September 25, 2019

Reinventing Organisations Notes

Different levels of organisations, each can deal with different amounts of complexity:

  • Red (impulsive) - small teams where the leader is dictatorial and has his finger in every pie. Think the Mafia. Today we see small founder-led businesses where the CEO interferes with everything. Innovations: division of labour + top-down authority
  • Amber (conformist) - big, static organisations with repeatable processes. Think the Catholic church. Governments mostly work this way. Innovations: Replicable processes, stable org chart
  • Orange (achievement/meritocratic) - big organisations as machines. Think big Wall Street banks. Leaders and consultants design organisations, humans are resources, cogs in the machine. Innovations: innovation (lol) in the form of R&D, marketing departments. A dynamic worldview. Individual freedom and accountability. Meritocracy
    • Produced the modern world, but can often feel soulless
  • Green (pluralistic) - organisations are families. Think trendy non-profits, community activists. Southwest Airlines and Ben & Jerrys. Innovations: empowerment of lower-level employees, values driven culture, stakeholder value (beyond shareholders to include customers, employees, the environment etc.)
    • Can become paralysed by indecision and thus ineffective, or turn into a dictatorship (red)

Example: How does compensation work in the different organisations?

  • Red - boss decides how to share the spoils. No formal processes for negotiating pay, nor any formal incentive processes.
  • Amber - same work, same pay. If you are a clergyman you get a clergyman’s wage. No negotiations.
  • Orange - individual incentives and bonuses. Large pay gaps are acceptable if they reflect the value the employees bring.
  • Green - team bonuses

The Teal (evolutionary) worldview:

  • Taming an ego - not identifying with your own thoughts, fears and ambitions. Increases trust
  • Internal moral compass - does this decision seem right? Am I being true to myself? Am I being in service to the world?
  • yearning for wholeness - sounds kinda bullshitty tbh

Buurtzorg example:

  • Teal organisations substitute client’s proximal objectives for ultimate ones. A proximal objective might be: buy a new car. But the ultimate objective could be: provide efficient freedom and transport for my family, or look cool in front of my friends.
  • In the case of Buurtzorg, the proximal objectives that the « orange » companies optimised for were giving patients shots, providing treatment XYZ. But the ultimate objective, which Buurtzorg focused on, was to help patients lead lives as rich and autonomous as possible.

The Teal metaphor: organisations as living systems

  • self management (self organisation) - from hierarchy to a fluid system of distributed authority and collective intelligence (e.g. a market)
  • wholeness - bring all of who we are to work” (I think this is rubbish)
  • evolutionary purpose - instead of trying to predict or control the future, members of the organisation are invited to listen and understand where the organisation wants to go, what it wants to become”
  • according to the author, the 3 breakthroughs are mutually reinforcing (I’m not sure this is the case)


  • Large groups need coordinating mechanisms, and structure, but not necessarily hierarchy
  • Hierarchy cannot cope with complexity - senior leaders have to make all the decisions and due to limited time are given incomplete information. This leads to patchwork solutions and locally optimal but globally suboptimal strategies
  • Communism, hardcore socialism has shown that central planning does not work!! But the success of capitalism is the success of the free market, it is a distributed computing system that (for the most part) allocates resources effectively
  • There are processes and coordination mechanisms, but no top-down decision making
  • Decision making is autonomous, not consensus-based. Tends to be fewer meetings
  • In order to move towards a self-managing organisation which works like an organism, we need to upgrade most fundamental building blocks of management.

Organisational structure:

  • Small teams are cells”, aided by support staff. A small HQ which does administrative tasks Decision making:
  • Three legacy ways of making decisions:
    • Top-down (boss decides)
    • Consensus (meeting)
    • Vote (majority rule)
  • The advice process (autonomous decision making). Anyone can make a decision provided they a) seek advice from people experienced about the topic, b) and from those who are meaningfully affected
  • People take it seriously because they are on both ends of the situation all the time (they are accountable, their reputation is at stake)
  • Example: engineers who actually use machinery get to decide whether to purchase a new one (means they are excited rather than annoyed to use it) Teal organisations self-adapt, which means they correct errors faster than command-and-control orange organisations
  • How quickly will a problem be detected, and will someone step up to correct it
  • For a system to self-correct quickly 3 things are needed:
    • A shared understanding of what’s healthy
    • Information — knowing whether or not problems exist
    • A forum for conversation to trigger self-corrective action (and people need to be incentivised to raise these points)
  • The CEO as a defender of the evolutionary organisation — needs to make sure hierarchical procedures are not voluntarily imposed (e.g. the final check/balance on a democracy voting itself into dictatorship)
    • E.g. stealing a drill from an open supply room
    • Zobrist as an example of a good manager


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