Frederic Laloux: Organizations Beyond Ego

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You’re listening to Insights at the Edge. Today my guest is Frederic Laloux. Frederic is originally from Belgium, and is a former associate partner with McKinsey and Company and holds an MBA from INSEAD and a degree in coaching from the Newfield Network. Frederic’s book, Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage in Human Consciousness has sold upwards of 400,000 copies self-published, and is considered by many to be the most influential business book of this decade. Frederic Laloux is a sensitive visionary. He has a way of seeing not just what’s breaking down in our cultural institutions, but what wants to be born and he’s applied his very sharp intelligence and good heart to organizational life, to business life, and what might be possible for the organizations of the future to reflect the deep spiritual growth and the growth of human consciousness that we’re now undergoing. Here’s my conversation with Frederic Laloux.

Your book, Frederic, Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage in Human Consciousness, supposes that there is something called “The Next Stage in Human Consciousness.” You’re working within a model that has consciousness evolving, can you share with our listeners what that model is?

Frederic Laloux: Yes, it’s actually based on a whole number of models. There are so many people who’ve looked at this question of: how does human consciousness develop? Within one human being in her lifetime or his lifetime, but also humanity and historically, we’ve had these leaps. And everybody who looked into it seems to come to the same conclusion: that humanity doesn’t just evolve slowly, linearly, but makes these leaps over time and grows into new worldviews, new forms of consciousness. And Ken Wilber has written about this and psychologists like Robert Kegan from Harvard has written about this, and [Jane] Loevinger and so there’s a great number of people. And Ken Wilber, in particular, has contrasted a lot of these models and shown that in many ways, they often say the same thing.

We had a general sense of worldview that existed with hunter-gatherer societies. And when we made the leap to agrarian societies, the outlook and consciousness changed, and it happened again with the scientific Industrial Revolution. And many people believe that we’re just starting to grow into the next stage. And that has profound implications in all sorts of domains, and I look in particular at the implications for organizations and management.

TS: This next stage, how would you characterize it?

FL: There’s so many ways to talk about it, but one way to talk about it is the discovery that we’re more than our egos. That there is some deeper part within that whispers, that helps us, that guides us into what we want to do with our lives. And that opens up a whole different domain for consciousness in action. And in particular, when you look at leadership, and even more broadly, if you think strategically, you can start to apply that same consciousness to organizations. What if organizations had their own inner motive? Had their own thing that they wanted to manifest in the world? Had their own consciousness? And we rob them just with our egos wanting to impose a certain direction. We’re actually able to listen to what the organization wants to be, wants to become in the world.

TS: Now, first of all, when you talk about the move beyond the human ego as a stage of human evolution, I imagine the Sounds True audience feeling very resonant with that. They get that. And listeners may or may not have asked this next question. “Well, what does that mean for businesses and for our organizational life? What does that mean when we start to discover we’re not our ego?” OK, but now you brought in this other thought that the organization could have its own life. Now just bear with me here for a moment, Frederic, because Sounds True works with a lot of soul-based teachers of different kinds. And some people would say that an organization has its own soul, its own being, outside even of the people who are necessarily working there. They’re partnering with a type of soul force. How do you see that?

FL: Yes, it’s interesting how, if you look at artists, so many of them say that the book they wrote or the song that they just wrote, wasn’t really theirs, it just came to them. It’s almost a universal phenomenon that artists experience. And often people who found organizations, talk about this in the same way. They often say, “This was just something that wanted to manifest through me.” And what is interesting is that there seems to be now, readiness for more and more people, including organizational leaders, to look at organization in that way of saying, organizations aren’t just a collection of people and assets that we have to steer with strategic plans. But could it be that the organization has its own soul, its own sense of direction, its own sense of what it wants to manifest in the world? And that we’re there to help it achieve that, to listen to where it wants to go and help it achieve that.

TS: Now the book, Reinventing Organizations—talking about artists, here, who receive an inspiration—this idea came to you, to look at human evolution and what’s needed in organizational life. Who knew at the time that this book would sell upwards of 400,000 copies as a self-published book and become really one of the most influential and important business books of the past decade? Tell us a little bit about that story, that process of how this idea came to you, to apply your talent and background to this question of organizations—I’m going to say it—beyond ego.

FL: Yes, actually it came in a bit of a moment of crisis. At some point in 2011, I felt a sudden sadness and lack of energy, which I really couldn’t place because everything was going so well in my life, in my personal life, in my professional life. And it took me two or three weeks to understand or have an interpretation of what was happening. And that was that I could no longer work as a consultant and coach and facilitator to these large corporations that I was working with. And I had loved that work, it felt meaningful. I had often very profound conversation behind closed doors with powerful executives and executive committees. And that felt like very meaningful work. But really, from one day to the next, there was something in me that said that that work was no longer possible.

And I had read Ken Wilber and other people and knew about these stages of consciousness and so I had some language around this, to say that I was no longer able to work with these modern—or “orange”, to use Wilber’s color coding of these stages—I was no longer able to work with these modern organizations. There was something there that was just too cold, too soulless. There was something about me simply walking into these, often grand, lobbies with marble and glass, of these banks and chemical companies. And there’s something in there that I could no longer participate with, people were running around and doing the next midterm planning and next year’s budget, and I just wanted to tell them, “Do you still believe any of that?”

There was obviously a part of me that had evolved beyond how these organizations were set up, there was a part of me that if I was being honest to myself, realized that whatever good work I was doing, working individually or with executive teams, I really wasn’t having much impact. For a while I was opening up the space for valuable deep conversations to happen. But as soon as I left that space, the structures of the organization themselves were so unhealthy, that people would go right back to the kind of behaviors that you see in pretty much all of these large organizations. And so pretty much from one day to the next, I told all my clients that I was no longer going to work with them. And that brought up questions. “Ok, but then what’s next? What’s my source of income? And what’s my identity and what am I going to do?”

And then I realized that that wasn’t actually the right question to ask, even though it was the obvious one. That the right question to ask was, “What would be the most meaningful thing I could do with my life right now?” And trust that something would come out of it and the universe would provide some form of income. And with that question, there was an obvious answer, which is, “OK, if I can no longer work with these organizations that look at the world from this modern, “orange” perspective, what would organizations look like that would be founded by people who have done a bit of inner or spiritual journey, and look at the world from a different perspective and how would they structure and run organizations?”

And that started me on this research where I started looking for these fabulous organizations are described in the book that have been founded by people who in the same way as I was, simply were no longer available to run organizations in traditional ways, and were looking for something else.

TS: Now Frederic, we’re going to have to get this color coding out of the way we’re going to have to cover this. For people who are hearing “modern,” “orange,” he was working for some corporate bank and he’s calling it “orange.” What do you mean, describe the color coding system and the type of next-stage organizations that you write about you call “teal organizations.” How do you get to this teal apex?

FL: Yes, but it’s certainly not the last stage, but it’s the one we’re growing into. Yes, I simply borrowed this color coding that Ken Wilber uses, basically goes through all of these historical stages saying, for example, that the agrarian stage, he calls it “amber.” And then this stage that we’ve inherited from the industrial and scientific revolution, the modern mechanistic stage, he calls that “orange.” And that’s the stage really, that’s the kind of management that we all have grown up with, that’s the kind of management that is being taught in business schools and in most business books. And then, post-modern stage is “green” in Wilber’s color coding. And then this sort of more holistic and integral stage that is just starting to show up is “teal.”

I specifically researched organizations that were founded, or at some point taken over by, people who look at the world through these lenses. And so from that perspective, most likely just won’t be comfortable in doing management as were told we should be doing it, which is, two stages earlier in this sort of mechanistic modern stage.

TS: Now, just a small clarification when you said, “Teal, certainly not the last stage.” So here we’re in this emerging stage called teal, what’s beyond that? Where are we going, Futurist Frederic?

FL: Well, it’s not me the futurist, there’s different people who research that. And our knowledge about stages beyond teal, frankly, from the different people who research that, are much less solid. Because the number of people who seem to have grown into that perspective, are much, much rarer and there aren’t that many. Psychologists or researchers who themselves are in that stage are able to formulate it well. But it seems like the stage beyond that is appearing that is sometimes called “turquoise,” is the stage that we discover when we’re not only discovering that we’re not our egos, but that we have this inner voice, this inner self, this inner soul, but actually there is, beyond that, a big self where everything else is interconnected.

And where people start to yearn to transcend that small self for something larger, even more interconnected. And people become much less interested in their own personal development, and much more interested in how consciousness of the whole field rises. And quite frankly, I’m out of my depth here. I’m just parroting what some researchers that have said, I’m not sure I understand this perspective in any detail.

TS: OK, now I want to talk directly to that person who was listening to you describe your experience working within the banking system and with your corporate clients and says, “You know, I kind of feel that way. I kind of feel right now as I’m listening to this, that I’m putting my time and energy into a job that doesn’t quite fit. But Frederic, he went off and decided to write a book and that seems, I mean, good for him. I’m glad he was able to do what was meaningful for him. When I ask what would be meaningful. I get some ideas, but they’re not necessarily tied to paychecks, and I can’t just go make a move right now that would be, I have a family to support or that’s too risky.” Can you talk to that person?

FL: Oh, I have so much sympathy for that. The other day I was talking to a woman I have a lot of respect for called Miki Kashtan and she says, “To put it starkly, often it feels like we have a choice between spiritual suicide and financial suicide.” We just live at this moment of transformation, where if we’re willing to open our eyes, we realize how incredibly unhealthy a lot of our current systems are, unhealthy to our human spirits. And on the other hand, the new economy is barely born. And so, how do we make a living? I’m incredibly sympathetic to that question. One thing I can say is that, in the last few years there has been an explosion of organizations who are in the process of making that leap.

There’s an explosion of the number of organizations whose leaders feel like, “I no longer want to do this old way,” and are experimenting. And so, if that’s something that feels congruent with how you look at the world, go out there and find out about organizations that are making that leap, and see if you can work with them.

TS: How would someone who’s on the job hunt know, “Yes that organization, they’re not just talking the talk, but they’re walking the walk.” I mean, I’ve been hearing more and more from people, people I know in my life who say, “God, I’m so disappointed, Tami. I went, I worked for this organization, I was so hopeful. But then as it turned out, my manager, he blah, blah, blah.” And then they go ahead and they tell me some horror story about how it actually unfolded for them.

FL: Yes, one thing I’ve noticed is the organizations who are really earnestly pursuing this are the ones that seem to be talking least about this. Because they, in all humility, realize that they’re on a journey. There’s this whole field, which really feels pretty yucky, that’s called “employer branding,” where you apply the whole, all of the marketing toolkit to pretend that you’re this wonderful employer, and to try and attract the best talents. And when I see this, I would be very suspicious.

And when you go and meet organizations who are earnestly pursuing this direction, you just notice it in the conversations. There’s just something some form of authenticity that exists in the relationship that makes you feel like this is a different place. And I’m sure that candidates who speak with you, Tami, at Sounds True must feel that, I’m sure that there are conversations that people have when they talk with you that they don’t feel they have elsewhere.

TS: I think they think it’s startlingly up front, yes. OK. You decide to do these interviews and to research what you called “teal organizations” or organizations that are on the journey towards embodying teal, more and more and more. What did you find as your most important takeaways, Frederic?

FL: Well, the most striking thing was how often these organizations were working with very similar principles, and sometimes outright similar practices, even though they didn’t know each other. There was a really strange phenomenon where all these organizations often thought that they were pretty much the only crazy ones that really dared to push the boundaries that much, that really dared to leave behind an old paradigm and experiment the way to a new one. And yet when you looked at them and compared them, the similarities were striking. As if there’s something in the air that different people are downloading at the same time.

That was really striking, and in the book, I synthesize that by talking about three breakthroughs. It’s three things that simply didn’t exist in previous organizations. And that seemed to pop up pretty much everywhere you look at these new kind of organizations. And I talk about it with the terms of self-management, striving for wholeness, and an evolutionary purpose. Maybe we can start unpacking some of these breakthroughs.

TS: Yes, I want to talk about all three, believe it or not, let’s start with evolutionary purpose, and then we’ll go to wholeness. And we’ll spend most of our time on self-management because I think that’s the one that for many companies seems the hardest to crack. But first with evolutionary purpose, you’re describing something more than just a reason for being like, “OK, our business exists to blah, blah.” When you say evolutionary purpose, you mean more. What do you mean exactly?

FL: I simply mean that the organization is imbued with its own sense of purpose. You were talking about it as the organization having its own soul.

TS: Yes.

FL: And so, if we believe that, that really changes a lot of the very concrete practical things that we do in our organization. Instead of every few years, making a big strategic plan, looking down the road for the next three to five years, it becomes a process where on a daily basis, we’re trying to listen in to where this organization wants to go. We’re no longer imposing our vision on to the organization. We’re actually in a much more humble way trying to see what would be the right decision. Trying to seek guidance from the organization itself. It has profound implications in terms of targets. Does it still make sense to impose targets on to the organization, when we see that the organization is a living organism, and just like any living organism sometimes might grow more quickly and sometimes grow more slowly? And what point is there in putting your targets and objective on to an organization? It has very practical implications.

TS: Now, I’m very resonant with this idea of, the way I put it personally is kind of like having my nose right on the ground and smelling, kind of like a wild animal, what’s needed right now. Not making these long-term plans. But a lot of people like—I’ve noticed that I’ve worked with here at Sounds True—they like to have plans. They’re like, “We want to know what’s next,” and then “What’s beyond that?” and “This will help us.” And then I imagine those people who are out there going out and raising money for their business. They certainly want to be able to tell their investors, “Here’s our five-year plan where you’re going to get your money out with this.” It seems like it goes against some parts of human nature who want to see the plan.

FL: It’s true, and I think part of it is simply the conditioning, right, we’ve been so conditioned that we want this form of certainty that plans give us. And don’t misunderstand me, there’s nothing wrong there, sometimes you need to plan. If you’re building a bridge you better planning your way ahead, and not just show up every day at work. And so there’s absolutely a place for planning. But no longer this kind of planning where we cast things in stone. We make now a strategic plan and this is our plan for the next three to five years but hey, if tomorrow we learn something new, maybe we still need to start adapting the plan already.

What we’re really talking about is a shift from this notion of predict and control, which is so central to modernity, to the scientific perspective. We want to predict and control nature, we want to predict and control the world, to a perspective of sense and respond. Yes, we can make plans, but we’re constantly sensing or responding, whether our plans still make sense and whether they need updating. I think another part of your response is simply sort of the time frame, there’s this organization in France that has this beautiful image, they say, most organizations look five years ahead and plan for the next year. And they say, we think like farmers, we look 20 years ahead and plan for the next day. There’s still very much a notion of looking ahead of having a sense where that journey goes, and but then you’re just constantly sensing and responding and picking up new signals.

TS: Now, the other point you made, and I just want to make sure that we pull this out, was you talked about the business as a living system. Because I think what’s so interesting under these three ideas: wholeness, self-management, and evolutionary purpose, is the mindset or the heartset that is underpinning the themes that you found. So under evolutionary purpose, this idea that there’s a living system that I’m a part of, versus something I’m trying to make happen that’s outside of me that I’m trying to direct. That’s a very different way of being part of an organization.

FL: Yes, that was, another fascinating finding for me is the change of metaphor. The dominant metaphor of modernity is that the world is a machine, right? In medicine, the human body is a machine, in agriculture the earth is a machine with inputs and outputs, and the same is true for management. Our MBA thinking looks at an organization as a well-oiled machine, where we have human resources as inputs, and then you try to maximize your outputs. And it’s full of engineering language. And it’s just fascinating to see how consistently organizations who are led by some of these visionary founders or leaders talk about their organization as a living system, as a living entity, as an ecosystem, and use images and language and metaphors from nature..

And so that has indeed profound implications, like, a machine needs to be programmed. Otherwise it doesn’t move. You need a strategic plan, and then you need to force execution because by itself, it won’t move. Whereas a living system has its own life force, and so we don’t actually need to push it that much. We actually just need to invite it in a certain direction that is life-giving. Then the whole system will move in that direction.

TS: What ecological metaphors did you find teal organizational leaders using the most? Which types of nature metaphors?

FL: Oh, we have, you have everything. From people using the human body, with all the different functions—what is the heart of the organization? What’s the mind of the organization, and what’s the gut of the organization? Those ones too using, talking about ecosystems and so, you can really use any one of those.

TS: Ok, let’s move on to this second feature that you found of teal organizations: wholeness. What do you mean by that?

FL: Yes, there’s something in most workplaces, that is unspoken, but there’s often this subtle level of fear, that makes that it we don’t dare to show up, in sort of the full glory of who we are. That we feel as it’s safer to wear a professional mask, or sometimes to wear a whole a lot of professional masks. In most organizations, strangely enough, we feel that it’s OK to show up with your ego. Fight for your own career, or fight for your own team or your budget, and that’s pretty acceptable in meetings.

But talk about, really, the longings of your heart, talk about what you really hope and wish for, talk about some of the things that really hurt your integrity, and that quickly becomes risky. That, in many organizations, might even be sort of career-threatening. We often quickly learn not to talk about the deepest things that move our heart. And that’s why, I think, why we have so many ego games at organizations, because we’re simply left with the ego.

In most organizations, people show up, men and women, in a more masculine form. And shut down the more feminine energies that they have. Because in most organizations, we have a culture that values people showing up resolute, and knowing exactly what they want, and showing no sense of weakness. And people who show up with doubt and vulnerabilities or saying, “Hey, maybe we should slow down and listen more,” that’s rarely something that makes you very successful in your career. We all show up more resolute than we need to be, we all show up much more rational. Facts and figures, that’s always welcome in any discussion and meeting, but our emotional sides, our spiritual sides in most organizations have no place at all.

And it’s a pretty small, and sometimes sad, version of ourselves that is allowed to show up, sort of a very masculine, ego-driven, rational self. And I’ve come to see that. I think that if so many organizations feel lifeless, if so many people don’t really like going to work, it is maybe because we bring very little life to the organization. Because at some deep level—sometimes the unconscious level—we feel cheated, when our relationships are so transactional, when we cannot show up with the whole glory of who we are.

TS: Now Frederic, I want to ask you a question about this because here at Sounds True, I’ve really turned myself into a pretzel, stood upside down, done everything I could to create an environment where people would feel safe to come forward and bring their full selves to work. But the people who work here are part of our culture as a whole. And a lot of people report that they’re just afraid to do so. And they’re not going to do so because they’re just afraid, even though no one in Sounds True has been punished. I’m just reflecting that we live as part of a bigger culture where many people come from families that didn’t handle confrontation well, didn’t reward speaking up. Even when organizations have this value system, it’s not that easy to get everybody to come and bring their whole selves to work.

FL: Yes, that’s true. And that’s why, of course, it has to remain an invitation. Like if it becomes something that you force on to people, that becomes another fearful mechanism. “Oh no, I have no option here, I have to open up.” But that being said, I just see organizations where people suddenly wake up to express themselves in different ways. There was a sentence that I’ve heard in three different organizations and that was just so fascinating where people said a version of, “Sometimes I wish my life at home was more like my life at work.”

And what they meant by that is that in some organizations, you create a space that feels safe enough to start to show up whole. Of course, the journeys never done, we’re never fully whole., there’s always new facets that we discover about ourselves. But a space where I feel safe enough to say some of the things that I might not necessarily feel safe enough to say, even at home with my own spouse, with my own children. And that just touched me deeply, the possibility of that can exist in organizations.

TS: And what have you discovered in your research are the keys to an organization inviting that kind of wholeness, creating enough safety where people really feel like, “Yes, I can do this at work.”

FL: Yes, it’s a culture that builds over time of course, it doesn’t change from one day to the other. But a lot of it has to do with creating a safe space, and we know how to do this quite well. We have actually known this for hundreds of thousands of years in a lot of spiritual circles and a lot of personal development workshops. We know how to create spaces where people very quickly feel safe enough to show up in a more authentic way. And the trick is to do that in an organization day in, day out where you know that you’ll meet the same people over and over again, not just random participants of a workshop that you might never see again. We actually know quite well what are the conditions to create, what are kind of facilitation that is needed to create a space, but then what is also needed is to start bringing that into all of the daily practices saying and to all of the HR practices, because if you want to create that kind of safety, you can’t do performance evaluation in the old way.

Hey, you can’t do recruiting in the old way. Recruiting is often the place where the line starts, right? I mean, when I write my bio, my curriculum and send it to an organization, that just part of it that’s part of my life that I want to hide and some other parts that I might exaggerate. And in many ways the organization does the same. Think about it, it’s often at the moment of recruitment that the lying starts, and both sides kind of know that the other side is lying a bit. And is trying to poke holes into what they’re saying, to say, “Is this really for real?” And so it’s a fascinating question about how can we start doing recruitment in a different way where we don’t start off from this place of lying, but really, from the beginning have very profound and meaningful conversations.

TS: Now, you said that we’ve known for hundreds and hundreds of years how to create a space where people feel comfortable speaking up, and I know you’re someone Frederic, just from my conversations with you, you elicit that from people, you elicit a type of genuineness. What are you doing inside yourself? I’d like you to articulate it because even though you said we’ve known it for hundreds of years, I don’t know if everybody knows how to do it.

FL: Yes, and I don’t know if I know how to do it consistently, but from what we know, it has to do both with our presence and the number of ground rules, right, after we’re offered the space. And you really need both, there’s something about the presence of the facilitator, or in some of these organizations of the organizational leader, that really comes into the space with a certain fearlessness and a certain egolessness and a certain capacity for compassion and love and for welcoming everything that is to be welcomed.

There’s something about the presence that you offer that allows other people to feel like it’s safe enough to drop your masks. And then it’s a number of ground rules that you set for these spaces. Ground rules like “Hey, no fixing, no advising, no judging of other people.” And feeling the safety that if that is starting to happen, somebody will intervene. There’s the facilitator or the organization, it will intervene and say, “Remember, this is not how we’re working.” So that people feel safe enough to go out there and show different parts of themselves.

TS: Now, I saved this third feature that you found in teal organizations for last, because I think it’s the most challenging, it’s the most revolutionary. It’s one thing to say, “The business is a living organism, let’s listen to what it needs,” and it’s another thing to say, “We want people to have honest and authentic conversations and be themselves.” It’s another thing to say, “We’re smashing the traditional C-Suite and the hierarchy that most organizations learn about in business school, and we’re creating self-managed organizations.” Describe this feature and help people really understand it Frederic, because I think as you point out in the book Reinventing Organizations, there’s a lot of misconceptions about this.

FL: Yes, there’s a lot of misconceptions, there’s a lot of unlearning and relearning to be done. I don’t know if I can summarize it well, but I’ll do my best. The simple fact of reality is that we just see more and more and more organizations out there, including some really large organizations of several thousand people in 10,000, 14,000 people, that operate entirely with distributed authority. Entirely on the self-managing basis, so no more layers of hierarchy, no more pyramid, no more boss-subordinate relationship. And that sounds absolutely crazy. Because we’ve all grown up with the idea that maybe you can have a team of four or five people who work as equals, but beyond that, at some point, come on, let’s be honest, we need a boss, we need structure, we need somebody to call the shots.

And the truth is that, yes we need structure, but we don’t, absolutely we don’t need hierarchy in a traditional sense of power hierarchy of, “I am your boss, I have power over you.” And we now know that we can design and create these extraordinarily vibrant, extraordinarily productive systems that operate with distributed authority. And while saying that, I imagine that for most people who might listen to our conversation that brings up all sorts of ideas and all sorts of misconceptions. The most typical misconception is “Oh, OK, but if you don’t have hierarchy that brings us back to sort of 1960s, 1970s, hippy dippy, ‘We’re all equal, we’re all sitting in a big circle and we’re all going to talk until we die, until we finally get consensus.’” And that’s not what these organizations are like at all.

So these organizations aren’t a big structureless blob, but are actually very structured organizations with very clear rules of the game of who can make what decision, based on what criteria. And what are the structures? And who holds what roles? There’s just as much structure, if not more than in traditional organizations. It’s just a structure where people no longer have power over other people.

TS: I think it would be good to give our listeners an example or two of businesses that are operating this way.

FL: Yes. One organization that I love in particular is a Dutch organization of neighborhood nurses. These are nurses that don’t work in hospitals, but go and see patients in their own homes, often older people, or people who’ve had chronic diseases or had accidents. And it’s now an organization of 14,000 people, and they grew incredibly quickly. They were founded 12 years ago with four people, now they are 14,000. And they have something like two thirds or three quarters now, I imagine, of market share in the Netherlands and they’re voted every year best employer of the Netherlands. And it’s just an amazing story. And this 14,000 people all work in self-managing teams. And so these nurses work in teams of 10 to 12. There is no team leader, as you would expect. So there’s no head nurse in the team, but simply the various roles that the manager would have held if there was a team leader, is now distributed among the other nurses.

Let’s talk about the typical roles of a manager. One role might be to recruit people, one role might be to make sure that everybody’s happy, another role might be to make sure that we hit the numbers. Another role might be to deal with conflict, to set a vision, to make the planning and all these roles are distributed among these 10 to 12 nurses. So maybe Tami, you’re a natural planner, you do the weekend planning and the holiday planning, and maybe people naturally come to me with conflict. Anyway, let me be the person who deals with conflict, and so forth. And so people just distribute these roles, rotate them regularly, “Oh, I have too much work, can somebody do the planning instead of me for the next two months, because I’m really swamped.” And they operate in that way.

And one of the things that these teams all do when they get formed is that they get some basic training about, “OK, how do we make decisions in this team of 10 to 12? That isn’t painful consensus in the absence of the manager? How do we deal with conflict if there isn’t a manager to call the shots?” And so they learn some of these basic processes of self-management, and then they just go out there and do their work. And it’s incredible how productive they are when they’re no longer distracted by the politics and the power games that you typically have with managerial positions.

TS: Frederic, even in setting up a structure like this and deciding what the structure should be, was that done in a self-managed way? Or did some visionary founder decide, “I’d like to have a self-managed situation where I’m the public face of this, but I’m not as involved in the work in the way a traditional CEO would be.”

FL: Yes, Buurtzorg is really sort of the brainchild of Jos de Blok who is himself a nurse, and was just too sick and tired of how these traditional organizations we’re running. And so he created Buurtzorg. And he sort of had this self-managing vision. And then they just stumbled upon this and just found these rules when they were growing. At some point there were a team of 10 to 12, then they realized, “Hey, let’s just make us a new ground rule, like every team of 10 to 12 needs to split up if they get larger than this.” And so they just, with lot of common sense, stumbled their way into this way of working, but there’s no doubt that there’s that Jos de Blok played a very strong role.

And so that is not at all contradictory. A lot of these organizations have very strong, powerful visionaries, people who have this very strong vision of how they want to run things differently. But Jos de Blok, as now sort of the founder and head of this organization of 14,000 people, has to play by the exact same rules at the other people, he cannot impose a decision on to the organization or, if he were to try, he would very quickly get a lot of pushback from nurses who would say, “No, no, this is not how we do things here.”

He has a lot of power through his natural authority, but not a power through his positional authority. And that is one of the other frequent misunderstandings around self-management, is that what we’re trying to do is dismantle the power hierarchy. “I have power over you, Tami, because I’m your boss. So I can decide whether your idea will be implemented, I can decide whether you get a cool project, I can decide whether you get a raise, or whether you get fired.” We take away that power that I hold over you, which often is so poisonous but what then happens is the contrary of flatland, the contrary of equality, in the sense of we want natural hierarchies to spring up.

You’re great at planning, so by any means, you do planning, and this other nurse is great at, she’s just a living encyclopedia of all of these arcane conditions. So she gets a lot of recognition. Everybody goes to see her about this, and I’m respected for this other skill, and people come to see me. And so Jos de Blok is highly respected and when he puts an idea out there and suggests the decision, people will listen because they have a lot of respect for her. You have a lot of natural authority rather than positional authority in these organizations.

TS: And just to describe the difference between what you’re calling natural hierarchy from a power based hierarchy, I mean, I could imagine someone saying, “Well, look, the reason that person became the chief financial officer was because they had special skills in finance and strategy. That’s why they got it.” I mean, what’s really the difference when it comes down to it, between a natural hierarchy and a traditional power-based hierarchy?

FL: It’s something that natural hierarchies use, you cannot impose something onto the organization. There’s a decision mechanism that is often called “the advice process,” that you have to play by whatever your level of authority, because whatever your level of authority, you can make mistakes. You can be too far removed from a situation, and it’s happened to Jos de Blok. There’s a famous example at Buurtzorg, where he suggested to change the way we calculate overtime. And he suggested that to the nurses, and the nurses said, “Hey, no, Jos. Obviously you identified a problem here, but your solution is way too simplistic you’re just too far from the field now.”

And it’s great that this organization, this living entity, could react in that way. In a traditional organization, this would have been imposed on to 14,000 nurses, who would have grudgingly had to accept that. The whole system would have worked, it would have been so dispiriting, we would have caused a lot of mayhem and maybe six months later, the whole thing would have been revisited. But here, the system naturally reacted to Jos de Blok’s proposal.

TS: And can you describe how the advice process works? The principles behind it, not necessarily how it works in any one organization.

FL: Yes, I alluded to it earlier that often we think that it’s a fact there’s only two ways to make a decision. Either it’s sort of hierarchical, top-down, either, “I’m in a position of power and I make that decision,” or it’s consensus, we all do a circle and we talk endlessly until we get a decision. And both of these don’t really work that well. And it’s been one of those fascinating discoveries is that all of the self-managing organizations that I researched, all operate with one version of another, of a third decision-making mechanism. That is sometimes called the advice process. And the principle is very simple. Any person in the organization can make any decision, small or large, but before making that decision has to ask people for advice, and has to ask people who have expertise.

It would be stupid not to ask people who know something about a topic you’re going to make a decision about. And has to ask people who will be meaningfully impacted by that decision. I feel it’s, “I have a sense that something could be better, I have to talk to people of expertise about this and people who will be meaningfully affected by this. And after I’ve spoken to these people, I listened to all the input I receive, and I can make a decision. I don’t need anybody’s approval, I don’t need consensus. But I need to listen to the right voices in the room.” And that is just an incredibly powerful mechanism. And so Jos de Blok has to operate in that way, too. And it’s really quite fascinating how that plays out.

If you imagine that it’s a small decision, it’s a really small decision, maybe I don’t I need to ask anybody, I just make the decision. Maybe I just need there’s just one person that’s impacted. And I just talked to that one person. Maybe it’s just our team, and I bring that into our next team meeting.

But sometimes it’s the whole organization. It happens, at Buurtzorg, somebody feels that something needs to change that will affect all 14,000 people working there. Well, then you need to ask these 14,000 people for advice. And that sounds, at first, like, usually impractical, like, “How would you ever do that?” But Jos de Blok has found a very simple way. Like when he does it, and other people at Buurtzorg do it, too. He writes a blog post on their internal social network, they have sort of an internal Facebook, where he says, “Hey, I’ve been thinking about this, and I really feel that we need to make this decision. And here’s my proposal.” And he sends it out. As such, with typos and all, it doesn’t go through an internal communication department. And typically within 24 hours, two thirds of all nurses will have read his proposal, and will comment below, and none of that is filtered.

That’s the sort of egolessness and fearlessness that you need as a leader. He’s just putting this out there, and then comments rolling. And so Jos de Blok posts his blog post with this proposal, and typically within 24 hours, roughly two thirds of the nurses will have read his blog post and then the comments just start rolling. People can just comment below the blog post. And that requires a level of egolessness and fearlessness, from a leader like Jos de Blok, because none of that is filtered. It’s all public to see, including people who disagree with him. But then, typically within 24 hours, 48 hours, he’ll read all of the comments and then say, “Yes, sounds like I was onto something, people mostly agree with my proposal. It’s confirmed as a decision.” Or maybe he’ll say, “Hm, it’s interesting, I learned a lot through your comments. And so I’ve refined my proposal, and so this is now sort of a refined decision.”

And in certain cases, as was the case, when he proposed a new way to calculate over time, he will simply say, “Oh, oops, my proposal was premature. There’s obviously way more that needs to be considered and, I will take more time,” or, “Who wants to help me work on this?” And so that’s sort of the decision-making cycle, of 24 hours, 48-hour decision-making cycle. That applies to the whole organization. It’s incredibly fast and efficient.

TS: Frederic, there’s so much to talk about when it comes to an organization either being self managed from the outset, or transitioning from a more traditional corporate structure. But I want to begin by just understanding, how many organizations are you in touch with that you would say, are very actively on the journey towards self-management? I mean, we’re talking about 100 companies, or 1000 companies, or 10,000?

FL: I would estimate that there must be 1000 or a few thousands who are on the way, who are earnestly on the way. Simply because I just see things popping up by chance on Facebook, on my emails. And so I every time I hear about one I put them in an Excel sheet, and I probably have about 200 organizations that I know of are underway, there must be so many more that I never hear about. And it’s interesting, obviously, for smaller organizations, it’s easier, like, if you’re an organization of 10 or 20 or 30 people, it’s much faster than if you’re a larger organization. But it’s quite fascinating to see that we start to see really large organizations go in that direction too.

The biggest one I know of is Michelin, the tire maker. They have plants all over the world making tires, and it’s an organization of 110,000 people. And the executive committee just decided that, they would invite their 70,000 people in the factories, the 70,000 blue-collar workers to operate in self-managing teams, and would also start it to bring to the 40,000 white-collar workers. Let’s see how that experiment goes. I mean, their pilots were very successful. They’ve done this with 38 teams in different plants all around the world, including in China and very different cultures. And it’s been successful, but nobody’s attempted to bring it yet to the scale of 70,000 people. That’s just going to be fascinating to see how that plays out. But there’s a very clear sense now that I have. That the train has left the station, there’s no coming back, for this wave of experimentation that started and is pretty unprecedented.

TS: I know you recently released a video teaching series on self-management and it’s at your website, Reinventingorganizations.com. You’re doing this with the “gift economy” model, yet another kind of experimental way of running your own personal business and in this case, so let’s just take a little aside here. Why did you decide to do this with a gift economy model where people can pay what they think it’s worth?

FL: Because there’s something that’s felt wrong, putting it behind a paywall, like I want organizations to start doing this, and restricting access just felt wrong. On the other hand, I feel that this work deserves income. I’m putting a lot of time and hours into this and so the only way I found to reconcile this, was to work in the gift economy. And as you say, I think it’s just a fascinating experiment. I think the book itself, the ebook version of the book in English has always been available in a “pay what feels right” fashion. And I almost don’t do any consulting or coaching work, but every once in a while, there’s leaders of organizations who will travel all the way to this small ecovillage in upstate New York where I live. And I operate always in that way. And I said, “OK, we can spend the day together and at the end, you decide what you pay me.” And I just feel like it makes things so much easier, rather than me having to put a price tag on it.

And I think it’s just part of growing into this new paradigm of being very touching, influenced by work from Charles Eisenstein, among others, who has written about sacred economics and the gift economy. And so this is just my own attempt of playing a little part in this.

TS: And part of the reason also that I wanted to tell our listeners that you have this video teaching series, is there are so many questions that might be coming up in people’s minds about self-management. And if people are listening, and you really want to have these questions answered in more detail, we’re obviously not going to be able to get to all of them here. But I am going to ask just a couple more specifics. Let’s say someone’s an underperformer, but they’re in a self-managed organization and they don’t have a boss. How do they get the feedback they need and possibly shown the way out of the organization, otherwise known as being fired, if they don’t have a boss or a manager?

FL: Yes, that’s very practical question which happens all the time in these organizations. They have to deal with that, like any other organization. First, there’s two interesting findings is, when we’re no longer operating with these boxes in the org chart, when we no longer have these fixed job titles and job descriptions, but can act in much more flexible ways, find the roles that suit our strength. And you actually find that many people that might otherwise be deemed insufficient in that particular job, find places where they’re actually really can contribute. And so you see this happening in self-managing organizations all the time. “I started working here, but then actually I realized, like, man, I’m not that good at this, and I’m actually not that interested in this, but my interest is in here.”

And you start seeing the most of amazing things with people splitting their time, “I’m working at my little manufacturing team, but really I’m doing the continuous improvement more than standing on a machine, because that’s really not my thing. I’m doing a little bit of recruitment, and I’m even writing some blog posts for the marketing team.” You actually see these things happening, so many more people find their strength than you do in traditional organizations. That’s one thing. The other thing is that a lot of people simply leave when they notice that it isn’t working. What you have in traditional organizations is, if I’m underperforming and I kind of sense that I’m underperforming. All my teammates know, I mean, they see it, but as long as my boss doesn’t realize, I’m safe. I play all these games where I’m trying to look good towards my boss, and everybody else is frustrated with me, but as long as he or she doesn’t notice it, I’m safe.

Now, when there’s no boss, and you’re just working with all of your peers. Like it’s pretty obvious, like people see it, people give you feedback. People, a lot of people leave and somebody says, “Yes, sounds like this is not my place.” The number of cases where people are actually fired, as you were saying, is pretty low. I mean, this is really just the cases where, for some reason, people have gotten into some negative spiral where they’re not willing to accept the feedback from their team members. And they just staunchly insist that they’re doing a good job, even though everybody else around them sees that they’re not.

And in those cases, you need conflict resolution practices, you need places where you can actually discuss that and you come to the conclusion of, you often have outsiders who come in and just, “Hey, you don’t seem to get the message that everybody in the team is willing, has been willing to help you, has been willing to try to bring you up to speed. And it’s not working and you no longer have the trust of the team. It sounds like it’s time for you to leave.”

TS: That’s interesting so the use of these outside coaches or consultants who can come in and be sort of “referees” in a situation or advisors in a situation.

FL: And it’s often the people particularly from other teams in the organization like Buurtzorg for instance, they have now more than 1000 teams of these 10 to 12 nurses. And they have, I don’t know what the latest number is, probably 25 coaches who are simply there to help teams, including in some of these very difficult conversations. And these coaches have no formal authority, they cannot formally fire that person, but they can just simply get the whole team to realize, and that person within the team to realize, “OK, this isn’t working out, like it’s time for you to leave.”

TS: Now, Frederic, do you see that the next stage of our corporate life—like you’re calling these next-stage organizations, teal organizations that have these qualities: self management, wholeness, evolutionary purpose—that in x number of years (this is where my question’s going) 20, 30, 40, how many years, this will become the norm? When you go to business school you learn about how businesses operate this way, are people not going to need MBAs in the same kind of way, because their education is going to be so radically different? Instead they’re going to do tree meditations or something and you will become qualified to understand ecological flows. What do you see?

FL: Oh boy, I wish I had a crystal ball and I could answer that question. It’s just, we’ve outgrown past ways of thinking, like we’ve outgrown a feudal way of thinking. But in the beginning, given the scientific sort of industrial way of thinking, it was all new and it was just a few percent of the population, and then it just spread. And the only thing I can say is if you map the stages of human consciousness, hunter-gatherers and tribal and agrarian and scientific industrial and postmodern and now, sort of integral. If you map them on a timeline, it’s an exponential curve. It took us a hundred thousand years to go from hunter-gatherers to tribal and it took us 10,000 years to go to agrarian. And agrarian has been a few thousand years and the scientific industrial, has just been 200 years, and the postmodern has barely been 50 years, and something new is coming up.

I don’t know if there’s a law of nature, of evolution playing out there, but it just seems that evolution is accelerating. And if that is true, then, this could, maybe the world might look very different in 20 or 30 years and in many ways, I’m hoping it is. Because from everything we know, we don’t have that much time. So many of our financial system are collapsing. And so, there’s really seems to be a race going on between the damage that we do, and the consciousness that we’re growing into. And I’m just hoping that we’re growing quickly enough into a new form of consciousness that makes for the survival of the human species and other ecosystems.

TS: Now, Frederic, when I think of you operating within the gift economy, for your new training series on self-management, and even some of the work that you’ve done in profiling certain organizations that people could say, “Well, that’s a unicorn. There’s a couple of unicorns out there.” I can imagine people thinking, Frederic, he’s kind of—Ready? Here’s the word—idealistic. And I wonder what you think about that when you hear that? Like, I’m sure that this isn’t the first time you’ve heard someone say, “Well, that’s very idealistic.” Frederic, what do you think about that?

FL: Well, that’s interesting, because few people who’ve read the book, actually use that term. I rarely get people telling me that I’m idealistic. Like it’s just, go out there like, look at how Buurtzorg operates, and look at how FAVI operates. And W.L. Gore has been operating self-management for 50 years and been extraordinary successful. And I think it’s easy to see as idealistic if you haven’t looked into it, right? Rather like people, poo-pooing meditation, the benefits of meditation, if they’ve never meditated. I’ve had a lot of people say, “Oh, self-management, that can never work.” But they’ve never actually looked at it.

Sometimes it makes me smile, like somebody would say, standing in the middle of a forest and would say, “You know what? It’s impossible that living organism grows 200 feet high.” And you say, “Well, just look at it, there’s a tree right in front of you,” but “No, no, that’s impossible.” It’s I think the same thing is true for these organizations. So I’m actually not being called an idealist that often.

TS: And then finally, what’s next for you, Frederic? I mean, here you are, you have this way of listening to how life moves through you, what’s called for. You’re a very interesting person to me, you really have, I think, a sense of the pulse of life unfolding. What’s next for you?

FL: Yes, I think I have another six months completing this video series, where I’m really trying to share everything that I’ve learned since the book came out about how traditional organizations, traditionally-run organizations, can make that leap. And then just half a day, or a day a week I’ve started researching into what might perhaps become another book that asks sort of a similar question, but not about organizational governance, but about political governance. An increasing number of people sense that our political systems, democracy, as we practice it now, is sort of no longer able to deal with the complexities of our times, seems exhausted. And there are experiments that are fascinating happening all around the world, in the United States, in Europe, and in Asia, with radically more positive forms of democracy. And I’m quite fascinated by that, and trying to see, if I look at these different experiments, are there some common underlying principles that would point to what might come beyond democracy as we practice it now?

TS: I’m so glad you’re on it. Thank you Frederic Laloux. Frederic can be visited the website Reinventingorganizations.com. That’s a great site that has a lot of interesting training materials. I want to thank you so much for being with us here on Insights at the Edge. He’s the author of the book, Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness.

And in a moment of transparency with our listeners, Sounds True is one of the organizations that was featured in the section of the book that talks about wholeness and what it means to bring our whole selves to work. And we’re also, here, in transition from a more hierarchical organization to a self-managed organization. And I have to say, it’s quite an interesting, bumpy, messy, worthy experiment, and I’m way into it. And thank you, Frederic, you’ve been part of the inspiration. Thank you so much.

FL: Thank you, Tami.

TS: Thanks for listening to Insights at the Edge, produced by Sounds True. At Sounds True, we are dedicated to creating a wiser and kinder world by making transformational education widely accessible. The new Sounds True Foundation exists to remove financial barriers and make sure that people in communities in need have access to transformational tools and teachings. You can find out more at SoundsTrueFoundation.org.

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