is
often a poor cover up for a deep inner sense of emptiness. The power
games, the politics, and the infighting end up taking their toll on
everybody. At both the top and bottom, organizations are more often
than not playfields for unfulfilling pursuits of our egos, inhospitable to
the deeper yearnings of our souls.

This book isn’t a rant about large corporations gone mad with
greed. People who work in government agencies or nonprofits are rarely
more exuberant about their workplaces. Even professions of calling

aren’t immune to organizational dis-
illusionment. Teachers, doctors, and
nurses are leaving their field of voca-
tion in droves. Our schools, unfor-
tunately, are for the most part soulless
machines where students and teachers
simply go through the motions. We
have turned hospitals into cold, bureau-
cratic institutions that dispossess doc-

tors and nurses of their capacity to care from the heart.

The questions that triggered the research for this book
The way we try to deal with organizations’ current problems often

seems to make things worse, not better. Most organizations have gone
through many rounds of change programs, mergers, centralizations and
decentralizations, new IT systems, new mission statements, new
scorecards, or new incentive systems. It feels like we have stretched the
current way we run organizations to its limits, and these traditional
recipes often seem part of the problem, not the solution.

We yearn for more, for radically better ways to be in
organizations. But is that genuinely possible, or mere wishful thinking?
If it turns out that it is possible to create organizations that draw out
more of our human potential, then what do such organizations look like?
How do we bring them to life? These are the questions at the heart of
this book.

To me, these are not merely academic but very practical questions.
An increasing number of us yearn to create soulful organizations, if only
we knew how. Many of us don’t need convincing that new types of
companies, schools, and hospitals are called for. What we need is faith
that it can be done and answers to some very concrete questions. The
hierarchical pyramid feels outdated, but what other structure could
replace it? How about decision-making? Everybody should make
meaningful decisions, not just a few higher-ups, but isn’t that just a
recipe for chaos? How about promotions and salary increases? Can we

Instinctively, we know that management
is out of date. We know its rituals and
routines look slightly ridiculous in the

dawning light of the 21st century. That’s
why the antics in a Dilbert cartoon or an

episode of The Office are at once
familiar and cringe-making.$

Gary Hamel

Introduction • The emergence of a new organizational model 5

find ways to handle such matters without bringing politics to the table?
How can we have meetings that are productive and uplifting, where we
speak from our hearts and not from our egos? How can we make
purpose central to everything we do, and avoid the cynicism that lofty-
sounding mission statements often inspire? What we need is not merely
some grand vision of a new type of organization. We need concrete
answers to dozens of practical questions like these.

Taking this practical perspective does not preclude us from also
considering much larger societal and environmental implications. Our
way of conducting business has outgrown our planet. Our organizations
contribute on a massive scale to depleting
natural resources, destroying ecosystems,
changing the climate, exhausting water
reserves and precious topsoils. We are play-
ing a game of brinkmanship with the future,
betting that more technology will heal the
scars modernity has inflicted on the planet.
Economically, a model of ever more growth with finite resources is
bound to hit the wall; the recent financial crises are possibly only
tremors of larger earthquakes to come. It is probably no exaggeration,
but sad reality, that the very survival of many species, ecosystems, and
perhaps the human race itself hinges on our ability to move to higher
forms of consciousness and from there collaborate in new ways to heal
our relationship with the world and the damage we’ve caused.

Organizations over the course of evolution (Part 1)
Einstein once famously said that problems couldn’t be solved with

the same level of consciousness that created them in the first place.
Perhaps we need to access a new stage of consciousness, a new world-
view, to reinvent human organizations. To some people, the notion that
society could shift to another worldview, and that from that worldview
we could create a radically new type of organization, might pass for
wishful thinking. And yet, this is precisely what has happened several
times in human history, and there are elements that hint that another
change of mindset―and thus another organizational model―may be
just around the corner.

A great number of scholars―psychologists, philosophers, and
anthropologists, among others―have dissected the journey of human
consciousness. They found that in the roughly 100,000-year history of
humanity, we have gone through a number of successive stages. At
every stage we made a leap in our abilities―cognitively, morally, and
psychologically―to deal with the world. There is one important aspect
that researchers have so far somewhat overlooked: every time humanity
has shifted to a new stage, it has invented a new way to collaborate, a
new organizational model. Part 1 of this book recounts this story: how
humanity’s consciousness evolved, and how at every step of the way we

The greatest danger in times of
turbulence is not the

turbulence―it is to act with
yesterday’s logic.

Peter Drucker

6 Reinventing Organizations

have invented new organizational models. (Those successive models are
still around today, so this historical perspective has much to offer
toward understanding today’s various types of organizations and many
of today’s debates in the field of management.)

Here is where things become particularly intriguing: develop-
mental psychology has much to say about the next stage of human
consciousness, the one we are just starting to transition into. This next
stage involves taming our ego and searching for more authentic, more
wholesome ways of being. If the past is any guide to the future, then as
we grow into the next stage of consciousness, we will also develop a
corresponding organizational model.

Empirical research―what pioneers can teach us (Part 2)
The second part of the book describes in practical detail how

organizations operate at this next stage. It so happens that the future is
not just around the corner―it is already blending into the present. For
two years, I have researched pioneer organizations that have already, to
a significant degree, started operating on a new organizational model
consistent with the next stage of human development. The questions I
was trying to answer as I started researching these pioneer organizations
were these:

What do organizations molded around the next stage of
consciousness look and feel like? Is it already possible to describe their
structures, practices, processes, and cultures (in other words, to con-
ceptualize the organizational model) in useful detail, to help other people
set up similar organizations?

I didn’t know what to expect when I set out to identify pioneer
organizations. This field is only emerging; would I find any good
examples? Would I stumble only on tiny organizations, with too little
history to get to any meaningful insights? I felt that rather strict selection
criteria were needed in any case―otherwise there might not be much
value in the claims the study would make. To be included in this
research, organizations could stem from any geographical area or sector
(business, nonprofit, education, health, government), but needed to
employ$ a minimum of 100 people,3 and to have been operating for a
minimum of five years along structures, practices, processes, and cultures
that to a substantial degree were consistent with the characteristics of the
next developmental stage.

My concerns proved unfounded. The twelve organizations I
researched (see chapter 2.1 for an overview) overshoot these criteria by a
long shot. Many have been operating on these breakthrough principles
for a long time, sometimes 30 or 40 years, and not just with a handful,
but with a few hundred and sometimes several thousand employees.

Another surprise: I was expecting to find case examples mostly in
service professions―health care or education―where work is often a

Introduction • The emergence of a new organizational model 7

calling, and the organization’s noble purpose helps people transcend
their more selfish motivations. I was happy to be proven wrong. Among
the pioneers are for-profit as well as nonprofit organizations. There are
retailers, manufacturing companies, an energy company, and a food
producer, as well as a school and a group of hospitals.

I was also surprised to discover that these organizations didn’t
know about each other. I had expected, if I found any such pioneers, that
they would know about like-minded peers with whom they would
exchange insights and experiences. Instead, they were generally
delighted to hear that they weren’t the only ones out there questioning
today’s management practices. I came to jokingly think about these
organizations as friendly aliens from some old TV series, living right
among us for quite a while now, endowed with superpowers but
isolated and unrecognized. Perhaps the times are catching up with them;
perhaps we are now finally ready to see them for what they are: not
merely as friendly but awkward outliers, but as pioneers of our
collective future.

Researching these case studies involved two sets of questions
(listed in Appendix 1). The first set relates to 45 practices and processes
that are commonly discussed in organizational research. They connect
to:
• key overarching organizational processes such as strategy, market-

ing, sales, operations, budgeting, and controlling;
• the main human resources processes, including recruitment, train-

ing, evaluation, compensation; and
• critical practices of everyday life like meetings, information flow,

and office spaces.
For each of these 45 areas, the research tried to identify in what

ways the practices of the pioneers differ―or don’t―from conventional
management methods. The approach was deliberately broad and open-
ended: given the emerging nature of the topic, the research looked at the
entire spectrum of structures, practices, and cultures typically considered
in organizational research, without preconceived notions. It relied upon
publicly available material, internal documents, interviews, and onsite
visits.

Spoiler alert
Each of the pioneer organizations is astonishing in its own right

and would warrant an entire book to tell its story. But of course, as part
of the research, I was curious if there was more to it than a collection of
case studies: are there patterns and commonalities that point to a
coherent new model? Can the pioneers provide not just inspiration, but a
template for those aspiring to create more soulful types of organizations?

The answer, clearly, is positive. These pioneer organizations didn’t
know about each other and experimented on their own; they work in
radically different sectors and locations; some have hundreds, others

8 Reinventing Organizations

tens of thousands, of employees. Despite all this, they have―after much
trial and error―come up with strikingly similar structures and practices.
I find it difficult not to get excited about this. It means that a coherent

organizational model seems to be emerging,
one we can describe in quite some detail. This
is not a theoretical model, not a utopian idea,
but a very concrete way to run organizations
from a higher stage of consciousness. If we
accept that there is a direction to human evolu-
tion, then we hold here something rather ex-

traordinary: the blueprint of the future of organizations, the blueprint to
the future of work itself.

I write this with full awareness that we are in the early days of
this emerging phenomenon. I don’t mean to suggest that this book offers
a definitive, fixed description of this upcoming organizational model. As
more companies start to innovate in this field, as more researchers look
at them from different angles, and as society as a whole evolves, more
richness and texture will certainly be added to the picture. But I am
confident that, even now, we hold a blueprint for how we can organize
entities in ways that make work vastly more productive, fulfilling, and
purposeful. Organizational leaders who want to create new types of
organizations don’t have to start from a blank sheet of paper; they can
draw inspiration from the very concrete descriptions in Part 2 of this
book outlining the principles, structures, practices, and cultures that
support a new way to come together in organizations.

Necessary conditions (Part 3)
The research for this book has also yielded interesting insights

concerning the journey to bring such new organizations to life (based on
a second set of research questions―see Appendix 1). What are the
necessary conditions to making this new model work? If you are
planning to start up an organization and want to, from the beginning,
eschew the old model and start on a new foundation, what can you learn
from pioneers who have done this before? Or, if you lead an existing
organization, large or small, and consider transitioning to this new
paradigm, what would be good ways to get started and to engage
colleagues in that journey? These are some of the questions addressed in
Part 3 of the book.

If we are to overcome the daunting problems of our times, we will

need new types of organizations―more purposeful businesses, more
soulful schools, more productive nonprofits. Anybody breaking out of
the mold and venturing into the new is likely to meet resistance, to be
called an idealist or a fool. Anthropologist Margaret Meade once said,
“Never underestimate the power of a few committed people to change
the world. Indeed, it is the only thing that ever has.” If you are one of

Organizations researched for
this book are like aliens from
some old TV series―living

right among us, unrecognized
despite their superpowers.

Introduction • The emergence of a new organizational model 9

them, if you feel called to create a radically more soulful, purposeful,
and productive workplace, then I hope that this book will provide you
with some extra confidence that it can be done. May it serve as a
practical handbook along your journey. I have no doubt that the world is
ready and waiting for you.

!

!
!

Part 1$

Historical and

Developmental Perspective

Chapter 1.1 • Changing paradigms 13

CHAPTER)1.1)

CHANGING!PARADIGMS:!!
PAST!AND!PRESENT!

!ORGANIZATIONAL!MODELS!

Seeing is not believing; believing is seeing!
You see things, not as they are, but as you are.

Eric Butterworth

Can we create organizations free of the pathologies that show up
all too often in the workplace? Free of politics, bureaucracy, and
infighting; free of stress and burnout; free of resignation, resentment,
and apathy; free of the posturing at the top and the drudgery at the
bottom? Is it possible to reinvent organizations, to devise a new model
that makes work productive, fulfilling, and meaningful? Can we create
soulful workplaces―schools, hospitals, businesses, and nonprofits―where
our talents can blossom and our callings can be honored?

If you are the founder or leader of an organization and you long
to create a different workplace, much rides on your answer to that
question! Many people around you will dismiss this idea as wishful
thinking and try to talk you out of even trying. “People are people,” they
will say. “We have egos, we play politics, we like to blame, criticize, and
spread rumors. This will never change.” Who can argue with that? But,
on the other hand, we have all experienced peak moments of teamwork,
where achievements came joyfully and effortlessly. Human ingenuity
knows no bounds and radical innovations sometimes appear all of a
sudden, out of nowhere. Who would wager we cannot invent much
more exciting workplaces?

So which voice should you heed? Is it possible to set a course
away from the land of management-as-we-know-it for a new world? Or

14 Reinventing Organizations

are you just going to sail off the edge, because there is nothing beyond
the world we know?

Part of the answer, I have found somewhat unexpectedly, comes
from looking not forward, but into the past. In the course of history,
humankind has reinvented how people come together to get work done
a number of times―every time creating a vastly superior new
organizational model. What’s more, this historical perspective also hints
at a new organizational model that might be just around the corner,
waiting to emerge.

The key to this historical perspective, interestingly, comes not
from the field of organizational history, but more broadly from the field
of human history and developmental psychology. It turns out that,
throughout history, the types of organizations we have invented were
tied to the prevailing worldview and consciousness. Every time that we,
as a species, have changed the way we think about the world, we have
come up with more powerful types of organizations.

A great number of people―historians, anthropologists, philo-
sophers, mystics, psychologists, and neuroscientists―have delved into
this most fascinating question: how has humanity evolved from the earliest
forms of human consciousness to the complex consciousness of modern times?
(Some inquired into a related question: how do we human beings evolve
today from the comparatively simple form of consciousness we have at birth to
the full extent of adult maturity?)

People have looked at these questions from every possible angle.
Abraham Maslow famously looked at how human needs evolve along
the human journey, from basic physiological needs to self-actualization.
Others looked at development through the lenses of worldviews (Gebser,
among others), cognitive capacities (Piaget), values (Graves), moral
development (Kohlberg, Gilligan), self-identity (Loevinger), spirituality
(Fowler), leadership (Cook-Greuter, Kegan, Torbert), and so on.

In their exploration, they found consistently that humanity evolves
in stages. We are not like trees that grow continuously. We evolve by
sudden transformations, like a caterpillar that becomes a butterfly, or a
tadpole a frog. Our knowledge about the stages of human development
is now extremely robust. Two thinkers in particular―Ken Wilber and
Jenny Wade―have done remarkable work comparing and contrasting
all the major stage models and have discovered strong convergence.
Every model might look at one side of the mountain (one looks at needs,
another at cognition, for instance), but it’s the same mountain. They may
give somewhat different names to the stages or sometimes subdivide or
regroup them differently. But the underlying phenomenon is the same,
just like Fahrenheit and Celsius recognize―with different labels―that
there is a point at which water freezes and another where it boils. This
developmental view has been backed up by solid evidence from large
pools of data; academics like Jane Loevinger, Susanne Cook-Greuter, Bill
Torbert, and Robert Kegan have tested this stage theory with thousands

Chapter 1.1 • Changing paradigms 15

and thousands of people in several cultures, in organizational and
corporate settings, among others.

Every transition to a new stage of consciousness has ushered in a
whole new era in human history. At every juncture, everything changed:
society (going from family bands to tribes to
empires to nation states); the economy (from
foraging to horticulture, agriculture, and indus-
trialization); the power structures; the role of
religion. One aspect hasn’t yet received much
attention: with every new stage in human
consciousness also came a break-through in
our ability to collaborate, bringing about a new
organizational model. Organizations as we know
them today are simply the expression of our
current world-view, our current stage of development. There have been
other models before, and all evidence indicates there are more to come.

So what are the past and current organizational models in human
history―and what might the next look like? In this chapter, I will take
you on a whirlwind tour of the major stages in the development of
human consciousness and of the corresponding organizational models.
The way I portray the stages borrows from many researchers, and
primarily from Wade’s and Wilber’s meta-analyses, touching briefly
upon different facets of every stage―the worldview, the needs, the
cognitive development, the moral develop-ment. I refer to every stage,
and to the corresponding organizational model, with both a name and
a color. Naming the stages is always a struggle; a single adjective will
never be able to capture all of the com-plex reality of a stage of human
consciousness. I’ve chosen adjectives I feel are the most evocative for
each stage, in some cases borrowing a label from an existing stage
theory, in other cases choosing a label of my own making. Integral
Theory often refers to stages not with a name but with a color. Certain
people find this color-coding to be highly memo-rable, and for that
reason I’ll often refer to a stage throughout this book with the
corresponding color (which should not obscure the fact―let’s add this to
avoid any misunderstanding―that the way I describe the stages of
consciousness stems from a personal synthesis of the work of different
scholars, which while generally compatible might not always square
entirely with the way Integral Theory describes the same stages).

Reactive―Infrared paradigm1!

This is the earliest developmental stage of humanity, spanning
roughly the period from 100,000 to 50,000 BC, when we lived in small
bands of family kinships (some of which survive in remote parts of the
world today, which accounts for our knowledge of this stage). These

Philosophers, mystics from
many wisdom traditions,

psychologists, and
neuroscientists have all delved

into this most fascinating
question: how has human

consciousness evolved from the
time we lived in caves
to who we are today?

16 Reinventing Organizations

bands typically number just a few dozen people. Beyond that number,
things start to break down, as people’s capacity to handle complexity in
relationships is very limited at this stage. The ego is not fully formed;
people don’t perceive themselves as entirely distinct from others or from
the environment (which causes some to romanticize about this period,
seeing it as pre-dualism bliss, ignoring the extremely high rate of vio-
lence and murder at this stage). Foraging is the basis of subsistence. This
model requires no division of labor to speak of (other than women
taking responsibility for the bearing and rearing of children), and so
there is nothing like an organizational model at that stage yet. In fact,
there is no hierarchy within the band―there is no elder, no chief that
provides leadership.

There are only a few remaining bands of people operating from
this paradigm in the world today. However, child psychologists study
what amounts to the same stage in newborn babies, who engage with
the world via a comparable form of consciousness, where the concept of
self isn’t yet fully separate from the mother and the environment.

Magic―Magenta paradigm2!

Around 15,000 years ago, and perhaps earlier in some places of
the world, humanity started to shift to a stage of consciousness some
authors have labeled “magical.” This stage corresponds to the shift from
small family bands to tribes of up to a few hundred people. Psycho-
logically and cognitively, this represents a major step up in the ability to
handle complexity. The self at this stage is to a large degree differen-
tiated physically and emotionally from others, but it still sees itself
very much the center of the universe. Cause and effect are poorly
understood, and so the universe is full of spirits and magic: clouds move
to follow me; bad weather is the spirits’ punishment for my bad actions. To
appease this magical world, tribes seek comfort in ritualistic behaviors
and by following the elder and the shaman. People live mostly in the
present, with some blending in of the past, but little projection toward
the future. Cognitively, there is no abstraction yet, no classification, no
concept of large numbers. Death is not seen as particularly real, and
the fear of one’s death is markedly absent (which accounts for con-
tinuing high rates of violence and murder). Organizations don’t exist at
this stage yet. Task differentiation remains extremely limited, although
elders have special status and command some degree of authority.

Today, this stage is typically experienced by children of around
three to 24 months of age. This is when they acquire sensorimotor differ-
entiation (when I bite my finger it’s not the same as when I bite the blanket)
and emotional differentiation (I’m not my mother, though in her presence I
feel magically safe). With adequate nurture, most children grow beyond
this stage.

Chapter 1.1 • Changing paradigms 17

Impulsive―Red paradigm3!

Historically, the shift to the Impulsive-Red paradigm was another
major step up for humanity. It brought forth the first chiefdoms and
proto-empires, around 10,000 years ago. From it also emerged the first
forms of organizational life (which I’ll refer to as Red Organizations).

The ego is now fully hatched, and people have a sense of self that
is entirely separate from others and from the world. At first, this
realization is frightening: for the first time, death is real. If I’m just a small
part, separate from the whole, I might suffer or die. The world at this stage is
seen as a dangerous place where one’s needs being met depends on
being strong and tough. The currency of the world is power. If I’m more
powerful than you, I can demand that my needs are met; if you are more
powerful than me, I’ll submit in the hope you will take care of me. The
emotional spectrum is still rather crude, and people often express their
needs through tantrums and violence. One is largely unaware of other
people’s feelings. The orientation is still mostly to the present―I want it,
and I want it now―but this impulsiveness can extend somewhat into the
future with simple strategies using power, manipulation, or submission.
Simple causal relationships such as rewards and punishments are
understood. Thinking is shaped by polar opposites, which makes for a
black and white worldview―for example, strong/weak, my way/your
way.

With ego-differentiation, role differentiation becomes possible―in
other words, meaningful division of labor. There is now a chief, and
there are foot soldiers. Slavery enters the picture on a large scale, now
that tasks can be isolated and given to enemies from neighboring tribes
that have been defeated and put into bondage. Historically, this has led
to the emergence of chiefdoms ruling not only hundreds, but up to
thousands or tens of thousands of people. Impulsive-Red functioning
can still be found in adults in many tribal societies in the world today
and in underprivileged areas amidst developed societies, when
circumstances don’t provide adequate nurture for children to develop
beyond this stage. Every paradigm has its sweet spot, a context in which
it is most appropriate. Impulsive-Red is highly suitable for hostile
environments: combat zones, civil wars, failed states, prisons, or violent
inner-city neighborhoods.

Red Organizations
Organizations molded in Impulsive-Red consciousness first

appeared in the form of small conquering armies, when the more
powerful chiefdoms grew into proto-empires. They can still be found
today in the form of street gangs and mafias. Today’s Red Organizations
borrow tools and ideas from modernity―think about organized crime’s

18 Reinventing Organizations

use of weaponry and information technology. But their structures and
practices are for the most part still molded in the Impulsive-Red paradigm.

What are the defining characteristics of Red Organizations? Their
glue is the continuous exercise of power in interpersonal relationships.
Wolf packs provide a good metaphor: rather like the “alpha wolf” uses
power when needed to maintain his status within the pack,4 the chief of
a Red Organization must demonstrate overwhelming power and bend
others to his will to stay in position. The minute his power is in doubt,
someone else will attempt to topple him. To provide some stability, the
chief surrounds himself with family members (who tend to be more
loyal) and buys their allegiance by sharing the spoils. Each member of
his close guard in turn looks after his own people and keeps them in
line. Overall, there is no formal hierarchy and there are no job titles.
Impulsive-Red Organizations don’t scale well for those reasons―they
rarely manage to keep in line people who are separated from the chief by
more than three or four degrees. While Red Organizations can be
extremely powerful (especially in hostile environments where later stages
of organizations tend to break down), they are inherently fragile, due to
the impulsive nature of people’s way of operating (I want it so I take it).
The chief must regularly resort to public displays of cruelty and punish-
ment, as only fear and submission keep the organization from disinte-
grating. Mythical stories about his absolute power frequently make the
rounds, to keep foot soldiers from vying for a higher prize.

Present-centeredness makes Red Organizations poor at planning
and strategizing but highly reactive to new threats and opportunities that
they can pursue ruthlessly. They are therefore well adapted to chaotic
environments (in civil wars or in failed states) but are ill-suited to
achieve complex outcomes in stable environments where planning and
strategizing are possible.

Conformist―Amber paradigm5!

Every paradigm shift opens up unprecedented new capabilities
and possibilities. When Conformist-Amber consciousness emerged,
humankind leaped from a tribal world subsisting on horticulture to the
age of agriculture, states and civilizations, institutions, bureaucracies,
and organized religions. According to developmental psychologists, a
large share of today’s adult population in developed societies operates
from this paradigm.

At the Conformist-Amber stage, reality is perceived through
Newtonian eyes. Cause and effect are understood,6 people can grasp
linear time (past, present, future) and project into the future. This is the
soil from which agriculture could emerge: farming requires the self-
discipline and foresight to keep seeds from this year’s harvest to provide
for next year’s food. The caloric surplus generated by agriculture allowed
for feeding a class of rulers, administrators, priests, warriors, and crafts-

Chapter 1.1 • Changing paradigms 19

men; this brought about the shift from chiefdom to states and civiliza-
tions, starting around 4000 BC in Mesopotamia.

Conformist-Amber consciousness develops a deeper awareness of
other people’s feelings and perceptions. Piaget, the pioneer child psy-
chologist, has given us a defining experiment of Conformist-Amber
cognition. A two-colored ball is placed between a child and an adult,
with the green side facing the child and the red side facing the adult.
Prior to the Amber stage, a child cannot yet see the world from someone
else’s perspective, and he will claim that both he and the adult see a
green ball. At the age of around six or seven, a child raised in a nurturing
environment will learn to see the world through someone else’s eyes and
will correctly identify that the adult sees the red side of the ball.

Psychologically, the implications are enormous. I can identify
with my perspective and my role and see it as different from yours. I can
also imagine how others view me. My ego and sense of self-worth are
now very much based on other people’s opinions. I will strive for
approval, acceptance, and belonging in my social circle. People at this
stage internalize group norms, and the thinking is dominated by
whether one has the right appearance, behaviors, and thoughts to fit in.
The dualistic thinking of Red is still present, but the individual “my way
or your way” is replaced with a collective “us or them.” Red egocentrism
has given way to Amber ethnocentrism. Ken Wilber puts it this way:

Care and concern are expanded from me to the group―but no
further! If you are a member of the group―a member of … my mythol-
ogy, my ideology―then you are “saved” as well. But if you belong to a
different culture, a different group, a different mythology, a different god,
then you are damned.7

In Conformist-Amber, the formerly impulsive Red self is now able
to exercise self-discipline and self-control, not only in public but also in
private. Amber societies have simple morals based on one accepted,
right way of doing things. The Conformist-Amber worldview is static:
there are immutable laws that make for a just world, where things are
either right or wrong. Do what’s right and you will be rewarded, in this
life or the next. Do or say the wrong things, and you will be punished or
even rejected from the group―and possibly suffer in the hereafter.
People internalize the rules and morality and feel guilt and shame when
they go astray. Authority to define what is right and wrong is now
linked to a role, rather than to a powerful personality (as was the case in
Red); it’s the priest’s robe, whoever wears it, that defines authority.

Any major change of perspective, like the change from Red to
Amber, is both liberating and frightening. To feel safe in a world of
causality, linear time, and awareness of other people’s perspectives, the
Amber ego seeks for order, stability, and predictability. It seeks to create
control through institutions and bureaucracies. It finds refuge in strictly

20 Reinventing Organizations

defined roles and identities. Amber societies tend to be highly stratified,
with social classes or caste systems and rigid gender differences as
defining features. A lottery at birth defines what caste you are born into.
From there, everything is mapped out for you―how you are to behave,
think, dress, eat, and marry is in accordance with your caste.

With so much in flux in the world today, some find Amber
certainties an appealing refuge and call for a return to a fixed set of
moral values. To take that perspective is to ignore the massive inequality
of traditional societies that set strict social and sexual norms. It can be
unpleasant, to say the least, to be a woman, a homosexual, an untouch-
able, or a free thinker in a Conformist-Amber society.

Amber Organizations
The advent of Amber Organizations brought about two major

breakthroughs: organizations can now plan for the medium and long term,
and they can create organizational structures that are stable and can scale.
Combine these two breakthroughs, and you get organizations able to
achieve unprecedented outcomes, beyond anything Red Organizations
could have even contemplated. Historically, Amber Organizations are
the ones that have built irrigation systems, pyramids, and the Great Wall
of China. Conformist-Amber Organizations ran the ships, the trading
posts, and the plantations of the Colonial world. The Catholic Church is
built on this paradigm―arguably it has been the defining Amber
Organization for the Western world. The first large corporations of the
Industrial Revolution were run on this template. 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.

Amber breakthrough 1: Long-term perspective (stable processes)
Red Organizations are highly opportunistic; they don’t generally

eye a prize beyond the next scheme in a few days or a few weeks. Amber
Organizations can take on long-term projects―constructing cathedrals
that might take two centuries to complete or creating networks of colo-
nial trading posts thousands of miles away to facilitate commerce.

This breakthrough is very much linked to the invention of
processes. With processes, we can replicate past experience into the
future. Last year’s harvest will be our template for this year’s; next year’s
classroom will be run with the same lesson plan as this year’s. With processes,
critical knowledge no longer depends on a particular person; it is
embedded in the organization and can be transmitted across generations.
Any person can be replaced by another that takes over the same role in the
process. Even the chief is replaceable, in an orderly succession, and
Amber Organizations can therefore survive for centuries.

Chapter 1.1 • Changing paradigms 21

At the individual level, people operating from a Conformist-
Amber paradigm strive for order and predictability; change is viewed
with suspicion. The same holds true for Amber Organizations, which are
exceptionally well-suited for stable contexts, where the future can be
planned based on past experience. They operate on the hidden
assumption that there is one right way of doing things and that the
world is (or should be) immutable. What has worked in the past will
work in the future. When the context is changing, and the way we do
things around here stops working, Amber Organizations find it hard to
accept the need for change. The idea that there is one right way makes
Amber Organizations ill at ease with competition. Historically, they
have striven for dominance and monopoly, and Amber Organizations
today still tend to view competition with suspicion.

Amber breakthrough 2: Size and stability (formal hierarchies)
In Red Organizations, power structures are in constant flux as

personalities jockey for influence. Conformist-Amber Organizations
bring stability to power, with formal titles, fixed hierarchies, and
organization charts. The overall structure settles into a rigid pyramid,
with a cascade of formal reporting lines from bosses to subordinates.
Below the pope there are cardinals; below cardinals, archbishops; below
archbishops, bishops; and below bishops, priests. The plant manager
commands the department heads, who in turn oversee unit managers,
line managers, foremen, and machine operators. The personal allegiance
of the foot soldier to the chief is no longer needed; the foot soldier has
integrated his place into the hierarchy. Even if the pope is weak, a priest
will not scheme to backstab him and take his place. Much larger
organizations become possible, spanning not hundreds but thousands of
workers, and they can operate across vast distances. Mankind’s first
global organizations―from the Catholic Church to the East India
Company―were built on a Conformist-Amber template.

Planning and execution are strictly separated: the thinking happens
at the top, the doing at the bottom. Decisions made at the top get handed
down through successive layers of management. The constant threat of
violence from above in Red Organizations
gives way to more subtle and elaborate
control mechanisms. A whole catalog of rules
is set up. Some among the staff are put in
charge of ensuring compliance and handing
out disciplinary measures and punishments
for those found wanting. Show up late at work, and part of your wage
will be deducted. Show up late again, and you will be suspended for a
day. Show up late again, and you could be dismissed.

The underlying worldview is that workers are mostly lazy,
dishonest, and in need of direction. They must be supervised and told
what is expected of them. Participatory management seems foolish from

Why is it that every time I ask
for a pair of hands, they come

with a brain attached?
Henry Ford

22 Reinventing Organizations

a Conformist-Amber perspective; management must rely on command
and control to achieve results. Jobs at the frontlines are narrow and
routine-based. Innovation, critical thinking, and self-expression are not
asked for (and often discouraged). Information is shared on an as-
needed basis. People are effectively interchangeable resources; individu-
al talent is neither discerned nor developed.

From the vantage point of later stages, this might sound severely
limiting. But as a step up from Red, it is major progress. Even for people
at the bottom of the organization doing routine work, it feels highly
liberating. In Red Organizations, people have to fight to protect their turf
(if not their survival)―day in and day out―from their boss, their peers,
and their underlings. In contrast, Amber Organizations’ order and pre-
dictability feels like a safe haven. We no longer need to watch out for
threats and danger that might come unexpectedly from any direction.
We just need to follow the rules.

Red Organizations are wolf packs. In Amber, the metaphor
changes: a good organization should be run like an army. Within a rigid
hierarchy, there must be a clear chain of command, formal processes,
and clear-cut rules that stipulate who can do what. Foot soldiers at the
bottom of the pyramid are expected to follow orders scrupulously, no
questions asked, to ensure the battalion marches in good order.

The social mask
Size and stability become possible because people in Conformist-

Amber are content to stay in their box and not vie for a higher prize.
People operating from this stage identify with their roles, with their
particular place in the organization. Amber Organizations have invented
and generalized the use of titles, ranks, and uniforms to bolster role
identification. A bishop’s robe signals that inside is no mere priest. A
general’s uniform can hardly be confused with a lieutenant’s or a
private’s, even from far away. In factories, the owner, the engineer, the
accountant, the foreman, and the machine operator tend to dress
differently to this day. When we put on our clothes, we also put on a
distinct identity, a social mask. We internalize behaviors that are
expected of people with our rank and in our line of work. As a worker,
it’s not only that I wear a different uniform than the engineer. I eat in the
workers’ mess; he eats in the factory restaurant. And in these places, the
subjects of conversation, the jokes, and the type of self-disclosure are
vastly different. Social stability comes at the price of wearing a mask, of
learning to distance ourselves from our unique nature, from our
personal desires, needs, and feelings; instead, we embrace a socially
acceptable self.

Historically, this hierarchical stratification in organizations paral-
leled social stratification: priests were recruited from peasantry; bishops
and cardinals, from aristocracy. The organizational ladder would come
with big gaps―a man (and certainly a woman) born into the working

Chapter 1.1 • Changing paradigms 23

class would not climb to a management position. Fortunately, that rigid
social stratification has disappeared in modern societies. But today’s
Amber Organizations still tend to replicate hierarchical stratification,
albeit in more subtle ways. In government agencies, schools, and the
military, positions higher than a certain level often still require a specific
diploma or a certain number of years of service. The promotion can
bypass the most qualified and go to the person who happens to tick off
the right criteria.

Us versus them
Social belonging is paramount in the Conformist-Amber

paradigm. You are part of the group, or you are not―it is “us” versus
“them.” This dividing line can be found throughout Amber Organiza-
tions―nurses versus doctors versus administrators, line versus staff,
marketing versus finance, frontline versus headquarters, public schools
versus charter schools, and so forth. To deflect internal strife within a
group, problems and mistakes are routinely blamed on others. Amber
Organizations have definitive silos, and groups eye each other with
suspicion across silos. The way Amber Organizations try to restore trust
is through control―creating procedures that people across silos have to
abide by.

If there are barriers inside the organization, there is a moat
between the organization and the outside world. Amber Organizations
try wherever possible to be self-contained and autonomous―one simply
shouldn’t need the outside world. Early car factories had their own
rubber plantations and steel mills, operated their own bakeries, and
provided social housing. Employees also “belong” to the organization:
employment is assumed to be lifelong, and much of people’s social life
revolves around the organization. The possibility of dismissal therefore
carries a double threat: employees risk losing both the identity the work
gives them as well as the social fabric they are embedded in. Someone
who decides to leave the organization is often met with bewilderment, if
not accused of betrayal. In milder forms, today’s Amber Organi-
zations―which often come in the form of government agencies, reli-
gious organizations, public schools, and the military―still have lifetime
employment as their implicit or explicit norm, and for many of their
employees, social life revolves heavily around their work life. For those
who feel unfulfilled in Amber Organizations and decide to leave, it is
often a painful process―akin to shedding an old life and having to
reinvent a new one.

Achievement―Orange paradigm8
In Orange, the world presents a new face. We see it no longer as a

fixed universe governed by immutable rules, but as a complex clockwork,

24 Reinventing Organizations

whose inner workings and natural laws can be investigated and under-
stood. There is no absolute right and wrong, though plainly, there are
some things that work better than others. Effectiveness replaces morals as
a yardstick for decision-making: the better I understand the way the world
operates, the more I can achieve; the best decision is the one that begets the highest
outcome. The goal in life is to get ahead, to succeed in socially acceptable
ways, to best play out the cards we are dealt.

The cognitive shift involved in this new paradigm is well described
by another of Piaget’s experiments, here recounted by Ken Wilber:

The person is given three glasses of clear liquid and told that they can
be mixed in a way that will produce a yellow color. The person is then
asked to produce the yellow color. Concrete operational children
[Piaget’s words for Amber cognition] will simply start mixing the
liquids together haphazardly. Formal operational adolescents [i.e., those
that master Orange cognition] will first form a general picture of the
fact that you have to try glass A with glass B, then A with C, then B
with C and so on. If you ask them about it, they will say something like
“Well, I need to try all the various combinations one at a time.”

It means the person can begin to imagine different possible worlds.
“What if” and “as if” can be grasped for the first time. All sorts of
idealistic possibilities open up. You can imagine what yet might be!
Adolescence is such a wild time, not just because of sexual blossoming,
but because possible worlds open up the mind’s eye―it’s the “age of
reason and revolution.” 9

With this cognitive capacity one can question authority, group
norms, and the inherited status quo. In the Western world, Achieve-
ment-Orange thinking started to poke holes in the Conformist-Amber
world of Christian certainties during the Renaissance, but it was at first
confined to a very small minority, primarily scientists and artists. With
the Age of Enlightenment and the Industrial Revolution, Orange
thinking emerged on a broader scale within educated circles. After the
Second World War, a more significant percentage of the population in
the Western world shifted to the Achievement-Orange paradigm. Today,
Orange is arguably the dominating worldview of most leaders in business
and politics.

Orange cognition has opened the floodgates of scientific inves-
tigation, innovation, and entrepreneurship. In a timeframe of just two
centuries―the blink of an eye in the overall history of our species―it has
brought us unprecedented levels of prosperity. It has added a few decades
to our life expectancy, doing away with famine and plague in the
industrialized world, and is now repeating the magic at a rapid pace in
the developing world as well.

Every paradigm, seen from a higher stage, also comes with its
shadows. The dark side of the Achievement-Orange paradigm is hard to
ignore these days: corporate greed, political short-termism, overleverage,

Chapter 1.1 • Changing paradigms 25

overconsumption, and the reckless exploitation of the planet’s resources
and ecosystems. But this shouldn’t eclipse the enormous liberation this
stage has brought us. It has moved us away from the idea that authority
has the right answer (instead, it relies on expert advice to give insight into
the complex mechanics of the world) and brings a healthy dose of
skepticism regarding revealed truth. It has allowed us to engage, for the
first time, in the pursuit of truth regardless of religious dogma and
political authority, without having to risk our lives. We have become
capable of questioning and stepping out of the condition we were born in;
we are able of breaking free from the thoughts and behaviors that our
gender and our social class would have imposed upon us in earlier times.
Where Red’s perspective was egocentric and Amber’s ethnocentric,
Orange brought about the possibility of a worldcentric perspective.

From an Orange perspective, all individuals should be free to
pursue their goals in life, and the best in their field should be able to
make it to the top. In practice, though, Achievement-Orange does not
deconstruct the traditional Conformist-Amber world as fully as its
thinking promises. People’s need to be seen as socially successful makes
them ready to adopt social conventions when they are helpful. Those
who have achieved success are generally happy to recreate forms of
social stratification―they move to privileged neighborhoods, join
exclusive clubs, and put their children in expensive private schools.
People operating from this perspective are often skeptical of religious
observance; and yet, many who do not have personal faith will retain a
religious affiliation if it is socially beneficial. (And as a hedging strategy,
too, in case there is some truth to Revelation after all.)

The worldview at this stage is solidly materialistic―only what can
be seen and touched is real. Achievement-Orange is suspicious of any
form of spirituality and transcendence because of a difficulty in
believing something that cannot empirically be proven or observed.
Unencumbered by deep soulful questions, our ego reaches the peak of
its dominance at this stage as we invest it with all our hopes of
achievement and success. In this material world, more is generally
considered better. We live our lives on the assumption that achieving the
next goal (getting the next promotion, finding a life partner, moving to a
new house, or buying a new car) will make us happy. In Orange, we
effectively live in the future, consumed by mental chatter about the
things we need to do so as to reach the goals we have set for ourselves.
We hardly ever make it back to the present moment, where we can
appreciate the gifts and freedom the shift to Orange has brought us.

Orange Organizations
Street gangs and mafias are contemporary examples of Red

Organizations. The Catholic Church, the military, and the public school
system are archetypes of Amber Organizations. Modern global corpora-

26 Reinventing Organizations

tions are the embodiment of Orange Organizations. Choose any of the
defining brands of our time―say, Walmart, Nike, or Coca-Cola―and
you are likely to have picked an organization whose structures, practices,
and cultures are inspired by the Achievement-Orange worldview.

In terms of outcome, Amber Organizations surpassed anything
Red Organizations could even contemplate. Achievement-Orange Organ-
izations ratcheted this up another level, achieving results on entirely
new orders of magnitude, thanks to three additional breakthroughs:
innovation, accountability, and meritocracy.

Orange breakthrough 1: Innovation
As Piaget’s experiment of mixing fluids illustrates, people

operating from the Orange paradigm can live in the world of
possibilities, of what is not yet but could one day be. They can question
the status quo and formulate ways to improve upon it. Unsurprisingly,
leaders of Orange Organizations don’t tire of saying that change and
innovation are not a threat, but an opportunity. Collectively, Orange
Organizations have ushered in a period of unprecedented innovation
that has fueled the massive wealth creation of the last two centuries.
They invented departments that didn’t exist (and largely still don’t exist)
in Amber Organizations: research and development, marketing, and
product management. Amber Organizations are entirely process driven;
Orange Organizations are process and project driven.

Orange Organizations retain the pyramid as their basic structure,
but they drill holes into rigid functional and hierarchical boundaries
with project groups, virtual teams, cross-functional initiatives, expert
staff functions, and internal consultants, to speed up communication and
foster innovation.

Orange breakthrough 2: Accountability
A subtle but profound change takes place in leadership and

management style. Amber command and control becomes Orange predict
and control. To innovate more and faster than others, it becomes a
competitive advantage to tap into the intelligence of many brains in the
organization. Larger parts of the organization must be given room to
maneuver and must be empowered and trusted to think and execute.

The answer comes in the form of management
by objectives. Top management formulates an
overall direction and cascades down objectives
and milestones to reach the desired outcome.
To a certain degree, the leadership doesn’t

care how the objectives will be met, as long as they are met. This attitude
has prompted the birth of a host of now familiar management processes
to define objectives (predict) and follow up (control): strategic planning,
mid-term planning, yearly budgeting cycles, key performance indicators,
and balanced scorecards, to name a few. In the Achievement-Orange

When I give a minister an
order, I leave it to him to find

the means to carry it out.
Napoleon Bonaparte

Chapter 1.1 • Changing paradigms 27

worldview, people are driven by material success. Unsurprisingly,
Orange Organizations have invented a host of incentive processes to
motivate employees to reach the targets that have been set, including
performance appraisals, bonus schemes, quality awards, and stock
options. To put it simply, where Amber relied only on sticks, Orange
came up with carrots.

The breakthrough in terms of freedom is real. Managers and
employees are given room to exercise their creativity and talent and the
latitude to figure out how they want to reach their objectives, which can
make work considerably more interesting. And when the incentive
schemes are set up well (when individual and organizational goals are
aligned), the often-adversarial relationship between workers and leaders
can be smoothed out by the pursuit of mutually beneficial objectives.

Experience shows that unfortunately, Orange Organizations don’t
always deliver on the promise of management by objective. The fears of
the ego often undermine good intentions. Take the notion that decisions
need to be pushed down to foster innovation and motivation: this makes
perfect sense for leaders operating from Achievement-Orange. But in
practice, leaders’ fear to give up control trumps their ability to trust, and
they keep making decisions high up that would be better left in the
hands of people lower in the hierarchy.

Or take the budget process that sets everyone’s objectives, a
critical piece in the puzzle to give people room to maneuver. It makes
perfect sense in principle. But anyone who has gone through such a
process knows how quickly it starts breaking down. When top
management asks departments to make their budgets, people play a
game called sandbagging―they push for the lowest possible expectation
to make sure they will achieve the targets and collect their bonuses.
When the numbers don’t add up, top management arbitrarily imposes
higher targets (which they make sure exceed what they promised to
shareholders, to ensure they will make their bonuses too), which people
lower down have no choice but to accept. Instead of frank discussions
about what’s feasible and what’s not, people exchange spreadsheets
with fictive forecasts driven by fear of not making the numbers. In the
process, budgets fail to deliver on one of their key objectives: making
people feel accountable and motivated for their outcomes.

Orange breakthrough 3: Meritocracy
Orange Organizations have adopted the revolutionary premise of

meritocracy. In principle, anybody can move up the ladder, and nobody
is predestined to stay in his position. The mailroom boy can become the
CEO―even if that boy happens to be a girl or has a minority back-
ground. This dramatically widens the talent pool, as nobody is excluded
from the outset. The pervasive thinking is that each person’s talent
should be developed and that everybody should be put in the box of the
organization chart where they can best contribute to the whole. The shift

28 Reinventing Organizations

from stratified Amber to meritocratic Orange has given birth to modern
human resources and its arsenal of processes and practices, which
include performance appraisals, incentive systems, resource planning,
talent management, leadership training, and succession planning.

It is hard to overstate the historical significance of the idea of
meritocracy. It is a breakthrough in social fairness. It gives people the
option to choose, at least in principle, the occupation that best suits their
particular talents and aspirations. In the process, people often leave
aside the aspiration to lifelong employment that was so critical in the
previous stage. People take the responsibility of managing their careers
and expect to change positions every few years, either inside the
organization, or outside if needed.

Meritocracy also largely does away with the symbols of
hierarchical stratification. The mandatory uniforms that used to indicate
one’s rank are dropped in favor of more indistinct business attire. As
people change position often during a career, the Conformist-Amber
fusion of identity with one’s rank and position in the pyramid is
weakened. Instead, people tend to wear a professional mask. One must

always look the part: be busy but
composed, competent, and in control of
the situation. Rationality is valued above
all else; emotions, doubts, and dreams are
best kept behind a mask, so that we do not
make ourselves vulnerable. Our identity is
no longer fused with our rank and title;

instead it is fused with our need to be seen as competent and successful,
ready for the next promotion.

In most workplaces, while the precise uniform may be out of
fashion, the signs of status are not. Senior managers have spacious
corner offices, enjoy reserved parking spaces, fly first class, and receive
generous stock options―while their subordinates fly coach and toil
away in cubicles. Perks are not incompatible with meritocracy: leaders
have the biggest impact on the organization’s success, so they must be
given the means to succeed. Besides, they deserve it. If you are smart
and work hard enough, these benefits could be yours too.

Organizations as machines
Achievement-Orange thinks of organizations as machines, a herit-

age from reductionist science and the industrial age. The engineering
jargon we use to talk about organizations reveals how deeply (albeit
often unconsciously) we hold this metaphor in the world today. We talk
about units and layers, inputs and outputs, efficiency and effectiveness,
pulling the lever and moving the needle, accelerating and hitting the brakes,
scoping problems and scaling solutions, information flows and bottlenecks, re-
engineering and downsizing. Leaders and consultants design organizations.
Humans are resources that must be carefully aligned on the chart, rather

It is my philosophy that in order to
be successful, one must project an

image of success at all times.
Buddy Kane, the “King of Real

Estate” in the movie
American Beauty

Chapter 1.1 • Changing paradigms 29

like cogs in a machine. Changes must be planned and mapped out in
blueprints, then carefully implemented according to plan. If some of the
machinery functions below the expected rhythm, it’s probably time for a
“soft” intervention―the occasional team-building―like injecting oil to
grease the wheels.

The machine metaphor, as impersonal as it sounds, also reveals the
dynamic nature of organizations in Orange (as compared to Amber,
where we think of organizations as rigid, unchanging sets of rules and
hierarchies). There is room for energy, creativity, and innovation. At the
same time, the metaphor of the machine indicates that these organiza-
tions, however much they brim with activity, can still feel lifeless and
soulless.

Every paradigm has its leadership style that suits its worldview.
Impulsive-Red calls for predatory leaders; Conformist-Amber for pater-
nalistic authoritarianism. In keeping with the machine metaphor, Achieve-
ment-Orange leadership tends to look at management through an
engineering perspective. Leadership at this stage is typically goal-
oriented, focused on solving tangible problems, putting tasks over
relationships. It values dispassionate rationality and is wary of emotions;
questions of meaning and purpose feel out of place.

The shadows of Orange
As with any new paradigm, the more light it shines, the more

shadow it can cast. One of Orange’s shadows is “innovation gone mad.”
With most of our basic needs taken care of, businesses increasingly try
to create needs, feeding the illusion that more stuff we don’t really
need―more possessions, the latest fashion, a more youthful body―will
make us happy and whole. We increasingly come to see that much of
this economy based on fabricated needs is unsustainable from a financial
and ecological perspective. We have reached a stage where we often
pursue growth for growth’s sake, a condition that in medical terminology
would simply be called cancer.

Another shadow appears when success is measured solely in
terms of money and recognition. When growth and the bottom line are
all that count, when the only successful life is
the one that reaches the top, we are bound to
experience a sense of emptiness in our lives.
The midlife crisis is an emblematic disease of
life in Orange Organizations: for 20 years, we
played the game of success and ran the rat race. And now we realize we
won’t make it to the top, or that the top isn’t all it’s made up to be. In
principle, work in Orange Organizations can be a vehicle for self-
expression and fulfillment. But when year after year things boil down to
targets and numbers, milestones and deadlines, and yet another change
program and cross-functional initiative, some people can’t help but
wonder about the meaning of it all and yearn for something more.

Ever more people today have
the means to live, but no

meaning to live for.
Viktor Frankl

30 Reinventing Organizations

In light of the corporate scandals of the last decade, some would
add that the most obvious shadow of the modern organization is indi-
vidual and collective greed. A small circle of CEOs grant themselves
ever higher salaries; they lobby government for favorable rules; corrupt
regulators; play off governments to pay little or no taxes; and merge in a
frenzy to dominate their industries and abuse their power over
suppliers, customers, and employees.

Pluralistic―Green paradigm10
The Achievement-Orange paradigm replaces Amber’s absolute

truth of right and wrong with another standard: what works and what
doesn’t. The Pluralistic-Green worldview holds that this idea is still too
simplistic. There is more to life than success or failure. Pluralistic-Green
is keenly aware of Orange’s shadow over people and society: the
materialistic obsession, the social inequality, the loss of community.

Pluralistic-Green is highly sensitive to people’s feelings. It insists
that all perspectives deserve equal respect. It seeks fairness, equality,
harmony, community, cooperation, and consensus. The self operating
from this perspective strives to belong, to foster close and harmonious
bonds with everyone. Orange promised a worldcentric stance; Green
wants to cash in on the promise. Not only should individuals be able to
break free from the prison of conventional roles, but the entire edifice of
castes, social classes, patriarchy, institutional religion, and other
structures needs to tumble down. In industrialized countries, in the late
18th and 19th centuries, a small circle of people operating from
Pluralistic-Green started championing the abolition of slavery, women’s
liberation, separation of church and state, freedom of religion, and
democracy. Ken Wilber puts it this way:

With the shift to reason and worldcentric morality, we see the rise of
the modern liberation movements: liberation of slaves, of women, of the
untouchables. Not what is right for me or my tribe, or my mythology, or
my religion, but what is fair and right and just for all humans,
regardless of race, sex, caste or creed.

And thus, in a mere hundred-year period, stretching roughly from
1788 to 1888, slavery was outlawed and eliminated from every rational-
industrial society on earth. In both the preconventional/egocentric [Red]
and conventional/ethnocentric [Amber] moral stance, slavery is per-
fectly acceptable, because equal dignity and worth are not extended to all
humans, but merely to those of your tribe or your race or your chosen
god. But from a postconventional stance, slavery is simply wrong, it is
simply intolerable. …

For almost identical reasons, we would see the rise of feminism and
the women’s movement on a culture-wide scale, generally dated … from

Chapter 1.1 • Changing paradigms 31

Wollstonecraft in 1792, exactly the general beginning period of
numerous liberation movements. …

[Democracy], too, was radically novel, on any sort of large scale. The
early Greeks had none of this universalism. Let us remember that in the
Greek “democracies,” one out of three people were slaves, and women
and children virtually so; the agrarian base cannot support emancipation
of slaves.11

In the late 18th and 19th centuries, only a small elite operated
from this Pluralistic-Green paradigm, but it profoundly shaped Western
thinking. In the 20th century, this paradigm steadily grew in numbers,
and some people embraced it wildly in the countercultural 1960s and
1970s. While Orange is predominant today in business and politics,
Green is very present in postmodern academic thinking, in nonprofits,
and among social workers and community activists.

For people operating from this perspective, relationships are
valued above outcomes. For instance, where Achievement-Orange seeks
to make decisions top-down, based on objective facts, expert input, and
simulations, Pluralistic-Green strives for bottom-up processes, gathering
input from all and trying to bring opposing points of view to eventual
consensus. Orange glorifies decisive leadership, while Green insists that
leaders should be in service of those they lead. Its stance is noble―it is
generous, empathetic, and attentive to others. It insists that in light of the
continuing inequality, poverty, and discrimination in our world, there
must be more to life than a self-centered pursuit of career and success.

Yet this stage has its obvious contradictions. It insists that all
perspectives be treated equally and finds itself stuck when others abuse
its tolerance to putting forward intolerant ideas. Green’s brotherly
outreach is only rarely returned in kind by Red egocentricity, Amber
certainty, and Orange contempt for what it sees as Green idealism.
Green’s relationship to rules is ambiguous and conflicted: rules always
end up being arbitrary and unfair, but doing away with rules altogether
proves unpractical and opens the door for abuse. Green is powerful as a
paradigm for breaking down old structures, but often less effective at
formulating practical alternatives.

Green Organizations
The Pluralistic-Green perspective is uneasy with power and

hierarchy. Ideally, it would want to do away with both altogether. Some
have tried to take this radical step―to discard the Amber and Orange
models and start from a blank slate. If power inequality always results in
those at the top ruling over those at the bottom, then let’s abolish hierarchy and
give everybody the exact same power. Let’s have all workers own the company
in equal shares and make all decisions by consensus, with nobody holding a

32 Reinventing Organizations

leadership position (or, if needed, work with rotating leadership). Some radical
experimenters have tried to create a new future along these lines; for
instance, in the cooperative moment in the late 19th and early 20th
centuries (in response to the glaring inequality brought about by the
Industrial Revolution) or in the communes in the 1960s (inspired by the
counterculture of the times). In hindsight, we know that these extreme
forms of egalitarian organization have not been successful on a meaning-
ful scale for any meaningful amount of time.12 Bringing about consensus
among large groups of people is inherently difficult. It almost invariably
ends up in grueling talk sessions and eventual stalemate. In response,
power games break out behind the scenes to try to get things moving
again. Power can’t simply be wished away. Like the Hydra, if you cut off
its head, another will pop up somewhere else.

Extreme egalitarianism has proven a dead-end track. Yet Green
has, like the previous stages, come up with its own breakthrough organ-
izational model, adding three breakthroughs to the previous Orange
model. Some of the most celebrated and successful companies of the last
decades―companies like Southwest Airlines, Ben & Jerry’s, and The
Container Store, to name only few, are run on Green practices and culture.

Green breakthrough 1: Empowerment
Green Organizations retain the meritocratic hierarchical structure

of Orange, but push a majority of decisions down to frontline workers
who can make far-reaching decisions without management approval.
People in the trenches are directly in touch with the myriad of smaller,
day-to-day problems; they are therefore trusted to come up with better
solutions than experts could devise from far away. Ground teams at
Southwest Airlines, for instance, are famous for being empowered to
seek creative solutions to passenger problems, whereas their colleagues
at most other airlines aren’t allowed to depart from the rulebook.

Making decentralization and empowerment work on a large scale
is no easy feat. Top and middle managers are effectively asked to share
power and give up some control. To make it work, companies have
found that they needed to very clearly spell out the kind of Green
leadership that they expect from people in senior and middle manage-
ment. Green leaders should not merely be dispassionate problem solvers
(like in Orange); they should be servant leaders, listening to their subor-
dinates, empowering them, motivating them, developing them. Much
time and effort is invested in helping people become servant leaders:
• Candidates for management positions are rigorously screened on

their mindset and behavior: Are they ready to share power? Will they
lead with humility?

• Green Organizations often invest a disproportionate share of their
training budget in courses for newly promoted managers, to teach
them the mindset and skills of servant leaders.

Chapter 1.1 • Changing paradigms 33

• Managers are evaluated based on 360-degree feedback, to make
bosses accountable to their subordinates.

• In some innovative companies, managers are not appointed from
above, but from below: subordinates choose their boss, after inter-
viewing prospective candidates.13 The practice naturally induces
managers to act as servant leaders.

Green breakthrough 2: Values-driven culture and inspirational
purpose

A strong, shared culture is the glue that keeps empowered
organizations from falling apart. Frontline employees are trusted to
make the right decisions, guided by a number of shared values, rather
than by a thick book of rules and policies.

Some people have become disillusioned with and scoff at the
notion of shared values. This is because Orange Organizations increas-
ingly feel obliged to follow the fad: they define a set of values, post them
on office walls and the company web site, and then
ignore them whenever that is more convenient for the
bottom line. But in Green Organizations, where leader-
ship genuinely plays by shared values, you en-counter
incredibly vibrant cultures in which employees feel
appreciated and empowered to contribute. Results are often spectacular.
Research seems to show that values-driven organizations can outperform
their peers by wide margins.14

In many cases, Green Organizations put an inspirational purpose
at the heart of what they do. Southwest Airlines doesn’t consider itself
merely in the transportation business; it insists that in reality it is in the
business of “freedom,” helping customers to go to places they couldn’t
go if it weren’t for Southwest Airlines’ low fares. Ben & Jerry’s is not just
about ice cream, it’s about the earth and the environment too.

In Orange Organizations, strategy and execution are king. In
Green Organizations, the company culture is paramount. CEOs of Green
Organizations claim that promoting the culture and shared values is
their primary task. The focus on culture elevates human resources (HR)
to a central role. The HR director is often an influential member of the
executive team and a counselor to the CEO. He heads a large staff that
orchestrates substantial investments into employee-centric processes like
training, culture initiatives, 360-degree feedback, succession planning
and staff morale surveys.

Green breakthrough 3: Multiple stakeholder perspective
Orange holds that for-profit companies should operate with a

shareholder perspective. Management’s primary (some people claim its
sole) obligation is to maximize profits for investors. Adam Smith’s
“invisible hand” is often invoked to explain how this benefits all stake-
holders in the long run. Green Organizations insist that there should be

Culture eats strategy
for breakfast.
Peter Drucker

34 Reinventing Organizations

no such hierarchy among stakeholders. Businesses have a responsibility
not only to investors, but also to management, employees, customers,
suppliers, local communities, society at large, and the environment. The
role of leadership is to make the right trade-offs so that all stakeholders
can thrive.

Every large organization today has to publish a corporate social
responsibility report. Green Organizations consider their social respon-
sibility an integral part of how they do business, contrary to their
Orange counterparts who often deem such reports a distracting obliga-
tion. Social responsibility is often at the core of their mission, and it
provides the motivation that spurs them on to innovate and become
better corporate citizens. Green Organizations work with their suppliers
in developing countries to improve local working conditions and pre-
vent child labor; they try to reduce their carbon footprint and their use of
water; they strive to recycle their products and reduce packaging.
Leaders in Green Organizations maintain that the “stakeholder per-
spective” might come with higher costs in the short term, but it will
deliver better returns in the long run for all parties, including
shareholders.

Family as the guiding metaphor
Where Achievement-Orange views organizations as machines, the

dominant metaphor of organizations in Pluralistic-Green is the family.
Listen to leaders of Green Organizations and you can’t fail to notice how
frequently the metaphor pops up in one form or another: employees are
part of the same family and in it together, ready to help each other out and be
there for one another. At Southwest Airlines, one of the eight injunctions to
display “a servant’s heart” in the Southwest Way is for employees to
“Embrace the SWA family.” DaVita, a leading operator of dialysis
centers that has implemented Green organizational principles and
practices with great consistency,15 uses another community metaphor.
Notwithstanding its large size, the company talks about itself as the
Village and calls its 41,000 employees citizens. The corporate headquarters
is known as Casa DaVita, while Kent Thiry, the chairman and CEO (who
is credited with having turned the company around from virtual
bankruptcy in 1999 to its current success by virtue of the Green culture
he brought about) is referred to as the Mayor of the Village.

From Red to Green: co-existence of organizational models
Organizations as we know them are a very recent phenomenon.

For the majority of the history of our species, we were busy hunting and
gathering, which we can safely assume didn’t involve email overload
and tedious budgeting meetings. In the overall scope of things, it wasn’t
long ago that we switched to the age of agriculture, and even then
organizations rarely spanned beyond family structures. It was only with

Chapter 1.1 • Changing paradigms 35

the Industrial Revolution that organizations began to employ a large
share of human resources. Management as a field of academic interest
really only blossomed in the last 50 years.

When we plot the successive stages of human and organizational
consciousness on a timeline, the result is striking. Evolution seems to be
accelerating, and accelerating ever faster. If the trend is to continue, we
might well experience the emergence of one or two new stages beyond
Green within our lifetimes.

The illustration reveals another interesting phenomenon: Never

before in human history have we had people operating from so many
different paradigms all living alongside each other. The same is true for
organizations: in the same city, if we care to look, we can find Red,
Amber, Orange, and Green Organizations working side by side.

In a broad generalization, it is safe to say that, in developed
societies, Impulsive-Red Organizations persist only at the fringes of legal
activity. Conformist-Amber is still heavily present in government agen-
cies, the military, religious organizations, and public school systems.
Achievement-Orange is clearly the dominant paradigm of business
corporations, from Wall Street to Main Street. Pluralistic-Green organi-
zational practices are making increasing inroads, not only in the world
of nonprofits, but in the business sector as well. The table below
summarizes these four organizational models, their breakthroughs, and
dominant metaphors. It shows the current state of affairs out of which,
perhaps, a new model is about to emerge.

100.000$$
years$ago$

50.000$$
years$ago$

Now$

Infrared( Magenta(
Red(
Amber(

Orange(
Green(

Teal(

36 Reinventing Organizations

Current’

examples’

Key’

breakthroughs’

RED’organiza:ons!
•  Mafia!!
•  Street!gangs!
•  Tribal!mili1as!

•  Division’of’labor’
•  Command’authority’

Guiding’

metaphor’

•  Wolf’pack’Constant!exercise!of!power!by!
chief!to!keep!troops!in!line.!
Fear!is!the!glue!of!the!
organiza1on.!Highly!reac1ve,!
shortCterm!focus.!Thrives!in!
chao1c!environments.!

‘AMBER’organiza:ons!
•  Catholic!Church!
•  Military!
•  Most!government!
agencies!
•  Public!school!
systems!

•  Formal’roles”
(stable(and(scalable(
hierarchies)(
•  Processes”
(long2term(
perspec5ves)(

•  Army’Highly!formal!roles!within!a!
hierarchical!pyramid.!TopC
down!command!and!control!
(what!and!how).!Stability!
valued!above!all!through!
rigorous!processes.!Future!is!
repe11on!of!the!past.!!

‘ORANGE’organiza:ons!
•  Mul1na1onal!
companies!
•  Charter!schools!

•  Innova:on’
•  Accountability’
•  Meritocracy’

•  Machine’Goal!is!to!beat!compe11on;!
achieve!profit!and!growth.!
Innova1on!is!the!key!to!staying!
ahead.!Management!by!
objec1ves!(command!and!
control!on!what;!freedom!on!
the!how).!

‘TEAL’organiza:ons!
?! ?! ?!?!

‘GREEN’organiza:ons!
•  Culture!driven!
organiza1ons!!
(e.g.,!Southwest!
Airlines,!Ben!&!
Jerry’s,!!…)!

•  Empowerment’
•  ValuesMdriven’
culture’

•  Stakeholder’model’

•  Family’Within!the!classic!pyramid!
structure,!focus!on!culture!and!
empowerment!to!achieve!
extraordinary!employee!
mo1va1on.!

Careful,’second’

version’exists’

later’in’this’

document’

(always’update’

both)’

Chapter 1.2 • About stages of development 37

CHAPTER)1.2)

ABOUT!STAGES!OF!DEVELOPMENT!

There is nothing inherently “better” about being at
a higher level of development, just as an adolescent is not
“better” than a toddler. However, the fact remains that an
adolescent is able to do more, because he or she can think
in more sophisticated ways than a toddler. Any level of de-
velopment is okay; the question is whether that level of
development is a good fit for the task at hand.

Nick Petrie

A pause might be in order at this moment in our exploration,
before we discuss Evolutionary-Teal, the next stage in human
consciousness. Some clarifications may be helpful toward better
understanding the process of human evolution and avoiding misunder-
standings. Sometimes, when people are first exposed to the notion of
successive stages in human evolution, they are so fascinated with the
insight that they tend to apply it haphazardly, oversimplifying reality to
fit the model. Other people have the opposite reaction; they feel uncom-
fortable with a model that could be used to label people and put them
into different boxes.

Let’s first get one potential misunderstanding out of the way: the
notion, which makes some people uneasy, that successive stages in
development would imply that some people are somehow better than
others. It’s a valid concern. As a human race, we have done much harm
to each other by means of colonialism, slavery, racism, and sexism, in the
name of one group being “better” than other groups.

Human consciousness evolves in successive stages; there is no
wishing away the massive amount of evidence that backs this reality.
The problem is not with the reality of the stages; it is with how we view
the staircase. We get into trouble when we believe that later stages are

38 Reinventing Organizations

“better” than earlier stages; a more helpful interpretation is that they are
“more complex” ways of dealing with the world. For instance, a person
operating from Pluralistic-Green can integrate people’s conflicting per-
spectives in a way that a person operating from Impulsive-Red most
likely cannot. At the same time, every level has its own lights and
shadows, its healthy and unhealthy expressions. Orange modernity, for
instance, has harmed the planet in a way previous stages never could.

Another way to avoid attaching judgment to stages is to recognize
that each stage is well adapted to certain contexts. If we were caught in a
civil war with thugs attacking our house, Impulsive-Red would be the
most appropriate paradigm to think and act from so as to defend
ourselves. On the other hand, in peaceful times in post-industrial
societies, Red is not as functional as some of the later stages.

The complexity of human evolution
The discussion of stages and colors is only an abstraction of

reality, just like a geographical map is only a simplified depiction of a
territory; it gives us distinctions that facilitate understanding of a
complex underlying reality, but it cannot claim to offer a full portrayal of
reality. In the previous chapter, I took you on a whirlwind tour of
human evolution, and by describing the stages one after the other, I may
have given the impression that people (or even whole societies) operate
neatly from just one paradigm. Research shows―bless it!―that we
human beings are wonderfully complex and cannot be reduced to a
single stage:
• Every paradigm includes and transcends the previous. So if we have

learned to operate from, say, Achievement-Orange, we still have
the ability, when appropriate, to also react from Conformist-
Amber or Impulsive-Red. Even the opposite is true to some extent:
were we to be surrounded by people operating from a later stage,
for example, Pluralistic-Green, we could temporarily display
Green behaviors, even though we wouldn’t yet have integrated
this stage.

• There are many dimensions of human development―cognitive,
moral, psychological, social, spiritual, and so on―and we don’t
necessarily grow at the same pace in all of them. For example, we
might have internalized Orange cognition and be running an
innovative business, but on the spiritual side, we espouse an
Amber Christian fundamentalist belief.
For these reasons, I cringe when I hear people say that someone is

Green, or Orange, or Amber. At best, we can say (and I have made every
effort to stick to this vocabulary) that in a specific moment a person
“operates from” one type of paradigm. Don Beck, a student of develop-
mental psychologist Clare Graves, uses an insightful analogy: If evo-
lution were music, stages of development would be musical notes, vibrat-

Chapter 1.2 • About stages of development 39

ing at a certain frequencies. Human beings would be like strings, capable
of playing many different notes. The range of notes they can play depends
on the range of tensions they have learned to accommodate.

Let’s also have in mind that people operating from the same stage
(that is, playing the same note) can see the world very differently from
each other, despite the fact that they share certain cognitive, moral, or
psychological traits. A right-wing Christian fundamentalist and a left-
wing trade union leader might operate from the same Conformist-
Amber world of certainties, yet come to opposite conclusions on almost
every issue. At a cocktail party, a flashy Wall Street trader, an intro-
verted scientist, and a trendy graphic designer might not find much to
talk about, even though all three likely view the world through an
Achievement-Orange lens. We can develop vertically by integrating a
perspective from a later stage, but there is just as much room to develop
horizontally within a stage―say, from an intolerant and narrow-minded
to a generous and open-minded expression of Amber.

Shifting stages
What triggers a person to open up to a later, more complex stage

of consciousness? According to the research, the trigger for vertical
growth always comes in the form of a major
life challenge that cannot be resolved from the
current worldview. When we face such a
challenge, we can take one of two approaches:
we can grow into a more complex perspective
that offers a solution to our problem, or we
can try to ignore the problem, sometimes
clinging more strongly to our existing world-view (or even shifting back
to the reassuring simplicity of an earlier worldview).

Take the shift from Conformist-Amber to Achievement-Orange.
When a person feels allegiance to several groups (say, family, friends,
work, and church) and the norms of two or more of these groups enter
into conflict, the conformist worldview is out of its depth. Something
can’t be right and wrong at the same time. In response, one can simply
choose to restore a single set of beliefs by staying with one group and
rejecting the other, or one can start to question the validity of absolute
rules.

Cognitively, psychologically, and morally, moving on to a new
stage is a massive feat. It requires courage to let go of old certainties and
experiment with a new worldview. For a while, everything can seem
uncertain and confused. It might be lonely, too, as sometimes in the
process we can lose close relationships with friends and family who can
no longer relate to us. Growing into a new form of consciousness is
always a highly personal, unique, and somewhat mysterious process. It
cannot be forced onto somebody. No one can be made to evolve in
consciousness, even with the best of intentions―a hard truth for coaches

Every challenge you encounter
in life is a fork in the road. You
have the choice to choose which
way to go―backward, forward,

breakdown or breakthrough.
Ifeanyi Enoch Onuoha

40 Reinventing Organizations

and consultants, who wish they could help organizational leaders adopt
a more complex worldview by the power of conviction. What can be
done is to create environments that are conducive to growing into later
stages. When someone is surrounded by peers who already see the
world from a more complex perspective, in a context safe enough to ex-
plore inner conflicts, chances are higher that the person will make the
leap1.

Stage development applied to organizations
To avoid oversimplifying, we need to be careful with organi-

zations, too, in how we apply developmental theory. Sometimes I get
asked, “What color is this or that organization?” I’m always careful to
explain first what I mean when talking about organizations operating
from a certain stage like Amber, Orange, or Green: I’m referring to
systems and culture, not people. If we look at an organization’s struc-
ture, its practices, and its cultural elements, we can generally discern
what worldview they stem from. Let’s take the topic of compensation to
illustrate this:
• If the boss can freely, on a whim, decide to increase or reduce pay,

that would be consistent with the Impulsive-Red paradigm.
• If salaries are fixed and determined by the person’s level in the

hierarchy (or the person’s diploma), that sounds like Conformist-
Amber.

• A system that stresses individual incentives if people reach
predetermined targets probably stems from an Achievement-
Orange worldview.

• A focus on team bonuses would be in line with a Pluralistic-Green
perspective.
When we look through this filter not only at compensation, but at

all the structure, practices, and culture of an organization, we find that
they are not scattered randomly among the stages and colors, but cluster
around a center of gravity, a stage that defines most practices of the
organization. It is this center of gravity that I refer to when I talk about,

for instance, an Orange Organization. To be
very clear, when I talk about an “Orange
Organization,” I don’t mean to imply that
all the daily interactions in that workplace
are consistent with the Achievement-
Orange paradigm, or that all the people in

it have reached and operate primarily from an Orange perspective. That
is never the case. At any moment in time, different people will operate
from different stages in their daily interactions. The term “Orange Organ-
ization” means that the majority of the organization’s structure, prac-
tices, and processes are shaped by the Achievement-Orange paradigm.

When you adopt a tool, you also
adopt the management philosophy

embedded in that tool.
Clay Shirky

Chapter 1.2 • About stages of development 41

In large organizations, certain units or certain locations can have a
different center of gravity than the rest of the organization. A typical
example: the headquarters of a large multinational might operate mostly
along Orange lines, while some of the factories are steeped in Amber.
We should therefore always be careful not to oversimplify and to be
clear what the labels refer to (and what they do not).

The pull of leadership―downward and upward
What determines which stage an organization operates from? It is

the stage through which its leadership tends to look at the world.
Consciously or unconsciously, leaders put in place organizational
structures, practices, and cultures that make sense to them, that
correspond to their way of dealing with the world.

This means that an organization cannot evolve beyond its leader-
ship’s stage of development. The practice of defining a set of shared
values and a mission statement provides a good illustration. Because this
practice is in good currency, leaders in Orange Organizations increas-
ingly feel obliged to have a task force come up with some values and a
mission statement. But looking to values and mission statements to
inform decisions only makes sense as of the Pluralistic-Green paradigm.
In Orange, the yardstick for decisions is success: Let’s go with what will
deliver top- or bottom-line results. In Orange Organizations, leadership
might pay lip service to the values; but when the rubber hits the road
and leaders have to choose between profits and values, they will
predictably go for the former. They cannot uphold a practice and a
culture (in this case, a values-driven culture) that stems from a later
stage of development.2

The pull of leaders toward their stage of consciousness goes in
two directions: they can pull “back” practices from later stages (render-
ing them ineffective as in the previous example), but they can also exert
a strong pull “forward.” The structure, practices, and culture they put in
place can help employees adopt behaviors of more complex paradigms
that they as individuals have not yet fully
integrated. Suppose I am a middle manager
looking at the world mostly from a Conformist-
Amber perspective. My natural style with my
subordinates would be to interact in very hierar-
chical ways, telling them exactly what they need
to do and how they need to do it. Now let’s say I work in a Green
Organization, where my leaders urge me to empower employees that
work for me. All around me I see other managers giving their
subordinates lots of leeway. Twice a year, I receive 360-degree feedback,
including from my direct reports, telling me how well I’m doing on
empowerment (which can affect my bonus); every six months, I’m asked
to sit down with my team and discuss how well we are doing in living

When you change the way
you look at things, the

things you look at change.
Wayne Dyer

42 Reinventing Organizations

company values (which include empowerment). Within such a strong
context of Pluralistic-Green culture and practices, I’m likely to espouse
some Green management skills and behaviors. The context has pulled
me up, leading me to operate in more complex ways than I would if left
to my own devices. And just perhaps, over time, when I’m ready for it,
the context will help me grow and genuinely integrate into that
paradigm.

That is the true genius of organizations: they can lift groups of
people to punch above their weight, to achieve outcomes they could not
have achieved on their own. This insight is a hopeful one in a time when
we need the consciousness of Green and Teal Organizations to start
healing the world of the wounds of modernity.

Chapter 1.3 • Evolutionary-Teal 43

CHAPTER)1.3)

EVOLUTIONARY1TEAL!

The most exciting breakthroughs of the twenty-
first century will not occur because of technology, but
because of an expanding concept of what it means to be
human.

John Naisbitt

The next stage in human evolution corresponds to Maslow’s “self-
actualizing” level; it has been variously labeled authentic, integral, or
Teal.1 This stage is the last one identified by Maslow’s hierarchy of needs
(though he later hinted at another stage of “self-transcendence”), but
other researchers and thinkers have established with a fair amount of
confidence that evolution doesn’t stop there (Appendix 2 gives a short
description of subsequent stages). Maslow and other authors agree, in
any case, that the shift from Green to Teal is a particularly momentous
one in the human journey―so much so that Graves and others in his
wake have used the term “first-tier” con-
sciousness for all stages up to Green and
the term “second-tier” for the stages start-
ing with Teal. All “first-tier” stages consider
that their worldview is the only valid one,
and that all other people are dangerously mistaken.2 People tran-
sitioning to Teal can accept, for the first time, that there is an evolution in
consciousness, that there is a momentum in evolution towards ever
more complex and refined ways of dealing with the world (hence the
adjective “evolutionary” that I will use for this stage).

Taming the fears of the ego
Each shift occurs when we are able to reach a higher vantage

point from which we see the world in broader perspective. Like a fish

[In Teal] the ego becomes more
of a variable, less of an absolute.

William Torbert

44 Reinventing Organizations

that can see water for the first time when it jumps above the surface,
gaining a new perspective requires that we disidentify from something
we were previously engulfed in. The shift to Conformist-Amber, for
instance, happens when Impulsive-Red internalizes rules that allow it to
disidentify from impulsively satisfying its needs; the shift to Achieve-
ment-Orange happens when Amber disidentifies from group norms. The
shift to Evolutionary-Teal happens when we learn to disidentify from
our own ego. By looking at our ego from a distance, we can suddenly see
how its fears, ambitions, and desires often run our life. We can learn to
minimize our need to control, to look good, to fit in. We are no longer
fused with our ego, and we don’t let its fears reflexively control our
lives. In the process, we make room to listen to the wisdom of other,
deeper parts of ourselves.

What replaces fear? A capacity to trust the abundance of life. All
wisdom traditions posit the profound truth that there are two

fundamental ways to live life: from fear and
scarcity or from trust and abundance. In
Evolutionary-Teal, we cross the chasm and
learn to decrease our need to control people
and events. We come to believe that even if
something unexpected happens or if we make

mistakes, things will turn out all right, and when they don’t, life will
have given us an opportunity to learn and grow.

Inner rightness as compass
When we are fused with our ego, we are driven to make decisions

informed by external factors―what others will think or what outcomes
can be achieved. In the Impulsive-Red perspective, a good decision is the
one that gets me what I want. In Conformist-Amber, we hold decisions up
to the light of conformity to social norms. Decisions beyond what one’s
family, religion, or social class considers legitimate cause guilt and
shame. In Achievement-Orange, effectiveness and success are the yard-
sticks by which decisions are made. In Pluralistic-Green, matters are
judged by the criteria of belonging and harmony.

In Evolutionary-Teal, we shift from external to internal yardsticks
in our decision-making. We are now concerned with the question of
inner rightness: does this decision seem right? Am I being true to myself? Is
this in line with who I sense I’m called to become? Am I being of service to the
world? With fewer ego-fears, we are able to make decisions that might
seem risky, where we haven’t weighed all possible outcomes, but that
resonate with deep inner convictions. We develop a sensitivity for situa-
tions that don’t quite feel right, situations that demand that we speak up
and take action, even in the face of opposition or with seemingly low odds
of success, out of a sense of integrity and authenticity.

Recognition, success, wealth, and belonging are viewed as plea-
surable experiences, but also as tempting traps for the ego. In contrast

Fear is the cheapest room in the
house. I would like to see you
living in better conditions.

Hafez

Chapter 1.3 • Evolutionary-Teal 45

with previous stages, the order is reversed: we do not pursue recog-
nition, success, wealth, and belonging to live a good life. We pursue a
life well-lived, and the consequence might just be recognition, success,
wealth, and love.

Life as a journey of unfolding
In previous stages, the pursuit of love, recognition, and success

shapes our lives slowly but surely to the point that we end up, in the
words of poet May Sarton, “wearing other
people’s faces.” In Teal, our journey toward
inner rightness prompts some soul search-
ing of who we are and what our purpose
in life might be. The ultimate goal in life is
not to be successful or loved, but to
become the truest expression of ourselves,
to live into authentic selfhood, to honor our birthright gifts and callings,
and be of service to humanity and our world. In Teal, life is seen as a
journey of personal and collective unfolding toward our true nature.

This is like a Copernican revolution in an age that tells us that we
can become anything we want, if we only put our mind to it. If we “go
Teal,” then instead of setting goals for our life, dictating what direction it
should take, we learn to let go and listen to the life that wants to be lived
through us. Parker Palmer, the author, educator, and activist, writes
beautifully about this perspective on life and vocation in his book Let
Your Life Speak:

Behind the understanding of vocation is a truth that the ego does not
want to hear because it threatens the ego’s turf: everyone has a life that is
different from the “I” of daily consciousness, a life that is trying to live
through the “I” who is its vessel. …

It takes time and hard experience to sense the difference between the
two―to sense that running beneath the surface of the experience I call
my life, there is a deeper and truer life waiting to be acknowledged.3

Many people transitioning to this stage take up practices like
meditation, centering, martial arts, yoga, or simply walking in nature to
find a quiet place that allows the inner voice of the soul to speak its truth
and guidance. Individuals who live from this perspective and connect to
a deeper sense of purpose can become quite fearless in pursuit of their
calling. With their ego under control, they don’t fear failure as much as
not trying. Clare Graves’ favorite phrase to describe someone operating
from Teal was “a person who has ambition, but is not ambitious.”

Growing into their true nature and working toward their calling is
their driving force, so much so that to others who don’t come from the
same perspective, persons operating from Teal can sometimes come
across as impatient with people who impede their personal growth, or

Now I become myself. It’s taken
Time, many years and places;

I have been dissolved and shaken,
Worn other people’s faces …

May Sarton

46 Reinventing Organizations

with situations that don’t feel aligned with the purpose they perceive for
their life.

Building on strengths
When we set goals for our life that are disconnected from our

deeper selfhood, when we wear other people’s faces, we don’t stand in
the strength of our selfhood. Inevitably we will find ourselves lacking
and invest much energy in trying to overcome our weaknesses, or in
blaming ourselves or others for not being who we think we ought to be.

When we see our life as a journey of unfolding toward our true
nature, we can look more gently and realistically at our limitations and
be at peace with what we see. Life is not asking us to become anything
that isn’t already seeded in us. We also tend to focus less on what is
wrong or missing in people and situations around us and move our
attention instead to what is there, to the beauty and the potential. We
trade in judgment for compassion and appreciation. Psychologists talk
about a shift from a deficit to a strength-based paradigm. Slowly, this shift
is making profound inroads in different fields, from management to
education, from psychology to health care―starting with the premise
that, as human beings, we are not problems waiting to be solved, but
potential waiting to unfold.

Dealing gracefully with adversity
When life is seen as a journey of discovery, then we learn to deal

more gracefully with the setbacks, the mistakes, and the roadblocks in
our life. We can start to grasp the spiritual insight that there are no
mistakes, simply experiences that point us to a deeper truth about
ourselves and the world. In previous stages, life’s roadblocks (an illness,
a bad boss, a difficult marriage) are seen as unfair rolls of the dice. We

meet them with anger, shame, or blame,
and these feelings disconnect us from
others and ourselves. In Teal, obstacles
are seen as life’s way to teach us about
ourselves and about the world. We are
ready to let go of anger, shame, and
blame, which are useful shields for the
ego but poor teachers for the soul. We

embrace the possibility that we played a part in creating the problem,
and inquire what we can learn so as to grow from it. In earlier
paradigms, we often convince ourselves that everything is all right until
a problem has snowballed and hits us like an avalanche, forcing change
into our life. Now, we tend to make frequent small adjustments, as we
learn and grow from problems we encounter along the way. In previous
stages, change on a personal level feels threatening; as of Evolutionary-
Teal, there is often an enjoyable tension in the journey of personal
growth.

With appropriate humility, we accept
our inability to control the world. …
We accept that losing is part of life.

We do not fear adversity or suffering.
Out of them comes new learning, new

growth, new hope, and new life.
Dennis Bakke

Chapter 1.3 • Evolutionary-Teal 47

Wisdom beyond rationality
In Orange, rationality is king and rules unquestioned in the

pursuit of the decision that will yield the best outcome. Any source of
insight other than facts and logical reasoning is “irrational” and must be
discarded. Ironically, however, Orange’s attachment to outcomes often
clouds the ability to see reality clearly. Amid the stacks of information
that are meant to inform complex decisions, we can fail to see
information that is incongruous with our worldview or with the future
our ego has projected and is attached to; often the writing was all over
the wall, and yet people dismissed the clues (or didn’t dare to speak up).
Teal, less attached to outcomes, can more easily accept the sometimes
unpleasant truths of reality; therefore, rational thinking within Teal can
be more accurately informed by data.

Beyond facts and figures, cognition at this stage taps a broader
range of sources to support decision-making. The Orange modern-scien-
tific perspective is wary of emotions that could cloud our ability to
reason rationally, whereas Green sometimes goes to the other extreme,
rejecting analytical “left brain” approaches
for “right brain” feeling as a basis for
decision-making. Teal is happy to tap into all
the domains of knowing. There are insights
to be gained from analytical approaches.
There is also wisdom to be found in emo-
tions if we learn to inquire into their signi-
ficance: Why am I angry, fearful, ambitious, or excited? What does this reveal
about me or about the situation that is unfolding?

Wisdom can be found in intuition, too. Intuition honors the
complex, ambiguous, paradoxical, non-linear nature of reality; we un-
consciously connect patterns in a way that our rational mind cannot.
Intuition is a muscle that can be trained, just like logical thinking: when
we learn to pay attention to our intuitions, to honor them, to question
them for the truth and guidance they might contain, more intuitive
answers will surface.

Many people believe that there are answers to be found in yet
deeper sources. Wisdom traditions and transpersonal psychology trust
that if we don’t simply ask a question, but live a question, the universe in
its abundance may give us clues to the answer in unexpected events and
synchronicity or in words and images that arise in dreams and
meditations. Non-ordinary states of consciousness―meditative states,
contemplative states, visionary experiences, flow, peak experiences―are
available at any stage of consciousness, but from Teal onward, people
often take on regular practices to deepen their experience in these states
and access the full spectrum of human experience.4

Another cognitive breakthrough is the ability to reason in paradox,
transcending the simple either-or with more complex both-and thinking.

The intuitive mind is a sacred
gift and the rational mind is a

faithful servant. We have created
a society that honors the servant

and has forgotten the gift.
Albert Einstein

48 Reinventing Organizations

Breathing in and breathing out provides an easy illustration of the differ-
ence. In either-or thinking, we see them as opposites. In both-and
thinking, we view them as two elements that need each other: the more
we can breathe in, the more we can breathe out. The paradox is easy to
grasp for breathing in and out; it is less obvious for some of the great
paradoxes of life that we only start to truly understand when we reach
Teal: freedom and responsibility, solitude and community, tending to
the self and tending to others.

Put this all together―a fearless rationality and the wisdom that
can be found in emotions, intuition, events, and paradoxes―and Evolu-
tionary-Teal turns the page from the rational-reductionist world-view of
Orange and the post-modern worldview of Green to a holistic approach
to knowing.

Striving for wholeness
Disidentifying from the ego is one more step of liberation on the

human journey. But with disidentification comes separation, and people
operating at this stage often develop a keen sense of how far we have let
separation fragment our lives and how much it has cost us. We have let
our busy egos trump the quiet voice of our soul; in our culture we often
celebrate the mind and neglect the body; we often value the masculine
above the feminine; we have lost community and our innate connection
with nature.

With this stage comes a deep yearning for wholeness―bringing
together the ego and the deeper parts of the self; integrating mind, body,
and soul; cultivating both the feminine and masculine parts within; being
whole in relation to others; and repairing our broken relationship with life
and nature. Often the shift to Teal comes with an opening to a trans-
cendent spiritual realm and a profound sense that at some level, we are all
connected and part of one big whole. After many successive steps of dis-
identification, as we learn to be fully independent and true to ourselves, it
dawns on us that, paradoxically, we are profoundly part of everything.

This longing for wholeness is at odds with the separation that
most existing workplaces foster, albeit unconsciously―overemphasizing
the ego and the rational while negating the spiritual and emotional;
separating people based on the departments they work in, their rank,
background, or level of performance; separating the professional from
the personal; separating the organization from its competitors and the
ecosystem it is embedded in. Vocabulary we use is often revealing: in
organizations, we often speak about “work-life balance”―a notion that
shows how little life is left in work when we have separated ourselves
from so much that truly matters. For people transitioning to Teal, these
separations in the workplace often become so painful that they choose to
leave organizational life for some form of self-employment, a more
accommodating context to find wholeness with themselves and with
others.

Chapter 1.3 • Evolutionary-Teal 49

Wholeness in relation to others
In Evolutionary-Teal, we can transcend the opposites of judgment

and tolerance. In earlier stages, when we disagree with other people, we
often meet them in judgment, believing that we must be right and they
must be wrong. Our task then is to convince, teach, fix, or dismiss them.
Or we can, in the name of tolerance, the Green ideal, gloss over our
differences and affirm that all truths are equally valid. In Teal, we can
transcend this polarity and integrate with the higher truth of non-
judgment―we can examine our belief and find it to be superior in truth
and yet embrace the other as a human being of fundamentally equal
value.

In the absence of judgment, relationships take on a new quality.
Our listening is no longer limited to gathering information so as to better
convince, fix, or dismiss. We can create a shared space safe from
judgment, where our deep listening helps others to find their voice and
their truth, just as they help us find ours. In Orange, we broke free from
the oppressive, normative communities of Amber. Now we have a
chance to recreate community on new grounding, where we listen each
other into selfhood and wholeness.

Wholeness with life and nature
Paradoxically, again, the more we learn to be true to our unique

self, the more it dawns on us that we are just one expression of
something larger, an interconnected web of life and consciousness. That
realization can be elating but also painful―we now comprehend how
deeply our relationship with life and nature has been broken. We strive
to repair that relationship, not from a place of moral obligation, but from
an inner awareness, knowing that we are not separate from but one with
nature. We see the foolishness and arrogance of mankind’s stance of
putting itself above the rest of life and try to find a more truthful and
humble place in the midst of it. Often, rekindling our relationship with
life and nature causes us to pursue a simpler life, less cluttered by
possessions we thought we needed until we understood that we are rich
not through the things we own, but through the relationships that
nourish our soul.

What this could mean for Teal Organizations
In the first chapter of this book we discussed how every new

organizational model in the past has achieved outcomes of a magnitude
that previous models could not consider. A number of researchers―Clare
Graves, William Torbert, Susanne Cook-Greuter, and Keith Eigel, to
name a few―have empirically established another interesting phenom-
enon: within a given organization (say, an Orange Organization), the
higher people have traveled on the developmental ladder, the more
effective they are. Torbert, for instance, established that the CEO’s
developmental stage determined to a significant degree the success of

50 Reinventing Organizations

large-scale corporate transformation programs (and within that, leaders
operating from Evolutionary-Teal were by far the most successful).5
Clare Graves came to a similar conclusion with a different approach. He
put together groups of people based on the paradigm they most often
operated from and gave them complex tasks to perform.

I took a group of people who thought the same way, and I put them in
situations … where they were required to solve problems with multiple
answers. … and lo and behold, when the results started to come in I
found this most peculiar phenomenon: the [Teals] find unbelievably more
solutions than all the others put together. They found more solutions
than the [Red] plus the [Amber] plus the [Orange] plus the [Green]. I
found that the quality of their solutions to problems were amazingly
better. … I found that the average time it took the [Teal] group to arrive
at a solution was amazingly shorter than it took any of the other
groups.6

It appears that the law of evolution holds true for Evolutionary-
Teal as much as it did for previous paradigms: the more complex our
worldview and cognition, the more effectively we can deal with
problems we face.

This is a hopeful message for organizations, especially when not
only individuals within it, but the organization itself, operates from Teal
principles and practices. Based on what we know about how individuals
operate from Teal, we can make some conjectures about what might
define Teal Organizations. Taming the ego could have deep reper-
cussions on how we structure and run organizations. Many of the
corporate ills today can be traced to behaviors driven by fearful egos:
politics, bureaucratic rules and processes, endless meetings, analysis
paralysis, information hoarding and secrecy, wishful thinking, ignoring

problems away, lack of authenticity, silos and
infighting, decision-making concentrated at the
top of organizations, and so forth. In Teal
Organizations, less driven by ego, we can hope
to put some of these corporate ills behind us.
More generally, the relationship to power could

be transformed in quite fundamental ways. When trust replaces fear,
will a hierarchical pyramid still provide the best structure? Will we need
all the rules and policies, detailed budgets, targets, and roadmaps that
give leaders today a sense of control? Perhaps there are much simpler
ways to run organizations when the fears of the ego are out of the way.

As people in Teal are busy exploring the calling in their lives, they
are likely to affiliate only with organizations that have a clear and noble
purpose of their own. We can expect that purpose, more than profita-
bility, growth, or market share, will be the guiding principle for
organizational decision-making. It’s also fair to assume that Teal Organ-

Companies either operate
from the fears of the ego or

the love of the soul.
Richard Barrett

Chapter 1.3 • Evolutionary-Teal 51

izations will strive for wholeness and community, and will be places that
support people’s longing to be fully themselves at work, and yet be
deeply involved in nourishing relationships.

The above are conjectures, based on what we know about
individuals seeing the world through a Teal lens. Thankfully, today we
can move past conjectures. Part 2 of this book tells the stories of
organizations that are already operating from this paradigm. It examines
the structures, practices, and cultures of a dozen extraordinary pioneers
and provides a detailed description of what the Teal organizational
model can look like in practice. There is a template ready to be copied,
emulated, and improved upon by people called to help more soulful,
fulfilling organizations come about.

!

!
!

Part 2$

The Structures, Practices,

and Cultures of Teal
Organizations

Chapter 2.1 • Three breakthroughs and a metaphor 55

)
CHAPTER)2.1)

THREE!BREAKTHROUGHS!!
AND!A!METAPHOR!!

Nothing is as powerful as
an idea whose time has come.

Victor Hugo

Up to this point in history, humanity has experienced four ways
to collaborate in organizational settings, based on four very different
worldviews: Impulsive-Red, Conformist-Amber, Achievement-Orange,
and Pluralistic-Green. Each of these organizational models has brought
about major breakthroughs, and allowed us to tackle more complex
problems and achieve results of unprecedented scale. (Page 36 summa-
rizes the breakthroughs and the dominant metaphors of the different
models).

As more people engage with the world from an Evolutionary-Teal
perspective, it’s fair to assume that more Teal Organizations will start to
arise. What breakthroughs will they bring about? What metaphors will
capture their essence? Here, in summary, are some answers that emerged
from the research into pioneer Teal Organizations.

A new metaphor: organizations as living systems
Achievement-Orange speaks of organizations as machines;

Pluralistic-Green uses the metaphor of families. Several of the founders
of the Teal Organizations researched for this book explicitly talk about
the need for a new metaphor. Clearly, looking at organizations as
machines feels soulless and constraining; these founders don’t want to
play the all-important CEO who pulls levers at the top to propel the

56 Reinventing Organizations

people below into motion like cogs in a machine. From an Evolutionary-
Teal perspective, the metaphor of family can feel awkward too. Families,
as we all know, don’t always bring out the better aspects of our nature;
more often than we would want, they are mildly or wildly dysfunc-
tional. And concretely, if I’m your boss and you are reporting to me,
does the metaphor imply that I’m a father and you are a child? Green
insists on caring, serving leadership, but from a Teal perspective, I don’t
want to be a father to anybody in the organization, not even a caring,
serving father.

The founders of Teal Organizations use a different metaphor for
the workplaces they aspire to create. With surprising frequency, they
talk about their organization as a living organism or living system. Life, in
all its evolutionary wisdom, manages ecosystems of unfathomable
beauty, ever evolving toward more wholeness, complexity, and con-
sciousness. Change in nature happens everywhere, all the time, in a self-
organizing urge that comes from every cell and every organism, with no
need for central command and control to give orders or pull the levers.

The metaphor opens up new horizons. Imagine what organi-
zations would be like if we stopped designing them like soulless, clunky
machines. What could organizations achieve, and what would work feel
like, if we treated them like living beings, if we let them be fueled by the
evolutionary power of life itself?

Three breakthroughs of Evolutionary-Teal Organizations
The case studies of pioneer Teal Organizations researched for this

book reveal three major breakthroughs:
• Self-management: Teal Organizations have found the key to

operate effectively, even at a large scale, with a system based on
peer relationships, without the need for either hierarchy or con-
sensus.

• Wholeness: Organizations have always been places that encour-
age people to show up with a narrow “professional” self and to
check other parts of the self at the door. They often require us to
show a masculine resolve, to display determination and strength,
and to hide doubts and vulnerability. Rationality rules as king,
while the emotional, intuitive, and spiritual parts of ourselves
often feel unwelcome, out of place. Teal Organizations have
developed a consistent set of practices that invite us to reclaim our
inner wholeness and bring all of who we are to work.

• Evolutionary purpose: Teal Organizations are seen as having a life
and a sense of direction of their own. Instead of trying to predict
and control the future, members of the organization are invited to
listen in and understand what the organization wants to become,
what purpose it wants to serve.

Chapter 2.1 • Three breakthroughs and a metaphor 57

Each of these breakthroughs manifests itself through a number of
concrete, day-to-day practices that depart―sometimes subtly, some-
times radically―from traditionally accepted management methods.
These practices will be described in the next chapters, illustrated with
stories and real-life examples from pioneer Teal Organizations. Chapters
2.2 and 2.3 look at self-management, chapters 2.4 and 2.5 detail the prac-
tices used in pursuit of wholeness, and chapter 2.6 deals with evolutionary
purpose. Chapter 2.7 discusses organizational culture, the “soft” aspect of
the Teal Organizational model.

Readers interested in an overview of the different practices can
consult Appendix 4, which outlines Evolutionary-Teal Organizations’
practices along the traditional lens of key functional processes (strategy,
innovation, marketing, sales), human resources processes (recruitment,
performance management, compensation), and key practices of daily life
(meetings, decision-making, information flow).

Organizations featured in the research
Like protagonists in a play, the organizations researched for this

book will come on the stage at different moments in the next few chapters.
Let me introduce each of them here to give you a sense of the type of
industries, locations, and sizes involved (and for reference, if while
reading you want to be reminded of who is who).

AES
Energy sector―Global―40,000 employees―For profit
AES was founded by Roger Sant and Dennis Bakke in the United
States in 1982 and quickly grew into one of the world’s largest electri-
city production and distribution companies, with plants in dozens of
countries spread around the globe and 40,000 employees.

BSO/Origin
IT consulting―Global―10,000 employees (1996)―For profit
BSO/Origin was founded in 1973 by Eckart Wintzen in the Nether-
lands. By 1996, when Wintzen left, after selling it to Philips, it had
10,000 employees in 20 countries.

Buurtzorg
Health care―Netherlands―7,000 employees―Nonprofit
Buurtzorg was founded as a nonprofit in 2006 by Jos de Blok and a
team of nurses. It has become the largest neighborhood nursing organ-
ization in the Netherlands, providing home care to the elderly and
the sick.

58 Reinventing Organizations

ESBZ
School (Grades 7-12)―Germany―1,500 students, staff, and
parents―Nonprofit
ESBZ, a publicly financed school in Berlin, was founded in 2007
under the guidance of Margret Rasfeld, the school’s director. It has
attracted international recognition for its innovative curriculum and
organizational model.

FAVI
Metal manufacturing―France―500 employees―For profit
FAVI, a brass foundry, is a family business created in 1957 in the
north of France. In 1983, Jean-François Zobrist was appointed CEO
and undertook a radical transformation of the organization. It pro-
duces, among other things, gearbox forks for the automotive industry.

Heiligenfeld
Mental health hospitals―Germany―600 employees―For profit
Heiligenfeld currently operates a rehabilitation center and four mental
health hospitals in central Germany. The company was founded in
1990 by Dr. Joachim Galuska and Fritz Lang, after Galuska had tried
unsuccessfully to apply his vision for a holistic approach to mental
health problems in traditional mental health hospitals.

Holacracy
Organizational operating model
Holacracy is an organizational operating model, originally developed
by Brian Robertson and his team at Ternary Software, a Philadelphia-
based start-up. After transferring Ternary to new leadership, Robertson
co-founded HolacracyOne, a training, consulting, and research com-
pany dedicated to spreading this new organizational model, which
has been adopted by large and small for-profit and nonprofit organi-
zations on several continents.

Morning Star
Food processing―United States―400-2,400 employees―For profit
Morning Star was founded in 1970 by Chris Rufer as a single-truck
business transporting tomatoes. Today, it holds an overwhelming
market share of tomato processing and transport in the United States.
If you have enjoyed a pizza or spaghetti sauce in the United States,
you are likely to have tasted a Morning Star product.

Patagonia
Apparel―United States―1,350 employees―For profit
Yvon Chouinard, perhaps history’s most unlikely businessman, found-
ed what would later be called Patagonia in 1957 to produce climbing
pitons. The California-based company has grown into a leading out-
door apparel maker, committed to being a positive influence on the
environment.

Chapter 2.1 • Three breakthroughs and a metaphor 59

RHD
Human Services―United States―4,000 employees―Nonprofit
Resources for Human Development (RHD) is a Philadelphia-based
nonprofit operating in 14 states, serving people in need through a
variety of homes, shelters, and programs in areas such as mental
disabilities, addiction recovery, and homelessness. It was founded in
1970 by Robert Fishman.

Sounds True
Media―United States―90 employees and 20 dogs―For profit
Sounds True is in the business of disseminating spiritual wisdom
through recordings of spiritual masters, books, online courses, and
music. It was founded in 1985 by Tami Simon, who still owns and
leads the company today.

Sun Hydraulics
Hydraulics components―Global―900 employees―For profit
Sun Hydraulics, a company that was founded in 1970 by two
engineers, designs and manufactures hydraulics cartridge valves and
manifolds. Today it is a public company with factories in Florida
(where it is headquartered), Kansas, England, Germany, and Korea.

For methodological reasons, only organizations with at least 100

employees were researched in depth. (Admittedly, I gave Sounds True a
nudge by adding its 20 dogs into the tally. More about the dogs at
Sounds True, and why it is not entirely disingenuous to count them in,
at the beginning of chapter 2.4.) When relevant, the next few chapters
will occasionally also mention remarkable practices from other organiza-
tions such as Ozvision, a Japanese Internet company; the Center for
Courage & Renewal, an educational nonprofit supporting Parker Palmer’s
work with leaders in the field of education, health care, clergy, and
business; Realize!, a small Dutch organizational consultancy; Valve, a
Seattle based game-software company; and others.

Among the organizations listed above, AES and BSO/Origin have
special insights to offer, albeit for unfortunate reasons. They achieved
spectacular results during the two decades when they operated with a
number of Teal practices and structures; however, under new leader-
ship, they have reverted to more conventional management approaches.
Today, not much remains of their pioneer Teal style. Their journeys offer
valuable insights about the necessary conditions for Teal practices, a
topic discussed in Part 3 of this book.

The way I have linked organizations to stages in human
development in Part 1 of this book (see page 40) applies of course to
Evolutionary-Teal just as well. When, as a matter of convenience, I talk
about a “Teal Organization,” I do not mean to imply that all people who
work there and all daily interactions are informed by the Evolutionary-
Teal paradigm. As discussed in chapter 1.2, our human nature is (thank-
fully) far too complex to be reduced to one single label. What I mean to

60 Reinventing Organizations

imply, instead, is that many if not most of the structure, practices, and
cultural aspects of that organization are consistent with the Evolu-
tionary-Teal stage of consciousness.

A few of the researched organizations are almost pure “Teal.”
Most are a blend―they have innovated with Evolutionary-Teal practices
very consistently in some areas, and work with more traditional Orange-
Green practices in other areas. An extreme example is Morning Star, the
tomato processing company: it has pushed and refined the breakthrough
of self-management to an extraordinary degree, but hasn’t much
pursued the other two Teal breakthroughs. Calling it a Green-Teal Organ-
ization might be more accurate, and the same could be said of some of
the other organizations. Fortunately, this doesn’t impair the research:
while some of the Teal pieces might be missing in some organizations,
collectively, in every area, we have more than enough overlapping
pieces for the full picture to emerge. Based on their innovations, the
Evolutionary-Teal organizational model can be described in enough
detail to provide practical guidance for other organizations wanting to
operate in similar ways; we can even distinguish between structures and
practices that can apply to all types of organizations and those that need
to be adapted to the characteristics of specific companies and industries.

Chapter 2.2 • Self-management (structures) 61

CHAPTER)2.2)

SELF1MANAGEMENT!
(STRUCTURES)!

Why do so many people work so hard so they can
escape to Disneyland? Why are video games more
popular than work? … Why do many workers spend years
dreaming about and planning for retirement?

The reason is simple and dispiriting. We have
made the workplace a frustrating and joyless place where
people do what they’re told and have few ways to
participate in decisions or fully use their talents. As a
result, they naturally gravitate to pursuits in which they can
exercise a measure of control over their lives.

In most organizations I have been exposed to
around the world, … we still have the offices “above” the
working people … who, without consulting workers, make
decisions that dramatically affect their lives.

Dennis Bakke

The concentration of power at the top, separating colleagues into

the powerful and the powerless, brings with it problems that have
plagued organizations for as long as we can remember. Power in
organizations is seen as a scarce commodity worth fighting for. This
situation invariably brings out the shadowy side of human nature:
personal ambition, politics, mistrust, fear, and greed. At the bottom of
organizations, it often evokes the twin brothers of powerlessness:
resignation and resentment. Labor unions were born from the attempt to
confederate power at the bottom to counter power from the top (which
in turn tries to break the power of unions).

62 Reinventing Organizations

The widespread lack of motivation we witness in many organi-
zations is a devastating side effect of the unequal distribution of power.
For a few lucky people, work is a place of joyful self-expression, a place
of camaraderie with colleagues in pursuit of a meaningful purpose. For
far too many, it is simply drudgery, a few hours of life “rented out”
every day in exchange for a paycheck. The story of the global workforce
is a sad tale of wasted talent and energy.

If you think this is too strong a statement, consider the 2012
survey conducted by Tower Watson, a human resources consulting firm.
It polled 32,000 workers in the corporate sector in 29 countries to
measure employee engagement (as well as the key factors contributing
to engagement, such as confidence in senior management and the
perceived interest by senior management in employee well-being). The
overarching conclusion: just around a third of people are engaged in
their work (35 percent). Many more people are “detached” or actively
“disengaged” (43 percent). The remaining 22 percent feel “unsupported.”
This survey is not a negative outlier. The same survey has been
administered for years, and in some years results have been worse still.
Gary Hamel, a scholar and writer on organizations, aptly calls survey
results such as these the shame of management.

Pluralistic-Green Organizations seek to deal with the problem of
power inequality through empowerment, pushing decisions down the
pyramid, and they often achieve much higher employee engagement.
But empowerment means that someone at the top must be wise or noble
enough to give away some of his power. What if power weren’t a zero-
sum game? What if we could create organizational structures and
practices that didn’t need empowerment because, by design, everybody
was powerful and no one powerless? This is the first major
breakthrough of Teal Organizations: transcending the age-old problem
of power inequality through structures and practices where no one holds
power over anyone else, and yet, paradoxically, the organization as a
whole ends up being considerably more powerful.

This chapter will address in detail the structures that make self-
managing organizations possible―what becomes of the pyramid, the
staff functions, the executive team, the project teams that we know from
today’s organizations? The following chapter (2.3) will then describe the
practices needed to make self-management work: who gets to make
what decisions; how information flows; how people are evaluated,
promoted, and compensated in these new structures.

A case example: from Orange to Teal
Buurtzorg, a Dutch neighborhood nursing organization, is perhaps

the best available case example to illustrate the change from today’s domi-
nant organizational model (Achievement-Orange) to the emerging para-
digm of Evolutionary-Teal.

Chapter 2.2 • Self-management (structures) 63

First, some background: Since the 19th century, every neigh-
borhood in the Netherlands had a neighborhood nurse who would make
home visits to care for the sick and the elderly. Neighborhood nurses are
an essential piece of the Dutch health care system, working hand-in-
hand with family doctors and the hospital system. In the 1990s, the
health insurance system (which over time had taken on footing most of
the bill), came up with a logical idea: why not group the self-employed
nurses into organizations? After all, there are obvious economies of scale
and skill. When one nurse is on vacation, sick, or simply trying to get a
good night’s sleep, someone else can take over. If one has too much
work while another has a lull, the organization can balance the load.
And not every nurse knows how to treat every type of pathology, so
there are complementarities in terms of skills.

Soon enough, the organizations that grouped the nurses started
merging themselves, in pursuit of ever more scale: the number of
organizations dropped from 295 to 86 in just five years, from 1990 to
1995. Piece by piece, the Achievement-Orange logic grew deeper roots.
Tasks were specialized: some people would take care of intake of new
patients and determine how nurses would best serve them; planners
were hired to provide nurses with a daily schedule, optimizing the route
from patient to patient; call center employees started taking patients’
calls; given the growing size of the organizations, regional managers and
directors were appointed as bosses to supervise the nurses in the field.
To ensure accurate planning and drive up efficiency, time norms were
established for each type of intervention: in one company, for instance,
intravenous injections would be allotted exactly 10 minutes, bathing 15
minutes, wound dressing 10 minutes, and changing a compression
stocking 2.5 minutes. To reduce costs, these different health treatments
(now called “products”) were tiered according to the expertise they
required. The more experienced and expensive nurses perform only the
more difficult products, so that cheaper nurses can do all the others. To
be able to keep track of efficiencies, a sticker with a bar code is placed on
the door of every patient’s home and nurses have to scan in the barcode,
along with the “product” they have delivered, after every visit. All
activities are time-stamped in the central system, and can be monitored
and analyzed from afar.

Each of these changes makes perfect sense in the Achievement-
Orange pursuit of economies of scale and skill. But the overall outcome
has proved distressing to patients and nurses alike. Patients have lost the
personal relationship they used to have with their nurse. Every day (or
several times a day if their situation calls for it) a new, unknown face
enters their home. The patients―often elderly, sometimes con-
fused―must gather the strength to re-tell their medical history to an
unknown, hurried nurse who doesn’t have any time allotted for listen-
ing. The nurse changes the bandage, gives the shot, and then is out the
door. The system has lost track of patients as human beings; patients

64 Reinventing Organizations

have become subjects to which products are applied. The human
connection is lost, and the medical quality is compromised too: there is
no continuity in care; the subtle but important cues about how a patient’s
health is evolving are often overlooked when a different nurse comes
along every day.

Nurses find these working conditions degrading. Most of them
chose their profession out of vocation to care for those in need―nursing
is hardly a profession in which to get rich―and these practices make a
mockery of their vocation. One of the nurses now working at Buurtzorg
says this about her previous work in a neighborhood nursing organiza-
tion:

The whole day, the electronic registration system that you have to
carry with you is making you crazy. Some evenings I had to go and see
19 different patients. Then there is nothing you can do but run inside,
put on a bandage or give a shot, and run out. You can never finish your
work in a qualitative way. And when you go home, you keep thinking all
the time, “I hope the nurse that comes after me doesn’t forget to do this or
that.”1

Another nurse tells a similar story of her experience in one of the
neighborhood nursing organizations:

The last years I was responsible for 80 patients that I never got to
know well. … The planning was done somewhere else by someone who
didn’t know the patients. It went wrong so many times that at some
point I could no longer explain to patients why nobody would come or
why the agreed time wasn’t respected. In seven years I had 14 managers
and was tired of that too. The organization had become too big and
difficult to navigate. Nobody felt responsible for the care of patients.
Every day there were complaints and conflicts among colleagues.2

A third nurse tells the following story:

The final straw came when my previous organization wanted us to
sell stuff to our patients. We had to sell products from the internal
pharmacy that the organization had set up. We felt deeply troubled
because our expertise and integrity were abused. … For me and for many
colleagues, this was a turning point in our loyalty towards our
employer.3

People who work in the headquarters of these organizations don’t
find work much more meaningful. As these organizations grew, so did
the number of levels of management. In good faith, managers at each
level are trying to do their job―supervising their direct reports, paying
close attention to budget variances, double-checking each request for
resources, ensuring that all the bases are covered by all relevant supe-

Chapter 2.2 • Self-management (structures) 65

riors before approving a change in course. In the process, motivation and
initiative are choked out.

Buurtzorg, the organization that has caused a revolution in neigh-
borhood nursing, was founded in late 2006 by Jos de Blok. Jos had been a
nurse for 10 years and had then climbed the ladder to assume manage-
ment functions and staff roles in a nursing organization. When he saw
that he couldn’t effect change from the inside, he decided to start his
own organization.4 An entirely different paradigm would inform the
care and the organizational set-up. Buurtzorg, the organization he cre-
ated, has become extraordinarily successful, growing from 10 to 7,000
nurses in seven years and achieving outstanding levels of care.

Self-managing teams
Within Buurtzorg (which means “neighborhood care” in Dutch),

nurses work in teams of 10 to 12, with each team serving around 50
patients in a small, well-defined neighborhood. The team is in charge of
all the tasks that were previously fragmented across different depart-
ments. They are responsible not only for providing care, but for deciding
how many and which patients to serve. They do the intake, the planning,
the vacation and holiday scheduling, and the administration. They
decide where to rent an office and how to decorate it. They determine
how best to integrate with the local community, which doctors and
pharmacies to reach out to, and how to best work with local hospitals.
They decide when they meet and how they will distribute tasks among
themselves, and they make up their individual and team training plans.
They decide if they need to expand the team or split it in two if there are
more patients than they can keep up with, and they monitor their own
performance and decide on corrective action if productivity drops. There
is no leader within the team; important decisions are made collectively.

Care is no longer fragmented. Whenever possible, things are
planned so that a patient always sees the same one or two nurses.
Nurses take time to sit down, drink a cup of coffee, and get to know the
patients and their history and preferences. Over the course of days and
weeks, deep trust can take root in the relationship. Care is no longer
reduced to a shot or a bandage―patients can be seen and honored in
their wholeness, with attention paid not only to their physical needs, but
also their emotional, relational, and spiritual ones. Take the case of a
nurse who senses that a proud older lady has stopped inviting friends to
visit because she feels bad about her sickly appearance. The nurse might
arrange a home visit from a hairdresser, or she might call the lady’s
daughter to suggest buying some new clothes.

Buurtzorg places real emphasis on patients’ autonomy. The goal is
for patients to recover the ability to take care of themselves as much as
possible. What can patients learn to do themselves? Can patients structure

66 Reinventing Organizations

their support networks? Are there family members, friends, or neighbors
who could come by and help on a regular basis? Nurses will often go ring
at a neighbor’s door to inquire if they would be open to helping support
the older lady living next door. Buurtzorg effectively tries to make itself
redundant whenever possible. Vocation is restored in its true sense: the
patient’s well-being trumps the organization’s self-interest. The result is
that patients are thrilled by how Buurtzorg’s nurses serve them. And so
are their families, who often express deep gratitude for the important
role nurses come to play in the life of the sick or elderly (it is not unusual
for nurses to care for terminally ill patients until their last moments).

Outrageous results
The results achieved by Buurtzorg on the medical front are

outrageously positive. A 2009 Ernst & Young study found that
Buurtzorg requires, on average, close to 40 percent fewer hours of care per
client than other nursing organizations―which is ironic when you
consider that nurses in Buurtzorg take time for coffee and talk with the
patients, their families, and neighbors, while other nursing organizations
have come to time “products” in minutes. Patients stay in care only half

as long, heal faster, and become more
autonomous. A third of emergency hospital
admissions are avoided, and when a patient
does need to be admitted to the hospital, the
average stay is shorter. The savings for the
Dutch social security system are consi-

derable―Ernst & Young estimates that close to €2 billion would be
saved in the Netherlands every year if all home care organizations
achieved Buurtzorg’s results. Scaled to the US population, this savings
would be equivalent to roughly $49 billion. Not bad for just home care.
Imagine if the incomparably bigger hospital organizations were to be
run in a similar manner.

These numbers fail to include what might be even more impor-
tant―how patients feel about the emotional and relational support they
receive during their illness or the last years of their life. Trying to put
numbers on this would be arbitrary and ultimately meaningless. It
would be equally pointless to try to peg a dollar value to the sense of
vocation that has been restored to nurses. A common phrase heard
within Buurtzorg teams is, “I have my job back.” Some numbers do
testify to the level of job satisfaction: absenteeism for sickness is 60
percent lower at Buurtzorg and turnover 33 percent lower than in
traditional (Orange) nursing organizations. Nurses at traditional organ-
izations are leaving in droves to join Buurtzorg, which has gone from a
start-up with 10 nurses in late 2006 to a point in 2013 at which it employs
two-thirds of all neighborhood nurses in the Netherlands. Buurtzorg is

Humans are born to care. Our
institutions magnify or depress

the human capacity to care.
Jane Dutton

Chapter 2.2 • Self-management (structures) 67

single-handedly transforming a key component of the health care industry
in the Netherlands.

No boss
Buurtzorg teams have no boss. All team members―typically 10 to

12 people―are nurses. They deal with all the usual management tasks
that arise in every team context: they set direction and priorities, analyze
problems, make plans, evaluate people’s performance, and make the
occasional tough decisions. Instead of placing these tasks on one single
person―the boss―team members distribute these management tasks
among themselves. The teams are effectively self-governing and self-
organizing.

Anybody who has worked on a team with no boss knows that it
can easily turn into a nightmare. Yet that only rarely happens at Buurtzorg.
How come? Productive self-management rarely happens spontaneously.
Buurtzorg has become very effective at
giving teams the specific support (train-
ing, coaching, and tools) required for
self-management to work in practice. To
begin with, all newly formed teams and
all new recruits to existing teams take a
training course called “Solution-Driven
Methods of Interaction,”5 learning a co-
herent set of skills and techniques for
healthy and efficient group decision-making. Within the training, team
members deepen their knowledge in some of the most basic (and
ironically often most neglected) building blocks of human collaboration:
learning different types of listening and different styles of communi-
cation, how to run meetings, how to coach one another, and other prac-
tical skills.

Let’s take a look, for instance, at a team meeting where important
issues need to be resolved. With no boss in the room, no one can call the
shots or make the final call. Instead, Buurtzorg teams use a very precise
and efficient method for joint problem solving and decision-making. The
group first chooses a facilitator for the meeting. The agenda of topics to
be discussed is put together on the spot, based on what is present for
team members at that moment in time. The facilitator is not to make any
statements, suggestions, or decisions; she can only ask questions: “What
is your proposal?” or “What is the rationale for your proposal?” All
proposals are listed on a flipchart. In a second round, proposals are
reviewed, improved, and refined. In a third round, proposals are put to
a group decision. The basis for decision-making is not consensus. For a
solution to be adopted, it is enough that nobody has a principled
objection. A person cannot veto a decision because she feels another

The question is not how you can
make better rules, but how you can
support teams in finding the best
solution. How can you strengthen

the possibilities of the team members
so that they need the least amount of

direction-setting from above?
Jos de Blok

68 Reinventing Organizations

solution (for example, hers!) would have been preferable. The perfect
solution that all would embrace wholeheartedly might not exist, and its
pursuit could prove exhausting. As long as there is no principled
objection, a solution will be adopted, with the understanding that it can
be revisited at any time when new information is available. The meeting
process elegantly ensures that every voice is heard, that the collective
intelligence informs decision-making, and that no one person can derail
the process and hold others hostage trying to impose her personal
preferences.

If, despite their training and meeting techniques, teams get stuck,
they can ask for external facilitation at any time―either from their
regional coach or from the pool of facilitators of the institute they trained
with. A team that is stuck can also turn to other teams for suggestions,
using Buurtzorg’s internal social network platform, as most likely some
team somewhere will already have grappled with a similar problem.

Often, nurses joining from other organizations find the switch to
self-management quite challenging at first. The job brings up tough
questions all the time. For instance, should the team add a second person
to the night shift, even though no one likes to work at night? Or take the
case of a team that has too much work already, when the family of a
patient it has cared for before says to the team, “Our mother is
terminally sick; could you please care for her?” Nurses can’t offload
these difficult decisions to a boss, and when things get tense, stressful, or
unpleasant, there is no boss and no structure to blame; the teams know
they have all the power and latitude to solve their problems. Learning to
live with that amount of freedom and responsibility can take some time,
and there are often moments of doubt, frustration, or confusion. It’s a
journey of personal unfolding, in which true professionals are born.
Many nurses report their surprise at how much energy and motivation
they discovered in themselves that was never evoked when they worked
in a traditionally managed organization.

Let’s add an important clarification straightaway, because this can
be easily misunderstood: In Buurtzorg’s teams, there is no boss-subor-
dinate hierarchy, but the idea is not to make all nurses on a team
“equal.” Whatever the topic, some nurses will naturally have a larger
contribution to make or more say, based on their expertise, interest, or
willingness to step in. One nurse might be a particularly good listener
and coach to her colleagues. Another might be a living encyclopedia of
arcane medical conditions. Another might have a knack for handling
conflict within the team or within the feuding family of a patient.
Another might be a great planner and organizer. In any field, some
nurses will naturally have more to offer than others. Some nurses build
up reputations and influence even well beyond their team and are
consulted by nurses from across the country on certain topics of expertise.
Because there is no hierarchy of bosses over subordinates, space
becomes available for other natural and spontaneous hierarchies to

Chapter 2.2 • Self-management (structures) 69

spring up―fluid hierarchies of recognition, influence, and skill (some-
times referred to as “actualization hierarchies” in place of traditional
“dominator hierarchies”).

No middle management
There is no boss within the team. Surely, then, there must be

strong leadership coming from higher up in the hierarchy, say, from the
regional managers that oversee a number of teams? The answer, as
you’ve probably guessed, is no. There are no regional managers. Instead,
there are regional coaches. It’s not merely semantics. Unlike typical
regional managers, coaches at Buurtzorg have no decision-making power
over teams. They are not responsible for team results. They have no
targets to reach and no profit-and-loss responsibility. They receive no
bonuses if their teams perform well. The vertical power transmission of
traditional pyramidal organizations is taken off its hinges: the teams of
nurses aren’t simply empowered by their hierarchy; they are truly powerful
because there is no hierarchy that has decision-making power over them.

In traditional organizations, the position of regional manager is
often a breeding ground for young talents on their way up. At
Buurtzorg, there is no managerial ladder to climb; coaches are selected
for their coaching capacity―they tend to be older, highly experienced
nurses with strong interpersonal skills. Those who have held manage-
ment positions in other nursing organizations have to learn to approach
their role from a very different angle, as one coach explains:

I had to free myself from previous ways of working, when I was
trained to manage and control. I have to let go of that here. The big
difference is that, really, I’m not responsible. The responsibility lies with
the teams and Jos [de Blok, the founder].6

Coaches have no hierarchical power, but make no mistake, they
play a crucial role just the same. Self-management is no walk in the park.
Newer teams in particular face a steep learning curve. They are
effectively in charge of all the aspects of creating and running a small
organization of 12 people (remember, there are no intakers, no planners,
no call center operators, no administrators, no managers), and at the
same time they are learning to manage interpersonal dynamics within a
self-organizing, boss-less team. The regional coach is a precious resource
to the teams; upon request she can give advice or share how other teams
have solved similar problems. Mostly, though, the coach’s role is to ask
the insightful questions that help teams find their own solutions. Coaches
mirror to teams unhelpful behavior and can at critical moments raise the
flag and suggest that a team pause to deal with a serious problem.

There is no job description for the regional coach. Every coach is
encouraged to find and grow into her specific way of filling the role,

70 Reinventing Organizations

based on her specific character and talents. Nevertheless a few unwritten
principles have emerged as part of Buurtzorg’s culture:
• It’s okay for teams to struggle. From struggle comes learning. And

teams that have gone through difficult moments build resilience
and a deep sense of community. The coach’s role therefore is not
to prevent foreseeable problems, but to support teams in solving
them (and later help them reflect on how they’ve grown in the
process).

• The coach’s role is to let teams make their own choices, even if she
believes she knows a better solution.

• The coach supports the team mostly by asking insightful questions
and mirroring what she sees. She helps teams frame issues and
solutions in light of Buurtzorg’s purpose and its holistic approach
to care.

• The starting point is always to look for enthusiasm, strengths, and
existing capabilities within the team. The coach projects trust that
the team has all it takes to solve the problems it faces.
The span of support (what in traditional organizations would be

called “span of control”) of Buurtzorg’s regional coaches is broad; on
average, a coach supports 40 to 50 teams. Jos de Blok, Buurtzorg’s found-
er and CEO, explains the intention:

Coaches shouldn’t have too much time on their hands, or they risk
getting too involved with teams, and that would hurt teams’ autonomy.
Now they take care of only the most important questions. We gave some
of the first teams from Buurtzorg quite intensive support and attention,
and today we still see that they are more dependent and less autonomous
than other teams.7

Buurtzorg teams have incredible latitude to come up with their
own solutions. Very little is mandated from the top. There are only a few
ground rules that experience has shown are important so as to make
self-management work in practice. The list of ground rules includes:
• A team should not grow larger than 12 persons. Beyond that num-

ber, it should split.
• Teams should delegate tasks widely among themselves. They

should be careful not to concentrate too many tasks with one
person, or a form of traditional hierarchy might creep in through
the back door.

• Along with team meetings, teams plan regular coaching meetings
where they discuss specific issues encountered with patients and
learn from each other (using a specific group coaching technique).

• Team members must appraise each other every year, based on
competency models they can devise themselves.

Chapter 2.2 • Self-management (structures) 71

• Teams make yearly plans for initiatives they want to take in the
areas of client care and quality, training, organization, and other
issues.

• The target for billable hours in mature teams is 60 to 65 percent.8
• Teams make important decisions based on the specific decision-

making technique outlined earlier.

Bare minimum staff functions
In the last decades, we have witnessed, especially in large

organizations, a proliferation of staff functions: human resources (HR),
strategic planning, legal affairs, finance, internal communications, risk
management, internal audit, investor relations, training, public affairs,
environmental control, engineering services, quality control, knowledge
management.

There is a natural tendency for people in such staff functions,
often with the best of intentions, to prove their worth by finding ways to
“add value”―devising rules and procedures, building up expertise,
finding new problems to solve. Ultimately,
they concentrate power and decision-making
away from the frontline. People there feel
disempowered: they have to follow rules that
often make sense only in principle but cannot
accommodate the complexity of the concrete
situations they face on the ground. Teal
Organizations, in contrast, keep staff functions
to an absolute bare minimum. They understand that the economies of
scale and skill resulting from staff functions are often outweighed by the
diseconomies of motivation produced. As a result, there are very, very
few people working in staff functions in Teal Organizations. And those
that do typically have no decision-making authority. They can provide
guidelines but cannot impose a rule or a decision. They truly deserve the
name support functions, kicking into action only when teams request their
support.

At Buurtzorg, for example, the 7,000 nurses are supported by only
30 people working from a humble building in a residential part of
Almelo, a town in the northern Netherlands―a far cry from the head-
quarters building you might expect for such a successful company. None
of them are involved in the typical headquarters functions of nursing
companies (intake, planning, call center). Buurtzorg has incredibly moti-
vated employees (it is regularly elected “best company to work for” in
the country) but, like many other Teal Organizations, it has no human
resources department. People working at headquarters have a strong
ethos of service to the teams of nurses―their duty is to support nurses
with the same dedication and responsiveness that the nurses bring to

Bureaucracies are built by
and for people who busy

themselves proving they are
necessary, especially when
they suspect they aren’t.

Ricardo Semler

72 Reinventing Organizations

their patients. Calls and emails from nurses are answered on the spot, or
within a few hours at most.

How is it possible to manage a 7,000-person-strong organization
with such a barebones headquarters? Many of the typical staff tasks are
simply devolved back to the teams. Take recruitment for example: when
a team feels the need to expand, it does its own recruiting (the regional
coach might give advice when asked but is not involved in the decision).
Chances are that the team will co-opt somebody who will fit in well.
Because the team members make the decision themselves, they are
emotionally invested in making the recruit successful.

How about expertise? In every organization, there is a natural
tension between the need for expertise and the need to let frontline

people make decisions. At Buurtzorg, it
doesn’t make sense for every one of the
roughly 600 Buurtzorg teams to develop
expertise in every arcane medical condition
they might encounter. The first instinct, in
most organizations, would be to create a
central pool of experts. The risk, of course,
is that over time two castes emerge within
the organization: the prestigious, and pro-

bably higher paid, group of central experts and the lesser-paid genera-
lists scattered around the country. Buurtzorg has developed a number of
effective alternatives to deal with expertise, medical and otherwise:
• Nurses on the teams are encouraged to build up expertise and

become contact points beyond their team. Through Buurtzorg’s
intranet, nurses can easily identify and access colleagues with
relevant expertise in a specific subject matter.

• Occasionally, volunteer task forces of nurses are set up that, in
addition to their work with patients, investigate a new topic and
build up expertise (for instance, how Buurtzorg should adapt in
response to new legislation).

• When needed, an expert can be hired centrally as a freelancer,
rather than brought into a staff role.

• If a staff function is hired, that person has no decision-making
authority over teams.
A real-life example: one day, in a meeting of Buurtzorg’s regional

coaches, a suggestion was made to hire a specialist in labor law, a topic
many teams occasionally need assistance with. The suggestion made
sense. And yet, other avenues were explored; after closer examination, it
appeared that most questions were recurring, and so the group decided
to create a self-help section of “frequently asked questions on labor law”
on Buurtzorg’s intranet. This took care of most questions, but a year
later, the group realized that some questions still popped up for which
the FAQ provided no answers. It was decided to contract a freelance

We were used to working in large
organizations and to joking about
the idiots from HQ that came up
with all sorts of things. Now we
have to do it ourselves and can’t

complain about others.
A nurse at Buurtzorg about the

absence of staff functions

Chapter 2.2 • Self-management (structures) 73

expert for a few days per month who would answer questions from
teams on request.

Trying to avoid or limit staff functions is something I encountered
not only in Buurtzorg, but in all self-managing organizations in this
research. The absence of rules and procedures imposed by headquarters
functions creates a huge sense of freedom and responsibility throughout
the organization. Why is it then, we might wonder, that most
organizations today rely so heavily on staff functions? I believe that
there are two main reasons for this:
• Staff functions provide economies of scale, or so goes the usual

rationale. Economies of scale can easily be estimated in hard dollar
figures, whereas it is virtually impossible to peg a number to the
diseconomies of motivation.

• Staff functions give CEOs and leaders a sense of control over
employees working out in the field. Rarely do leaders invoke this
reason for putting staff functions in place, but it is very real. In the
old machine metaphor of organizations, staff functions are like
levers that the C-suite leaders use to steer the ship―levers that are
conveniently close at hand, just a few doors down the hall at
headquarters. Yet it is often an illusion of control: from the
perspective of headquarters, rules and procedures always make
sense; one must be in the field to experience the counterproductive
and dispiriting results they often produce and to realize how often
people find creative ways around them or simply ignore them.
Leaders of Teal Organizations therefore must embrace trust twice:

they must trust that they can give up a sure thing (economies of scale)
for something less certain but probably much more beneficial (unbridled
motivation). And, after having already severed the power transmission
of middle management, they must give up the illusion that staff func-
tions can provide control over frontline staff.

Blue collars turn Teal
An organization like Buurtzorg might seem the natural place for

self-managing practices to emerge. Many nurses wouldn’t want to climb
a career ladder to become managers, even if there was one. For that
reason, when I started the research that led to this book, I wondered if
perhaps I would find Teal Organizations only in serving professions―in
health care, education, or the nonprofit sector. I was happy to be proven
wrong more than once. FAVI, a family-owned French brass foundry,
was the first example I stumbled upon of a blue-collar company that
operates with Evolutionary-Teal principles of self-management. FAVI
was created in the late 1950s and started off creating brass pieces for
faucets. Today most of its revenue comes from the gearbox forks it

74 Reinventing Organizations

produces for the automotive industry; its other products include compo-
nents for electrical motors, water meters, and hospital equipment.

Work at FAVI is physically demanding; it’s real blue-collar work.
The factory is not a squeaky clean automotive assembly where you can
see robots perform elegant and silent dances. It’s a workshop where
operators work hard loading and unloading metal pieces onto noisy
workstations. The nature of batch production at FAVI allows for only
limited automation. Walking through the factory, you might not notice
immediately what is special about it. You could be forgiven for thinking
that cranking out gearbox pieces isn’t a very sexy or rewarding business.
Yet FAVI’s results are far from ordinary. All its competitors have moved
to China to enjoy cheaper labor costs. And yet FAVI is not only the one
producer left standing in Europe; it also commands a 50 percent market
share for its gearbox forks. Its product quality is legendary, and its on-
time delivery close to mythical: workers are proud of their record of not
a single order delivered late in over 25 years. FAVI delivers high profit
margins, year in and year out, despite Chinese competition, salaries well
above average, and highly cyclical demand patterns. There is virtually
no employee turnover; workers who have tasted FAVI’s ways of
working can’t see themselves going back to traditionally run factories.

FAVI used to be operated like a traditional factory, before the
family appointed Jean-François Zobrist, a charismatic metallurgist and
former paratrooper, as new CEO of the brass foundry in 1983.9 (He
remained CEO until his retirement in 2009, when Dominique Verlant
took over that role). Despite its relatively small size (80 people), it was
firmly stacked like a pyramid: shop-floor workers reported to a chef
d’équipe that reported to a chef d’atelier that reported to a chef de service
that reported to the chef de production that reported to the CEO. The chef
de production was part of the management team, together with the heads
of sales, engineering, planning, maintenance, HR, and finance, all of
whom reported to the CEO. This setup is still typical for a
manufacturing organization today, with perhaps one or two layers taken
out to flatten the structure and reduce costs. No academic or
management consultant would find fault with such a structure.

But with Zobrist at the helm, within two years FAVI was
fundamentally reshaped, along lines that bear a striking resemblance to
Buurtzorg’s way of operating. Today, the factory has more than 500
employees that are organized in 21 teams called “mini-factories” of 15 to
35 people. Most of the teams are dedicated to a specific customer or
customer type (the Volkswagen team, the Audi team, the Volvo team,
the water meter team, and so forth). There are a few upstream produc-
tion teams (the foundry team, the mold repair team, maintenance), and
support teams (engineering, quality, lab, administration, and sales
support). Each team self-organizes; there is no middle management, and
there are virtually no rules or procedures other than those that the teams
decide upon themselves.

Chapter 2.2 • Self-management (structures) 75

The staff functions have nearly all disappeared. The former HR,
planning, scheduling, engineering, production-IT and purchasing depart-
ments have all been shut down. Their tasks have been taken over by the
operators in the teams, who do their own hiring, purchasing, planning,
and scheduling. At FAVI, the sales department has been disbanded too.
The sales account manager for Audi is now part of the Audi team, just as
the sales account manager for Volvo is part of the Volvo team. There is no
head of sales above the group of account managers. In the old structure,
white-collar workers in offices with windows overlooking the shop floor
planned in detail what the workers needed to do, by when, and how. Now
blue-collar workers effectively wear their own white collars and no longer
receive instructions from above.

How a client order makes its way through the system perhaps
best illustrates how deeply the new model departs from the traditional
one. Previously, when an order came in, it would arrive first at the sales
department. The planning department would give sales a predicted
shipment date and allocate the necessary machine times into the master
planning. Then, the day prior to production, scheduling would make the
detailed planning of what exactly would need to be produced when on
which machine. Based on the scheduling, HR would allocate workers to
the machines according to schedule. Workers then simply did what they
were told. They had no insight into the order book, whether business
was good or bad, and why on that specific day they were allocated to
this product or that machine. All they were asked to do was show up at
the right place and time and then perform the prescribed tasks for a
number of hours. Workers were given no information or say in their
work; this state of affairs might or might not have been intentional, but
with a fragmented order process, where successive departments refine
the planning, it could not be any other way. Workers weren’t the only
blind ones in the process; the sales account managers did not know what
happened on the shop floor any more than workers knew about the
order history. They weren’t able to understand and tell their customers
why certain orders would be delivered on time and others not. Orders,
once put in, landed in something of a black box; no one could easily
untangle the complex flow that had taken the order through planning,
scheduling, HR, and the shop floor.

Now, in the team setup, the process looks very different. Every
week, in a short meeting, the account manager of, for example, the
Volkswagen team will share with his dozen colleagues the order the
German carmaker has placed. Everybody joins in the joy when the order
is high or the disappointment when it is low. Planning happens on the
spot, in the meeting, and the team jointly agrees on the shipment date.
Account managers now have a good understanding of how their
agreements with clients affect people and processes in the factory, and
when they are put under pressure to reduce prices, they can enlist

76 Reinventing Organizations

workers in finding solutions. Can the process be somehow improved, or
productivity increased, to shave off another few cents per unit?

The account managers do not report to a head of sales; in practice,
they report to their own teams. No one gives them sales targets (you
read that right―sales people without sales targets). Their motivation is
to serve their clients well and, in the face of Chinese competition, to
maintain and when possible increase the number of jobs the factory can
provide. Shop floor operators are not faceless workers, but colleagues
they know well from their weekly interactions. To account managers,
feeding their team with work is a motivation far stronger than any sales
target from a head of sales could ever provide. Incidentally, at FAVI,
sales orders are always discussed in terms of employment, not in
monetary terms; so there is no “we got a $1 million order,” but rather
“we got an order for 10 people’s work.”10

No executive team, few meetings
The functional structure at FAVI has disappeared, and so there

are no more executive team meetings. No one meets at the top! The
weekly meetings that used to bring together the heads of sales,
production, maintenance, finance, HR, and other departments are now
held at the level of every team. At FAVI, each team decides on its
meeting schedule―typically they hold three regular meetings: a short
tactical discussion at the start of every shift, a weekly meeting with the
sales account manager to discuss orders, and a monthly meeting with an
open agenda. There are no fixed weekly or monthly meetings across
teams that would resemble the previous executive team meeting. When
cross-team meetings happen, it’s because a specific need has prompted
someone to organize it ad hoc. The same holds true for Buurtzorg. Jos de
Blok, the CEO, does not meet every week with his regional coaches, for
instance. In many ways, such meetings would make a lot of sense: the
regional coaches have great insight into what’s happening in the field;
collectively, they could spot issues and opportunities and determine
which actions to take and initiatives to launch. But that would exactly be
the problem, in Buurtzorg’s perspective―people from up high believing
they know what is needed down below. Jos de Blok and the regional
coaches have recognized that meeting frequently would most likely spur
them to get busy in all sorts of ways. Therefore, they decided to come
together just four times a year, with an open agenda to discuss any
topics that emerge. This rhythm, they found, is infrequent enough to
prevent the risk of their taking the reins from the teams in the way an
executive team would.

In a pyramid structure, meetings are needed at every level to
gather, package, filter, and transmit information as it flows up and down
the chain of command. In self-managing structures, the need for these
meetings falls away almost entirely. Meeting overload in traditional

Chapter 2.2 • Self-management (structures) 77

organizations is particularly acute the higher you go up the hierarchy.
The typical day of a top manager consists of back-to-back meetings. The
joke goes that in most organizations, people low in the hierarchy work,
while people higher up do meetings. But think of it: in functional
pyramidal structures, it could hardly be otherwise. The higher you go,
the more lines converge. It is only at the
very top that the different departments such
as sales, marketing, R&D, production, HR,
and finance meet. Decisions are naturally
pushed up to the top, as it’s the only place
where decisions and trade-offs can be infor-
med from the various angles involved. It’s almost deterministic: with a
pyramidal shape, people at the top of organizations will complain about
meeting overload, while people below feel disempowered.

In the type of structure adopted by Buurtzorg, FAVI, and other
self-managing organizations we will meet, the lines converge at the
lowest level, within teams. Teams hold short meetings (daily, weekly, or
monthly) to align and make decisions; beyond that, there tend to be no
regularly scheduled meetings at all. Meetings are planned only ad hoc,
when a topic demands attention, with the relevant people around the
table. It’s an organic way of running an organization, where structure
follows emerging needs and not the other way around.

Coordination and knowledge exchange across teams
Of course, coordination is often needed across teams. Tradition-

ally, that’s when bosses and staff functions step in. Take load-balancing:
because customer orders fluctuate, on any given day some teams might
have too much work and others too little. Perhaps a COO role might be
needed after all, with an assistant planner to allocate workers across
teams. Yet this would be a step back toward reinstating a dominator
hierarchy.

FAVI chose a more organic and elegant solution. At regular inter-
vals, a group composed of one designated person from each team comes
together for a few minutes; they quickly discuss which teams are over or
understaffed; back in their teams, they ask for volunteers to switch
teams for a shift or two. The person from the Audi team, for example,
might ask who in the team is willing to spend the day with the Volvo
team. Things happen organically on a voluntary basis; nobody is being
allocated to a team by a higher authority.

Let’s look at another example of coordination: the capital expen-
diture process. Once a year, every team at FAVI establishes the
investment budget for the next year―new machines, new tooling, and
so on. In most organizations, the finance department challenges these
requests and ultimately the executive committee or the CEO arbitrates
across departments to channel more money in one direction or another.

Traditional pyramidal structures
demand too much of too few and

not enough of everyone else.
Gary Hamel

78 Reinventing Organizations

This opens up the can of worms of politics. Everyone jockeys for a bigger
part of the pie. For middle managers, the size of the budget is often the
yardstick by which their status is measured. They try, as best as they
can, to influence the decision makers in the executive committee through
any formal and informal channels at their disposal.

At FAVI, there are no middle managers that fight for budgets, and
Zobrist refused to play the role of the father who would decide how to
divide up the candy among his children. Teams know that no haggling
will take place, so they don’t throw in inflated numbers to start with;
they make realistic requests based on realistic needs. In most years,
when the budgets of the teams are added up, the resulting number is
reasonable, and all plans get the green light, with neither discussion nor
scrutiny. Teams are trusted to do the right thing; if one team were to get
itself golden-plated machines, other teams would quickly notice, and
peer-pressure would self-regulate the problem away. In those years
where the combined projects exceed what would be reasonable, the CEO
simply asks teams to sit together and to come back to him with a revised
plan. Representatives from each team come together and put all the
plans on a table. They look at what is most important and what might be
deferred in everyone’s plans. In one or two meetings, the problem is
always sorted out.

When opportunities arise that span the boundaries of several
teams, the same mechanism plays out: workers self-nominate to create a
temporary project team. Sometimes a person is appointed for a staff role
to coordinate across teams, but that person receives no authority to
impose decisions on the teams. For example, at FAVI there is Denis, an

engineer, whose role is to help teams
exchange insights and best practices. He
spends his days encouraging machine
operators to go and see what other teams
have come up with. He can’t coerce a
team into adopting another team’s ideas.
He must get them interested and excited.
If he fails to do so, if teams stop seeing

added value in his work, then his role will naturally disappear and
Denis will need to find himself another role to fill. In the true sense of
the word, he has a support function. In case you are not familiar with
manufacturing environments, let me point out how unusual this is―an
engineer who is in service and not in command of less-educated (but
highly skilled) blue-collar workers.

Another support role in the FAVI environment is held by Frank, a
former machine operator. He is FAVI’s idea scout. Frank joined the
factory as an unskilled operator at the age of 18 when he could hardly
read and write. Zobrist noticed a fierce curiosity in Frank’s eyes. He
prodded him to attend local night classes in French literature to feed his
curiosity and to build up self-confidence. After a few years of working

Every decision made at headquarters
takes away responsibility from people

elsewhere in the organization and
reduces the number of people who
feel they are making an effective
contribution to the organization.

Dennis Bakke

Chapter 2.2 • Self-management (structures) 79

on the shop floor, Frank felt ready for more. He told Zobrist: “I’m sure
we could be more innovative if we were to scout more actively for new
machines, materials, and suppliers. I want to do that job.” Zobrist gave
him an answer in keeping with his usual leadership style: “Go do it. I
believe you have what it takes to be successful in that role. But it’s not
my decision. You need to show the teams that your role is worthwhile to
them.” Frank made a success of it. He has been traveling the world,
looking for new technologies and new suppliers. He works without a
budget and without targets, just like everyone else at FAVI. He is trusted
to be reasonable in his travel and hotel expenses. Roughly once a month,
he comes back to the factory on a Friday morning and holds a conference
to share his findings. The topic determines who among the operators or
engineers show up. That people choose to attend the meeting and pick
up on his ideas is proof that his role is valuable. If at some point
colleagues were to stop coming to his Friday morning meetings, his role
would naturally cease to exist. In that case, Frank would need to find a
new role for himself, possibly rejoining a team as a machine operator.

Just like Denis and Frank, the teams at FAVI that offer staff-like
support―maintenance and quality, for instance―have no decision-
making power over the shop floor teams. They can only rely on their
powers of persuasion. Mostly they act upon request from the shop floor.
The general philosophy is one of reverse delegation. The expectation is
that the frontline teams do everything, except for the things they choose
to push upward.

These examples―load balancing, investments, task forces, expert
functions―show how Teal Organizations deal with the need for
coordination across teams: form follows function. When a problem or an
opportunity arises, an ad hoc meeting is convened across teams. When a
more permanent form of coordination is needed, a staff function might
emerge from the teams in a process of reverse delegation. None of this
needs approval from above. The decision to create a role like Frank’s, or
to put an end to it, is not in the hands of the CEO. Things happen
organically. Meetings and roles in self-managing structures emerge
spontaneously; they subsist as long as they add value to the ecosystem.

Information technology tools such as internal social networks and
knowledge repositories can play a critical role in steering clear of unne-
cessary structures, especially when companies grow larger and people
are spread throughout different locations. At FAVI, where the 500
employees all work in the same factory, a colleague is never far away.
Much of the knowledge exchange and coordination happens informally
on the shop floor or over lunch. At Buurtzorg, there are 7,000 nurses
scattered over the country, and most of them have never met. The
company’s internal social network helps nurses locate a colleague with a
specific expertise; they can then pick up the phone and ask a question.
Nurses can also post questions directly on the platform in a continuous
Facebook-like stream. Collectively, the 7,000 nurses have an extraordinary

80 Reinventing Organizations

breadth of medical and technical knowledge; in almost all cases, the
answer to a question is out there somewhere. The trick is to find the
right person! The engagement level on the platform is so high (nurses
tend to log onto it at least once a day, if not more) that within hours, a
new question is seen by thousands of colleagues and will attract one or
several responses. From Buurtzorg’s inception, Jos de Blok envisioned
that the “BuurtzorgWeb” would be a critical piece in the company’s self-
managing puzzle. The alternative―attempting to centralize knowledge
within a staff of experts―would most likely be less effective and more
costly. Above all, it would undermine the sense of pride with Buurtzorg’s
nurses that they are the experts and collectively have invaluable knowl-
edge to offer one another.

Trust versus control
With no middle management and little staff, Teal Organizations

dispense with the usual control mechanisms; they are built on
foundations of mutual trust. Zobrist has written a book outlining FAVI’s
practices that is subtitled: L’entreprise qui croit que l’Homme est bon (“The
organization that believes that mankind is good”). The heart of the
matter is that workers and employees are seen as reasonable people that
can be trusted to do the right thing. With that premise, very few rules
and control mechanisms are needed.

Before Zobrist sparked change at the company, it had, like most of
its manufacturing peers still have today, intricate systems to exert
control and ensure compliance. Workers clocked in and clocked out
(white-collar employees were exempt from the system), and the hourly
output of every machine was registered. Every minute a worker showed
up late for work, and any output below the hourly target, would be
recorded and lead to a deduction from the monthly paycheck. Shortly
after taking over as CEO, Zobrist got rid of the clocks and the production
norms with no warning (chapter 3.3 tells the story of how Zobrist shifted
FAVI from Amber to Teal management practices). The management
team he had inherited was aghast. This was a recipe for disaster! Pro-
ductivity would collapse! Zobrist admits he checked the productivity
numbers every day for a week after he had gotten rid of the control
systems, not sure what would happen. He firmly believed in the power
of trust and was hoping productivity would not decrease, but he had no
guarantee his wager would pay off. It turned out that productivity
didn’t decrease but increased! When Zobrist saw the numbers, he
inquired with the operators to understand what happened. When you
operate a machine, they told him, there is an optimal physiological
rhythm that is the least tiring for the body. In the old system, with the
hourly targets, they had always intentionally slowed down. They gave
themselves some slack in case management increased the targets. For
years, operators had effectively worked below their natural productivity,

Chapter 2.2 • Self-management (structures) 81

at a rhythm that was more tiring and less comfortable for them―and
less profitable for the company. Now they simply worked at their
natural rhythm.

Another unexpected outcome: when time clocks were still around,
workers used to leave their machines the minute the shift came to an
end; they now regularly stay a few minutes or half an hour longer to
finish the work they have started. When you ask them why, they say that
their self-image has changed: they used to work for the paycheck; now
they feel responsible for their work and they take pride in a job well done.

One administrative staff member, Ginette, had worked full time
on maintaining the control system and calculating the pay deductions.
Zobrist sat down with her and said “Ginette, I can’t imagine you can be
happy in the role of the factory sentry, spending your days fining people. I
apologize; I should have put an end to this earlier. … Take the time you need to
find yourself another job within FAVI. Your salary will stay the same.” Ginette
talked to her colleagues and found out that reception really needed to be
staffed in two shifts; clients increasingly expected their calls to be
answered early in the morning and late into the afternoon. She had
found herself a new job.

At FAVI, trust extends well beyond working hours and
production norms. Keys to company cars are freely available at the
reception. Any worker can decide to leave the factory floor, pick up a
car, and drive to a supplier or a
client, no approval needed
(though the habit is to inform
colleagues, should someone be
interested in joining). There used
to be a stock keeper in the stock
room who would give workers
tools and supplies only if they
came with a signed request from
a shift supervisor. Whenever he
went for a break, the stock room
would be locked. Now the stock room is always open; workers can pick
up anything they need. They just need to submit an entry in a logbook
for replacement orders. When a drill was stolen one day, Zobrist put up
a flipchart in the stock room with the following message “A drill was
stolen. You know that as a matter of principle we would fire someone for
stealing toilet paper. So it’s a stupid thing to do, especially as no one was ever
denied permission to borrow a tool for an evening or a weekend.” That was
enough to put an end to the matter; no further items were stolen.
Experience shows that such breaches of trust are exceedingly rare at
FAVI, as well as in other organizations that have gone down the road of
self-management.

When trust is extended, it breeds responsibility in return.
Emulation and peer pressure regulates the system better than hierarchy

I’d rather get burned now and then than to
treat my employees like snakes. My colleagues
are honorable men and women, and they prove

it every day by their actions in a workplace
where they’re at liberty to run amok if they’re
so inclined. They’re just not so inclined, that’s

all. The exceptions are so rare that to clamp
heavy restrictions on the whole work force just
to try to control the actions of the potential bad

apples would be a colossal self-sabotage.
Stan Richards

82 Reinventing Organizations

ever could. Teams set their own objectives, and they take pride in
achieving them. When a person tries to take advantage of the system,
such as by not pulling his weight and slacking off, his team members
will be quick to let him know their feelings. At FAVI, workers are well
aware, from their weekly meetings with the sales account manager, what
sharp competition they are up against from China. Nurses at Buurtzorg
know their patients intimately and care deeply for their well-being.
Teams at FAVI and at Buurtzorg don’t need management or control
systems to spur them on.

The energy of trust
When people work in small teams of trusted colleagues, when

they have all the resources and power to make the decisions they feel are
needed, extraordinary things begin to happen. If you care to listen,
Zobrist can fill a night telling stories about the energy that self-
management has unleashed at FAVI. One such story happened a few
years after the factory had adopted the new practices. One Monday
morning, Zobrist sensed that something was up with the group
producing gearbox forks for FIAT, the Italian car manufacturer (which
also owns Alfa Romeo and Ferrari and recently acquired Chrysler). The

team was used to a steady order pattern:
every Sunday night, a fully loaded truck
would depart from FAVI in the north of
France to FIAT in Italy. That Monday
morning, colleagues from the team told
him, “Can you believe it? We did two
trucks!” Zobrist had no clue what they

were talking about. They were quick to share the story: on Friday, while
Zobrist was traveling and away from the factory, FIAT inquired whether
they could make an exception and send over two trucks on Sunday
night. The team came together, and after a bit of thinking and planning,
decided to take on the challenge. They enlisted some volunteers from
other teams and added three shifts on Saturday and Sunday. Exhausted
but proud, they sent two full trucks out to Italy on Sunday night. It
didn’t cross their mind to inform the CEO or to seek permission. No one
asked to be paid overtime; the team self-organized so as to recover the
extra time they had put in over the coming weeks. Zobrist observes:

Had we been organized like everybody else, that is to say, with a
planning department that processes client orders, that planning
department would certainly have concluded that FIAT’s request was
impossible. Or, if it had accepted the request, the operators would
certainly have felt that the extra hours were forced upon them, rather
than making of it a collective adventure.11

We have used rules and regulations
… to make ourselves safe. But there

is no safety in separation. … We
find well-being only when we

remember that we belong together.
M. Wheatley & M. Kellner-Rogers

Chapter 2.2 • Self-management (structures) 83

Another day, an operator at the Volkswagen team noticed a
quality problem on a part he was working on. He stopped the machine,
and with a member of the quality team, sifted through all other finished
pieces and works-in-progress. They found no other defective pieces. He
chose nevertheless to discuss the incident with the Volkswagen sales
account manager. Together, they
decided to pick up the keys to a com-
pany car and go for the eight-hour drive
to the German Volkswagen plant. Once
there, they explained the reason for their
impromptu visit and were allowed to
inspect all similar parts FAVI had previously shipped. All items proved
to be perfect, and no defect was found. The quality manager at
Volkswagen was flabbergasted. Normally, a defective piece at a supplier
leads to some official notification and legal paperwork in the best of
cases; more likely, an operator might quietly try to cover up the
problem, for fear of reprisals from management. This machine operator
not only owned up to his mistake, but he also felt responsible for driving
all the way to his client to personally make sure any possible problem
was prevented!

These cases might seem extraordinary, but they testify to a spirit
that can be found every day in self-managing organizations―at FAVI,
Buurtzorg, and elsewhere. Ultimately, it comes down to this―fear is a
great inhibitor. When organizations are built not on implicit mechanisms
of fear but on structures and practices that breed trust and responsibility,
extraordinary and unexpected things start to happen.

Projects
Sun Hydraulics, a 900-person-strong Florida-based global producer

of hydraulic cartridge valves and manifolds, is another industrial
organization thriving on self-management. Bob Koski, one of the two
engineers who founded the company in 1970, wanted to create a
“healthy, self-managed, and informal” organization, instead of what he
considered “mostly a poisonous and disrespectful atmosphere of
bureaucracy and intimidation” in the companies he had worked for
previously.12 Like FAVI, Sun has no quality control, scheduling, or
purchasing departments. There are no standard production times, no
time clocks, no piece rates. People work in natural clusters and self-
organize to get their work done. The results have been spectacular here
too. Sun Hydraulics, now a public company quoted on the NASDAQ
stock exchange, has a stellar reputation for quality and service in the
industry. The atmosphere on the shop floor and in the offices is unlike
anything I have experienced in other manufacturing environments, save
for FAVI. In Florida, and throughout engineering schools in the country,

Everything that is really great and
inspiring is created by the individual

who can labor in freedom.
Albert Einstein

84 Reinventing Organizations

people know that if you can land a job at Sun, you’d better take it! Finan-
cially, Sun’s results are impressive too. In a highly cyclical industry, the
company never took a loss in over 30 years. In 2009, at the height of the
financial crisis, its revenues were cut in half, and yet it posted a profit for
the 38th consecutive year, even though it didn’t lay off workers (it never
has in any previous downturn either). In a normal year, its profit
margins are off the charts13 and it has been growing at double-digit rates
since the 1970s.

Radically simplified project management
Sun makes a good illustration of another aspect: how projects are

run in a self-managing environment. Sun is an engineering-heavy
company. At any point in time, there are hundreds of engineering
projects running in parallel, ranging from product modifications
prompted by machine operators, custom-designed manifolds for clients,
new cartridge valves to extend the line, or entirely new products the
company is inventing. Running so many projects in parallel and getting
them completed on time and within budget is a difficult feat for any

organization. Prioritizing resources
across all these projects can easily
turn into a logistical and political
quagmire. A whole industry has
come into being, trying to help
organizations get control of this com-
plexity. Software systems help track

all the projects with elaborate Gantt charts that calculate interdepen-
dencies and resource needs. Project and program managers are trained
in specific methodologies to keep things under control. A major part of
their job is to produce monthly reports and indicators to track progress,
so that people higher up can understand the situation and make infor-
med decisions.

At Sun Hydraulics, all of this is radically simplified. There is no
management that wants to understand and control the complexity.
Projects happen organically and informally. Engineers are typically
working on several projects in parallel. They constantly rearrange their
priorities, based on what they sense is the most important, most urgent,
or most fun to do. Google has the famous practice of “20 percent
time”―engineers are free to decide how to spend their Fridays. Sun and
other self-managing organizations basically extend this to the whole
week. There is no master plan. There are no project charters and no one
bothers with staffing people on projects. Project teams form organically
and disband again when work is done. Nobody knows if projects are on
time or on budget, because for 90 percent of the projects, no one cares to
put a timeline on paper or to establish a budget. A huge amount of time
is freed by dropping all the formalities of project planning―writing the
plan, getting approval, reporting on progress, explaining variations,

As you’ve found out by now, you were
not hired to fill a specific job

description. You were hired to
constantly be looking around for the

most valuable work you could be doing.
Valve handbook for employees

Chapter 2.2 • Self-management (structures) 85

rescheduling, and re-estimating, not to mention the politics that go into
securing resources for one’s project or to find someone to blame when
projects are over time or over budget. When I discussed with Kirsten
Regal, one of Sun’s leaders, how little their meeting rooms seemed to be
used, she quipped, “We don’t waste time being busy.”

Project prioritization
But then how are things prioritized? Who decides what should

take precedence? “Things have a natural way of taking priority,” one of
Sun’s engineers told me. At Sun, people have dropped the illusion that
one person, however competent, could master all the information of
such a complex system and heroically, from above, make the right call
for hundreds of decisions that need to be made every week. Instead,
they trust the collective intelligence of the system.

If the notion of trusting the collective intelligence of a system
seems risky or outright foolish, think about this: the idea that a country’s
economy would best be run by the heavy hand of central planning
committees in Soviet style has been totally discredited. We all know that
a free-market system where a myriad of players pick up on signals,
make decisions, and coordinate among themselves works much better.
Yet for some strange reason, inside organizations, we still trust the
equivalent of central planning committees. Self-management brings the
principles that account for successful free-market economies inside
organizations. “Things do fall through the cracks occasionally,” the
engineer conceded. But that is often to be welcomed as the outcome of a
collective prioritization effort; the system simply roots out a project that
doesn’t seem promising or important after all. If it had been, someone
would have picked it up. Contrast this with failing projects in
traditionally run companies: they are often kept alive way too long;
everyone knows they are doomed, and everyone also knows that once
the project is finally axed, someone will carry the blame. In the hope that
the blame will fall on someone else, everyone keeps a low profile.

FAVI relies on the same principle of prioritization as Sun. The
factory was an eager and early adopter of Japanese manufacturing
techniques; it masters continuous improvement like few others, a critical
capability to survive and thrive in the low-margin automotive business.
FAVI, you might not be surprised to hear, has no continuous
improvement department and no lean production experts; these ideas
are all embedded deeply within the teams. A very simple process is at
work: whenever a team stumbles upon a problem or an opportunity, as
happens every day, the issue is logged in a logbook. Anybody can
volunteer to tackle an item by writing his or her initials next to the issue
in the logbook. Typically, the two or three people that are most affected
or interested decide to join forces and analyze the issue. If no one picks
up a certain problem or opportunity, it probably means it is not
important. Otherwise it will come up again, and someone will end up

86 Reinventing Organizations

tackling it. Like at Sun, no one bothers with statistics, master plans,
project management software, or reporting. There is a simple reminder
mechanism: operators have asked a woman working in administration
to go through the logs once in a while, and if there are items that have
been open for more than three months, to remind people who had
signed up to tackle the issue about their commitment. Teams have found
this gentle prodding to be helpful.

Companies whose work involves lots of projects have started to
rethink the physical architecture of their spaces. The office at Sun
Hydraulics is a big open space with custom-designed cubicles that go
only waist high. At a glance, people can see who is there and can over-
hear many conversations. It greatly improves collaboration, colleagues
say: many problems that would initiate an email exchange or the sche-
duling of a meeting at another company are solved by people simply
talking to each other over the low dividers.

Valve, a Seattle game-software company whose 400 employees
work entirely based on self-management principles, has pushed the
physical fluidity a step further. All employees have desks on wheels.
Every day, some people will roll their desk to a new place, depending on
the projects they join or leave. All it takes is unplugging the cables from
the wall in one place and plugging them in somewhere else. The fluid
way Valve runs projects (people vote with their feet) is physically
reflected in the office space, in the form of ever-morphing clusters of
desks huddling together to get work done. Because people move around
so often, the company has created an app on its intranet to locate
colleagues. It renders a map of the office in real-time, showing the spots
where people have plugged their computers into the wall.

Scaling to tens of thousands of employees
Can such self-governing organizations scale beyond a few

hundred or thousand coworkers? Can they go global? Applied Energy
Services (AES), a global energy provider with headquarters in Arlington,
Virginia, shows that self-management principles can work in all cultures
and scale to an organization with tens of thousands of employees. From
its founding in 1982, the company grew to 40,000 employees in the year
2000, operating power plants and power distribution grids in 31 countries
on all continents―from Argentina to El Salvador, from Hungary to
Kazakhstan, from Bangladesh to China, and from South Africa to
Tanzania. The story of AES, incidentally, also highlights how a company
can revert to traditional management under new leadership―a topic
picked up in more detail in chapter 3.1. Today, unfortunately, not much is
left of the self-managing structure and practices that AES pioneered.

The company was founded in 1982 by Roger Sant and Dennis
Bakke. They had conceived the business plan for the company two years
earlier while driving from Maryland to Washington, D.C. As Sant

Chapter 2.2 • Self-management (structures) 87

dropped Bakke at his house, he added, “And let’s make it fun.” Bakke,
the driving force behind AES’s innovative management practices, had
spent years working in different departments of the federal government,
which profoundly shaped his thinking about organizations. There, he
learned that purpose was necessary to make work meaningful, but he
also experienced the dispiriting nature of hierarchical organizations and
staff functions:

As a line executive responsible for the Energy Conservation Program
in the federal government … I experienced the debilitating effects of
“serving” central staff groups. It seemed as if I had 15 bosses. Each one
of the offices was responsible for something I thought was essential to
operating my program. … People like me couldn’t even testify before a
congressional committee without an entourage of people concerned that I
might say something related to their area of responsibility. As the
executive of the program, I was not really trusted to operate it or speak
freely about it. It was almost as if I didn’t have a job. At best, my “line”
job was about coordinating all the “staff” people who drifted in and out
of my program.14

Bakke recounts an earlier anecdote that explains how his view on
work was shaped from early childhood―one of a strand of many expe-
riences that would determine his vocation to create organizations that
make work fun and fulfilling:

On this particular day, my mother had organized the evening work in
her usual style. The kitchen was abuzz with activity. I was 16 years old
and charged with cooking creamed peas for supper. My younger brother
was carrying wood from the shed to the storage area next to the kitchen.
Kenny’s older sisters [Kenny and his sisters were foster children at the
Bakke home] were clearing dirty cooking dishes and setting the table with
dinner ware. …. No one was paying attention to Kenny. …. Suddenly
the two-year-old … picked up the spoon on his tray. “I want jobs, I want
jobs, I want jobs,” he chanted as he pounded his spoon.

I think this little guy with a crooked smile and troubled past was
saying, “I want to contribute. I can make a difference. I want to be part of
the team. I’m somebody. I want to have fun working, too!” Over the
years, I have reflected on that moment and come to believe that it cap-
tures the early and substantial influence Mom had on my concept of fun
in the workplace. Somehow, she created an environment in which every-
one was energized, not from fear of punishment or promise of reward, but
from a desire to accomplish something positive. She had unbridled
confidence in our ability to accomplish the tasks at hand. … She gave us
enormous freedom to work and make decisions. Somehow she made work
so attractive that even an abused two-year-old wanted desperately to
pitch in for the sheer joy and excitement of it.15

88 Reinventing Organizations

Under Sant and Bakke, AES, a massive 40,000-employee
organization, functioned in self-managing teams of 15 to 20 people.
Believing that bad things start to happen when any site becomes too big,
they also tried to limit the number of employees in a site to a maximum
of 300 to 400 (15 to 20 teams of 15 to 20 people)―the natural limit, they
felt, for colleagues to more or less put names and faces together and
enter into a casual discussion with any colleague.

Like their counterparts at FAVI and Sun, teams at AES were
responsible for decisions relating to all aspects of day-to-day operations:
budgets, workload, safety, schedules, maintenance, hiring and firing,
working hours, training, evaluations, compensation, capital expendi-
tures, purchasing, and quality control, as well as long-term strategy,
charitable giving, and community relations. Let me invite you to pause
for a second, as you would be forgiven for having read through that long
list of responsibilities too quickly. AES is an energy provider, operating
thermal and hydroelectric power plants as well as electrical grids. This
equipment is absolutely central to the lives of many people and
businesses. Operating problems can lead to disastrous blackouts for the
economy, and accidents to the loss of many human lives. And yet
millions of customers throughout the world were supplied with energy
produced by self-governing teams responsible for such crucial matters as
safety and maintenance. With 40,000 people scattered across different
continents, AES only had about 100 people working at headquarters in
Arlington―hardly a number that could claim to control what was
happening in faraway places like Cameroon, Colombia, or the Czech
Republic.

And yet, it worked. A front-page article in the Wall Street Journal
by reporter Alex Markels illustrates with a story how far teams at AES
went with taking on responsibilities typically handled by headquarters:

MONTVILLE, Conn. –– His hands still blackened from coal he has
just unloaded from a barge, Jeff Hatch picks up the phone and calls his
favorite broker. “What kind of rate can you give me for $10 million at 30
days?” he asks the agent, who handles Treasury bills. “Only 6.09? But I
just got a 6.13 quote from Chase.”

In another room, Joe Oddo is working on J.P. Morgan & Co. “6.15 at
30 days?” confirms Mr. Oddo, a maintenance technician at AES Corp.’s
power plant here. “I’ll get right back to you.” Members of an ad hoc team
that manages a $33 million plant investment fund, Messrs. Oddo and
Hatch quickly confer with their associates, then close the deal. …

It sounds like “empowerment” gone mad. Give workers more
autonomy in their area of expertise? Sure. Open the books to employee
purview? Perhaps. But what good could possibly come from handing
corporate finance duties to workers whose collective borrowing experi-
ence totals a mortgage, two car loans, and some paid-off credit-card debt?

Plenty of good, says AES. … “The more you increase individual
responsibility, the better the chances for incremental improvements in

Chapter 2.2 • Self-management (structures) 89

operations,” argues Dennis W. Bakke, the company’s chief executive and
one of its founders. … “And more importantly” he says “it makes work a
lot more fun.”

Is giving coal handlers investment responsibility risky? Mr. Bakke
thinks not. He notes that the volunteer team in Montville does have a
financial adviser, and they work within a narrow range of investment
choices. They aren’t exactly buying derivatives. What the CEO likes
about the arrangement is that “they’re changed people by this experience.
They’ve learned so much about the total aspect of the business, they’ll
never be the same.”16

Volunteer task forces
Scale changes surprisingly little in the structures and practices of

self-management. Buurtzorg operates with 7,000 people in pretty much
the same way as it did with a few hundred. Before it reverted to more
traditional management practices, AES, with its massive size and geo-
graphical dispersion, operated in nearly identical ways to Buurtzorg,
FAVI, or Sun Hydraulics. There is one element, though, in the toolbox of
self-management that AES relied on much more than its smaller
counterparts needed to: the use of temporary and permanent task forces.

With only around 100 staff in its headquarters in Arlington,
Virginia, AES had no central maintenance or safety departments, no
purchasing, no HR, and no internal audit departments. In a smaller com-
pany, like FAVI and Sun, when
an issue arises in one of these
areas, people can simply call a
meeting, or delegate a specific
coordinating role to a colleague.
At AES, with 40,000 people scat-
tered around the globe, that was
no longer feasible. The company
came up with the “80-20 rule”:
every person working at AES,
from cleaning staff to engineer,
was expected to spend on average 80 percent of their time on their
primary role and make themselves available for the other 20 percent in
one or more of the many task forces that existed around the company.

Take investment budgeting, normally the prerogative of finance
staff at headquarters. At AES, everything happened in the field; every
team established its investment budget once a year. Investment budgets
would be added up at the plant level, sometimes running as high as $300
million in a year. When teams were satisfied with the consolidated
budget for the plant, it was reviewed, together with those from all other
plants, by a budget task force that would suggest possible changes and
improvements (but didn’t have power to enforce changes). That task

The reality is that centralized decision makers
simply don’t have enough information to
manage the specifics of corporate life. But
because centralization is an idea in good

currency, corporations apply the model … to
solve almost every problem. In so doing, power
is amassed at the very top, rigid hierarchies are

developed, workers lose their freedom while
productivity eventually slows down.

Bob Fishman

90 Reinventing Organizations

force was staffed with a few people from headquarters with relevant
expertise, but predominantly with people from local units with all sorts
of backgrounds―a security guard could sit next to a technician and an
engineer. Internal audits were performed in the same way, by volunteer
task forces: each plant would be audited by colleagues from other plants.
Task forces were put in place for topics as diverse as compensation,
community service, environmental work, and corporate values.

AES found out that using voluntary task forces instead of fixed
staff functions has multiple benefits. Employees find avenues to express
talents and gifts that their primary role might not call for. They develop
a true sense of ownership and responsibility when they see they have
real power to shape their company. Dennis Bakke insists on another
point: these task forces are formidable learning institutions. At any point
in time, thousands of people would be involved in task forces, picking
up technical and leadership skills from more experienced colleagues. It’s
a modern-day form of apprenticeship, scaled to a massive level. No
classroom training could ever provide the amount of learning that was
taking place day in and day out in the voluntary task forces.

No organization chart, no job description, no job titles
Amber and Orange Organizations come with organization charts.

Boxes on the charts come with titles and job descriptions, which in turn
come with an implicit expectation: people must adapt to the box they
have been recruited or promoted into. Teal Organizations reverse the
premise: people are not made to fit pre-defined jobs; their job emerges
from a multitude of roles and responsibilities they pick up based on their
interests, talents, and the needs of the organization.

The traditional tasks of a manager―direction-setting, budgeting,
analyzing, planning, organizing, measuring, controlling, recruiting, eval-
uating, and communicating―are now scattered among various members
of a team. A worker at FAVI, for example, might operate a number of
different machines, be in charge of ordering supplies for his team, lead a
number of continuous improvement actions, and be responsible for
recruitment to his team. Except perhaps for recruitment purposes, no
one bothers to write down a job description. Try giving the above
person’s job a name―is he an “operator-recruiter-supply coordinator”?
Job titles and descriptions hardly do justice to unique combinations of
roles, and they are too static to account for the fluid nature of work in
Teal Organizations. Colleagues frequently switch and trade roles
according to workload and preferences. A nurse at Buurtzorg whose
patients suddenly require more care might ask a colleague to take over
her role of team planner, for instance. For a while, some nurses might
carry more than their fair share of management tasks for the teams and
less at other times. Thinking in terms of granular roles instead of pre-
defined jobs creates great fluidity and adaptability. People can give up

Chapter 2.2 • Self-management (structures) 91

one role and take up another without needing to go through the cumber-
some and often political processes of appointment, promotion, and sala-
ry negotiation.

At Buurtzorg, teams are careful to keep management tasks
somewhat spread out at all times. There is a risk, as some teams have
experienced, that hierarchical practices creep back in when too many
management roles are delegated to a single team member. Other
organizations, like FAVI for instance, have one person on the team that
holds most management roles for the team (FAVI calls them, rather
unhelpfully, a “team leader,” which might imply hierarchical power over
their colleagues). The nature of work in the two organizations accounts
for the different approaches. It’s easier for a nurse to spend some time in
between two patients on a management role than it is for machine
operators to stop their machines. FAVI found it works best to have one
person free to roam among the team and only operate a machine
occasionally when a helping hand is needed. FAVI’s team leaders act as
coaches for their colleagues, as a clearinghouse for information, and as a
point person when coordination is needed with other teams. This choice
nevertheless carries a risk. Our cultural baggage of hierarchy is so strong
that over time, team leaders could start behaving like bosses and become
the primary decision makers on their teams. At FAVI, a simple but
powerful relief valve exists, should a team leader find the taste of power
too sweet: workers can choose at any moment to join another team.
Team leaders have no meaningful way of coercing people into desired
behavior; they certainly don’t have the authority to fire people
unilaterally. If they start to behave autocratically, people can simply
walk away.

In most organizations, especially of the Orange sort, job titles are a
currency for status. Like all currencies, job titles are subject to the law of
inflation. In many companies, they seem to swell and multiply―there
are vice presidents, senior vice presidents, executive vice presidents,
junior or senior directors, and ever more types of chief officers. It is a
common expectation, in the Orange worldview, that people will work
hard to achieve the next promotion and a bigger title.

From the Evolutionary-Teal perspective, job titles are like
honeypots to the ego: alluring and addictive, but ultimately unhealthy.
We can quickly get attached to our job title if it carries social prestige,
and we can easily fall into the trap of believing we “are” our job identity.
And in a hierarchical system, it’s all too natural to start considering that
we are somehow above certain people and below others. Unsurprisingly,
Teal Organizations mostly do without job titles.

Again, we have to be careful: it does not mean that everyone is
equal, that all jobs are the same. Some roles have a rather narrow scope
(say, the role of operating a certain machine or cleaning the office), while
other roles take a broader perspective (for instance, the role of designing
a new product line). In all organizations researched for this book, there is

92 Reinventing Organizations

one person recognized for taking the broadest perspective, and usually
that person is called the CEO, at least by the outside world (even though
she doesn’t hold the same prerogatives as a traditional CEO, a topic
discussed in chapter 3.1). And there are certain sets of well-defined roles
that people naturally give a name to―for example, the regional coaches
at Buurtzorg or the team leaders at FAVI. But for the vast majority of
employees, people don’t bother trying to find the right label that would
capture all the different roles they hold at any point in time. Thinking in
terms of job titles is so ingrained in our culture’s thinking, though, that
for their family and friends, most people invent a job title for themselves
that somehow captures what they do in the language of traditional
organizations.

The organizations I researched didn’t only drop job titles; almost
all of them also decided to drop words like employee, worker, or manager,
and replace them with something else―most often simply colleague. If
we stop and listen carefully to the meaning carried by the words
employee, worker, or manager, we end up wondering how we use them so
freely in everyday life.

Outsiders, and sometimes even insiders, can find the absence of
job descriptions and job titles confusing. Without boxes to put people
into, the organization chart disappears and it’s not always easy to know
who is responsible for what. For that reason, many organizations elect to
keep a log on their intranet where colleagues can indicate the roles they
currently fill. This is the case, for instance, at Buurtzorg, where a
function within the intranet helps nurses locate the relevant colleague if
they have a question or want a tip from someone filling the same role.

It’s hard to not think in terms of the traditional organization chart.
Often during my research, I caught myself trying to figure out where in
a traditional organization chart a person might fit, given her roles. It
happened when I was talking to an engineer at Sun Hydraulics and
asked him, “So you would be the equivalent of a plant manager in a
normal company, right?” With just three words, he gave the best
possible answer: “Yes and no.” On the one hand, yes, he performs some
roles a plant manager would. For instance, one of his roles entails
exploring factory-wide improvement initiatives; another is sensing the
atmosphere among colleagues at the plant and bringing up issues if the
mood is low. He might take the lead on some large projects, say, the
automation of a step in the manufacturing process. On the other hand,
he has no profit-and-loss responsibility for the factory (or to be more
exact, he has it to the same degree as everybody else); his job is not on
the line if results are bad (everybody’s job is); he cannot impose
decisions; he has no privilege to hire or fire people. In that sense, he is
not at all like a traditional boss.

Does this mean there are no bosses in a self-managing organi-
zation? Quite the contrary. Every role people take on is a commitment
they make to their peers. They are not accountable to one boss; every one

Chapter 2.2 • Self-management (structures) 93

of their peers is a boss in respect to the commitments they made. And as
we will see in the next chapter, which discusses the practices that bring
self-managing structures to life, anybody can put on the hat of “the
boss” to bring about important decisions, launch new initiatives, hold
underperforming colleagues to account, help resolve conflicts, or take
over leadership if results are bad and action is needed.

Self-managing students, teachers, and parents―a Teal school
Our schools today are probably further away from self-

management than most other types of organizations. We have turned
schools, almost everywhere, into soulless factories that process students
in batches of 25 per class, one year at a time. Children are viewed
essentially as interchangeable units that need to be channeled through a
pre-defined curriculum. At the end of the cycle, those that fit the mold
are graduated; castoffs are discarded along the way. Learning happens
best, this system seems to believe, when students sit quietly for hours in
front of all-knowing teachers who fill their heads with information.
Children can’t be trusted to define their own learning plans and set their
own goals; that must be done by the teachers. But, really, teachers cannot
be trusted either; they must be tightly supervised by principals and
superintendents and school districts and expert commissions and
standardized tests and mandatory school programs, to make sure they
do at least a somewhat decent job.

This factory-like system seems increasingly out of date. More and
more people are crying out for innovation in education and starting to
experiment with curricula, technologies, and governance in schools. But
is it possible to build a truly Evolutionary-Teal school? And what would
it look like? A superb example can be found in the center of Berlin in
Germany. The “ESBZ” is a grade 7-12 school that opened its doors in
2007 with more than a bit of improvisation. Just three months before the
start of the school year, the city council had suddenly given a decrepit
prefabricated building from communist times to a group of pesky
parents who simply wouldn’t let go of their dream. When the school
year started, only 16 students were registered. A few months later, at the
mid-year point, 30 more students had joined, mostly rejects and
troublemakers other schools had expelled. Hardly a promising start for a
new school. And yet today, only a few years later, the school has 500
students and attracts hundreds of principals, teachers, and education
specialists from all over the country who want to study the ESBZ model.

The driving spirit of the school is Margret Rasfeld, a former
science teacher and radical innovator, whom the group of parents
recruited as principal from the other side of the country. The seed for the
school was planted 20 years earlier, in an event that would profoundly
change Rasfeld’s outlook on children and education. In 1986, a few 8th-

94 Reinventing Organizations

grade students she was teaching approached her to discuss the violence,
bullying, and extortions that were taking place in their school. She said
they were welcome to talk things out in the privacy of her home, if they
wanted to. Sixteen students came. A week later there were 33. The
teenagers were looking to her for answers; she didn’t have any, but she
helped them journey to find their own. In the process, she discovered a
side of the children she had never seen before. She marveled at the
courage, persistence, resilience, intelligence, and compassion students
were finding in themselves and that the school had never evoked before.
From then on, she was determined that education should do justice to
children’s true potential and true nature; she wanted to engage not only
their minds, but their hands, hearts, and souls, too.

Fast-forward to the present at the beginning of a school day. As a
visitor to ESBZ, even while still outside at the entry gate of the school,
you can sense there is something different about the school. It has to do
with the children’s presence, the way they walk and interact. The stu-
dents don’t hang out at the gate waiting until the last minute to go in;
they seem happy to walk straight toward their classroom. They sport an
air of quiet determination and concentration, their mind already on
some project. There is no adolescent posturing, no competition of cool.
The school claims in its founding principles that all children are unique,
that they all have talents to contribute, that they are valuable, valued,
and needed. Somehow, the way these children walk into their school
seems to say these are more than mere words; the students seem to have
embodied the school’s guiding principles in their very bodies, posture,
and attitudes.

How are these principles translated in the school? First and
foremost, children are given full responsibility for their learning. To a
large degree, students teach themselves and each other. Adults are
mostly mentors and coaches and only act as teachers in the traditional
sense when needed. They offer encouragement, counsel, praise, feed-
back, and challenge. The responsibility for learning is firmly in the hands
of the students.

It starts with the way basic subjects are taught―language, math,
and science. For these subjects, the school has done away with frontal
teaching. Subjects are divided into modules, and each module comes in
oversized flashcards that the teachers have devised with theory,
exercises, and tests. Students self-pace their learning. A student that

struggles with math can choose to spend more
time on the subject to come to grips with it and
spend less time on another subject that comes
easily. There are advanced elements in the
modules that interested students can take but

are not required to. Students learn on their own or form small groups
when helpful. When they have questions, they inquire first among other
students; only if their peers can’t help do they turn to the teacher (whose

Teachers open the door.
You enter by yourself.

Chinese proverb

Chapter 2.2 • Self-management (structures) 95

time is thereby freed to provide in-depth individual coaching). Classes
mix several grades―students from grades 7, 8, and 9 learn together.
Children continuously toggle from being learners to being teachers. The
older students in particular learn to help out the younger ones (which
helps them review material they have learned in the past). Because
learning is self-paced, ESBZ has become unusually inclusive. In every
classroom, there are children with autism and with light or severe
learning disabilities. Normally they would be relegated to a special
needs school, but here they can simply work alongside other students at
their own rhythm. The student body has an unusually broad spectrum
of social backgrounds: 20 percent of students come from a minority
background, and 25 percent are eligible for subsidized meals; roughly a
quarter of the students come from the other end of the spectrum, from
very privileged backgrounds.

Each student has a logbook, in which they record what they have
accomplished. It’s not a free-for-all. There are clear expectations of what
is expected at the end of the year (students are free of course to go
beyond the expectations when they are passionate about a subject, and
many children choose to do so). Every child has a one-on-one meeting
every week on Friday with their tutor-teacher. Together they discuss
progress made during the week, problems that might have come up, and
plans for the week ahead―and also, when relevant, emotional or
relational topics that weigh on the child’s mind. Through these weekly
one-on-one discussions, teachers and students know each other on a
much deeper level than in traditional schools. The children know:
Someone cares about me; someone is there to listen. Twice a year, in a
discussion with their tutor, students set themselves three goals for the
upcoming months. For instance, Paul, a shy 13-year-old, set himself the
goal of becoming more comfortable being seen by others. One of the
things he wants to learn is to speak up more in public.

The self-paced learning of basic subjects takes the first two hours
of the morning. A big chunk of the day is spent working on individual
or collective projects with real-life implications. Some students redesign
a part of their school building and then coordinate the actual renovations.
Others might try to get the city council to adopt higher environmental
standards. Students are encouraged to find out what matters to them, to
aim high, to fail, to try again, and to celebrate their accomplishments.
They learn that their voice matters, that they can make a difference, that
others need them and that they need others.

All year long in grades 7 and 8, students spend two hours every
Wednesday outside of school in a class called “Responsibility.” In
counsel with their tutor-teacher, the children find themselves an activity
where they can make a meaningful contribution while learning at the
same time. Paul, who wants to overcome his shyness, volunteered to
teach chess at his former primary school. The chess class he had loved so
much would no longer take place, he had heard, because the teacher was

96 Reinventing Organizations

moving to another school. Paul was sad that other kids wouldn’t enjoy
learning chess the way he had. Suddenly it all made sense: Paul could
teach chess; standing in front of a group of children fit with Paul’s goal
of learning to speak in public―and doing so in front of younger children
would be an easier way to practice. All he needed to do now was
convince the principal of his former school to let him have a go at it. Just
like Paul, all students find a place that suits them. Some work in retire-
ment homes, while others organize school plays in kindergartens. It all
depends on their interests and learning objectives. Children experience
what it’s like to take initiative, to be needed, and to make a difference in
other people’s lives.

In grades 8, 9, and 10, students have a class called “Challenge”
(the beautiful German word “Herausforderung” literally means “being
called to grow from the inside out”). They are invited to delve into some
inner potential that lies dormant. During the year, they organize and
prepare for a special three-week session, where they, alone or in small
groups, will challenge themselves to step out of their comfort zone. One
group of four students prepared for a three-week survival camp deep in
the woods, where they lived in a shelter they built and on food they
gathered. Daniel, a 16-year-old extroverted youngster, found his challenge
in a three-week silent meditation in a monastery. A music teacher
challenged a group of children to do intense music practice eight hours a
day for three weeks in an abandoned old farm. Other students biked
through Germany together, with little money, having to ask for accom-
modation and food along the way. The experience is often taxing, but
students rave about their accomplishments and the personal growth
they experienced, confronting their fears and growing beyond them.

The most daring experiment with student self-management is
currently underway. At the end of grade 12, students in Germany must
pass a state exam; the grades they get determine what university they
can apply to. The stakes are so high that grades 10, 11, and 12 at ESBZ
have thus far relied on more traditional teaching-to-the-test methods
than students and faculty would like. Could it be possible, students and
faculty wondered, to completely redesign the curriculum of grades 10,
11, and 12 in accordance with the school’s guiding principles, while still
preparing students well for the state exam? This year, all students from
those grades will work in an ambitious yearlong project to redesign
these three grades. Experts in Design Thinking (a methodology
developed by IDEO, a celebrated design firm) will help the children and
faculty, in an intensive two-day design workshop, to develop an overall
concept. Students and teachers will then work the rest of the year, with
support from leading education experts, to turn the concept into
concrete structures and practices. Students and teachers are effectively
redesigning their own school.

Teachers at ESBZ self-manage too. Teaching is often a lonely pro-
fession; at ESBZ it is a team sport. Every class has two tutor-teachers, so

Chapter 2.2 • Self-management (structures) 97

all teachers work in tandem. Three classes form a mini-school―they
share a floor with a small faculty room where the six teachers meet
weekly. The mini-schools are effectively what teams are to FAVI,
Buurtzorg, or AES―flexible units that can react quickly to the daily flow
of issues and opportunities. On paper, the school has a traditional
hierarchy (it is publicly financed, and with that privilege comes a
mandatory structure consisting of a principal, two vice-principals, and a
pedagogical director), but mini-schools can make almost all decisions
without needing approval from the principal.

Parents also self-manage. The school was created under a special
status―the city only pays 93 percent of the teachers’ salaries; for the
building and all other expenses, the city provides no funds at all. Parents
have to close the gap with a contribution calculated on the basis of their
income. To minimize the cost, parents have decided that they would
each contribute three hours of time every month to the school. What
they do and how they do it all happens based on self-managing
principles. The building renovation team, for instance, regularly
organizes big festive weekends where 50 parents get their hands dirty
and renovate a few classrooms. Piece by piece, parents have created
warm, colorful, and functional school premises in what a few years ago
were rundown leaky buildings. After school hours, the premises now
host workshops attended by hundreds of principals and teachers who
want to understand ESBZ’s magic. The workshops (as you might have
guessed) are taught almost exclusively by students, not by teachers or by
Margret Rasfeld, the founder and principal.

What is remarkable is that ESBZ enjoys no free pass. The school
has to make do with the same amount of teacher hours as any other
school in Berlin. Even with the parents’ contribution, the school has a
lower budget than public schools. Every school can replicate ESBZ’s
success, because more money or resources are not the decisive factor. All
it takes, really, is to look at children, teachers, parents, and education
with fresh eyes.

Chapter 2.3 • Self-management (processes) 99

CHAPTER)2.3)

SELF1MANAGEMENT!
(PROCESSES)!

Self-organization is not a startling new feature of
the world. It is the way the world has created itself for
billions of years. In all of human activity, self-organization
is how we begin. It is what we do until we interfere with
the process and try to control one another.

Margaret J. Wheatley and Myron Kellner-Rogers

Self-management requires an interlocking set of structures and
practices. The previous chapter dealt with the structural aspects of self-
management―for example, how the pyramid makes way for teams and
how typical staff functions can be embedded within the teams. Change
only the structure, though, and you are left hanging in midair. With the
pyramid gone, many of the most fundamental organizational processes
need to be reinvented―everything from decision-making practices to
information flow, from investments to performance evaluations and com-
pensation processes. We need answers to some very basic questions: if
there is no longer a boss to call the shots, how do decisions get made?
Who can spend company money? How is performance measured and
discussed? What prevents employees from simply slacking off? Who
gets to decide who deserves a salary increase or a bonus? This chapter
will explore each of these questions in turn.

Decision-making―the advice process
If there is no formal hierarchy, how are decisions made? Can any-

body just make any decision? That sounds like a recipe for chaos. Are

100 Reinventing Organizations

decisions then made by consensus? That sounds exhausting and im-
practical, certainly for organizations with hundreds or thousands of
employees.

Almost all organizations in this research use, in one form or
another, a practice that AES called the “advice process.” It is very
simple: in principle, any person in the organization can make any
decision. But before doing so, that person must seek advice from all

affected parties and people with expertise on
the matter. The person is under no obligation to
integrate every piece of advice; the point is not
to achieve a watered-down compromise that
accommodates everybody’s wishes. But advice
must be sought and taken into serious

consideration. The bigger the decision, the wider the net must be
cast―including, when necessary, the CEO or the board of directors.
Usually, the decision maker is the person who noticed the issue or the
opportunity or the person most affected by it.

Dennis Bakke recounts a story that exemplifies the advice process
in action. One day Shazad Qasim, a recently hired financial analyst at
AES, consulted with Bakke. He was intending to leave his role to go back
to his native Pakistan and research the opportunity for electricity-
generating capacity there on behalf of AES. Bakke remembers his
reaction:

I told him I was skeptical. Several years earlier, Agency for
International Development (AID) representatives from the U.S.
Department of State had encouraged us to expand into Pakistan. We had
told them that we hardly knew what we were doing in the United States,
let alone a place like Pakistan. Besides, it ranked as one of the most
corrupt countries in the world for doing business. The ethical standards
at AES probably ensured that we would never get any business there.1

Despite the CEO’s recommendation, the advice process meant the
decision was Shazad’s. He decided to go to Pakistan, effectively creating
a new position for himself as business developer, retaining his previous
salary. Six months later, the former financial analyst invited Bakke to
Pakistan to meet the prime minister. Two and a half years later, a $700
million power plant was running. In line with AES’s principles, the
decision that AES would invest $200 million of its equity wasn’t made
by Bakke or the board, but by Shazad and people with less seniority
(who of course, given the amounts at stake, asked Bakke and the board
for advice).

We often think that decisions can be made in only two general
ways: either through hierarchical authority (someone calls the shots;
many people might be frustrated, but at least things get done) or
through consensus (everyone gets a say, but it’s often frustratingly slow
and sometimes things get bogged down because no consensus can be

With the advice process, any
person can make any

decision but must seek
advice from affected parties
and people with expertise.

Chapter 2.3 • Self-management (processes) 101

reached). The advice process transcends this opposition beautifully: the
agony of putting all decisions to consensus is avoided, and yet every-
body with a stake has been given a voice; people have the freedom to
seize opportunities and make decisions and yet must take into account
other people’s voices. The process is key to making self-management
work on a large scale. It is actually so critical that, at AES and other self-
managing organizations, colleagues know that forgetting to uphold the
advice process is one of the few things that can get them fired (we’ll
touch later on the topic of how someone can be dismissed in the absence
of hierarchy).

It’s interesting to hear Bakke elaborate on the many benefits of the
advice practice: in his experience, it creates community, humility,
learning, better decisions, and fun (notice how these align with values
that are important at the Evolutionary-Teal stage):

First, it draws people whose advice is sought into the question at
hand. They learn about the issues and become knowledgeable critics or
cheerleaders. The sharing of information reinforces the feeling of
community. Each person whose advice is sought feels honored and
needed.

Second, asking for advice is an act of humility, which is one of the
most important characteristics of a fun workplace. The act alone says, “I
need you.” The decision maker and the adviser are pushed into a closer
relationship. In my experience, this makes it nearly impossible for the
decision maker to simply ignore advice.

Third, making decisions is on-the-job education. Advice comes from
people who have an understanding of the situation and care about the
outcome. No other form of education or training can match this real-time
experience.

Fourth, chances of reaching the best decision are greater than under
conventional top-down approaches. The decision maker has the
advantage of being closer to the issue and … usually has to live with the
consequences of the decision.

Fifth, the process is just plain fun for the decision maker because it
mirrors the joy found in playing team sports. … The advice process
stimulates initiative and creativity, which are enhanced by wisdom from
knowledgeable people elsewhere in the organization.2

It might be interesting to note that AES, unlike Buurtzorg and
some other organizations we are yet to meet, did not completely figure
out how to work entirely on peer-based systems. It still had some
pyramid-like “layers” in place―operators, plant managers, regional
directors, the executive committee. And yet, the simple practice of the
advice process transcended these layers. Whatever someone’s place in
the organization, he or she could initiate any decision. People “higher
up” could not simply overrule these decisions based on hierarchical
position. Everybody, including the executive committee and Dennis

102 Reinventing Organizations

Bakke (the co-founder and CEO), had to seek advice to make decisions.
Bakke even pushed the board to play by these rules. Its members
actively participated in decision-making when consulted by employees
on important decisions through the advice process; beyond that, he felt
they should not make any decisions themselves other than those
mandated by law.

Avoid jumping to any hasty conclusions. The CEOs and other
leaders of self-managing companies are anything but weak, hands-off
leaders. Arguably, these CEOs and senior leaders are better informed
and more influential than leaders invested with the powers of hierarchy.
With the advice process, they are continually consulted regarding
decisions by people from all corners of the organization. Information

and decisions that reach them are not
vetted and filtered many times over as
they climb up the chain of command. In
traditional organizations, senior leaders
must do the hard work of integrating
conflicting perspectives into a decision;
because this process takes time, senior

leaders become bottlenecks for decision-making. With the advice
process, they can ask tough questions and give their opinions forcefully,
but then move on to the next question; meanwhile, someone else will do
the work of integrating different perspectives and advice.

There is no prescribed format for seeking advice. People might
reach out to colleagues in one-on-one discussion, or convene the relevant
group for a meeting. When large groups are affected by a decision, email
or the intranet is often the best way to collect input. Buurtzorg, for
instance, has a very active internal social network. When Jos de Blok, the
founder and CEO, or anybody else, is contemplating changes that might
affect a great number of coworkers (for instance, a decision about
compensation), he simply puts out the issue and the proposed solution
on the social network to collect colleagues’ advice.

No, it’s not consensus
The advice process is a simple form of decision-making that

transcends both consensus and unilateral action. In some cases, more elab-
orate decision-making approaches might be applied. Buurtzorg’s elegant
integrative process (discussed on page 67) is one example, and we’ll
encounter another one later in this chapter when we discuss Holacracy’s
governance process. It is worth repeating that these decision-making
processes work without consensus. I have noticed that for some reason,
many people naturally assume that in the absence of bosses, decisions in
self-management organizations will be made by consensus. And because
they have been scarred by the paralysis and endless discussions that
often come when people seek consensus, they are quick to dismiss self-
management as a viable way to run organizations.

The [advice] process is bottom-up, but
it is not a loosey-goosey, anything-
goes affair. It involves creativity,

careful analysis, meticulous planning,
and disciplined execution.

Dennis Bakke

Chapter 2.3 • Self-management (processes) 103

In principle, consensus sounds appealing: give everyone an equal
voice (a value particularly prized in Green). In practice, it often
degenerates into a collective tyranny of the ego. Anybody has the power
to block the group if his whims and wishes are not incorporated; now
it’s not only the boss, but everybody, who has power over others (albeit
only the power to paralyze). Attempting to accommodate everyone’s
wishes, however trivial, often turns into an agonizing pursuit; in the
end, it’s not rare that most people stop caring, pleading for someone to
please make a decision, whatever it turns out to be. With the advice
process, no one has power over anybody else. The process transcends
the need for consensus by giving everyone affected a voice (the
appropriate voice, not an equal voice), but not the power to block
progress.

Consensus comes with another flaw. It dilutes responsibility. In
many cases, nobody feels responsible for the final decision. The original
proposer is often frustrated that the group watered down her idea
beyond recognition; she might well be the last one to champion the
decision made by the group. For that reason, many decisions never get
implemented, or are done so only half-heartedly. If things don’t work
out as planned, it’s unclear who is responsible for stepping in. With the
advice process, the ownership for the decision stays clearly with one
person: the decision maker. Convinced that she made the best possible
decision, she sees things through with great enthusiasm, trying to prove
to advice givers that their trust was well placed or their objections
immaterial. While consensus drains energy out of organizations, the
advice process boosts motivation and initiative.

Decision-making in times of crisis
Can the advice process be upheld in times of crisis, when swift

and even harsh decisions might be needed―say, to lay off staff in a
downturn or to sell parts of a business? Can we genuinely consult with a
group of coworkers about laying them off? Perhaps an extreme situation
calls for extreme measures; perhaps self-management needs to be
suspended temporarily for the CEO to make a few necessary, top-down
decisions. But then, how can workers maintain trust in their organi-
zation’s self-management, if every now and again the CEO can decide to
step in and make autocratic decisions? FAVI, Buurtzorg, and AES have
all faced crisis moments. The graceful ways they found to deal with such
situations can provide inspiration for other self-managing organizations
facing a crisis.

No one would call Jean-François Zobrist, a bear of a man and
former paratrooper, a softie. But when he was faced with difficult and
critical decisions at FAVI, he readily admitted he needed help to find a
good answer. More than once, on impulse, he went around the shop
floor, asked everybody to stop the machines, climbed on a soapbox and

104 Reinventing Organizations

shared his problem with all the employees, trying to figure out a course
of action. The first major crisis under his leadership happened in 1990
when car orders plummeted in the wake of the First Gulf War. Stocks
were piling up, and there simply wasn’t enough work to keep workers
busy. Capacity and costs needed to be reduced. There was one obvious
solution: fire the temp workers. But at FAVI, no one was really con-
sidered a temp worker. For reasons related to labor laws in France, new
recruits were hired as temp workers for 18 months before they were
offered a full contract. Most of them were already considered full
members of their teams. By firing the temps, FAVI would rescind its
moral commitment to them, and it would lose talent it had invested in,
with a recovery perhaps only a few months away. With many questions
and no clear answers, Zobrist found himself on the soapbox and shared
his dilemma with all employees in that shift (including the temp workers
whose fate was being discussed). People in the audience shouted ques-
tions and proposals. One worker said, “This month, why don’t we all
work only three weeks and get three weeks’ pay, and we keep the temp
workers? If we need to, we will do the same thing next month as well.”
Heads nodded, and the proposal was put to a vote. To Zobrist’s surprise,
there was unanimous agreement. Workers just agreed to a temporary 25
percent salary cut. In less than an hour, the problem was solved and
machine noise reverberated around the factory again.

Most leaders I know would consider Zobrist’s approach extremely
risky. Sharing their dilemma openly with everybody would make them
feel so vulnerable that this course of action probably wouldn’t even cross

their mind. Indeed, no one could have
predicted with certainty how employees
would react to the news that their jobs
were on the line. The gathering could
have descended into chaos, with fear of
layoffs pitting people against each other
in heated exchanges. Zobrist had no
preconceived idea, no script, for how to

lead the discussion once he had shared the company’s problem. He
chose to trust―trust himself, trust employees, and trust the process.

Obviously, the safer option would have been to ask the head of
human resources (HR) to discreetly work out a number of scenarios,
confidentially convene the management team to discuss them, and hide
the problem from the workers until a decision was ready to be
announced. (In the case of FAVI, of course, Zobrist didn’t have an HR
director nor an executive team at hand, but he could have convened a
few trusted advisors.) This method is the tried-and-true way leaders
have learned to handle sensitive issues in organizations. Whether they
realize it or not, this approach is driven by a leader’s fear: fear that
employees might not be able to handle difficult news; fear that the
leader’s legitimacy might be questioned if he doesn’t call the shots; and

I finally figured out that not every
crisis can be managed. As much as
we want to keep ourselves safe, we
can’t protect ourselves from every-

thing. If we want to embrace life, we
also have to embrace chaos.

Susan Elizabeth Phillips

Chapter 2.3 • Self-management (processes) 105

fear that he might look like a fool if he discusses a problem before he has
fully figured out a solution. Zobrist’s ability to keep his fear in check
paved the way for a radically more productive and empowering
approach and showed that it is possible to confront employees with a
harsh problem and let them self-organize their way out of it. In the right
framework, it seems that the advice process can be upheld even in crisis
situations, and a leader should think twice before reverting to top-down
decision-making.

Buurtzorg faced a crisis in 2010 and mastered it using the advice
process too. The young company was growing at breakneck speed when
Jos de Blok heard that health insurance companies had threatened to
withhold €4 million in payments to Buurtzorg, citing technical reasons
(the more likely reason: the insurance companies wanted to signal to
Buurtzorg that it was growing too fast at the expense of established
providers). A cash crunch loomed. Jos de Blok wrote an internal blog
post to the nurses exposing the problem. He put forward two solutions:
either Buurtzorg could temporarily stop growing (new teams cost
money at first) or nurses could commit to increasing productivity
(increasing client work within the contract hours). In the blog comments,
nurses overwhelmingly chose to work harder because they didn’t like
the alternative: slower growth would have meant saying no to clients
and nurses wanting to join Buurtzorg. In a matter of a day or two, a
solution to the cash problem was found (and after some time, the
insurance companies eventually disbursed the withheld funds).

AES gives an example of how to suspend the advice process―as
gracefully as possible―in times of crisis. In fall of 2001, after the terrorist
attacks and the collapse of Enron, AES’s stock price plummeted. The
company needed access to capital markets to serve its high debt levels
but found them suddenly closed. Swift and drastic action was needed to
prevent bankruptcy. A critical question was: how many and which
power plants would need to be sold off to raise the necessary cash? With
40,000 people spread around the world, Dennis Bakke, the CEO, could
hardly convene everybody and stand on a soapbox like Zobrist at FAVI.
And the problem was so complex that he couldn’t simply send out a
blog post with two alternatives, like Jos de Blok did at Buurtzorg.

Bakke chose a course of action that temporarily suspended the
advice process in a way that nevertheless minimized the risk of under-
mining trust in self-management. He didn’t work out a plan behind
closed doors with his management team; instead, he publicly announced
that top-down decision-making would be made during a limited time
for a limited number of decisions, albeit critical ones. The advice process
would remain in force for all other decisions. To investigate the best
course of action and make the tough calls, Bakke appointed Bill Luraschi,
a young and brilliant general counsel. Luraschi wasn’t regarded as one of
the most senior leaders nor as someone who would seek a leading role in
the future. The signal was clear: the senior leaders of the organization

106 Reinventing Organizations

were not looking to exert more power. Top-down decision-making would
be handled by someone with no thirst for power, and it really would be
temporary.

If the advice process needs to be suspended in times of crisis,
these two guidelines can serve to maintain trust in self-management:
give full transparency about the scope and timeframe of top-down
decision-making, and appoint someone to make those decisions who
will not be suspected of continuing to exert such powers when the crisis
is over.

Purchasing and investments
Employees’ power to make decisions using the advice process is

perhaps most evident when it comes to spending company money. Most
organizations put authorization limits in place. A frontline manager
might be free to spend money up to $1,000 but require authorization
from his bosses beyond that amount; a unit manager might have
spending power up to $10,000 and a plant manager up to $100,000.
Whatever the amounts, the purchase order must generally proceed
through a central procurement department that coordinates the relation-
ships and negotiations with suppliers.

In self-managing organizations there are no authorization limits
and no procurement departments. An employee who needs a new $50
printer doesn’t have to call the IT department, hope for a green light
from his boss, and wait the days or weeks it takes for the printer to
arrive. He can simply head down to Walmart and buy a printer. In
principle, any person can spend any amount of money, provided he has
sought the necessary advice before making the decision; the larger the
purchase, the more people are typically involved in the advice process.
At FAVI, Sun Hydraulics, and other self-managing organizations,
workers rather than managers are in charge of purchasing the machines
and equipment that they work with, even when they cost several
hundred thousand dollars. They do the analysis, write up the necessary
specifications, visit and negotiate with suppliers, and secure financing
from the bank if needed. In hierarchical organizations, when engineers
do the analysis and choose a machine model, workers often complain
about the new machine and drag their feet when it comes to learning
how to operate it. When they have chosen the model, there is no such
resistance to change.

What about volume discounts? Surely money is left on the table if
purchases are not pooled? As often, the answer is: trust people to make
the right decisions within the framework of self-management. For items
where volume discounts are too good to give up, colleagues who buy
from the same vendor will choose to coordinate to maximize their
buying power. At Morning Star, a tomato processing company we’ll
soon discuss in greater depth, colleagues noticed that lots of people were

Chapter 2.3 • Self-management (processes) 107

buying threadlocker, an adhesive that prevents nuts and bolts from
accidentally loosening, in dozens of different formats and from different
vendors. They were not only losing out on volume discounts, but the
uncoordinated purchasing generated unnecessary bureaucracy because
regulations in the food industry required workers to painstakingly track
every threadlocker format in a Material Safety Data Sheet. At some
point, a worker suggested that he could walk around the plant once a
quarter and ask colleagues if they wanted to order threadlocker through
him. A similar solution emerged for purchasing packaging materials, an
area where volume discounts can quickly add up. When there is value in
coordination, people simply start to coordinate.

What about standardization? It makes sense to buy computer or
telephone equipment from the same or compatible vendors, for instance.
Again, one can simply trust the advice process. A secretary buying herself
a new computer, unless she is very well versed in hardware and software
specifications, will likely seek advice from a knowledgeable party to
ensure the computer will easily fit in with the rest of the IT equipment.
In this case, there is no need for a central department to enforce stan-
dards. In more complex cases, when standards need to be specified,
someone will step up and call together a group that will look into the
matter and define the standards.

Explicit assumptions
Founders and leaders of self-managing organizations get asked

the same question over and over again: isn’t it risky and foolish to let
people make decisions without top-down control, especially when
money is involved? In their experience, it is less, not more risky, because
better decisions get made. But the really interesting thing is that the
choice between trust and control is seldom debated on a rational level.
It’s a choice that gets made based on deeply held, often unconscious
assumptions we hold about people and their motivations. Several leaders
of Teal Organizations have found it useful, therefore, to talk often and
explicitly about the assumptions underpinning self-management and to
contrast them with the assumptions made by traditional hierarchies.

When AES acquired a new power plant, Bakke would often
introduce AES’s management practices to the new group of colleagues
by asking them what assumptions owners and managers of a typical
factory hold about their workers. Here is how Bakke summarizes the
assumptions workers generally feel bosses have about them:

• Workers are lazy. If they are not watched, they will not work
diligently.

• Workers work primarily for money. They will do what it
takes to make as much money as possible.

108 Reinventing Organizations

• Workers put their own interest ahead of what is best for the
organization. They are selfish.

• Workers perform best and are most effective if they have one
simple repeatable task to accomplish.

• Workers are not capable of making good decisions about
important matters that affect the economic performance of
the company. Bosses are good at making these decisions.

• Workers do not want to be responsible for their actions or for
decisions that affect the performance of the organization.

• Workers need care and protection, just as children need the
care of their parents.

• Workers should be compensated by the hour or by the
number of “pieces” produced. Bosses should be paid a salary
and possibly receive bonuses and stock.

• Workers are like interchangeable parts of machines. One “good”
worker is pretty much the same as any other “good” worker.

• Workers need to be told what to do, when to do it, and how
to do it. Bosses need to hold them accountable. 3

These assumptions sound harsh when they are put into words,
and yet they are the basis for the structures and practices we have in
organizations today. If this view of employees is true, leaders are
prudent to build in controls, rewards, and punishments; only a fool
would trust workers to make decisions using the advice process.
Because the assumptions are often implicit, or even held subconsciously,
Bakke felt it was critical to make them explicit and then to define a
different set of assumptions.

AES people:
• Are creative, thoughtful, trustworthy adults, capable of making

important decisions;
• Are accountable and responsible for their decisions and actions;
• Are fallible. We make mistakes, sometimes on purpose;
• Are unique; and
• Want to use our talents and skills to make a positive contri-

bution to the organization and the world.4

With this set of assumptions, self-management and the advice pro-
cess make perfect sense; while control mechanisms and hierarchy are
needless and demoralizing distractions.

Jean-François Zobrist often initiated similar discussions with
workers and new recruits at FAVI to explain the rationale for self-manage-
ment. One day, for training purposes, he wrote down the following set
of assumptions:

Chapter 2.3 • Self-management (processes) 109

The analysis of our organization chart in the 1980s [when FAVI
was still run like any other factory] reveals without a doubt that men
and women were considered to be:

• Thieves because everything was locked up in storage rooms.
• Lazy, as their working time was controlled and every late

showing punished by somebody … who didn’t even care to
inquire about the reasons for being late.

• Not dependable because all their production was controlled
by somebody else who must not have been very dependable
either because random controls … had been put in place.

• Not intelligent, as a “manufacturing engineering” depart-
ment did the thinking for them.

Zobrist and his colleagues defined three new assumptions that
over time have become mantras inside the factory.

• People are systematically considered to be good.
(Reliable, self-motivated, trustworthy, intelligent)

• There is no performance without happiness.
(To be happy, we need to be motivated. To be motivated, we
need to be responsible. To be responsible we must under-
stand why and for whom we work, and be free to decide how)

• Value is created on the shop floor.
(Shop floor operators craft the products; the CEO and staff
at best serve to support them, at worst are costly distrac-
tions)5

If you are familiar with management theory, you will have
recognized the similarity between the statements from AES and FAVI
and the Theory X and Theory Y that Douglas McGregor developed in
the 1960s when he was a professor at MIT. He stated that managers hold
one of two sets of beliefs concerning employees: some think employees
are inherently lazy and will avoid work whenever possible (Theory X);
others think workers can be ambitious, self-motivated, and exercise self-
control (Theory Y).

Which set of assumptions is true? People can debate this topic
endlessly. McGregor had a key insight that has since been validated time
and again: both are true. If you view people with mistrust (Theory X)
and subject them to all sorts of controls, rules, and punishments, they
will try to game the system, and you will feel your thinking is validated.
Meet people with practices based on trust, and they will return your
trust with responsible behavior. Again, you will feel your assumptions
were validated. Expressed in terms of developmental psychology, if you
create a strong Amber-Orange structure and culture, people will end up

110 Reinventing Organizations

responding in Amber-Orange ways; create a strong enough Teal context
and people are likely to behave accordingly.

At the core, this comes down to the fundamental spiritual truth
that we reap what we sow: fear breeds fear and trust breeds trust.
Traditional hierarchies and their plethora of built-in control systems are,
at their core, formidable machines that breed fear and distrust. Self-
managing structures and the advice process build up over time a vast,
collective reservoir of trust among colleagues.

Organizations routinely talk about their values and mission; Teal
Organizations talk about something even more fundamental―their basic
assumptions about human nature. This has to do, I believe, with the fact
that self-managing practices are still countercultural today. Many of us

hold deeply ingrained assumptions about
people and work that are based on fear,
assumptions that call for hierarchy and
control. Only by shining light on these
fear-based beliefs can we decide to choose
a different set of assumptions. FAVI, AES,

and others have found that when colleagues know and talk about the
two sets of assumptions frequently, people shift their belief system. The
risk that fear-based control mechanisms will creep in through the back
door is minimized. Someone will speak up and say, “Wait a minute!
Does this new process fit our assumptions? I think not.”

Internal communications
The way information flows illustrates how assumptions

(conscious or unconscious) shape organizational practices. In most
workplaces, valuable information goes to important people first and
then trickles down to the less important. Sensitive information is best
kept within the confined circle of top management. If it must be released
more widely, it needs to be filtered and presented carefully from the best
possible angle. The underlying assumption is that employees cannot be
trusted; their reactions could be unpredictable and unproductive, and
they might seek to extract advantages if they receive too much
information. Because the practice is based on distrust, it in turn breeds
distrust among people lower in the hierarchy: What are the bosses conceal-
ing now?

In Teal Organizations, there are no unimportant people. Every-
body expects to have access to all information at the same time. It’s a “no
secret” approach that extends to all data, including the most sensitive.
This information includes not only financial data, but also salaries or the
performance of individual teams. At Buurtzorg, for instance, teams can
see every month how their productivity compares to that of other teams.
The data of other teams is not anonymized or averaged out. People are

Whatever fundamental
assumption you hold about

human nature, it will be validated
by the response your behavior will

evoke from people around you.

Chapter 2.3 • Self-management (processes) 111

trusted to deal with good and bad news. There is no culture of fear, and
so teams with bad results are not deemed to need the protection of
anonymity. Teams that go through a difficult phase are trusted to own
up to the reality of the situation and to search for solutions.

Why go to this extraordinary length and share all information?
Three reasons make this practice compelling for self-managing
organizations:
• In the absence of hierarchy, self-managing teams need to have all

available information to make the best decisions.
• Any information that isn’t public will cause suspicion (why else

would someone go through the trouble to keep it secret?), and
suspicion is toxic for organizational trust.

• Informal hierarchies reemerge when some people are in the know
while others are not.
In the case of AES, a publicly traded company, the decision to

share all information with all employees brought up unprecedented
questions with the U.S. Securities and Exchange Commission, as Bakke
recalls:

If everyone had access to financial data of the company, then every
AES employee, even those working in faraway plants, would be classified
as “insiders.” Instead of 5 to 10 “insiders” at a typical company, AES
had thousands. All were subject to “blackout periods” in which they
could not trade the company securities. Fairly soon after AES stock
began trading publicly, we asked our people if they would like to limit
their access to information so that they would not be considered insiders
and would be free to trade AES stock at any time. By an overwhelming
margin, they chose to have full access to financial information and to
remain insiders.6

In practice, to avoid information getting distorted or lost as it
spreads from one person to another, self-managing organizations use
their intranet as a central repository where everybody can publish and
retrieve information in real time. At Buurtzorg, all data concerning per-
formance of all the teams is put on the company’s intranet. A team that
struggles in one area can identify a team in the neighborhood with
outstanding results and ask for advice and best practices. At FAVI and at
Sun Hydraulics, there are computer stations with open access through-
out the shop floor so that machine operators can log in to consult data at
any time.

All-hands meetings are another standard practice in many Teal
Organizations. They are typically held when there is new and important
information to share: quarterly results, the annual values survey, a
strategic inflection point, and so forth. The information is not simply
shared top-down―it is discussed and debated. There tends to be no

112 Reinventing Organizations

script to the meetings. Questions can take the meeting in any direction;
frustrations can be vented; accomplishments and people spontaneously
celebrated. In these moments, more is at play than simple information
exchange. At a deeper level, trust in the organization and its values is

tested and reaffirmed. All eyes are on the
people in senior roles. Will they be candid,
humble, and vulnerable? Will they face rather
than dodge difficult questions or criticisms?
Will they involve the whole group in problem
solving? If traditional companies rarely hold all-

hands meetings, it is precisely because they can be unpredictable and
risky. But in that very risk lies their power to reaffirm an organization’s
basic assumptions and to strengthen the community of trust.

Of course, not all news is pleasant to hear. The practice of sharing
all information puts everyone in the same situation as the CEO of a
traditional organization. It forces people to grow up and face unpleasant
realities. In the 2002 recession, Sounds True, a media publishing
company we will meet in the next chapter, was for the first time in its
history facing a difficult financial situation. Its founder and CEO, Tami
Simon, remembers that some people were then experiencing the other
side of total transparency:

There is a certain kind of anxiety introduced in an environment
where people know all about the business and its accompanying uncer-
tainties. In companies where the executive team acts like parents who
withhold difficult information from workers, people are protected from
this anxiety. But I think that approach gives people a false sense of safety.
Here, employees may feel anxious about finances more of the time, but at
least everyone knows where they stand.7

Conflict resolution
How do self-managing organizations deal with conflict? What

happens when people have substantial disagreement on the right course
of action? Or when two colleagues rub each other the wrong way? In a
traditional workplace, people would send up the dispute to a boss to
settle the matter. In self-managing organizations, disagreements are
resolved among peers using a conflict resolution process. This process is
so fundamental to collaboration without hierarchy that many self-
managing organizations train every new recruit in conflict resolution.

That is the case, for instance, at Morning Star, the company in this
research that has fleshed out, perhaps better than any other, the
processes required for effective self-management. Morning Star is the
world’s largest tomato processing company, located on the West Coast
of the United States. It began in 1970 when Chris Rufer, at the time a
recent MBA graduate, started a one-person truck-driving operation

If you empower people but
don’t give them information,
they just fumble in the dark.

Blair Vernon

Chapter 2.3 • Self-management (processes) 113

hauling tomatoes. Today, Morning Star harvests tomatoes, runs a 200-
truck hauling business, and operates three state-of-the-art processing
plants that produce over 40 percent of the tomato paste and diced
tomatoes consumed in the United States. Chances are that if you live in
the United States and you’re not allergic to spaghetti sauce, ketchup, or
pizza, you’ve enjoyed Morning Star’s products many, many times.

Tomato processing is a highly capital-intensive business working
to incredibly exacting standards. From the outside, the processing
factories look very much like chemical plants―they are huge masses of
interconnected steel pipes digesting hundreds of tons of tomatoes per
hour. The business is highly seasonal; the company works with 400
colleagues (the word Morning Star uses for employees) in low season
but employs 2,400 people during harvest time in the summer. All of
these people operate entirely on self-managing principles. There are 23
teams (called Business Units), no management positions, no HR
department, and no purchasing department. Colleagues can make all
business decisions, including buying expensive equipment on company
funds, provided they have sought advice from the colleagues that will be
affected or have expertise.

The founding principles for Morning Star’s way of operating were
set early in its history. When the first tomato processing factory was
built, Chris Rufer and the company’s first employees met to define how
they wanted to work together. They decided that two principles, two
basic social values, should inspire every management practice at
Morning Star: individuals should never use force against other people and
they should honor their commitments. These principles are at the heart of
the company’s conflict resolution mechanism, a process that is described
in great detail in the “Colleague Principles,” a core document outlining
Morning Star’s self-managing practices.

The conflict resolution process (called “Direct Communication
and Gaining Agreement”), applies to any type of disagreement. It can be
a difference of opinion about a technical decision in a given situation. It
can be interpersonal conflict. It can be a breach of values. Or it can be
related to performance issues, when one colleague finds that another is
doing a lousy job or not pulling his weight. Whatever the topic, the
process starts with one person asking another to gain agreement:
• In a first phase, they sit together and try to sort it out privately. The

initiator has to make a clear request (not a judgment, not a demand),
and the other person has to respond clearly to the request (with a
“yes,” a “no,” or a counterproposal).

• If they can’t find a solution agreeable to both of them, they
nominate a colleague they both trust to act as a mediator. The
colleague supports the parties in finding agreement but cannot
impose a resolution.

• If mediation fails, a panel of topic-relevant colleagues is convened.
The panel’s role, again, is to listen and help shape agreement. It

114 Reinventing Organizations

cannot force a decision, but usually carries enough moral weight
for matters to come to a conclusion.

• In an ultimate step, Chris Rufer, the founder and president, might
be called into the panel, to add to the panel’s moral weight.
Since the disagreement is private, all parties are expected to

respect confidentiality during and after the processes. This confidentiality
applies of course to the two persons at the heart of the conflict as well.
They must resolve their disagreement between themselves and are
discouraged from spreading the conflict by enlisting support and build-
ing rival factions.

Several other organizations in this research rely on virtually
identical conflict resolution mechanisms: first a one-on-one discussion,
then mediation by a trusted peer, and finally mediation by a panel. At
first, I was struck by what seemed like an extraordinary coincidence.
Before engaging in this research, I had never encountered a company
with an explicit conflict resolution mechanism, and here I stumbled
upon several organizations that had come up with virtually identical
processes. In discussions with people at Morning Star, I came to
understand that this process is about more than simply managing the
occasional workplace conflict. Conflict resolution is a foundational piece
in the puzzle of interlocking self-management practices. It is the
mechanism through which peers hold each other to account for their
mutual commitments. In traditional companies, when one person
doesn’t deliver, colleagues grumble and complain but leave it to the
person’s boss to do something about it. In self-managing organizations,
people have to step up and confront colleagues who fail to uphold their
commitments. Morning Star and other self-managing organizations
readily admit that this essential piece can be tricky to put in place and to
maintain. The process is effective to the degree that there is a culture
within the workplace where people feel safe and encouraged to hold
each other to account, and people have the skills and processes to work
through disagreements with maturity and grace. Freedom and
responsibility are two sides of the same coin―you can’t have one
without the other (at least not for long). Holding colleagues accountable
to their commitment can feel uncomfortable. A clearly outlined conflict
resolution process helps people confront each other when needed.

Role definition and allocation
We discussed in the previous chapter how Teal Organizations

have done away with rigid job descriptions and job titles. Instead, every
colleague has a number of roles that he has agreed and committed to
fulfill. How are these roles created? And how are people appointed to
new roles? In most cases, it happens organically without much fanfare.
Someone senses an issue or an opportunity that calls for a new role. Say

Chapter 2.3 • Self-management (processes) 115

the receptionist notices that clients often call to ask about technical data
of certain products. Wouldn’t it make sense to put the technical data on
the website? The logical next step is to discuss the idea with relevant
people from product development and after-sales services. Most likely
someone will step forward and take on the role. In hierarchical
organizations, with their silos and turfs, this question might spark lots of
debates and meetings regarding which department the job belongs in,
what budget and resources should be allocated, and on and on. Here,
someone simply steps forward and takes on the role.

Depending on their company culture and the industry they work
in, organizations can put different levels of formalism around the
process of creating roles. At FAVI, AES, Sun, and Buurtzorg, the process
is pretty informal; you might remember the story of Frank at FAVI who
created his own role as idea scout, or that of Shazad at AES who chose to
relocate to Pakistan to try to get a power plant going there. People
simply follow the advice process: they bounce the idea off the relevant
people that a role must be created (or modified or scrapped). Or they
simply discuss it in a team meeting.

Formalized contracting
Morning Star has created a somewhat more formal process to

define and allocate roles. Given the annual rhythm of the tomato
business, roles at Morning Star are formally discussed and determined
once every year. (Of course roles keep evolving during the year, and ad
hoc discussions to agree on changes of roles take place regularly.) As a
Morning Star colleague, you write a personal mission statement
(“Personal Commercial Mission” in Morning Star’s language) and spell
out all of the roles you commit to in a document called Colleague Letter of
Understanding (or simply CLOU). Roles at Morning Star are defined very
specifically, so you might well hold 20 or 30 different roles (one might be
receiver of tomatoes at the unloading station, another might be trainer of
seasonal whole peel sorters). For each role, you specify what it does, what
authority you believe you should have (act, recommend, decide, or a
combination thereof), what indicators will help you understand if you
are doing a good job, and what improvements you hope to make on
those indicators.

Why this level of formality and granularity? At FAVI and
Buurtzorg, colleagues don’t bother to write down roles in such detail,
nor to define performance indicators or targets for themselves. The
nature of nursing at Buurtzorg requires constant shifting and flexibility,
and so too does the type of small batch processing that happens at FAVI.
Turning tomatoes into paste, in contrast, is one long continuous process.
Trucks repeatedly dump in tomatoes on one side, and paste comes out in
aseptic packaging on the other. In what is essentially a low-margin
commodity business, the name of the game here is not flexibility but
continuous improvement to increase efficiency by one or two more

116 Reinventing Organizations

percentage points. In that context, it makes sense to define roles with
great granularity and to track performance indicators very closely.

In a continuous process like Morning Star’s, each person in the
chain receives tomatoes or paste in some form from someone upstream
and delivers them in another form to someone downstream. Therefore,

colleagues at Morning Star chose to
discuss the CLOUs, once written or up-
dated, not in a team setting (which most
self-managing organizations do), but in a
series of one-on-one discussions with the
handful of colleagues up and down-
stream that people interact with most.

People discuss and negotiate what’s written in each other’s CLOU
documents very seriously―they want to make sure that people
upstream commit to supplying them with the right input, so that they
can in turn deliver to people downstream what they committed to. The
chart below shows a visual depiction of the web of commitments within
the company. Each dot represents a person, and the lines connect people
who are joined by a commitment made in a CLOU. Morning Star has no
organization chart. If it had one, this would be it.

Web of commitments at Morning Star

Actually, one could argue that every organization’s real structure
looks like this: an intricate web of fluid relationships and commitments
that people engage in to get their work done. Unfortunately, most organ-
izations force a second structure, the one with boxes piled up in pyramid
shape, on top of the first. No wonder it sits there so uneasily―it distorts

The real organization chart in any
company is a spider web of informal
relations. Unfortunately, we insist

on forcing a pyramid structure onto
this web, which distorts the natural

flow of work.

Chapter 2.3 • Self-management (processes) 117

more than it helps the real work going on in the web of relation-ships
underneath.

Perhaps you noticed how many more lines there are in Morning
Star’s web than in a formal organization chart. The resulting structure
weaves into a fabric that is highly resilient, like a spider web. Notice too
how within such a system that there are no layers and thus no
promotions. What happens is that people, as they grow in experience,
take on roles with larger responsibilities and offload simpler ones to new
recruits or more junior colleagues. People don’t need approval from a
boss to change roles, but consent from their peers. The implication is
profound, as one Morning Star colleague expresses:

The temptation to not be ourselves and look good in the eyes of a boss
is much diminished, as it is hard to constantly look good to a dozen
colleagues. We just give up even trying to play that game.8

In Teal Organizations, people don’t compete for scarce
promotions. You can broaden the scope of your work and increase your
pay if your colleagues are ready to entrust you with new roles. They will
grant you important roles if you’ve developed your skills and have
shown yourself to be trustworthy and helpful. In Teal Organizations,
there can be internal competition, but it’s a healthy type. Chris Rufer
uses a golfing analogy to explain:

When Jack Nicklaus was competing, was he concerned about
becoming an executive senior vice president golfer? No. He knew that if
he got good at it, he would achieve what everyone longs for: a sense of
accomplishment. He also knew accomplishment would give him an
income to enjoy the life he wanted. Moving up is about competency and
reputation, not the office you hold.9

Defining roles and governance within teams
At Morning Star, roles emerge from a series of one-on-one

commitments, a practice that is well suited for an industry with a
continuous process. In organizations where teams are the natural unit,
Holacracy provides perhaps the most elegant process to define roles and
help them evolve. Holacracy is not so much an organization as an
organizational operating model, a brainchild of American entrepreneur
Brian Robertson. In the 1990s, Robertson and two colleagues in the
Philadelphia area founded and developed Ternary Software, which
became a fast-growing software development company. The impulse for
starting a new company was Robertson’s deep dissatisfaction with
organizations he had worked in:

I had gone through a several year period of just feeling like there was
so much [in organizations] that was limiting our ability to express and to

118 Reinventing Organizations

contribute everything we have to offer, that wasn’t embracing … our
whole range of skills and talents, and wasn’t allowing us to integrate
together in the most effective way that I could envision or imagine. I
wasn’t quite sure how to resolve a lot of those things but it was really a
spark of dissatisfaction that led to starting the software company: “My
God there’s got to be a better way, there’s just got to be something better
than this.”10

Robertson and his two co-founders started experimenting
relentlessly with any organizational practice that sounded promising.
Where the ideas came from didn’t matter―inspiration was found in
places as different as agile software development, sociocracy, and David
Allen’s Getting Things Done. Anything that worked was kept; anything
that didn’t work was discarded. The almost daily new experiments with
different organizational practices were taxing, as Robertson recalls:

I think there was [at Ternary Software] a real appreciation for the
kind of culture where experimentation and change was embraced.
However, the actual experimentation process at the level we engaged in
to get to Holacracy was very taxing. Things would change under you:
one day we are doing it this way, the next day we’d completely change
something core, and the next day it’s yet different and we’re always
running to catch up. The sense of lack of stability was huge, and for good
reason: there wasn’t much stability in our processes and methods because
we were evolving them so damn quick. …

There was a lot of pain in that organization from the continual
experimentation. It would have been so much easier just to say “we are
going to run this company in a conventional way”! To be very concrete,
there was a 12 month to 18 month period where we went through five
different salary systems, each one of which changed the way people were
paid, changed the level of pay, changed the way pay was calculated. …
These were scary changes. Each system was better than the last, but that
didn’t change the impact of “oh my God everything is changing around
here continually.”11

In time, from the crazy experimentation was distilled a
sophisticated and coherent set of structures and practices that Robertson
calls “Holacracy.” When Robertson hired a new management team and
exited Ternary Software, he created HolacracyOne, a consulting and
training firm dedicated to refining and spreading the practice of
Holacracy in organizations. He often uses a computer analogy to explain
what Holacracy is about:

Think about it as an operating system for an organization. Not a
technology, not a piece of software, but a social technology. Your
computer has an operating system … [that] controls how communication
happens, how power works, how applications share resources and

Chapter 2.3 • Self-management (processes) 119

information, the flow of work through that computer. Everything else is
built on top of that operating system.

And likewise in our organizations today, we have an operating system
that often goes unquestioned. Right now there is a bit of a monopoly on
the organizational operating system market, so to speak. We pretty much
have one way we use to structure and run a business, ultimately. There
are some variations of course, but it really comes back to the same basic
underlying structure for how power works and how work gets done in
the company.12

Robertson and his colleagues at HolacracyOne have distilled a
generic minimum set of practices they believe are needed to “upgrade the
operating system.”13 All other practices are considered apps (that is,
applications that run on top of that operating system, to keep with the
analogy), which can be handled in many ways and need to be adapted to
each company.

One of the core elements of Holacracy, which can be found in all
Teal Organizations in this research, is to separate role from soul, to break
the fusion of identity between people and their job titles. In holacratic
language, people don’t have a job, but fill a number of granular roles.
Where Holacracy goes further than other organizations is in the elegant
process through which roles are defined.

When someone senses that a new role must be created, or an
existing role amended or discarded, he brings it up within his team14 in a
governance meeting. Governance meetings are specific meetings where
only questions related to roles and collaboration are to be discussed,
separate from the rumble and tumble of getting work done. (Everything
that has to do with getting business done is discussed in what are called
“tactical meetings” with specific meeting practices.) Governance meet-
ings are held regularly―generally every month―and any member of a
team can request an extra meeting at any point in time. They follow a
strict process to ensure that everybody’s voice is heard and that no one
can dominate decision-making. A facilitator guides the proceeding.
Anybody who feels a role needs to be created, amended, or discarded
(called the proposer) can add it to the agenda. Each such governance item
is discussed in turn and brought to resolution with to the following
process:

1. Present proposal: The proposer states his proposal and the issue
this proposal is attempting to resolve.

2. Clarifying questions: Anybody can ask clarifying questions to
seek information or understanding. This point is not yet the
moment for reactions, and the facilitator will interrupt any
question that is cloaking a reaction to the proposal.

3. Reaction round: Each person is given space to react to the
proposal. Discussions and responses are not allowed at this
stage.

120 Reinventing Organizations

4. Amend and clarify: The proposer can clarify the intent of his
proposal further or amend it based on the prior discussion.

5. Objection round: The facilitator asks, ”Do you see any reasons
why adopting this proposal would cause harm or move us
backwards?” Objections are stated and captured without
discussion; the proposal is adopted if none surface.

6. Integration: If an objection is raised, the facilitator leads an
open discussion to craft an amended proposal that would
avoid the objection while still addressing the proposer’s
concern. If several objections are raised, they get addressed in
this way one at a time, until all are removed.

With this process, every month a team will typically adapt, clarify,
create, or discard one or several roles. The organization constantly
adapts and corrects, based on problems and opportunities people sense.
The process might sound formal, but people who use it report they find
it deeply liberating. There is no need for corridor talk, for politics, for
coalition building to get a change in roles. Anybody who senses the need
for something in the organization to change knows that there is a place
to take an idea and have it addressed. People who experience such a
meeting for the first time are surprised at how dramatically efficient it is.
It cuts through the sometimes endless, uncomfortable discussions we
have when we deal with the sensitive topic of roles and responsibilities.
In a single meeting, a number of changes of roles can be worked through,
one after the other.

In essence, Holacracy’s governance process is a variation of the
advice process. In this case, it’s not one person that integrates people’s
advice into a decision, but the team that does it as a whole. It ensures
that no valid objection is overlooked, and it truly builds on the collective
intelligence of a team. You might have noticed how similar Holacracy’s
governance process is to the one nurses use at Buurtzorg when they
discuss important topics (see page 67). In both cases, the goal is to not to
aim for a perfect and definite answer, but to find a workable solution
and iterate quickly if needed. People don’t wait for perfect answers to
try out new arrangements and see how they fare. Roles evolve
organically, all the time, to adapt to changes in the environment.
Employees who are not used to such frequent change can find it taxing
at first. Over time, most end up loving it. When there is only one
promotion coming around every few years, people are ready to put up a
fight for it. When every month there might be some changes to roles
within the team, everybody is more relaxed. It’s okay to sometimes forgo
a nice role for a while. Nothing is written in stone; new interesting roles
will come around.

Total responsibility
In hierarchical organizations, managers are responsible for deliv-

ering the numbers. Their area of responsibility is their turf. Just as they

Chapter 2.3 • Self-management (processes) 121

won’t mess with somebody else’s business, other managers had better
stay out of theirs. In Teal Organizations, people have roles, which come
with clear areas of responsibility, but no turfs. No part of the organiza-
tion belongs to anybody. Many of the organizations researched for this
book stress the opposite; they emphasize what Morning Star calls “total
responsibility”: all colleagues have the obligation to do something about
an issue they sense, even when it falls outside of the scope of their roles.
It’s considered unacceptable to say, “Somebody should do something about
this problem,” and leave it at that; if you see a problem or an oppor-
tunity, you have an obligation to do something about it, and most often
that “something” is to go and talk about it with the colleague whose role
relates to the topic.

Holacracy has pushed this principle so far as to define explicit
channels to make sure any “tension” (Holacracy’s word for issues and
opportunities15) that anybody senses at any time can get processed
quickly and reliably. Depending on the type of issue, it can be brought to
either a “governance meeting” or a “tactical meeting,” each of which has
its specific decision-making processes.16 Everyone is invited to process
any tension; “it’s not my problem” is not an acceptable attitude.

Total responsibility can sound daunting, but the experience of
Holacracy and Morning Star is that people grow to love it. People’s
concerns are no longer limited to their scope of responsibility; they can
take the well-being of the whole organization to heart. Of course, not all
team members cheer when a colleague comes and tells them they should
consider doing something about an issue. But in a self-managing
organization, people have roles, not turfs, and no one can formally shut
out a colleague by saying, “This is none of your business.”

Appointment process
In many cases, people’s work evolves organically over time―they

discard a few roles and take on another few. But sometimes there is a
whole new “job” that opens up. Given Buurtzorg’s explosive growth,
every few months a new regional coach is needed.
Or at Sun Hydraulics, a new role might open up in
project engineering. Often, the appointment proc-
ess is very organic; in time, a person emerges that
team members entrust with the role. When Zobrist
retired from his position as CEO of FAVI in 2009,
one of the team leaders had emerged as a natural successor. No other
team leader seems to have eyed the job; certainly, no one left in
bitterness or disappointment. Leading up to the succession, there was no
political jockeying and no infighting, and there was no settling of scores
from the new leader after his appointment. The same is true of the other
CEO transitions that took place in the organizations researched for this
book. Perhaps it boils down to this: when employees are empowered to
make all the decisions they want, the urge to climb the ladder recedes.

When everybody has the
power to make decisions,

the urge to climb the
ladder recedes.

122 Reinventing Organizations

When needed, a more formal discussion process can be put in
place. At Sun Hydraulics, for instance, when a new job is created or an
existing job becomes available, an internal recruitment process takes
place: candidates are interviewed by the colleagues who will work most
closely with them. At FAVI, Zobrist instituted another nifty practice―a
confirmation process. Every five years, he asked the team leaders to
organize a vote in their teams to decide if he should stay on as the CEO
of the organization. As we will discuss in chapter 3.1, it is critical that
CEOs play by the same rules as everyone else, or self-management can
unravel quite quickly. Zobrist of course expected his colleagues to speak
up on the spot were he ever to behave autocratically. The formal vote
was meant to remind workers that they have the power to make any
decision, including removal of the CEO.

Trading roles
Because roles in self-managing organizations are defined

granularly, it can be quite easy to trade roles within a team. A person
that is very busy can ask colleagues to pick up one of her roles, tempora-
rily or permanently. A team member that wants to learn a new skill can
ask a colleague to trade a corresponding role toward that end.

To make it easy to trade roles across teams as well as within them,
HolacracyOne has set up a company-wide Role Market Place (in hola-
cratic language, this is an “app;” it’s not part of the basic operating
system). On the company’s intranet is a file where colleagues can “rate”
every role they currently fill, using a scale of -3 to +3:
• If they find the role energizing (+) or draining (-)
• If they find their talents aligned (+) or not (-) with this role
• If they find their current skills and knowledge conducive to (+) or

limiting in (-) this role
Using the same scale of -3 to +3, people can also signal their

interest in roles currently filled by other people. The market place helps
people wanting to offload and people wanting to pick up roles to find
each other more easily.

Talent management
In the last 20 years, it’s become a general practice in large corpora-

tions to set up talent management programs. Managers throughout the
company are asked to identify high potentials, which HR puts on special
training tracks and provides with stretch assignments to prepare them for
higher offices. Succession planning is another best practice in human
resources―for every management position throughout the company,
possible successors must be identified and groomed to be ready to take
over. And then there is career planning. For every type of profile, HR
should think through the best career paths that expose people to the
right set of skills as they make their journey up the management ranks.

Chapter 2.3 • Self-management (processes) 123

In self-managing organizations, leadership is distributed, and
there are no leadership roles to prepare people for. None of the organi-
zations in this research spends time on talent management, succession
planning, or career planning. They have found that in a self-managing
context, people naturally come across so many opportunities to learn
and grown that senior leaders don’t need to worry about people getting
the right exposure. People who have freedom in their work are eager
learners; they can be trusted to shape their own journeys. Careers in self-
managing organizations emerge organically from people’s interests,
callings, and the opportunities that keep coming around in a liberated
workplace.

Performance management at the team level
How does performance management work in a self-managed

context? In Orange Organizations, it’s the role of bosses to keep the
pressure on employees and to prevent them from slacking off. Top
management sets ambitious targets in the company’s yearly budgets and
mid-term plans, and these targets then cascade down the organization.
It’s part of a leader’s role to always challenge subordinates to do more,
to do it faster, to do it cheaper.

In self-managing organizations that have no managers to keep up
the pressure, what prevents teams from getting complacent? The short
answer: intrinsic motivation, calibrated by peer emulation and market
demands.

The better question, though, might be: what makes us think that
people need to be put under pressure to perform? Research shows that
when people pursue a meaningful purpose, and when they have the
decision-making power and the resources to work toward that purpose,
they don’t need pep talks or stretch targets.17 Unfortunately, in many
traditional organizations, people work under the opposite circum-
stances; they don’t see much purpose in their work, and they feel
restricted in their potential for self-expression by rules and bosses. No
wonder they lose interest and must be pressured to give 100 percent.
Imagine working as a nurse in a traditional Dutch neighborhood nursing
organization: every morning, you receive a plan with 30 appointments
with patients you don’t know, put together by a planner you don’t
know. You are given exact time slots (10 minutes for an injection with
the first patient, five minutes to change the compression stockings for
the second patient, and so on). Patients are unhappy with you because
you hurry them, and meanwhile you know that if you were to take more
time, you’d have to explain yourself, because the time registration
system keeps track of everything you do. The work is so mindless that
you would be forgiven for wanting to slack off.

124 Reinventing Organizations

Now imagine what a day might be like working at Buurtzorg: you
are part of a team that is known and respected in the neighborhood. You
have made your own plan for the day. You will see 10 patients with
whom you’ve developed a relationship. You know their life stories and
medical histories. You might have met their children and neighbors and
helped arrange a network to encourage your patients to regain more
autonomy. You cheer when you see them making progress, and you
stand by their side when they reach the end of their days.

People working in these conditions, Buurtzorg has found, don’t
need a boss to motivate them. More often than not, it’s the other way
around―nurses are so deeply engaged in their work that they must

remind each other to set boundaries and
not to let work overrun their private lives.
More generally, experience shows that self-
governing teams in pursuit of a meaningful
purpose don’t need prodding from above.
If people stop working with enthusiasm
and productivity drops, it is generally the

symptom of a problem that needs addressing―for example, relational
problems in the team or roles that need to be reallocated. Resolve the
problem and spirits are restored.

People don’t need pressure from above, but they still need to get a
sense of whether they are doing well. Teal Organizations measure
indicators like team results, productivity, and profit, just like other
organizations―except that they mostly tend to do so at the level of
teams or process steps, and they don’t bother to measure individual
performance (contrary to Orange Organizations that believe in
individual incentives and therefore need individual metrics). The data is
made public for all to see, creating emulation, a healthy form of peer
pressure. When teams perform similar tasks―like the nursing teams at
Buurtzorg or the automotive teams at FAVI―results are easy to com-
pare. In a glance, a team in Buurtzorg can know if it is at the bottom or
the top of the league in terms of, say, productivity. Teams at the bottom
are motivated to improve out of pride; they don’t need a boss to discuss
how they could improve.

In traditional organizations, many people would consider such
total transparency about results to be brutal. All depends on how
information is handled. In Orange Organizations, bad results prompt
fears (and good results provoke envy or suspicion). Who gets to see
what data is a very touchy subject. In Teal Organizations, people know
that information will not be used against them. No one needs to be
protected from the facts, good or bad.

What about organizations where teams don’t do comparable
work? At Morning Star, teams engaged in “tomato sorting,” “steam
generation,” or “packaging” don’t share metrics that would help them
compare themselves. To help teams nonetheless get feedback on their

When people have the decision-
making power and the resources

to work toward a meaningful
purpose, they don’t need pep talks

or stretch targets.

Chapter 2.3 • Self-management (processes) 125

performance, the company has come up with an interesting practice:
every year in January, teams present a self-evaluation to a group of
colleagues, which comprises Chris Rufer (the founder and president)
and anyone else who cares to join. They are expected to talk candidly
about what went well and what didn’t, how effectively they used
company resources, and what they plan to do in the next year. It’s not a
superficial effort; each presentation lasts for a few hours, and teams can
expect challenging, sometimes grilling questions from their colleagues.
In the course of a month, all teams make presentations; teams that
haven’t performed well have received much input from their peers and
know they have homework to do.18 Morning Star’s budget and invest-
ment cycle also offers another opportunity for peer review. Every year,
each team presents its investment plans to a panel of peers for advice.
Teams that are not performing well are likely to be challenged as to
whether spending money is really the best way to fix their problems.

Individual performance management
In Teal Organizations, performance and outcomes are discussed

foremost at the team level: Are we collectively doing a good job contributing
to the organization’s purpose? Most people nevertheless still look for
feedback about their individual performance. Psychologists have come
across an interesting phenomenon: a person put in a sensory-deprivation
room (a so-called anechoic chamber, a room designed to dampen all
sound and block out light) after only a short amount of time reports
experiencing visual hallucinations, paranoia, and a depressed mood.19
Put simply, without outside stimulus, we go mad. I believe something
very similar happens when we are deprived of feedback related to our
work. Our egos may be wary of feedback, but we are relational beings
that thrive on honest feedback. I’ve seen organizations where no feed-
back is ever exchanged “go mad” because of it. People judge others
behind their backs, only to wonder nervously what others might be saying
when they have their backs turned. In places like these, every word, every
silence, every raised eyebrow, is scrutinized for unspoken judgments.

Teal Organizations are high on trust and low on fears. Feedback
in such environments feels less threatening, and most organizations in
this research are places where colleagues exchange feedback frequently.
In some of them, new recruits are trained in Marshall Rosenberg’s
Nonviolent Communication and in effective ways to give feedback. Of
course, the advice process is a formidable feedback mechanism built
right into the fabric of daily life in these organizations.

Because feedback is exchanged so freely, some organiza-
tions―FAVI, for instance―don’t hold any formal appraisal discussions.
But colleagues in most organizations in this research still see value in
taking the time, once a year, to reflect on their performance at work. Of

126 Reinventing Organizations

course, instead of a boss doing the appraisal, they put in place peer-
based systems:
• At Morning Star, people receive feedback at the end of every year

from each of the persons they have committed to in their CLOU.
• At AES, Dennis Bakke installed a beautiful practice of team

appraisal with his closest peers. They got together once a year,
often over dinner in one of their homes to make for a relaxed,
informal setting. Every person in turn shared his or her self-
evaluation. Other team members commented, questioned, or
encouraged each other to reach a deeper understanding of their
potential and performance.

• At Buurtzorg, the rules of the game (see page 70) simply stipulate
that every year, each team is to hold individual appraisals within
the team, based on a competency model that the team has
designed. Each team decides what format it will use for their
discussions. A team I spent time with decided to exchange
feedback in subgroups of three colleagues. Everyone prepares a
self-evaluation as well as feedback for the other two colleagues in
the trio, so people can measure their self-perception against their
colleague’s perceptions.
Traditional performance evaluations can be dispiriting affairs.

Often we don’t recognize ourselves in the feedback because our boss
only has a narrow view of our work (or sometimes because he tells us
everything is all right, just to get the uncomfortable moment over with).
With more input from more peers, we get a more meaningful reflection
of our contribution. There is another reason why so many appraisal
conversations feel lifeless: they tend to be very narrow discussions,
sticking to some preformatted evaluation grid, neglecting to inquire into
broader questions of the person’s selfhood―their hopes, dreams, fears,
yearnings, and sense of purpose in life. We will discuss in chapter 2.5
how a few simple questions can turn appraisal conversations into
moments of joyful and soulful introspection (see page 183).

Dismissals
“What happens when someone does a lousy job, when someone

needs to be fired?” is a question people often ask when they hear about
self-management. If there is no boss, can low performers just hang on
forever? What if someone is a pain and makes the workplace hell for
others? Will he just be allowed to stay on? Self-managing organizations
of course face such situations occasionally and have put processes in
place to deal with them, processes that don’t rely on a hierarchy but on
peer-based mechanisms.

Before we go into these processes, though, let’s start by saying
that in practice, these cases prove to be surprisingly rare. In traditional

Chapter 2.3 • Self-management (processes) 127

workplaces where a job is a box in an organization chart, there is little
flexibility: you are either a good fit for the job or you are not (in reality of
course, you are probably a bit of both), and so you should either be
allowed to stay in the job or asked to move on. In self-managing
organizations, people can more easily customize a job for themselves at
which they excel. A person with “performance issues” might shed one or
several roles in which she fails to deliver and take up other roles that
better match her skills, interests, and talents.

But some people just don’t fit in, or they perform below what their
colleagues expect of them. In a traditional organization, a boss or the HR
department can decide to give them a
bad review and to dismiss them for
low performance, rather like a teacher
has power to decide a child’s future in
the school. And so it’s perhaps not
surprising that people being dis-
missed react like children being told
they failed to make it to the next
grade―they feel like a failure, treated
unfairly; they blame circumstances and nurture resentment. In this
research, I encountered an interesting phenomenon: in self-managing
organizations, it seems that almost universally, people choose to leave
before they are dismissed. Only in the rarest cases is the company
saying, “That’s enough.” How come? The dynamics of self-management
give people natural clues that they might not be in the right place. At
Sun Hydraulics, an engineer might notice that somehow little work
comes his way―few colleagues spontaneously ask him to join their
projects or solicit him for advice. At Buurtzorg, a nurse will feel in her
interactions with colleagues that she doesn’t fit the team, or that self-
management doesn’t suit her after all. There are currently 250 nurses
joining Buurtzorg every month and 25 that leave each month, once they
have been there for a while and realize it wasn’t meant to be. Almost
always, the departure happens by mutual consent, on a friendly basis.

This does not change the fact that on a personal level, the process
can be painful. The self-managing context nevertheless helps people
realize that no one is to blame; they are perhaps simply not meant for
this particular work. How we react to an event such as a dismissal
depends on our perspective on life. Remember: in a Conformist-Amber
worldview, lifelong employment is the norm. A dismissal is therefore a
deeply distressing event, a forced expulsion from an identity-giving
community. In Achievement-Orange, it is often experienced as a
traumatic blow to the sense of self-worth, and in Pluralistic-Green as a
betrayal by the group. In Teal, we can hold the event more consciously: a
door closes, perhaps painfully at first, in order for another door to open
down the line that might bring us closer to our path in life. We can see it
as an invitation to reflect on the real nature of our strengths and talents

Despite the American myth, I cannot be
or do whatever I desire. … Our created
natures make us like organisms in an
ecosystem: there are some roles and

relationships in which we thrive and
others in which we wither and die.

Parker Palmer

128 Reinventing Organizations

and discover what other work might better suit us. We learn, grow, and
move on.

What about forced dismissals? Though rare, they do happen―for
instance, when someone breaches the company values. In the absence of
dominator hierarchy, the process is peer-based. At Buurtzorg, when one
person has lost the trust of the team, the team tries to find a mutually
agreeable solution. If that doesn’t work out, the group calls in its

regional coach or an external facilitator
to mediate. In almost all cases, the
presence of a mediator brings resolution.
In some cases, the person and the team
decide on some mutual commitments
and give it another go. In others, after
some deliberation, the person comes to

see that trust is irrevocably broken and understands it is time to leave. If
no agreement can be found, as a last chance to try to settle the matter,
the team members can ask Jos de Blok, the founder, to mediate; in the
rare cases where even that fails, they can ask him to put an end to the
person’s contract (legally, he is the only one who can do so).

At Morning Star, the process is almost identical, except that it is
initiated by an individual rather than a team (at Morning Star, people
aren’t embedded as deeply in teams). Morning Star views a dismissal as
the final step in a conflict and therefore uses its conflict resolution
mechanism to deal with the situation. The process starts when one
person asks another to leave the organization. Suppose that someone
finds that a colleague has fundamentally breached a company value
(perhaps the person made an important decision without requesting
advice from colleagues) or that a colleague is failing time after time to
live up to his commitments, despite a number of previous attempts to
improve the situation. She can initiate a conflict resolution process,
asking her colleague to resign. The four-stage process kicks in:
• In a first phase, they have to sit together and try to sort it out. In

the discussion, the person asked to leave can suggest ways to
restore trust. Or perhaps he will come to see that he has irrevoca-
bly lost the trust of his colleagues and that he is better off looking
for work elsewhere.

• If they can’t agree on an outcome, another colleague is called in as
mediator.

• If necessary, in a third step, a panel of colleagues is asked to mediate.
• As a last resort, Chris Rufer, the founder and president, is asked to

join the panel.
People asked to mediate or sit on a panel take their role very

seriously. Morning Star’s principle of not using force against anyone is at
stake. They are not a jury, passing a verdict on a colleague. Their role is
to explore every possible way to restore trust in the relationship. The
process can take a long time if needed. Only when the person who has

In retrospect, I can see in my own
life how the job I lost helped me find
work I needed to do … how losses
that felt irredeemable forced me to

discern meanings I needed to know.
Parker Palmer

Chapter 2.3 • Self-management (processes) 129

been asked to leave sees that colleagues genuinely tried to find a solu-
tion, and that none could be found, will he come to accept that resigna-
tion is the reasonable outcome. Therein lies the power and legitimacy of
the process.

How often do people leave Morning Star after such a process? No
one knows. Because Morning Star views this as a private conflict
between two persons, everyone is under the understanding of full
confidentiality (as is always the case with the conflict resolution
mechanism), and no one keeps statistics. But the process clearly does get
used in practice: some of the more senior colleagues I’ve spoken to told
me that they have been part of a handful of panels over the years.
Having been part of such panels, they are keen advocates of the method.
The discussions in the panel are never easy, they report, but they do help
people reach fair and reasonable outcomes.

Compensation and incentives
What about compensation and incentives in Teal Organizations?

Here again, they deeply question standard management practices and
come up with different methods; these include the process to decide
who deserves how much pay (people set their own salaries, with
guidance from their peers), how people are incentivized (incentives
distract people from their inner motivation, so we are better off without
them), and what type of salary differences are deemed acceptable
(people at the lower end of the scale should make enough to have their
basic needs met).

Peer-based processes and self-set salaries
In the absence of bosses, the process to determine who gets to take

home how much money must be peer-based. W. L. Gore, the company
best known for developing Gore-Tex fabrics, pioneered self-manage-
ment practices in the late 1950s. To decide on people’s salaries, it asks
each employee to rank, once a year, the colleagues they have worked
with. HolacracyOne uses a similar ranking method. Once a year, co-
workers fill out a survey for all their colleagues, consisting of only two
questions:
• “This person contributes (much) more or (much) less than me.”

(On a scale of -3 to +3)
• “This person has a good basis to evaluate me.” (On a scale of 1 to 5)

A simple algorithm crunches through the answers and groups
colleagues into a few salary buckets. The more experienced, knowl-
edgeable, and hard-working people land in the higher buckets that earn
bigger salaries; the more junior, less experienced colleagues naturally
gravitate toward buckets with lower salaries. The process is simple and
easy to understand. It has the benefit of fairness. When it’s not just one

130 Reinventing Organizations

person (the boss), but all the colleagues we interact with informing the
process, the resulting salary is likely to be a fairer reflection of our contri-
bution.

Some organizations go a step further: they allow people to set
their own salary. AES, under Dennis Bakke, experimented in certain
areas with a radical version of a peer-based process. People set their own
salary, using the advice process―they had to seek advice and
recommendation from their peers around them. In that way, people
were made fully responsible for assessing their own contribution and
validating it in the eyes of the colleagues. Semco, a Brazilian group of
companies operating in various manufacturing and service industries,
has fared well for a great number of years with self-set pay.20

Morning Star has developed, to my knowledge, the most refined
process: self-set pay with feedback from elected salary committees. If
you work at Morning Star, then once a year, along with all your
colleagues, you write a letter stating the raise in salary you believe to be
fair for yourself and why. In an uneventful year, you are likely to stick
with a cost-of-living adjustment. But if you feel you have taken on more
challenging roles or made special contributions, you can choose a higher
percentage. You back up the letter with the peer-based feedback you
received from your CLOU colleagues (the people with whom you
concluded one-on-one contracts a year earlier) and any relevant data on
performance indicators you are responsible for. You then share your
letter with a handful of colleagues that were elected into a compensation
committee (there is one such committee in each of the company’s four
locations). The committee’s job is to review all the letters it receives,
calibrate them, and provide feedback. It might tell you that you’ve been
too humble about your accomplishments and that you should consider
going for a bigger raise. Or it might tell you that, in comparison to your
peers, the salary increase you granted yourself seems on the high side.
The committee has only advisory power. You can choose to take the
committee’s feedback into account or to keep the raise you had set
originally (in which case the committee might choose to enter into a
“Gaining Agreement” process with you21). Morning Star’s experience is
that people prove to be remarkable skillful at assessing a fair
compensation for themselves. In any given year, roughly a quarter of
people choose salary increases above the cost-of-living adjustment. Only
a handful of people throughout the company receive feedback that they
might have aimed too high.

In small organizations, the process can be simplified. All
colleagues can come together for a meeting to discuss and honor their
contribution and decide on the appropriate salary levels for every
person in turn. Realize!, a four-person partnership in the field of organi-
zational development consulting based in Amsterdam, the Netherlands,
sets salaries in this way. (The company, which works with Holacracy’s
principles and practices, attracted some attention when two of its

Chapter 2.3 • Self-management (processes) 131

partners participated in the launch of a thought-provoking podcast
series called “Waking up the Workplace.”) Each quarter, the four
partners come together for a much-anticipated discussion. The meeting
starts with a traditional business update―discussing client activity,
prominent events, and key figures for the last quarter. Then comes the
beautiful (and sensitive) part: each partner in turn shares his perspective
on his contribution during the last quarter, including work he has done,
projects he has led, and support he has given to others. While one
partner speaks, the others can chime in to add any unreported
contributions, offer praise, or ask a critical question. When the group is
done and feels that everyone’s contribution has been heard and honored,
each person pauses to reflect in silence about compensation. How could
the earnings from the last quarter be shared among the partners in a way
that reflects everyone’s contribution? At some point, one partner breaks
the silence with a proposal. Sometimes, the proposal feels just right and
gets accepted on the spot. More often, it is a basis for a discussion: I feel
my contribution here or your contribution there deserves a higher recognition.
How exactly the cash will be split, the partners acknowledge, is
ultimately not what this conversation is about. The discussion serves a
higher purpose: making sure everybody feels his or her contribution is
fully valued, that the inner and outer perspectives (what I know and
what others perceive) are in sync. It is an exercise in openness, trust, and
vulnerability. The four partners report that invariably they go into the
discussion with some nervousness and leave the meeting with a deep
sense of gratitude (and spontaneous collegial hugs) for being part of a
partnership that operates from such deep levels of listening and trust.

No incentives, but company-wide bonuses
How people think about incentives is often directly linked to their

worldview. Conformist-Amber holds that people should be paid
according to their rank, with no performance incentives (a perspective
unions embrace: “same work, same pay”). Achievement-Orange believes
that people can be lured to work hard and smart if given the right indi-
vidual incentives (a perspective shared by most organizational leaders
today). Pluralistic-Green is uncomfortable with the competitive nature of
individual incentives and high wage differentials. It prefers team bonuses
to reward collaboration.

What about Evolutionary-Teal? It values intrinsic over extrinsic
motivators. Once people make enough money to cover their basic needs,
what matters more than incentives and bonuses is that work is meaning-
ful and that they can express their talents and callings at work. For that
reason, most of the organizations in this research have done away with
incentives altogether. Almost all organizations studied here have
abandoned the practice of individual incentives. Seen from an Evolu-
tionary-Teal perspective, it’s a rather sad image we have of people if we
believe that their primary motivation is the size of the carrot we dangle

132 Reinventing Organizations

in front of them. In his book Drive, Daniel Pink concludes from a great
amount of research on the matter that in today’s complex work settings,
incentives are mostly counterproductive, reducing rather than enhancing
people’s performance. Yet, in the world of business, doing away with
individual incentives is still rather revolutionary―sales people without
sales targets and sales incentives? This process is what all the companies
in this research have opted for. CEOs without bonuses and stock options?
All but one of the organizations have done away with them.

Green Organizations often work with team incentives: teams that
achieve outstanding results receive a bonus to be shared equally among
all team members. Most organizations in this research have abandoned
even that kind of incentive scheme. Instead, at the end of very profitable
years, they choose to share some part of the profit with all employees (in
some cases everyone receives the same fixed percent of base salary, in
others everyone receives the same fixed amount).22 At FAVI, for instance,
all employees, regardless of their base salary, receive the same bonus
when the profits are high. In 2011, everyone came home with an extra
€3,000 ($4,000) at the end of the year.

Reduced compensation inequality
The dominant thinking in business today is Orange. To achieve

results, people must be motivated by individual incentives. Orange has no
problems if this results in large wage differentials, if these differentials
are justified by people’s merits and contributions. This thinking has
created rather extraordinary wage inequalities in recent years. And,
unsurprisingly, it has turned out to be a good deal for the leaders who
advocate this practice: CNNMoney calculates that in 2011, the CEOs of
Fortune 50 companies took home on average a staggering 379 times the
median pay of employees in their company23 (the multiple would be
even higher when compared to the lowest paid employee).

From an Evolutionary-Teal perspective, the notion of meritocracy
has, well, merit. But one person making a few hundred times the salary
of someone else seems to stretch the boundaries. Most of the
organizations researched for this book strive to reduce the salary
differentials that are practiced in their industry―boosting lower salaries,
while keeping higher salaries in check. From a Teal perspective, a parti-
cular point of attention is ensuring that the lowest paid employees make
enough money to cover their basic needs (in keeping with Maslow’s
insight that people can only reach for self-actualization if their basic
needs are met).

AES, like FAVI, eliminated hourly wages for operators and
offered them fixed salaries. It erased the distinction between blue- and
white-collar workers; all AES colleagues, including operators, were com-
pensated based on the same principles. Dennis Bakke explains some of
the consequences:

Chapter 2.3 • Self-management (processes) 133

When we started this change in AES compensation policy, only 10
percent of our people worldwide were paid a salary. The other 90 percent
received hourly wages and overtime. By the time I left in 2002, over 90
percent of 40,000 people in 31 countries were paid a salary, just like the
company’s leaders. It was a giant step in breaking down barriers between
management and labor and in bringing us together as AES business
people. On average, people were paid about the same amount of money as
before but spent less time at their plants and offices. There was no reason
to take four hours on a Saturday morning to make a repair instead of
staying an extra hour on Friday evening to get it done. In most cases,
employees took more responsibility, initiative, and pride in their work.
The most important result was the self-respect that it engendered among
AES people.24

RHD, a nonprofit we will meet in the next chapter, holds the
principle that when there is room for salary increases, they should be
disproportionately geared toward the lowest salaries first. The CEO’s
salary is capped to a maximum of 14 times the lowest salary in the
organization. You can argue about the multiple―is it too high or too
low?―but notice the clever twist RHD introduced by capping the
highest salary not based on the average or median salary, as many Green
Organizations have started doing, but on the lowest. It’s now very much
in the CEO’s and the leadership’s own interest to ensure that even the
colleagues with the lowest qualification earn enough for a decent living.
Next to this direct focus on entry-level salaries, RHD has set up a
scholarship fund to offer staff members opportunities to pursue formal
education and increase their earning potential. And it has instituted a
companion currency, the RHD Equal Dollar, that allows lower-paid
colleagues to increase their access to goods and services by trading with
each other and with their local community.

Paying blue-collar employees salaries instead of hourly wages and
capping CEO pay might sound revolutionary to some, but I wonder if
the future will not bring even more profound changes. Today, salaries
are determined in large part by the law of supply and demand. The
organizations in this research have often done away with the pyramid,
but a phantom pyramid still exists in terms of pay―people whose roles
involve larger issues get paid more than people whose roles are more
narrow. Some people argue that this is fair and desirable; those who
contribute more to an organization’s purpose should be paid more.
Another perspective is that all colleagues are fundamentally of equal
worth and that all work done with love and dedication is to be honored
equally, be it strategic thinking or scrubbing the floors.25 Perhaps people
scrubbing the floors should be paid more, not less, if people find it a less
desirable task. How we think about compensation is ultimately about
much more than cash―it reveals much about our relationship to money,

134 Reinventing Organizations

to scarcity and abundance, and to what we value in people and in
ourselves. To what extent we will keep basing salaries on the law of
supply and demand, as society as a whole transitions to a Teal perspec-
tive, is anyone’s guess.

In summary―the structures, processes, and
practices of self-management

Leading scientists believe that the principal science of the next
century will be the study of complex, autocatalytic, self-organizing, non-
linear, and adaptive systems. This is usually referred to as “complexity”
or “chaos theory” (the Teal equivalent to Orange’s Newtonian science).
But even though we are only now starting to get our heads around it,
self-management is not a startling new invention by any means. It is the
way life has operated in the world for billions of years, bringing forth
creatures and ecosystems so magnificent and complex we can hardly
comprehend them. Self-organization is the life force of the world,
thriving on the edge of chaos with just enough order to funnel its
energy, but not so much as to slow down adaptation and learning. For a
long time, we didn’t know better and thought we needed to interfere
with the life’s self-organizing urge and try to control one another. It
seems we are ready now to move beyond rigid structures and let
organizations truly come to life. And yet self-management is still such a
new concept that many people frequently misunderstand what it is
about and what it takes to make it work.

Misperception 1: There is no structure, no management, no
leadership

People who are new to the idea of self-management sometimes
mistakenly assume that it simply means taking the hierarchy out of an
organization and running everything democratically based on consen-
sus. I hope it is clear by now that there is, of course, much more to it.
Self-management, just like the traditional pyramidal model it replaces,
works with an interlocking set of structures, processes, and practices;
these inform how teams are set up, how decisions get made, how roles
are defined and distributed, how salaries are set, how people are
recruited or dismissed, and so on. The tables on pages 140-141 give an
overview of the key practices of self-managing organizations and
contrast them with the Orange equivalents that dominate today’s
thinking. Appendix 3 engages in a more detailed discussion of three
types of self-managing structures encountered during the research and
examines how certain industries or contexts can call for one type of
structure rather than another.

What often puzzles us at first about self-managing organizations
is that they are not structured along the control-minded hierarchical

Chapter 2.3 • Self-management (processes) 135

templates of Newtonian science. They are complex, participatory, inter-
connected, interdependent, and continually evolving systems, like eco-
systems in nature. Form follows need. Roles are picked up, discarded,
and exchanged fluidly. Power is distributed. Decisions are made at the
point of origin. Innovations can spring up from all quarters. Meetings
are held when they are needed. Temporary task forces are created
spontaneously and quickly disbanded again. Here is how Chris Rufer,
the founder and president of Morning Star, talks about the structure of
self-managing organizations:

Clouds form and then go away because atmospheric conditions,
temperatures, and humidity cause molecules of water to either condense
or vaporize. Organizations should be the same; structures need to appear
and disappear based on the forces that are acting in the organization.
When people are free to act, they’re able to sense those forces and act in
ways that fit best with reality.26

The tasks of management―setting direction and objectives,
planning, directing, controlling, and evaluating―haven’t disappeared.
They are simply no longer concentrated in dedicated management roles.
Because they are spread widely, not narrowly, it can be argued that there
is more management and leadership happening at any time in Teal
Organizations despite, or rather precisely because of, the absence of
fulltime managers.

Misperception 2: Everyone is equal
For as long as human memory goes back, the problem of power

inequality has plagued life in organizations. Much of the pervasive fear
that runs silently through organizations―and much of the politics, the
silos, the greed, blaming, and resentment that feed on fear―stem from
the unequal distribution of power.

Interestingly, the interlocking structures and processes allowing
for self-organization do not resolve the question of power inequality; they
transcend it. Attempting to resolve the problem of power inequality
would call for everyone to be given the same power (a notion consistent
with the Green-Pluralistic worldview). Cooperatives, for instance, have
sought in equal ownership a method to divide power equally. Interest-
ingly, none of the organizations I have researched are employee-owned;
the question of employee ownership doesn’t seem to matter very much
when power is truly distributed.

From an Evolutionary-Teal perspective, the right question is not:
how can everyone have equal power? It is rather: how can everyone be power-
ful? Power is not viewed as a zero-sum game, where the power I have is
necessarily power taken away from you. Instead, if we acknowledge that
we are all interconnected, the more powerful you are, the more powerful
I can become. The more powerfully you advance the organization’s pur-

136 Reinventing Organizations

pose, the more opportunities will open up for me to make contributions
of my own.

Here we stumble upon a beautiful paradox: people can hold
different levels of power, and yet everyone can be powerful. If I’m a
machine operator―if my background, education, interests, and talents
predispose me for such work―my scope of concern will be more limited
than yours, if your roles involve coordinating the design of a whole new
factory. And yet, if within what matters to me, I can take all necessary
actions using the advice process, I have all the power I need.

This paradox cannot be understood with the unspoken metaphor
we hold today of organizations as machines. In a machine, a small turn of
the big cog at the top can send lots of little cogs spinning. The reverse
isn’t true―the little cog at the bottom can try as hard as it pleases, but it
has little power to move the bigger cog. The metaphor of nature as a

complex, self-organizing system can much
better accommodate this paradox. In an
ecosystem, interconnected organisms thrive
without one holding power over another. A
fern or a mushroom can express its full
selfhood without ever reaching out as far

into the sky as the tree next to which it grows. Through a complex
collaboration involving exchanges of nutrients, moisture, and shade, the
mushroom, fern, and tree don’t compete but cooperate to grow into the
biggest and healthiest version of themselves.

It’s the same in Teal Organizations: the point is not to make
everyone equal; it is to allow all employees to grow into the strongest,
healthiest version of themselves. Gone is the dominator hierarchy (the
structure where bosses hold power over their subordinates). And
precisely for that reason, lots of natural, evolving, overlapping
hierarchies can emerge―hierarchies of development, skill, talent,
expertise, and recognition, for example. This is a point that management
author Gary Hamel noted about Morning Star:

Morning Star is a collection of naturally dynamic hierarchies. There
isn’t one formal hierarchy; there are many informal ones. On any issue
some colleagues will have a bigger say than others will, depending on
their expertise and willingness to help. These are hierarchies of influence,
not position, and they’re built from the bottom up. At Morning Star one
accumulates authority by demonstrating expertise, helping peers, and
adding value. Stop doing those things, and your influence wanes—as
will your pay.27

So really, these organizations are anything but “flat,” a word often
used for organizations with little or no hierarchy. On the contrary, they
are alive and moving in all directions, allowing anyone to reach out for
opportunities. How high you reach depends on your talents, your

The problem of power inequality
has plagued organizations since

the dawn of time. Teal
Organizations don’t resolve the

problem, they transcend it.

Chapter 2.3 • Self-management (processes) 137

interests, your character, and the support you inspire from colleagues; it
is no longer artificially constrained by the organization chart.

Misperception 3: It’s about empowerment
Many organizations today claim to be empowering. But note the

painful irony in that statement. If employees need to be empowered, it is
because the system’s very design concentrates power at the top and
makes people at the lower rungs essentially powerless, unless leaders
are generous enough to share some of their power. In Teal Organiza-
tions, people are not empowered by the good graces of other people.
Empowerment is baked into the very fabric of the organization, into its
structure, processes, and practices. Individuals need not fight for power.
They simply have it. For people experiencing self-management for the
first time, the ride can be bittersweet at first. With freedom comes
responsibility: you can no longer throw problems, harsh decisions, or
difficult calls up the hierarchy and let
your bosses take care of it. You can’t take
refuge in blame, apathy, or resentfulness.
Everybody needs to grow up and take
full responsibility for their thoughts and
actions―a steep learning curve for some
people. Former leaders and managers sometimes find it is a huge relief
not having to deal with everybody else’s problems. But many also feel the
phantom pain of not being able to wield their former positional power.

Many leading thinkers and practitioners in the field of organiza-
tional design focus their energy today on the question of how leaders
can become more conscious. The thinking goes as follows: if only leaders
could be more caring, more humble, more empowering, better listeners,
more aware of the shadow they cast, they would wield their power more
carefully and would create healthier and more productive organizations.
Brian Robertson, the founder of Holacracy, put it well in a blog post:

We see attempts for leaders to develop to be more conscious, aware,
awake, servant leaders that are empowering. … And yet, the irony: … If
you need someone else to carefully wield their power and hold their space
for you, then you are a victim. This is the irony of empowerment, and yet
there is very little else we can do within our conventional operating
system other than try our best to be conscious, empowering leaders.28

If we can’t think outside the pyramid, then indeed, as Robertson
notes, the best we can do is try to patch up the unhealthy consequences
of power inequality with more enlightened leadership. Pioneer Teal
Organizations show that it’s possible to transcend the problem of power
inequality and not just patch it up. We can reinvent the basic structures
and practices of organizations to make everyone powerful and no one
powerless.

At the moment power is shared …
people feel needed and valued,

because they are needed and valued.
Dennis Bakke

138 Reinventing Organizations

Misperception 4: It’s still experimental
Another common misconception is that self-management might

still be an experimental form of management. That is no longer true: self-
management has proven its worth time and again, on both small and
large scales and in various types of industry. W. L. Gore, a chemical
manufacturing company best known for its Gore-Tex fabrics, has been
operating on self-organizing principles since its founding in the late
1950s. Whole Foods, with its 60,000 employees and $9 billion in revenue,
operates its more than 300 stores with self-governing units (the rest of
the organization has more traditional hierarchical structures). Each store
consists of roughly eight self-managing units, such as produce, seafood,
and check-out (central services are run with a Green, empowered
hierarchy).

The Orpheus Chamber Orchestra has operated since its founding
in 1972 on entirely self-managing principles. The orchestra, with residence
in New York’s Carnegie Hall, has earned rave reviews and is widely
regarded as one of the world’s great orchestras. It operates without a
conductor. Musicians from the orchestra make all artistic decisions, from
choosing the repertoire to deciding how a piece ought to be played. They
decide who to recruit, where to play, and with whom to collaborate.

Virtual and volunteer-driven organizations practice self-management
on staggering scales. In 2012, Wikipedia had 100,000 active contributors.
It is estimated that around the same number―100,000 people―have
contributed to Linux. If these numbers sound large, they are dwarfed by
other volunteer organizations. Alcoholics Anonymous currently has 1.8
million members participating in over 100,000 groups worldwide―each
of them operating entirely on self-managing principles, structures, and
practices.

I believe it is because we have grown up with traditional hierar-
chical organizations that we find it so hard to get our heads around self-
management. Young people, on the other hand, who have grown up
with the Web (variously referred to as Millennials, Generation Y, or
Generation “F” for Facebook) “get” self-management instinctively. On
the web, management writer Gary Hamel notes:

• No one can kill a good idea
• Everyone can pitch in
• Anyone can lead
• No one can dictate
• You get to choose your cause
• You can easily build on top of what others have done
• You don’t have to put up with bullies and tyrants
• Agitators don’t get marginalized
• Excellence usually wins (and mediocrity doesn’t)
• Passion-killing policies get reversed
• Great contributions get recognized and celebrated29

Chapter 2.3 • Self-management (processes) 139

Many organizational leaders and human resource managers complain
that Millennials are hard to manage. Indeed, this generation has grown
up in the disruptive world of the Internet, where people’s influence is
based on contribution and reputation, not position. Why would they
want to put up with anything other than self-management in the work-
place? Why would anyone else, for that matter?

140 Reinventing Organizations

Orange’prac*ces’ Teal’prac*ces’

Organiza(on*
structure*

•  Hierarchical pyramid •  Self-organizing teams
•  When needed, coaches (no P&L

responsibility, no management
authority) cover several teams

Staff*func(ons* •  Plethora of central staff
functions for HR, IT,
purchasing, finance,
controlling, quality, safety,
risk management, etc.

•  Most such functions performed
by teams themselves, or by
voluntary task forces

•  Few staff remaining have only
advisory role

Job*(tles*&*job*
descrip(ons*

•  Every job has job title and
job description

•  Fluid and granular roles
instead of fixed job descriptions

•  No job titles

Orange’prac*ces’ Teal’prac*ces’

Coordina(on* •  Coordination through
fixed meetings at every
level (from executive team
downwards), often leading
to meeting overload

•  No executive team meetings
•  Coordination and meetings

mostly ad hoc when needs arise

Projects* •  Heavy machinery
(program & project
managers, Gantt charts,
plans, budgets, etc.) to try
and control complexity
and prioritize resources

•  Radically simplified project
management

•  No project managers, people
self-staff projects

•  Minimum (or no) plans and
budgets, organic prioritization

Informa(on*
flow*

•  Information is power and
is released on a need-to-
know basis

•  All information available in
real-time to all, including about
company financials and
compensation

Crisis*
management*

•  Small group of advisors
meet confidentially to
support CEO in top-down
decision making

•  Communication only
when decision is made

•  Transparent information
sharing

•  Everyone involved to let the
best response emerge from
collective intelligence

•  If advice process needs to be
suspended, scope and time of
suspension is defined

Purchasing*&*
investments*

•  Authorization limits
linked to level in hierarchy

•  Investment budgets
steered by top
management

•  Anybody can spend any
amount provided advice
process is respected

•  Peer-based challenging of
team’s investment budget

DecisionC*
making*

•  High up in the pyramid
•  Any decision can be

invalidated by hierarchical
superior

•  Fully decentralized based on
advice process (or on holacratic
decision-making mechanisms)

Conflict*
resolu(on*

•  (Conflict often glossed
over, no conflict resolution
practices)

•  Formal multi-step conflict
resolution practice

•  Culture restricts conflict to the
conflicting parties and
mediators; outsiders are not
dragged in

Role*
alloca(on*

•  Intense jockeying for
scarce promotions leads to
politics and dysfunctional
behavior

•  Silos: every manager is
king of his castle

•  No promotions, but fluid
rearrangement of roles based
on peer agreement

•  Responsibility to speak up
about issues outside of one’s
scope of authority

Performance*
management*

•  Focus on individual
performance

•  Appraisals established by
hierarchical superior

•  Focus on team performance
•  Peer-based processes for

individual appraisals

Compensa(on* •  Decision made by
hierarchical superior

•  Individual incentives
•  Meritocratic principles can

lead to large salary
differences

•  Self-set salaries with peer
calibration for base pay

•  No bonuses, but equal profit
sharing

•  Narrower salary differences

Dismissal* •  Boss has authority (with
HR approval) to dismiss a
subordinate

•  Dismissal last step in mediated
conflict resolution mechanism

•  In practice very rare

Careful,’two’other’version’exists’later’in’this’document'(always’update’both)’

Self-management Self-management

Chapter 2.3 • Self-management (processes) 141

Orange’prac*ces’ Teal’prac*ces’

Organiza(on*
structure*

•  Hierarchical pyramid •  Self-organizing teams
•  When needed, coaches (no P&L

responsibility, no management
authority) cover several teams

Staff*func(ons* •  Plethora of central staff
functions for HR, IT,
purchasing, finance,
controlling, quality, safety,
risk management, etc.

•  Most such functions performed
by teams themselves, or by
voluntary task forces

•  Few staff remaining have only
advisory role

Job*(tles*&*job*
descrip(ons*

•  Every job has job title and
job description

•  Fluid and granular roles
instead of fixed job descriptions

•  No job titles

Orange’prac*ces’ Teal’prac*ces’

Coordina(on* •  Coordination through
fixed meetings at every
level (from executive team
downwards), often leading
to meeting overload

•  No executive team meetings
•  Coordination and meetings

mostly ad hoc when needs arise

Projects* •  Heavy machinery
(program & project
managers, Gantt charts,
plans, budgets, etc.) to try
and control complexity
and prioritize resources

•  Radically simplified project
management

•  No project managers, people
self-staff projects

•  Minimum (or no) plans and
budgets, organic prioritization

Informa(on*
flow*

•  Information is power and
is released on a need-to-
know basis

•  All information available in
real-time to all, including about
company financials and
compensation

Crisis*
management*

•  Small group of advisors
meet confidentially to
support CEO in top-down
decision making

•  Communication only
when decision is made

•  Transparent information
sharing

•  Everyone involved to let the
best response emerge from
collective intelligence

•  If advice process needs to be
suspended, scope and time of
suspension is defined

Purchasing*&*
investments*

•  Authorization limits
linked to level in hierarchy
•  Investment budgets

steered by top
management

•  Anybody can spend any
amount provided advice
process is respected

•  Peer-based challenging of
team’s investment budget

DecisionC*
making*

•  High up in the pyramid
•  Any decision can be

invalidated by hierarchical
superior

•  Fully decentralized based on
advice process (or on holacratic
decision-making mechanisms)

Conflict*
resolu(on*

•  (Conflict often glossed
over, no conflict resolution
practices)

•  Formal multi-step conflict
resolution practice

•  Culture restricts conflict to the
conflicting parties and
mediators; outsiders are not
dragged in

Role*
alloca(on*

•  Intense jockeying for
scarce promotions leads to
politics and dysfunctional
behavior

•  Silos: every manager is
king of his castle

•  No promotions, but fluid
rearrangement of roles based
on peer agreement

•  Responsibility to speak up
about issues outside of one’s
scope of authority

Performance*
management*

•  Focus on individual
performance

•  Appraisals established by
hierarchical superior

•  Focus on team performance
•  Peer-based processes for

individual appraisals

Compensa(on* •  Decision made by
hierarchical superior

•  Individual incentives
•  Meritocratic principles can

lead to large salary
differences

•  Self-set salaries with peer
calibration for base pay

•  No bonuses, but equal profit
sharing

•  Narrower salary differences

Dismissal* •  Boss has authority (with
HR approval) to dismiss a
subordinate

•  Dismissal last step in mediated
conflict resolution mechanism

•  In practice very rare

Careful,’two’other’version’exists’later’in’this’document'(always’update’both)’

Self-management Self-management

Chapter 2.4 • Striving for wholeness (general practices) 143

CHAPTER)2.4)

STRIVING!FOR!WHOLENESS!
(GENERAL!PRACTICES)!

A human … experiences himself, his thoughts and
feelings, as something separated from the rest. This
delusion is a kind of prison for us, restricting us to our
personal desires and to affection for a few persons nearest
us. Our task must be to free ourselves from this prison by
widening our circles of compassion to embrace all living
creatures and the whole of nature in its beauty.

Albert Einstein

Historically, organizations have always been places where people
showed up wearing a mask, both in an almost literal and in a figurative
sense. Literally, we see this in the bishop’s robe, the executive’s suit, the
doctor’s white coat, and the uniforms at a store or restaurant, to name a
few. The uniform signals a person’s professional identity and rank. It is
also a claim the organization makes on the person: while you wear this
uniform, you don’t fully belong to yourself. You are to behave and show
up not as yourself, but in certain pre-determined, acceptable ways.

Along with the uniform comes a more subtle influence: people
often feel they have to shut out part of who they are when they dress for
work in the morning. They put on a professional mask, conforming to
expectations of the workplace. In most cases, it means showing a
masculine resolve, displaying determination and strength, hiding doubts
and vulnerability. The feminine aspects of the self―the caring, ques-
tioning, inviting―are often neglected or dismissed. Rationality is valued
above all other forms of intelligence; In most workplaces the emotional,
intuitive, and spiritual parts of ourselves feel unwelcome, out of place.

144 Reinventing Organizations

Organizations are for the most part, in the true sense of the word,
soulless places―places inhospitable to our deeper selfhood and to the
secret longings of our soul.

What makes us leave so much of our selfhood behind when we go
to work? There is a conspiracy of fears at play that involves employees
as much as their organizations. Organizations fear that if people were to
bring all of themselves to work―their moods, quirks, and weekend
clothes―things would quickly dissolve into a mess. Armies have long

known that people made to feel interchange-
able are much easier to control. Employees,
for their part, fear that if they were to show
up with all of who they are, they might
expose their selfhood to criticism and ridicule
and come across as odd and out of place. It is

deemed much better to play it safe and to hide the selfhood behind a
professional mask.

Wisdom traditions from around the world speak to this from a
deeper level: at heart, we are all profoundly interconnected and part of a
whole, but it’s a truth we have forgotten. We are born into separation
and raised to feel divided from our deeper nature, as well as from the
people and life around us. Our deepest calling in life, these traditions tell
us, is to reclaim wholeness, within ourselves and in our connection with
the outside world.

This spiritual insight inspires Teal Organizations’ second break-
through: to create a space that supports us in our journey to wholeness.
Extraordinary things begin to happen when we dare to bring all of who
we are to work. Every time we leave a part of us behind, we cut
ourselves off from part of our potential, of our creativity and energy. No
wonder many workplaces feel somehow lifeless. In wholeness we are
life-full. We discover in awe how much more life there is in us than we
ever imagined. In our relationships with colleagues, much of what made
the workplace unpleasant and inefficient vanishes; work becomes a
vehicle where we help each other reveal our inner greatness and
manifest our calling.

Self-management goes a long way toward helping us show up

more fully. With no scarce promotions to fight for, no bosses to please,
and no adversaries to elbow aside, much of the political poison is
drained out of organizations. There is a phrase I heard many times in the
self-managing organizations I researched: here I feel I can fully be myself.
Without a boss looking over our shoulder, without employees to keep in
line and peers that could turn into competitors, we can finally let our
guard down and simply focus on the work we want to do. People in
these organizations often use the archetypes of Parent-Child-Adult (from
Eric Berne’s Transactional Analysis) to describe how self-management
opens the space for healthier ways to be at work. The bond between a

You can measure an organi-
zation by the number of lies

you need to tell to be part of it.
Parker Palmer

Chapter 2.4 • Striving for wholeness (general practices) 145

boss and the subordinate often makes for an unhealthy parent-child
relationship. In self-managing organizations, the system pushes us to
behave in adult-to-adult relationships, whatever our differences in
education, seniority, and scope of work. In a peer-based system, if we try
to behave like a parent (or like a child for that matter), our colleagues
will quickly let us know they won’t have any of it.

Brian Robertson, the founder of Holacracy, sometimes uses
another set of archetypes to talk about the power of self-management to
shift relationships to a healthier level―helping us to move from Perse-
cutor, Rescuer, Victim, to Challenger, Coach, Creator.

I’ve always appreciated the Karpman Drama Triangle model of
Persecutor, Rescuer, Victim. We see it play out in organizations all the
time, where people end up in this Drama Triangle pattern. …

I think it’s a great frame to look at the effect of Holacracy. It’s really
difficult to maintain a victim stance in Holacracy. It’s possible, but it’s
difficult, because the world keeps holding up a mirror to you, saying,
“You can process your tensions. If you’re choosing to be a victim, that is
your choice, and perhaps a choice because you don’t know how to do
something else, but it’s not because somebody else is persecuting you. It
is your choice to stay in that pattern if you so choose.” Which is a nice
catalyst to shift someone over to a Creator side of “Oh, alright, let me
bring a proposal, let me process a tension, let me do something to change
the environment I’m in.”

Before Holacracy, it was easy for me to end up in a Persecutor role as
I tried to lead an organization and get its needs met. … Holacracy offers
me a powerful alternative. … Now I can be a Challenger. Now I can say,
“Okay, well, what are you going to do? It’s in your power. What’s your
next step?” I can ask questions, and I can challenge.

There’s a great story … from Bernard Marie Chiquet, one of our
licensees and Holacracy coaches, who talks about his own background
with the Savior pattern. How easy it was for him in business to fall into
that Savior/Rescuer pattern of trying to rescue others, and how Holacracy
helps him shift to be a Coach, and say, “I’m done with rescuing,” because
in this environment, there are no victims that need to be rescued anyway.1

Self-management greatly reduces the subtle levels of fear in organi-
zations that prevent us from being ourselves. Some organizations, like
Holacracy and Morning Star, focus clinically on self-management and
feel little need to add other practices to encourage individual and
collective wholeness. Other organizations find that even without hierar-
chy, being in a community of peers is hard. We all have personal histo-
ries and baggage we bring with us to the workplace. Perhaps the
presence of others brings out a need to be liked. Or a desire to be perfect.
Or to be seen as competent and successful. Or a need to dominate others.
Or to be dominated.

146 Reinventing Organizations

Precisely in the difficulty of fully being ourselves, Teal Organiza-
tions see an opportunity. They create practices for people to support each
other in their inner work while doing the outer work of the organization.
Every time our fears get triggered is an opportunity to learn and grow
into more wholeness, reclaiming aspects of ourselves that we have
neglected or pushed into the shadows.

Inviting our humanity to work
Most of the practices to invite us into wholeness are surprisingly

simple. And yet, we have grown so used to the narrow, almost aseptic
places we call work that these practices can seem out of place in a
professional context. Take the following practice of Sounds True, a
Colorado-based business that disseminates the teaching of spiritual
masters through audio and video recordings, books, and online
seminars. In the early days, Tami Simon, the founder and CEO of Sounds
True, brought her dog along to the office. When the business expanded
and employees were hired, it didn’t take long for some of them to ask if
they too could bring their dogs to work. Tami couldn’t think of a reason
to refuse (other than the potential issue that has been taken care of with
the rather loosely enforced “three poops and you’re out” rule). Today it
is not rare for a meeting to take place with two or three dogs lying at
people’s feet (currently the company has 20 dogs along with its 90
employees). Something special happens within the presence of dogs,
colleagues noticed. Animals tend to ground us, to bring out the better
sides of our nature. The simple practice of petting a dog tends to soothe
us, to reconnect us to our body, and to calm down our spinning minds.
And when it’s a colleague’s dog we pet, or a colleague that pets ours, we
subtly build community. People found that the decision to open the
company’s doors didn’t only allow in dogs, but more human life as well.

Something similar has happened at Patagonia, the outdoors
apparel maker. At its headquarters in Ventura, California, the company
hosts a Child Development Center for employees’ children, from the
tender age of a few months up to kindergarten age. Children’s laughter
and chatter are among the regular sounds at the office, coming from the
playground outside, from children visiting their parents’ desks, or from
kids joining parents and colleagues for lunch at the cafeteria. It is not
uncommon to see a mother nursing her child during a meeting.
Relationships change subtly but profoundly when people see each other
not only as colleagues, but also as people capable of the profound love
and care young children inspire. When colleagues have just played with
a baby over lunch, it’s that much harder to fly at each other’s throats
when they sit in a meeting.2

Allowing dogs or children into the workplace is not earth-
shattering. And yet in fifteen years of consulting and coaching, I haven’t

Chapter 2.4 • Striving for wholeness (general practices) 147

come across any organizations with such practices prior to these. It
makes me wonder: how far have we gone in the madness of separation
to find this so unusual? Of course, some will argue that animals and
children might distract us from work. I have come to believe that some-
thing deeper is at play: we have found safety in showing up with just a
narrow part of ourselves in the workplace. We might not at first like the
thought of having babies or animals in the workplace precisely because
it’s so difficult, in their presence, not to show a whole different part of
ourselves to our colleagues―a part that is deeply loving and caring.

Safe and open working environments
Yet underneath our fears, at the most fundamental level, a part of

us aspires to wholeness. It longs to integrate our divided selves and to
honor the truth of our soul. Why then is wholeness so hard to achieve
and separation so easy to fall into? Showing up whole feels risky. We
put out our selfhood for all to see, and expose this most treasured part of
ourselves to potential criticism, ridicule, or rejection. Parker Palmer, the
educator, writer, and activist, has explored throughout his life what it
takes for us to seek and find wholeness in community.

What sort of space gives us the best chance to hear soul truth and
follow it? … My answer draws on the only metaphor I know that reflects
the soul’s essence while honoring its mystery: the soul is like a wild
animal.

Just like a wild animal, the soul is tough, resilient, savvy, resourceful,
and self-sufficient: it knows how to survive in hard places. Many of us
learn about these qualities in the darkest moments of our lives when the
faculties we normally depend upon utterly fail us—the intellect is
useless, the emotions dead, the will impotent, and the ego shattered. But
sometimes, way back in the thickets of our inner lives, we sense the
presence of something that knows how to stay alive and helps us to keep
going. That something, I suggest, is the tough and tenacious soul.

Yet despite its toughness, the soul is also shy. Just like a wild animal,
it seeks safety in the dense underbrush, especially when other people are
around. If we want to see a wild animal, we know that the last thing we
should do is go crashing through the woods yelling for it to come out.
But if we will walk quietly in the woods, sit patiently at the base of a tree,
breathe with the earth, and fade into our surroundings, the wild creature
we seek might put in an appearance. …

Unfortunately, community in our culture too often means a group of
people who go crashing through the woods together, scaring the soul
away. … Under these conditions, the intellect, emotions, will, and ego
may emerge, but not the soul; we scare off all the soulful things, like
respectful relationships, goodwill, and hope.3

148 Reinventing Organizations

Crashing through the woods is how we have learned to be
together in organizations. All it takes to scare the soul away is to make a
sarcastic comment or to roll the eyes in a meeting. If we are to invite all
of who we are to show up, including the shy inner voice of the soul, we
need to create safe and caring spaces at work. We must learn to discern
and be mindful of the subtle ways our words and actions undermine
safety and trust in a community of colleagues.

Resources for Human Development (RHD), a Philadelphia-based
nonprofit, provides a beautiful example of an organization that has

strived, for more than 40 years, to create and
maintain safe and open workplaces that
invite people into wholeness. RHD was
started in 1970 with a $50,000 contract to pro-
vide community mental health services in sub-
urban Philadelphia. Today, its 4,600 staff pro-
vide services worth $200 million to tens of

thousands of people in need through programs in 14 states that operate
homes and shelters for the mentally ill, developmentally disabled, drug
and alcohol addicted, criminally adjudicated, and homeless. They also
operate outpatient mental health centers and serve troubled children in
their homes and schools.

RHD, like AES and FAVI, is explicitly founded on a number of
basic assumptions about people and work―in the case of RHD, that
1) all people are of equal human worth, 2) people are essentially good unless
proven otherwise, and 3) there is no single way to manage corporate issues well.
Each of RHD’s programs is run by a self-managing team, with an
average of 20 and at most 40 to 50 people. Units, as these teams are
called within RHD, are encouraged to develop their own sense of
purpose, pride, and identity. Within the units, there are no job descrip-
tions. Units are responsible for their entire operation, from defining a
strategy to recruiting and purchasing, from budgeting to monitoring
results. Central staff at headquarters is kept to a minimum. Specialist
staff―for instance, the budget managers that support teams in financial
matters or specialists in clinical review―can counsel teams, but the final
decision is kept in the unit. At RHD, teams have a team leader (called
“Unit Director”). Like team leaders at FAVI, Unit Directors have no
power to impose decisions and cannot unilaterally hire or fire anybody.

“Above” the teams, there are no middle managers, but rather hub
leaders that support a number of units in the same way that regional
coaches at Buurtzorg support teams of nurses. Hub leaders expect to be
kept informed of major existing or potential problems; they may advise
or help, but the responsibility for resolving problems stays with the unit.
Hubs have no business targets and are not responsible for their units’
financial results. By design, units offering similar types of services are
not regrouped within the same hub. One hub leader might support a
residential care home for the mentally ill, a shelter for homeless people,

Showing up whole feels risky.
We need spaces where we feel

safe if we are to share with
others our deeper selfhood, our

gifts, our longings, and our
concerns.

Chapter 2.4 • Striving for wholeness (general practices) 149

and a service for troubled children. Robert Fishman, RHD’s founder and
CEO, explains the rationale: “Since no one person at the Hub level can
know all this detail, the expertise needed to provide services remains
decentralized, spread across a range of local managers. In this way, we
avoid cookie-cutter uniformity and corporate blandness.” It all makes
for an incredibly vibrant and entrepreneurial organization. As one em-
ployee, Dennis, says:

The freedom started from the first day we were hired. Like most RHD
employees, we weren’t given job descriptions; instead, many of our job
responsibilities were self-assigned and self-monitored. There were very
few “oughts” or “shoulds.” It was simply expected, though not necessa-
rily stated, that we would do something constructive on behalf of others.
And if we could be creative as well, it was never discouraged. In fact, it
was celebrated. None of us take this for granted. At the drop of a hat we
can tell the painful stories of friends who work in very different circum-
stances.4

RHD is a remarkable success story. It has maintained a yearly
growth rate of 30 percent on average since its inception more than 40
years ago. In all that time, while managing close to $2 billion in
revenues, with 200 units in the field making autonomous decisions, it
has never lost a contract due to fiscal mismanagement. But the numbers
only tell part of the story. At the heart of RHD’s success is the extraor-
dinary care it provides every day to thousands of people in need. Here is
one everyday story, recounted by Bob Fishman, RHD’s founder and
CEO, that captures what RHD is about:

This is the story about one of those “Friday-at-five” calls. The kind
that come in when you’re ready for the weekend―in this case, July 4th
weekend―half out the door, and more than half tempted just to let that
phone ring.

The call was from a government administrator at wits’ end. There
was not a single bed available in Connecticut’s entire Department of
Mental Retardation system, he said, and no one was able to move any
mountains before a holiday weekend. He had no idea what to do with a
man who had just come into his charge, Rick, who was forty-five,
developmentally disabled, in a panic, and without anyone to care for him
after the unexpected death of his father. He was waiting in the
Emergency Room of the hospital where his father had been having
routine surgery. Could RHD-Connecticut do anything, anything at all,
to help?

No immediate solution presented itself to Paul, the Director of RHD-
Connecticut. He was pretty sure, actually, that RHD’s beds were full,
just as the Department’s were. Regardless of the uncertainty, however,
regardless of the holiday, regardless of the time, Paul didn’t hesitate.
“Yes, of course, we will help.” He wasn’t a top executive, but he knew

150 Reinventing Organizations

that as a Unit Director at RHD he had the power, as well as the
responsibility, to make something happen.

Paul … recalled that [he] had worked with Rick several years before
… “Rick could become violent and actually hit people or break things,”
Paul recalls. … He had a dual diagnosis―he was both developmentally
disabled and mentally ill. … “It was clear that Rick would certainly be a
challenge,” Paul remembers, “but I thought the staff and the other
residents could meet that challenge, especially if they were prepared.”

Within a few hours after the phone call from the government, Paul
had mobilized a team based at Sunset House, one of our family-like
homes. … The Sunset House team offers round-the-clock staff to serve for
developmentally disabled people. On that Friday, Mary, the Sunset
House nurse, called Rick’s doctors and found a way to transfer his medi-
cation prescriptions to Sunset House―no easy task. Tracey, the House
Manager, led the Sunset House team in moving quickly to dismantle the
site’s office and make it into a bedroom. The office was small, too small
for the long term: for now it would do. …

The residents were gathering that evening for a group event so
Cassandra, RHD-Connecticut’s Assistant Director, took the opportunity
to tell them about Rick and his sadness at the death of his father.
Cassandra and the residents talked about offering Rick a temporary home
in what was the office, and that perhaps someday they could give him a
permanent home at Sunset House, if they could renovate the garage. Not
everyone was happy about the idea, but one resident after another agreed
that it was important to help Rick out. …

On the very same Friday that Paul got the initial call, Rick made the
transition from the hospital to Sunset House. A staff member picked him
up at the hospital and when Rick opened the front door, the residents
gave him a big welcome. Paul remembers, “Rick grinned as he recognized
me, took in all the smiling faces all around him, and cheerfully proclaimed,
‘This is my new home.’”

“Sometimes,” Paul recalls, “you know when you have done a good
thing. And that day we did a really good thing.”5

Fishman goes on to elaborate how RHD’s basic assumptions have
created a culture, practices, and decision-making mechanisms that allow
small everyday miracles like this one to come about:

The vital interplay of RHD’s values and delegation results in the
success that is perfectly illustrated in Rick’s story. Our first basic
assumption, that all people have equal human worth, guided us in
offering Rick a respectful and caring response to his desperate need. Our
second basic assumption, that people are good unless proven otherwise,
allowed our local Unit Director to work with government to solve a
problem quickly and without a contract, with the expectation and the
trust that we would get paid for it (we did). And our third basic
assumption, that there is no single way to handle corporate issues well,

Chapter 2.4 • Striving for wholeness (general practices) 151

gave us the flexibility we needed for everything we did. If we had tried to
solve Rick’s problem from the central office, we would not have had
enough information either about Rick or the local unit to make wise
decisions, or to avoid delays while we got up to speed; delays or missteps
would have caused further misery to Rick and inconveniences to our
governmental customer. Also the local staff group would have felt
imposed upon, which is not a productive way to get a job done. …

RHD employees are not any different than the employees of other
corporations; empowerment hasn’t made people perfect. … What we
aspire to do, and what we continue to achieve, however, is to manage
status, power, and money according to our basic assumptions.6

Self-management is fundamental to RHD’s extraordinary care;
people need the freedom to decide in the moment how to best meet the
needs of the people they care for. But another ingredient is just as
important: the safe and open environment RHD has managed to create
in the units and throughout the company, which helps people tap into
their deepest humanity to bring out their care for others.

It is a challenge for any organization to create an environment
where people feel safe to show up whole. It is even more so at RHD,
whose very purpose is to deal, day in day out, with people experiencing
difficult journeys in life―people who are mentally ill, alcoholic, ex-
convicts, developmentally disabled, or homeless. In the midst of this
testing environment, where verbal or physical violence can flare up
quickly, RHD has distilled over time a beautiful set of practices to foster
a safe and open working environment.

Ground rules for a safe environment
Fishman has written a book, together with his wife, about RHD’s

practices. In the introduction, he traces his calling to create a radically
different type of workplace all the way back to his childhood:

Listening to my parents quarrel, and trying to understand why they
repeatedly fought, absorbed many a night. This effort and its implications
have shaped my thinking and my professional work for the past fifty
years.

My parent’s arguments always followed the same format: My mother
insisted the she was right and that my father was wrong―and the bad
one. When their fight reached a certain pitch, my father, a man of few
words, angrily stomped out of the apartment, repeatedly demonstrating
that he could leave her―and me.

By the time I was eleven, I figured out that neither she nor he was
right―or bad. I couldn’t side with either one. Later, my attention shifted
to how my friends argued, and I realized that their complaints were also
mostly trivial. It was the way they fought that was the problem. Without
even knowing it, I began to practice peacemaking. … Looking back, I see
that this was another step in what would become a lifelong effort to

152 Reinventing Organizations

understand human relationships and find a better way to manage
conflict. …

None of my teachers in college and graduate school seemed to have a
vision of a healthy human relationship. They certainly taught me about
relationships, but mostly I found myself studying hostile connections
and the variety of ways people tried to find safety in the midst of the wars
they created. Most people didn’t see any way out. Why? I wondered. …

At work, I was exposed to supervisors who believed that their
approaches to work problems were absolutely right. They had no doubt.
And in order to make their favored solutions happen they acted like
tyrants. It made no sense.

Slowly some answers emerged. I knew I needed to love and be
loved―as do we all―and I knew I wanted to lead others in the search for
better ways to work together. … RHD was conceived and developed as
an experiment. Thirty-six years later, I’m clear that the experiment is
about creating healthy workplace communities.7

Creating safe workplaces starts with raising everybody’s
awareness of the words and actions that create or undermine a safe
working environment. Unfortunately, as Bob Fishman points out, we
weren’t taught this process in school. Teal Organizations spend signi-
ficant time and energy training everybody in a number of ground rules
that support healthy and productive collaboration. Several of the organi-
zations in this book end up writing down these ground rules in a
document. RHD, for instance, has developed over the years a beautiful
and precisely worded Bill of Rights and Responsibilities for Employees and
Consumers. The first two articles spell out RHD’s objective of creating a
safe environment and constructively managing conflict and anger. (Later
articles deal with topics related to self-management.) The premise is
maintained that conflict is inevitable, but that hostile behaviors are not:

This corporation has chosen to operate with several basic
assumptions. One of those assumptions is that there are multiple “right”
ways or paths we can follow in making decisions, thus there is no one
“true” or “absolute” reality. Each person in a situation holds his/her
own view of reality, and his/her own perspective about the most effective
way to do things. This assumption allows us to recognize that conflict is
inevitable and that people will disagree in the workplace. While conflict
and difference (or disagreement) are to be expected, explosive or
otherwise hostile expressions of anger are not acceptable in RHD.

As a member of the RHD community, it is important to be able to do
two things:

a) Separate from our own need to be “right” in order to hear
and respect others’ realities and perspectives: and,

b) Differentiate between thoughts (what’s going on inside your
head) and behaviors (what you do or say).8

Chapter 2.4 • Striving for wholeness (general practices) 153

The document goes on to spell out in detail five unacceptable
expressions of hostility. The first―demeaning speech and behavior―is des-
cribed in the following terms:

Demeaning speech and behavior involves any verbal or nonverbal
behavior that someone experiences as undermining of that person’s self-
esteem and implies that he/she is less than worthy as a human being.
Such behaviors include, but are not limited to, name-calling, ridicule,
sarcasm, or other actions which “put down” people. Demeaning a person
with such physical behaviors as rolling one’s eyes when the person speaks
or otherwise negating her importance as a member of the community is
also unacceptable. Anyone encountering such hostile behavior has the
right and responsibility to surface it as an issue.9

Other expressions of hostility―“negative triangulated messages,”
“threat of abandonment,” “disconfirming the other person’s reality,”
and “intimidation/explosion”―are defined in an equally precise manner.

Green Organizations have pioneered values-based cultures that,
in one form or another, often include values such as integrity, respect, or
openness. The detailed ground rules in Teal
Organizations essentially take shared values
to the next level. RHD is not an outlier in
creating its detailed Bill of Rights and
Responsibilities. Morning Star has documents
called Organizational Vision, Colleague Princi-
ples, and Statement of General Business Philo-
sophy; FAVI has its fiches, and Holacracy its Constitution. These docu-
ments provide a vision for a safe and productive workplace. They give
colleagues a vocabulary to discuss healthy relationships, and they draw
lines that separate recommended from unacceptable behaviors.

Practices to cultivate discussions about values and ground rules
Of course, it takes more than a document to bring values to life.

Many organizations in this research have chosen to start right at the
beginning: all new recruits are invited, as part of the onboarding, to a
training session about the company values and ground rules, which
helps to create common references and a common language across the
organization.

Companies have found that beyond the initial training, there is a
need for dedicated times to discuss the values and the ground rules to
keep them alive. It can be done in a hundred ways; here are a few
examples:
• Values Day: Many organizations hold a yearly company-wide

values day where everybody is invited, through playful and/or
introspective activities, to revisit the organization’s purpose,
values, and ground rules and inquire how they, individually and

Ground rules take shared
values to the next level. They

spell out the mindsets and
behaviors that foster or

undermine a safe and healthy
work environment.

154 Reinventing Organizations

within their teams, live up to them. At RHD, for example, Values
Day is a major event, with lots of fun, singing, and dancing.
People celebrate and reaffirm their commitment to the company’s
extraordinary culture.

• Values meeting: Every two months, all RHD colleagues are invited
to join the values implementation meeting, where people can bring
up issues they have encountered with values in the workplace or
suggest changes to the Bill of Rights and Responsibilities. The
meeting is well attended. Bob Fishman, RHD’s founder, makes a
point to be present every time.

• Annual survey: Many organizations cultivate discussion about
values and ground rules through an annual survey. At AES, for
instance, a task force of volunteers devised a new set of questions
every year and sent them out to the entire organization. Each unit
had the obligation―it was one of the ground rules―to discuss the
outcome of the survey, in whatever format it thought would be
useful.

Reflective spaces
Wisdom traditions insist on the need for regular silence and

reflection to quiet the mind and let truth emerge from a deeper part of
ourselves. An increasing number of people pick up contemplative
practices―meditation, prayer, yoga, walking in nature―and integrate
these into their daily lives. Many organizations researched for this book
have set up a quiet room somewhere in the office, and others have put
meditation and yoga classes in place. This practice opens up space for
individual reflection and mindfulness in the middle of busy days. A
number of them go a step further: they also create collective moments for
self-reflection through practices such as group coaching, team super-
vision, large-group reflections, and days of silence.

An organization that can show us, perhaps better than any other,
how reflective practices can be integrated deeply into everyday life is a
German company called Heiligenfeld. It is a fast-growing company with
630 employees running four mental health and rehabilitation hospitals in
the center of Germany. It is the brainchild of Dr. Joachim Galuska, a
medical doctor and psychotherapist. In the 1980s, he felt that more
holistic approaches to therapy were needed to treat patients in mental
hospitals; he wanted to add spiritual and transpersonal approaches to
classical psychotherapy. He found that none of the existing hospitals he
talked to seemed open to his vision. In 1990, he stumbled upon Fritz
Lang, an entrepreneur and owner of a historic, if somewhat faded, hotel
in Bad Kissingen. Together they decided to transform the hotel into a
small 43-bed mental health hospital that would offer a holistic approach
to therapy. The success has been overwhelming, with clients traveling in

Chapter 2.4 • Striving for wholeness (general practices) 155

from all over Germany and other parts of Europe. Twenty years later,
Heiligenfeld has become a network of hospitals with 600 beds, which
most likely will keep expanding.

Dorothea Galuska, Joachim’s wife and a therapist herself, shared
with me a striking story of a patient treated at Heiligenfeld:

One day, I met a new patient who had been previously diagnosed
with severe psychosis. The 55-year-old woman was suffering from
depression and anxiety. She had never worked in her life and for a long
time had been too anxious to leave home. In the discussion, I had a
hunch. The woman might well be psychotic, but she seemed to have
extraordinary intuitive powers. Could it be that she was anxious because
she was overwhelmed by these powers and didn’t know what to do with
them? My hunch was confirmed at the end of the session. I was pregnant
at the time, and the woman suddenly told me, out of the blue, “What a
beautiful boy! What a pity he hasn’t yet turned to be head-first.” She was
right on both counts, but how could she know?

I recommended to her that she learn to master her psychic powers.
She registered in a course with a renowned teacher. We helped her with
her depression in the hospital, but the training proved the key to her
healing. Today she is transformed. She has a thriving practice where she
offers her talents to the world. What used to cripple her with anxiousness
now provides her with meaning and income.10

Not every patient’s story is that remarkable, of course, but it
illustrates what Heiligenfeld is about―a holistic perspective of mental
health problems that can open avenues for healing unavailable to more
narrow concepts of psychotherapy.

Heiligenfeld is an extraordinary place, and not just for patients; it
is also an incredibly vibrant workplace, the recipient of a remarkable
range of awards, among them “Best Workplace” in the health care sector
in Europe.

Large group reflections
Among the great number of innovative management practices

Heiligenfeld has introduced over the years, employees often credit one
practice in particular for making the company an outstanding work-
place. Every Tuesday morning, 350 employees come together for an
hour and a quarter to engage in joint reflection. (Ideally, all employees
would participate, but some colleagues need to stay with patients; the
number of participants is also currently limited by the size of the largest
available meeting room on the premises.)11

Every week, a new topic that is relevant at the moment and
conducive to self-reflection is put on the agenda. Recent meetings have
reflected on subjects as diverse as conflict resolution, dealing with failure,

156 Reinventing Organizations

company values, interpersonal communication, bureaucracy, IT inno-
vations, risk management, personal health, and mindfulness.

The meeting always kicks off with a short presentation to frame
the subject matter. But the heart of the meeting happens in small groups
engaged in self-reflection. Let’s take the example of the topic “dealing
with failure” to illustrate how this event plays out at Heiligenfeld. The
short plenary presentation introduces ways to deal gracefully with
failure―how new possibilities open up when we stop being judgmental
about our failures; how from a higher place of consciousness we can
view failure as life’s invitation to expand our skills and awareness and
grow into more of who we are.

After this short introduction, people shuffle their chairs around to
create groups of six to 10 people. In the groups, people are asked to
reflect on the topic―how they deal with failure in their lives, at work
and at home, individually and collectively. Every group elects a
facilitator who enforces a few ground rules to create a space where it’s
safe to explore, to be authentic and vulnerable. In the confines of the
small group, helped by their colleagues’ listening, people dare to dig
deep and gain new insights about themselves and others. At some point,
a microphone goes around the room and people who feel inclined to do
so share what came up for them in the discussion. There is no scripted
outcome to these meetings, no expected end product; everyone comes
out of the meeting with his or her own personal learning. Often,
collective insights emerge, as well as decisions and initiatives that are
then carried out when people go back to work.

It’s a time-consuming practice for sure―75 minutes every week
for more than half of the company. But people at Heiligenfeld say the
benefits far outweigh the costs. These large group meetings are like a
company-wide training program on steroids; the whole organization
grows its way through one topic after another, week after week (so
much so that the company is about to shift to a biweekly rhythm―there
simply aren’t that many hot topics popping up anymore).

The common experience also fosters community and a common
language beyond what can be achieved by any other practice I know of.
Colleagues are exposed repeatedly every week to a space made safe by
ground rules that invites them to truly be themselves. They learn to see
each other in the light of their deep humanity, in the beauty of their
strengths and vulnerability. The trust, empathy, and compassion that
build up in the meeting expand well beyond the confines of the meeting
room. These feelings start to permeate the whole organization. To
approving chuckles in the room, an employee of Heiligenfeld stood up
at the end of one of these Tuesday meetings and said, “You know, I wish
I could have more Heiligenfeld at home, too!”

Chapter 2.4 • Striving for wholeness (general practices) 157

Team supervision
Working in teams, which is what most people do in self-managing

organizations, invariably brings up tensions. We run into colleagues
with different styles, preferences, and belief systems. We can choose, as
most organizations do, to sweep the tensions under the rug. Or we can
have the courage to confront them so as to grow individually and
collectively. Heiligenfeld has developed a simple practice of team
supervision. The company works with four external coaches who each
have their domain of expertise (relationships, organizational devel-
opment, system thinking, leadership). There are a number of time slots
with the coaches every month that teams can sign up for. The
recommendation is for every team to hold at least one session a year; on
average teams hold two to four. In the discussion, with the help of the
outside supervisor, colleagues can explore what a tension reveals about
themselves and how they can grow to resolve it.

Peer coaching
Team supervision helps to deal with an issue that affects the

whole team. Peer coaching uses the power of the team to help one
specific team member work through an individual issue. At Buurtzorg,
all nurses are trained in “Intervisie,” a peer-coaching technique that
originated in the Netherlands. A nurse that wrestles with a certain
question can ask colleagues on her team to help her sort it out in a group
coaching session. How should she deal with a client that refuses to take life-
saving medication? How can she help an elderly patient accept help from his
children? How to say no to clients to protect herself from burnout? Often,
when a nurse struggles with one of these matters, it is because the ques-
tion brings up a broader personal issue she hasn’t worked through. In
these cases, a peer coaching session can help. Some Buurtzorg teams
allot an hour for peer coaching every month; other teams convene when
a team member requests it.

“Intervisie,” the process used at Buurtzorg, follows a strict format
and ground rules to prevent the group from administering the all-too-
common medicine of advice, admonitions, or reassurance. During most
of the process, team members can ask only open-ended questions; they
become fellow travelers into the mystery of the issue the person is
dealing with. A safe space is created that invites deep listening, authen-
ticity, and vulnerability―the necessary ingredients for inner truth to
emerge. The goal is for the nurse to see the problem in a new light and
discover her own solutions. It is at once a simple and beautiful process.
Being respectfully and compassionately “held” by a group is for many
people a new and unforgettable experience.12

158 Reinventing Organizations

Individual coaching
Offering individual coaching at certain stages of people’s careers

has become standard practice in many organizations today. Most often,
it is reserved for senior leaders, stars on their way up, or underper-
formers on their way out. Not surprisingly, Teal Organizations expand
coaching to all colleagues, whatever their role in the organization.
RHD’s coaching program goes one step further: it offers 10 free
counseling sessions for employees and/or their families every year. No
one else in the organization needs to be informed about the theme of the
coaching and the theme must not be a professional topic. The program is
built on the trust that if an employee is seeking support from an external
coach, the topic must be important enough to be worth the money the
company pays for it.

Silence
If we want to listen to the wisdom and truth of our souls, we need

to find moments to slow down and honor silence in the middle of the
noise and buzz of the work place. At Sounds True, a bell rings every day
at 8:30 a.m. Employees can join a 15-minute group meditation or simply
sit in silence at their desk for those minutes. At Heiligenfeld all new
employees―therapists and cleaning staff alike―are taught to meditate
as part of their onboarding. All mental-health patients are invited to
learn to meditate too. There are several fixed group meditation sessions
every week: some for employees only, others where patients are invited
to join in too.

Four times a year, Heiligenfeld organizes a “mindfulness day”―a
day that patients and staff spend in silence. Patients are invited to
remain entirely silent (they wear a tag with the word “silence” to remind

each other), while the staff speaks only
when needed, in whispers (staff wear a
tag with the word “mindfulness”). There
are no talking therapy sessions that day.
Instead, other forms of therapy take
place―walks in the woods, painting, or

creative activities, for instance. Information sessions help patients
prepare for the day, and there are “emergency talking places” for
patients who feel overwhelmed by the silence. “The majority of patients
love the experience and many ask us to organize this more often,” says
Dorothea Galuska. “Roughly a third of the patients are confronted with
some of their shadows and find the experience difficult. ‘If silence was
hard for you, you got lucky,’ I tell them. ‘People who’ve enjoyed it had a
good day. But you’ve now got great material for therapy.’” It’s also a
day that employees look forward to. Collaborating in silence brings a
special quality to relationships between colleagues. It requires a new
level of mindfulness, listening not to what colleagues say, but to their
presence, emotions, and intentions.

Silence in community is feared for
the exact reason that makes this