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Reinventing Organizations by Frédéric Laloux

Unlike the usual business books, Frederic Laloux's 'Reinventing organizations' invites readers to evolve their view of work roles and places to create a newer and kinder way of working. Describing organizational structures from the viewpoint of developmental theory, belief systems, and worldviews, Laloux embarks on a journey to answer fundamental questions about the world of work and future organizational structures. Are there better, more fulfilling, and soulful ways to arrange organizational structures? If so, what do these organizations look like, and how do we bring them to life?

I suspect Laloux had a hunch the answer to his first query was a 'yes' when he embarked on his research. Reinventing Organizations delivers examples of a range of businesses working in kinder and more accepting ways and provides a framework that new and existing organizations can follow or adapt to build or bring about change within their own companies.

From hierarchical structure to devolved power systems

Laloux begins by explaining the various iterations of humanity's development, concluding that most organizations today are run with an 'Achievement' worldview. From this perspective, innovation, keeping ahead of the competition, and aiming to run a business similar to a 'well-oiled machine' makes sense. Every person has their place in an organization, working both cooperatively and independently of the other parts.

'Evolutionary' organizations, on the other hand, see themselves as integrated, continually changing, adapting, and self-managing living structures. There is no-one at the helm pulling leavers or steering toward a brave new future. Every cell can affect change and is vital to the health of the entire system. In these kinds of organizations, individuals join the higher cause that enables them to 'punch above their weight,' achieving outcomes they would never have managed on their own and developing new ways of being.

Initially, this kind of thinking appears to be rooted firmly in utopic fantasy. Yet, through the analysis of 12 very different companies across disparate industries – manufacturing to community nursing, education to running electrical grids – the author shows us that organizations can effectively and profitably pioneer self-management, wholeness, and evolutionary purpose in the workplace.

These self-managed organizations have no power struggles because the power reserved for top players in 'Achievement organizations' has been entirely devolved. Everything from purchasing decisions to pay, hiring, training, firing, performance assessments, and more have been handed over to its members. No-one and everyone hold the power in self-managed organizations. Paradoxically, the organization becomes more powerful and more agile than could ever been previously possible.

Making assumptions

Most organizations today base their structure, rules, and policies on a set of assumptions. Sometimes overt and at other times inferred by how these organizations are run; workers are assumed to be lazy, only interested in remuneration, self-interested above all else, and incapable of making the right decisions.

These assumptions are in line with Douglas McGregor's 'Theory X' of management and place employees in the role of reluctant servants. Their ideas, aspirations, and personal purpose have little value in such a structure. Their worth comes only from what they can produce.

Self-managed organizations dance to a different tune. Their systems and processes are based on a drastically different set of beliefs. There are no unimportant people, and no-one holds controlling power.

Colleagues are assumed to be essentially good (unless proven otherwise); they enjoy being accountable and responsible for their decisions and actions; they are motivated by more than extrinsic rewards. They are eager to use their talents and skills to make a positive contribution to their lives and the organizations they work for. Based on this set of assumptions, organizations create new processes and ways of working that enhance a business' viability aligned with its purpose and the people who work within it.

The rules of self-managed business

Most self-managed organizations rely on a structure of multiple, small teams. Depending on the nature of the business, these teams range in size from 12 people to 50. Team leaders are advised to delegate tasks wisely, avoid over-reliance on any team member, and avoid reverting to traditional hierarchical behaviors: regular meetings and coaching help keep teams up to date with their work and track. The team members themselves agree on everything from annual targets to the rules of work.

In hierarchical organizations, decisions are often made by just a few people. The CEOs and the executive team are expected to understand any given issue's intricacies and make all-knowing, wise decisions.

In some organizations, consensus is the central process for decision making. With this process, reaching agreement throughout the tiers of management can take weeks, if not months. These delays can cause new market opportunities to be lost.

Self-organized teams side-step both processes elegantly with the advice process. Any individual within an organization can make decisions – big or small. There is just one stipulation – decisions cannot be acted upon until all parties affected by it have been consulted along with experts on the topics related to the decision. Once this has been achieved, decisions are made, accepted, and the organization's direction, priorities, or processes can change. Actions can be performed at any organizational level, for any topic, and be instigated by any individual, regardless of their role and responsibilities.

Along with the advice process for decisions, other foundational techniques for conflict resolution, information sharing (everyone has access to everything), and feedback, support self-managed organizations to remain stable while adapting to the market's demands and pursuing new opportunities

As colleagues in a self-managed organization come to terms with the freedom and voice they have been granted, respect, responsibility, and intrinsic motivation blossom amongst the workforce. Comradery grows, and people begin to pull together without their egos getting in the way of progress. Individuals are asked to abandon roles of 'Rescuer,' 'Persecutor,' or 'Victim' and instead adopt the role of 'Challenger,' 'Coach,' or 'Creator' – in many teams. Colleagues take on all three in varying degrees.

As unlikely as it may seem, self-managed organizations are not just possible; they're already in existence around us. In many cases, companies with this organizational structure have risen to be leaders in their fields. A simple look at Patagonia, Morning Star, or Sun Hydraulics shows this to be true.

While many business specialists talk of flattened organizational structures and increasing engagement through management-led initiatives concerned with culture, these few self-managed organizations have been approaching the many problems with the current ways of working from an entirely different worldview perspective.

Laloux's book provides an eye-opening exposé into a revolutionary way of running an organization based on wholeness, trust, and the building of relationships. These organizations support individual development and come together with honesty, trust, and confidence to make great things happen.