One of the most popular management books of the past few years is Reinventing Organizations by Frederic Laloux. Even though I believe this is an interesting and valuable book, it also suffers from some fundamental flaws that limit the value of the book as a guide for practitioners. Below I will highlight the strong and the weak sides of Laloux’s ideas.
For those who have not read the book, the basic thesis of the book is that human consciousness is entering a new phase (called the ‘teal’ phase, based on Ken Wilber’s spiral dynamics) which coincides with a new way of organizing in which self management takes over from hierarchy and control. This enables employees to bring their ‘whole authentic self’ to their work. And rather than periodic strategies, teal organizations have an evolutionary purpose that continuously adapts to changing circumstances. The concepts of self management, wholeness and evolutionary purpose sum up teal organizations in a nutshell.
Great case studies
Laloux illustrates his ideas with a number of case studies. The cases are crystal clear, well-written and provide a wealth of inspiring examples of how things can be done differently. That is not a minor accomplishment. I have read many case studies and after finishing most of them, I still didn’t know how the organizations worked in reality. Not so in this book. Laloux is very successful in showing how teal organizations may work in practice and describes many interesting tools and techniques that show how things can be done differently. That in itself makes the book worth reading.
Moreover, the topic of self management merits a book. Whereas a few years ago it might have been possible to argue that self management would only be relevant to a small niche of organizations, recent developments show that self management can be useful for diverse organizations, including large ones. Laloux is right to claim that self management is a viable alternative to hierarchy and his book clearly states his case.
Despite these strong aspects of the book, Laloux’s analysis of self management is flawed and this limits the usefulness of Laloux’s book for practitioners. My three main concerns are, first, his weak diagnosis of the reasons why self management increases in popularity and especially the disregard for the role of information technology; second, his selective research leading to a confirmation bias and a very narrow view of new organizational forms; third, lack of critical thinking about the downside of self management.
The first and most important weakness relates to his diagnosis of why organizations move towards self organization. Laloux simply posits that a new era of human consciousness is emerging that coincides with teal organizing. This is a superficial analysis based on the unfounded ideas of spiral dynamics. A thorough analysis is missing of how economic, technological and institutional changes affect organizations. At best they are mentioned in passing. For example, the role that information technology plays in making self-organization work is not analysed. Self management has nothing to do with ‘human consciousness’ but is a result of the increased capacity of organizations to process information. Historically organizations have always responded to new information processing capacities: managerial hierarchy could emerge in the 19th century because of the telegraph, for example. Similarly, the increased need for innovation, the limits of focusing on shareholder value and the wide availability of knowledge all help to stimulate a rethink of the way we organize. Laloux does not analyse these factors. For a much more convincing analysis see The Vanishing American Corporation by Gerald Davis. Spiral dynamics is an inadequate framework to analyse these developments.
This point is not just academic. When causes and effects are not analysed properly, implementation may result in failure. There are more conditions for new ways of organizing to be successful than having a teal mindset (in an earlier blog I identified 14 preconditions for self management to work, https://bit.ly/2JwLnkU). Rather than using vague and abstract terms like ‘human consciousness’, a more factual analysis of today’s business environment explains why new organizational forms emerge. Such insights help to avoid overly simple implementation advice.
Laloux’s weak diagnosis is caused by his selective research. Laloux explicitly states he looked for cases that confirmed his ideas. Confirmation bias is a standard psychological and methodological error. A standard, academic approach would be to try to refute your own ideas: always search for the counterfactual. Important developments in new organizational forms that are hard to reconcile with the idea of teal are missing from Laloux’s book. Agile working, Spotify models and platform organizations are spreading fast and have seen at least as much success (and failure) as the spread of the organizational forms Laloux mentions. Laloux misses this major development because he locked into human consciousness as the key driver of self management, rather than technology. Again, this matters for practice: if you only see one form of organizing, you will not consider others that may be equally or even more viable depending on specific circumstances. Confronting your ideas with facts that counter them requires some courage, but it improves your understanding of what is really happening. Limiting yourself to only one option excludes alternatives for further development of mankind’s ability to organize. This is a time in which many innovative forms of organizing emerge. We can learn from all of them, not only from ‘teal’ organizations.
Similarly Laloux ignores that the boundaries of the firm have become permeable. Modern organizing does not stop at the firm boundaries. Collaboration between firms in ecosystems has become standard. It is increasingly difficult to understand new organizational forms without including the external organization. In an ecosystem world, the interaction between internal and external is a key to success. Just like agile and platforms, ecosystems provide a counterfactual to teal and raise questions about the usefulness of ‘human consciousness’ to explain them.
Lack of critical thinking
My third objection is the lack of critical thinking about his prescriptions. Obviously this follows from the first two points but it merits a separate look. Even though Laloux warns that teal is not an easy way forward, the downsides of self management receive little attention. Despite the wholeness of the individual, the evidence that people are actually happier at work when they are allowed to self manage is thin. Burn out may actually increase in some teal organizations. The circumstances under which teal works have not been sufficiently analysed. No organizational form is perfect and we need to better understand the drawbacks of teal organizations.
Laloux provides no information leaflet that clarifies when to use teal and when not to use teal. This creates the impression that in the end teal is the only way forward. That seems unlikely. Organization theory, with all its division and debate, has come up with one law that seems to hold: there is no one best way of organizing. This implies that with each prescription, must come a leaflet stating the side effects, when not to use it and what to avoid. There is no such critical thinking in Reinventing Organizations. This makes it all too easy for sceptics to reject the book as irrelevant. That is a pity, because there is a clear need for new thinking about organizations and Laloux’s cases provide important building blocks for that. A more thoughtful analysis would have increased the relevance of Laloux’s book.
In How to survive the Organizational Revolution, my co-authors and I remedy these omissions. We analyse why new organizational forms emerge, broaden our scope to include competing new organizational forms, analyse their pro’s and cons and study the dark side of new organizational forms (https://amzn.to/2OuHL67).