Posted: August 1st, 2023

“People have long asked me what a “5th order,” or “high stage” organiza- tion

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 ! !

! ! ! !

Frederic Laloux

! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! 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

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(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,”

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“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

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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

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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

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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.

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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.

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