The key ideas

Reinventing Organizations

Frederic Laloux, 2014

Can a company of ten thousand people be run with almost no bosses? Frederic Laloux found organizations that live exactly like that: Dutch nurses, a French foundry, Californian tomato processors. You'll learn how organizations changed along with people, what companies without a pyramid rest on, and under what conditions such a model survives.

Who it is for

For anyone tired of work where the boss decides everything and people hide behind job titles. And for leaders who sense that the pyramid and five-year plans can no longer cope.

We often talk about work-life balance. The very notion shows how little life is left in work.

The nurse who walked out of the system

In the Netherlands, home care was long built on the laws of efficiency. A visit to a patient was broken down into separate services, each with its own quota of minutes, and the nurses' schedules were drawn up by planners. Patients saw a stream of new faces in their homes, and nurses felt their work had turned into an assembly line. Jos de Blok, a nurse who had also worked as a manager in that system, decided to try something different. In 2006 he and a few colleagues founded Buurtzorg, an organization where nurses decide for themselves how to care for people. Within seven years it had more than seven thousand employees.

Frederic Laloux spent many years advising large companies, including at McKinsey, and saw ever more clearly that people in them were unhappy, both at the top and at the bottom. He asked himself: could an organization be set up in a fundamentally different way? Laloux studied more than fifty organizations that had been running for at least five years, had at least a hundred people and did not live by the usual rules. His book came out in 2014.

Laloux's main idea is this: organizations have always changed along with the way people see the world. Right now, as he observes, a new model is being born, and he called it Teal.

You'll go through this whole story: from a chief with a club to nurses without bosses. And you'll find out what it takes for such an organization not only to be born but to survive.

A wolf pack and an army

Laloux starts far back, with a question that is rarely asked: where did organizations come from in the first place? He draws on developmental psychologists, who describe how a person's view of the world passes through stages. Laloux gives each stage a colour. This is his scheme, not a scientific classification, but it helps reveal a pattern.

The first form, the Red organization, is like a wolf pack. It is held together by the leader's strength: he tolerates no disobedience, and as long as he is strong, he is obeyed. Gangs and the mafia work like this. The invention of this stage is the division of labour and an authority that can give orders.

The next stage is Amber, and its image is the army. Here stable ranks, hierarchy and rules appear that will outlive any commander. People know their place, and the future can be planned years ahead. The church and the state lived by this model for centuries, and many government agencies still do.

Importantly, each new stage doesn't cancel the previous one but includes it. An army knows the power of command too, but adds order to it. Even today you can find bits of every colour in any company.

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About the author

Frederic Laloux is a Belgian organizational development consultant and a former McKinsey employee. His book Reinventing Organizations made the idea of the Teal organization known around the world.

All books by this author: Frederic Laloux

Terms from the book

  • Patagonia
  • McKinsey
  • Meritocracy
  • New York Times
  • Buurtzorg: A Dutch home care organization founded in 2006. It works through teams of nurses with no managers.
  • de Blok: Jos de Blok, a Dutch nurse and the founder of Buurtzorg.
  • Teal organization: A concept from Laloux's book, not a scientific term: an organization built on self-management, wholeness and evolutionary purpose.
  • Red organization: An image from Laloux's scheme: an organization held together by the personal power of its leader, like a wolf pack.
  • Amber: The Amber stage in Laloux's scheme: the organization as an army, with stable ranks, hierarchy and rules.
  • Orange: The Orange stage in Laloux's scheme: the organization as a machine, aimed at competition, profit and growth.
  • Green organization: The Green stage in Laloux's scheme: the organization as a family, with a focus on values, culture and employees' rights.
  • Self-management: In Laloux's model, one of the three breakthroughs of Teal organizations: decisions are made by the people closest to the work, with no hierarchy of bosses.
  • Wholeness: In Laloux's model, the second breakthrough: people bring their whole selves to work, with their feelings and doubts, not just a professional mask.
  • Evolutionary purpose: In Laloux's model, the third breakthrough: the organization as a living being with its own sense of direction, which people listen to instead of imposing a goal from above.
  • Coaches: A coach is a mentor who helps a person or a team find a solution through questions rather than instructions.
  • Ernst & Young: Ernst & Young (EY), one of the world's largest auditing and consulting firms.
  • Advice process: Anyone can make any decision, but first they must seek advice from those it will affect and from those who have expertise in the matter.
  • AES: An American energy company where Dennis Bakke used the advice process on a wide scale.
  • Bakke: Dennis Bakke, co-founder and former head of AES, author of the book Joy at Work.
  • Consensus: A decision that all participants agree with. Anyone who is against it can in effect stop it.
  • Morning Star: A Californian tomato processing company where employees have no bosses.
  • Low-margin: A business where little profit is left from each sale.
  • Rufer: Chris Rufer, founder and owner of Morning Star.
  • FAVI: A French plant that casts brass parts for cars and other uses.
  • Brass: An alloy of copper and zinc, yellow in colour, used to cast parts and fittings.
  • Zobrist: Jean-François Zobrist, former CEO of FAVI, who rebuilt the plant on trust in its workers.
  • Gulf War: The war of 1990–1991, in which a US-led coalition freed Kuwait after Iraq's invasion.
  • Time clocks: Devices on which workers record the time they arrive at and leave work.
  • Heiligenfeld: A German network of mental health clinics with more than five hundred employees.
  • Chouinard: Yvon Chouinard, an American climber and the founder of Patagonia.
  • Pitons: Metal spikes that climbers hammer into cracks in the rock to anchor their protection.
  • El Capitan: A granite rock face in Yosemite National Park in California, a famous climbing spot.
  • Chocks: Climbing gear: metal wedges that are slotted into a crack by hand, without a hammer, and later removed without harming the rock.
  • Decentralization: Moving decisions and authority from the centre out to people and teams on the ground.

All terms

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