Self-Managing Organizations: The Next Wave?

  • 9 mins read

Up to this point in history, we’ve organized work based on four very different worldviews: impulsive, conformist, achievement and pluralistic.

This organizational evolution is tied to the four stages of human consciousness proposed by psychologists Clare Graves, Don Beck and others, as summarized by Frederic Laloux in Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness (Nelson Parker, 2014):

  • Impulsive-Red: Tribes, crime cartels, and gangs run by a powerful chief
  • Conformist-Amber: Religions, the military, and schools run by rules and social norms
  • Achievement-Orange: Corporations and businesses driven by innovation, incentives, goals, profits, competition and egos
  • Pluralistic-Green: Nonprofit and service organizations driven by a culture of shared values, purpose, fairness, consensus, and respect for the community and environment

Each developmental stage yielded major breakthroughs that have allowed us to solve increasingly complex problems and achieve extraordinary results. And each stage also had its limitations, leading people to seek better ways of working together.

Most corporations today are organized around an Achievement-Orange worldview. Leadership is goal-oriented, focused on solving tangible problems and favoring tasks over relationships.

One of Orange organizations’ downsides is “innovation gone mad,” or growth for growth’s sake. When numbers, targets, milestones and deadlines drive success year after year, people may never experience meaning or fulfillment—a paradigm that can lead to collective greed.

Pluralistic-Green organizations emphasize bottom-up processes, gathering input from all stakeholders to achieve consensus. The Green perspective is uneasy with power and hierarchy. But reaching consensus in large groups is inherently difficult.

While Orange is predominant in business and politics today, Green prevails in postmodern academic thinking, nonprofits and activist groups.

In small but increasing numbers, leaders are thinking beyond Green, striving to attain the next stage of consciousness. Their goal is mindfulness, thus taming the ego’s needs and impulses. They develop an ethic of mutual trust. They ground decision-making in an inner measure of integrity. They’re ready for the next organizational paradigm.

The Evolutionary-Teal Paradigm

Progressive leaders are reinventing the way they organize work with the Evolutionary-Teal Paradigm, which encourages people to be:

  1. Self-managed
  2. Driven by a culture of shared power, responsibility, wholeness and higher purpose

This is not especially new; some businesses have successfully used these principles for some time. But self-management is a revolutionary change for many organizations.

Teal organizations have discovered that effective operation requires a system based on peer relationships, without hierarchy or consensus. Why is this so important?

Achievement-Orange organizations traditionally face a big problem: division of power. When people are classified as either powerful or powerless, competitive wars of ego, ambition, politics, mistrust, fear and greed can thrive. And that’s the good news, because at the bottom of the hierarchy, workers feel powerless and opt for resignation and resentment.

This unequal distribution of power accounts for the widespread lack of engagement reported by many employee surveys. In fact, only a third of today’s employees are engaged; the rest are either actively disengaged or feel unsupported.

But can we really let the inmates run the asylum, as cynics would say? Laloux isn’t suggesting mere consensus or empowerment. In Pluralistic-Green organizations, decisions are pushed down the pyramid so everyone has a say, but the pyramid exists and managers still run the show.

In Evolutionary-Teal organizations, the pyramid is banished altogether. Small self-organizing teams make decisions and take responsibility for results. They answer to themselves. If something doesn’t work, they revise the strategy, budget and targets. They monitor their own performance and make adjustments, as necessary. They hold meetings on an ad hoc basis.

Organizing People Successfully

Is it even possible to run a 7,000-person business using self-management principles?

Apparently so—and quite successfully in for-profits and nonprofits, large and small companies, and service and manufacturing businesses.

Productive self-management rarely happens spontaneously. Companies need ground rules to make it work. Laloux offers several examples:

  • No Boss: Teams of typically 10 to 12 members deal with all management tasks. They set direction and priorities, analyze problems, make plans, evaluate performance and make decisions. Their success depends on adequate training, coaching and tools. Teams have a set process for exploring decisions and solutions.
  • No Middle Management: No boss exists within the team, nor are there regional managers or a pyramid. Some organizations make coaches available when a team gets stuck. Teams are responsible for finding their way around problems. They delegate tasks widely among themselves and must appraise each other.
  • No Staff Functions: Only a few people handle staff functions like HR and billing, and they have no decision-making responsibilities. They serve to support the teams, when requested.
  • Talent Management: People rate themselves and each other, adjusting tasks according to individual strengths. They even set their own salaries according to a predefined rating system. This process ensures everyone feels valued. There are no incentives except for companywide bonuses, reducing compensation inequality and creating greater fairness.

Motivating People

In June 2015, CEOs of Fortune 50 companies took home a staggering 300 times the median pay of their employees, according to CNNMoney. This gap has increased with each decade, accounting for much of frontline workers’ disengagement.

Leading scientists believe that the principal science of the next century will be the study of complex, autocatalytic, self-organizing, non-linear and adaptive systems.
~ Frederic Laloux, Reinventing Organizations.

In Drive: The Surprising Truth About What Motivates Us, Daniel H. Pink argues that self-management/self-directed processes, mastery, worker autonomy and purpose (intrinsic rewards) are much more effective incentives than monetary gain (extrinsic rewards).

For most 21st-century workers, self-management and related intrinsic incentives are far more crucial than outdated notions of hierarchical management and an overreliance on monetary compensation as reward.

As Laloux notes:

It is the way life has operated in the world for billions of years, bringing forth creatures and ecosystems so magnificent and complex we can hardly comprehend them. Self-organization is the life force of the world, thriving on the edge of chaos with just enough order to funnel its energy, but not so much as to slow down adaptation and learning.

If nature is self-organizing, why can’t we use the same principles when working together? Are we ready to move beyond rigid structures and processes? Can we allow people to find their own solutions?


Many managers misunderstand self-management’s fundamentals and what it takes to make the concept work:

  1. Misperception #1: There is no structure, management or leadership. Self-managing organizations do not replace the pyramid with democratically led consensus. There is instead an interlocking, clearly defined set of structures, processes and practices that  inform how teams are set, decisions are made, roles are defined and distributed, salaries are set, people are hired and fired, and so on. All management tasks become the team’s responsibility.
  2. Misperception #2: Everyone is equal. Self-organizing teams circumvent the problems created by unequal distribution of power. People can hold different levels of power, yet everyone can be powerful. It’s not a zero-sum game. The question is not: How can everyone have equal power? It’s rather: How can everyone be powerful? Instead of hierarchies of power and position, there are natural hierarchies of influence.
  3. Misperception #3: It’s about empowerment. There is irony in the phrase “empowering people.” You can empower people only when there’s a hierarchy with an unequal distribution of power. In self-managing organizations, people have power and the freedom and responsibility that go along with it. Every team member is responsible for achieving the organization’s purpose.
  4. Misperception #4: It’s still experimental. Managers and leaders think of self-management as a rare commodity, but it’s actually been proven in both small- and large-scale companies in just about every field. There are several organizational models. Gore-Tex has used self-organizing principles since its founding in the 1950s. Other success stories include Whole Foods Market, the Orpheus Chamber Orchestra, Alcoholics Anonymous, Wikipedia and Linux.

Collaboration or Chaos?

There’s a lot of skepticism about self-management principles. Won’t this setup lead to chaos? Who’s going to set strategy, allocate resources, manage and lead? Most of us have been educated in management principles and have worked in hierarchical corporations for so long that we can’t imagine any other way.

But there’s one workforce group that immediately understands and embraces self-management: millennials. Young people who have grown up using the Internet are no stranger to self-organizing. In the disruptive online world, influence is based on contribution and reputation, not position. Some say millennials are hard to manage. Maybe not, if they have responsibilities and can contribute.

But this requires managers to abandon their efforts to control in favor of sharing power. It also means developing a tolerance for trying new things, making mistakes and adjusting course. Are we too ingrained with old organizational models to let new systems and structures evolve?

Our task must be to free ourselves from this prison by widening our circles of compassion to embrace all living creatures and the whole of nature in its beauty.
Albert Einstein

We see people wearing masks and uniforms at work, trying to conform to an expected role in achievement-oriented, pluralistic organizations. Self-management relieves the burden of trying to meet someone else’s expectations. It requires bringing the whole person to work.

The Evolutionary-Teal Paradigm creates a space to support the journey to wholeness. Things happen when we bring our complete selves—our potential, creativity and full engagement—to work.

Self-management drives engagement because we become more of who we are and more essential to everyone else. The emphasis is on engaging in wholesome ways to further the organization’s purpose.

What do you think?

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