Towards the end of my last post, I referenced a concept known as Teal organizations. I wanted to take a moment to explain this concept further. Teal is a greenish blue color (as opposed to turquoise, which is a bluish green color). The name apparently comes from a species of duck called the Eurasian teal (Anas crecca) that has a teal-colored stripe on its head. Teal was quite popular as a color in the 1990's, with several sports teams - including the Miami Marlins of MLB, the Jacksonville Jaguars of the NFL, the San Jose Sharks of the NHL, and the Charlotte Hornets of the NBA - adopting the color for their uniforms during this period. I have to be 100% honest though, I'm not sure I could tell the difference between the colors teal, turquoise, and aqua. Regardless, the management consultant Frederic Laloux uses the color teal to describe organizations that have adopted self-managed teams.
Laloux wrote a book called Reinventing Organizations (for a shortened version, see his article "The Future of Management is Teal" in Strategy + Business) in which he described different types of organizations using a color scheme developed by the social psychologist Ken Wilber. Wilber's integral theory of consciousness claims that humans have different levels of consciousness, each of which have a different associated color. Laloux argues that just as human consciousness evolved in stages, organizations evolved at the same time and to a similar degree as well (as shown in the Figure below). Each stage of development, denoted by a color, correlates to a particular time in human evolutionary history when these levels of consciousness, and the respective stage of organizational development, were prevalent.
Laloux claims that over the course of human history, there have been at least five distinct organizational paradigms. Teal organizations are the latest developing paradigm and are based on worker autonomy, self-management, and flattened hierarchical structures (if hierarchy exists at all). Red, Amber, Orange, and Green organizations, on the other hand, are based on hierarchy and meritocracy. It's an interesting theory, and given the topic I've been discussing with the last few posts, it's probably worth discussing in a little more detail.
Laloux starts over 10,000 years ago, when humans first shifted away from small bands or tribes to form proto-empires. These early "organizations", which Laloux labels Red organizations (he also uses the metaphor "wolf pack"), were based upon the division of labor and command authority with little in the way of hierarchical structure aside from a sole leader at the top who had power over the rest of the organization. These organizations remained successful as long as the leader was able to exercise power over the rest of its members, similar to the alpha wolf in a pack.
Starting around 4000 BC in Mesopotamia, Amber organizations (he also uses the metaphor "army") became the most prevalent type of organization, which are the classic pyramid-shaped hierarchical, process-driven, command-control organizations. Formal roles were clearly defined and allowed organizations to scale up in size. Workers at the bottom of the pyramid had be told what to do and how to do it by those at the top of the pyramid.
Starting with the Renaissance and lasting up until the early Industrial Revolution, innovation (through research and development), accountability, and meritocracy came into fruition. This era saw the the creation of modern HR practices, budgets, KPIs, yearly evaluations, and bonus systems for performance. Organizations adopted Frederick Taylor's principles of scientific management, and the concept of management by objectives first came into use. Laloux labels these Orange organizations (he also uses the metaphor "machine").
Green organizations (Laloux uses the metaphor "family" here) emphasized cooperation over competition, equality, and empowerment. While these organizations operated with the pyramidal structure of the Amber and Orange organizations, leaders share at least some of the control over what goes on in the organization. These organizations follow the stakeholder theory of the firm as opposed to the shareholder theory first advanced by the economist Milton Friedman. Empowerment and egalitarian management are the order of the day.
Beyond the Green organization, we finally have the Laloux's Teal organization (he uses the metaphor "living organism" here), where self-management replaces the hierarchical pyramid and organizations are seen as living organisms. In Teal organizations, the whole is the greater than the sum of the individual parts. Here, we see organizations as complex adaptive systems.
Laloux writes, "Every stage of organizational evolution is more mature and effective than the previous stage, because of the inherent attitude toward power. A Red leader asks, How can I use my power to dominate? An Amber leader asks, How can I use it to enforce the status quo? An Orange leader asks, How can we win? A Green leader asks, How can we empower more people? A Teal leader asks, How can everyone most powerfully pursue a purpose that transcends us all?"
One of the main criticisms of Laloux's work is that there is little scientific basis for some of the arguments he made in his book. I am less concerned with the historical or scientific accuracy of his claims and more interested in his conceptual model of the different types of organizations. I do think he makes some very interesting points here. Laloux talks about several organizations that have adopted the Teal organizational structure, including Patagonia, Morning Star, and Sun Hydraulics.
Whether the Teal organization will become more common is still under debate. According to a review published in 2004 in the journal Public Performance & Management Review, large numbers of U.S. businesses are experimenting with the use of self-managed teams. A survey of Fortune 1000 companies found that 27% of organizations used self-managed teams in 1987, though more recent estimates suggest that this percentage could be as high as 82%. So, as I have stated in the last few posts, I do think there is a place for these models in organizations today. If you choose to call organizations that utilize self-managed teams, "deference to expertise", or some of the characteristics that we find in complex adaptive systems a Teal organization or not is entirely up to you.
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