Dr. Tim Evans, Professor of Business and Political Economy at Middlesex University London, and Dr. Sarah Morris, Coaching Partner, The Parallax Partnership, explore the latest evolution in organisational management.
Darwinism suggests that natural selection favours those who are able to adapt to changing environments. The same is true in the structure, management and practice of enterprises be they private or public.
Since the advent of the industrial revolution, when the blueprint for many modern organisational practices were first developed, prevailing social, cultural and operating conditions have changed out of all recognition.
Yet many organisations struggle to keep up and find it difficult to cope with an increasingly volatile, uncertain, complex and ambiguous (VUCA) environment. This is made all the more challenging because people’s expectations of work are also more complex than ever before.
It is in this context that Frederic Laloux’s recent book detailing the growing success of Teal Organisations is so important. In his seminal Reinventing Organisations, he identifies an outdated and poorly adapted operating system – namely, the traditional pyramidal hierarchy and the ‘predict and control’ processes which underpin it – as being the root cause of some of the most intractable issues business organisations face today. Classically, senior executives burnout, people become frustrated with overload, decisions are endlessly bottlenecked, and innovation and responsiveness die.
Gary Hamel and Michelle Zanini refer to these symptoms as being the consequence of what they term ‘bureaucracy’. In their recent study of 7,000 respondents, they suggest that only 1% of modern organisations have a healthy BMI – or ‘Bureaucracy Mass Index’.
In many ways, the evidence is as clear as it is shocking. Nearly 40% of respondents say that their ability to deliver value would be either unaffected or enhanced by a 30% reduction in the number of head office staff. More than 80% report new ideas would likely encounter indifference, scepticism, or outright resistance. And nearly 60% assert that organisational change programs are ‘mostly’, or ‘almost always’ focused on catching up.
Organisations with the courage and capacity to face these realities realise that solutions demand more than mere tinkering with organisational charts, reporting lines or the numbers of levels of bureaucracy. Real and lasting change demands root and branch action.
Laloux describes ‘Teal’ organisations by building on terminology derived from an extensive raft of developmental work undertaken by the likes of evolutionary and social psychologists such as Jean Gebser, Clare Graves, Don Beck, Chris Cowan and Ken Wilbur. Variously, these frameworks explore the development of human consciousness and their historic impact and implications.
As an ideal type construct, the Teal mind-set represents the leading edge of current evolutionary development, and like each stage which preceded it, is characterised by a number of unique breakthroughs. As such, Teal is centred on a move away from rigid hierarchies and toward an operating system based around networks of self-managed teams. It moves beyond the ‘predict and control’ mind-set of management’s past to a purpose-led ‘sense and respond’ approach. Finally, Teal stresses ‘wholeness’, a world in which organisations view people bringing their whole selves to work – all their interests, passions and desires – as an important business asset. As such, ‘employees’ are encouraged to step out from behind their business persona to reveal and capitalise on their core truths and realities.
These three breakthroughs are fully enabled by the ability for pioneering Teal organisations, such as Patagonia, Nucor, Morning Star, Buurtzorg and Spotify, to nurture cultures which are based on profound levels of trust. Trust that people at all levels want to, and are capable of, doing the right things at the right time, given the opportunity and necessary support. Clearly defined rules of play allow the dissemination of power away from individuals concentrated at the top, instead distributing power throughout the structure and way down to those on the front-line, who, after all, are very often the primary sensory organs of any business.
Freed from the necessity to wait for permission to act when they spot issues or opportunities, such employees can respond quickly and creatively to even small changes in the environment. Overall, such an approach produces an organisational dynamism that many increasingly envy, for it allows organisations to evolve on an ongoing basis and thereby avoid the need to ever play ‘catch-up’. Crucially, such enterprises generate their own organic capacity for continual and seamless renewal.
For those willing to embrace this evolutionary next step, the future is all about seeing the nurturing of individuals and their humanity as a business asset, and replacing fixed long-term strategies with a guiding purpose, a ‘North Star’, against which micro-evolutions in structure, direction and products occur, vastly increasing organisational responsiveness.
As the Teal revolution gathers pace, so its results become ever clearer. To date, Nucor has delivered more than a 350% return on investment for its shareholders. Buurtzorg has sickness and turnover levels at 60% and 33% lower than its more traditional competitors. And Patagonia has tripled its profits since 2008, with a compound annual growth rate of more than 14%.
Today, too many business organisations are creaking under the weight of an antiquated hierarchical and formulaic operating system that no longer keeps pace with the rapidly changing world.
That is why Teal innovators are destined to impact ever more organisations and sectors over the years ahead. For in meeting head on the challenges of the VUCA environment, they prove that there are real world alternatives that truly enable organisations to capitalise on ever-evolving opportunities. As this new paradigm develops, so its impact will be felt globally. In 2018, the future is clear: it is going to be Teal.
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