Bye bye Elliott Jaques, it’s been fun but it’s time to part ways!

What type of organisation do you see before you if I tell you that there is no top down strategy, no pre-defined roles, no budgets, no performance targets, full transparency and sharing of information (incl. financials), self-organising teams, fully decentralised decision-making, and where change management is a superfluous concept? Does a vision of some hippie commune, Kibbutz style co-operative emerge or perhaps a not-for profit charity type organisation?

What if I then say that it is not only a single organisation but a suite of very successful organisations ranging in size from around 100 employees to 10s of thousands of employees, across industries and in both the not for profit and for profit sector?

Perhaps you are asking yourself how you could run a large organisation without the foundations; a clear strategy, clear roles and accountabilities, levels of authority, defined performance targets cascaded down the organisation to measure how well strategy is executed, a well-developed project management framework with its associated budgets and Gantt charts, annual performance reviews and all the other practices we’ve been conditioned to believe are essential.

In his book “Reinventing Organizations”, Frederic Laloux has researched organisations that operate from level of consciousness that represent a significant shift. He categorises the practices of organisations using a spectrum of colours to represent the level of consciousness that shapes the organisational mindset.

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Plotting the successive stages of human and organisational consciousness on a timeline, the results tell a clear story; evolution seems to be accelerating, and accelerating ever faster. We have according to Laloux never been in time where so many people operated from some many different levels of consciousness at the same time. The same is true for organisations, Red, Amber, Orange, and Green Organisations are found working side by side in the same cultures and cities.

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The difference between the organisations that Frederic Laloux has researched for this book and most other organisations today is not only stark but also incredibly exciting – not only is there is a better way, but there is plenty of evidence of its positive impact on people and its longevity.

Now here is the catch – you will only see the potential and the power of these practices if your adult development stage aligns with this worldview. As humans, we develop in stages, just as a caterpillar through sudden transformations becomes a butterfly, or a tadpole a frog. A key aspect of human development stages is that there is nothing inherently better or worst being at any level – it makes no sense saying that an adult is better than a toddler. However, depending on the task a certain stage may be a better fit. I have referred to adult development in previous posts, click here for link.

For anyone familiar with the Cynefin framework it quickly becomes evident that the practices that these organisations share are well suited for operating in complex environments. There is an incredible shared sense of purpose, which guides decision making on a day-to-day basis. There are also just a few clear and simple rules or principles that guide what is acceptable behaviour. This allows for initiatives to emerge and if there is merit in them, people will naturally support them and give them their energy. Because decision-making is so inclusive and closely tied to the organisational purpose, change does not have to be “managed” in the way we think about it in traditional organisations.

Below are some of the practices that are common and represent what Laloux refers to as Teal Organisations. If you read these and think – how crazy, could never work, maybe it is time to reflect on your view of people – are you a Theory X or a Theory Y supporter?

Each level of consciousness has brought with it some breakthroughs compared with the previous level. For Teal organisations these are; Self-management, Wholeness, and Evolutionary Purpose.

The following is quoted directly from a summary of the book by Ulrich Gerndt from Change Factory.

Self-management: operate effectively, even at a large scale, with a system based on peer relationships, without the need for either hierarchy or consensus.

Wholeness: practices that invite us to reclaim our inner wholeness and bring all of who we are to work, instead of with a narrow “professional” self / “masculine resolve” etc.

Evolutionary Purpose: organizations seen as having a life and a sense of direction of their own. Instead of trying to predict and control the future, members of the organization are invited to listen in and understand what the organization wants to become, what purpose it wants to serve.

Self Management Practices Wholeness Evolutionary Purpose
Self organizing teams Self-decorated warm spaces without status markers Organization seen as a living entity with its own evolutionary purpose
Coaches w/o P&L responsibility when needed Clear values translated into explicit ground rules, Strategy emerges organically from collective intelligence of self-managing employees
Almost no staff functions Ongoing values discussion Decision making by listening to organization‘s purpose (everyone, large group, meditations…)
Coordination and meetings ad hoc when needs arise Quiet room, meditation practices, team supervision, peer coaching Concept of competition irrelevant (embraced to pursue purpose)
Radically simplified project management, Storytelling practices to support self-disclosure and community building Growth and market share only important in as much they help achieve purpose
Minimum plans & budgets Absence of job titles and descriptions to allow selfhood to shape roles Profit as lagging indicator: will come naturally when doing the right thing
Fluid and granular roles Honest discussion about individual time commitments Inside out marketing: offer is defined by purpose
Decision making fully decentralized (advice process) Regular time devoted to address conflicts “Sense and respond“ planning/budgeting/controlling
Transparent real time information sharing incl. financials Specific meeting practices keep ego at check No or radically simplified budgets, no tracking of variance; no targets
Anybody can spend any amount of money provided advice process is respected Distributed initiatives taking “Change management“ no longer relevant as organization constantly adapts from within
Formal multi-step conflict resolution process Recruitment interviews by future colleagues, focus on fit with organization Suppliers chosen by fit with purpose
Focus on Team performance, peer-based process for individual appraisals Personal freedom for training, focus on culture-building Total transparency invites outsiders to make suggestions to better bring about purpose
Self-set salaries with peer calibration, no bonus, profit sharing Personal inquiry into one‘s learning journey and calling Conscious sensing of what mood would serve best
Caring support to turn dismissal into a learning opportunity

This book really shifted my thinking about organisations and leadership; maybe I read it at the right time in my life and/or at a juncture where my understanding of complexity was sufficient to enable this shift. Either way, it was the straw that broke the proverbial camel’s back with respect to my long-standing relationship with Elliott Jaques and structured hierarchy. The more I am learning about complexity the harder this relationship has become. Faced with evidence that disprove my current view – I now have to dismiss some of the concepts I have been working with and often promoted for a long time, or at least recognise their limitations in complex environments.

I had an exchange with Jurgen Appelo a few months ago where we debated the idea of levels of work in manager – subordinate relationships. Jurgen has for a long time argued that management is too important to leave to the managers, I now feel that I have a much better idea of where he is coming from.

I still maintain that people have different levels of capability and that a successful outcome is to some extent dependent on a good match between complexity and capability. However, this does not have to be formalised through a hierarchy with defined role vested authority and accountability, personally earned authority seems to suffice. Collectively we are smarter than any individual is and not many complex tasks are completed in isolation from everyone else in the organisation.

The sad part of the research findings that underpins the book (although not surprising) is that Frederic was not able to point to any examples of organisations shifting and sustaining Teal practices without the following two conditions:

  1. “Top leadership: The founder or top leader (let’s call him the CEO for lack of a better term), must have integrated a worldview and psychological development consistent with the Teal development level. Several examples show that it is helpful, but not necessary, to have a critical mass of leaders operating at that stage. .

  2. Ownership: Owners of the organisation must also understand and embrace Evolutionary Teal worldviews. Board members that “don’t get it,” experiences shows, can temporarily give a Teal leader free rein when their methods deliver outstanding results. But when the organisation hits a rough patch or faces a critical choice, owners will want to get things under control in the only way they know that makes sense to them – through top-down, hierarchical command and control mechanisms”

Reinventing Organizations – Frederic Laloux

All the adult development theories I have come across suggest that only a relatively small percentage of the adult population is at a post-conventional or in a later developmental stage akin to that of Teal Organisations. Possibly even fewer in leadership positions where they could affect any change. Most operate from a conventional stage and hence we have so many of the achievement driven organisations we see and potentially work in today.

So perhaps given that last paragraph I should not totally give up on all of the ideas and concepts from RO and Systems Leadership Theory, some may have a place in making orange and green organisations better in some ways even if they will not guide us into Teal territory.

Hopefully the pace of development truly is accelerating, as that is a prerequisite for more Teal organisations to emerge that more people get to the later stages of adult development. Even now we can start to see the how younger generations prefer to operate, it is in a similar fashion to what Gary Hamel, in his book “What Matters Now”,  notes are common practice on the web:

  • No one can kill a good idea
  • Everyone can pitch in
  • Anyone can lead
  • No one can dictate
  • You get to choose your cause
  • You can easily build on top of what others have done
  • You don’t have to put up with bullies and tyrants
  • Agitators don’t get marginalized
  • Excellence usually wins (and mediocrity doesn’t)
  • Passion-killing policies get reversed
  • Great contributions get recognized and celebrated

Interestingly though the language in the title of the book is very much from an Orange Achievement lens rather than a Teal one. Perhaps children growing up in today’s hyper connected, peer sharing world will be naturally drawn to organisations where Teal practices are in place? For my own son’s sanity I really hope he does not have to suffer through the same level of corporate BS that his parents have (and are still dealing with).

For a summary of the book visit or for a video

understanding the work part 1

Understanding the Work 

 “We humans are first of all beings in a situation, we cannot be distinguished from our situations, for they form us and decide our possibilities”

My interpretation of Jean-Paul Sartre’s (paraphrased) statement is that the environment shapes the situation and our possible choices are governed by the situation. Kurt Lewin the famous psychologist outlined the following equation to describe this.

Behaviour = ƒ(environment, personality)

When we think about organisation and how they operate the default position for most organisations is to focus solely on the person as if the person needs to be fixed.  Very few organisations understand that working on the people is working on the 5%. There is so much more leverage in working on the system.

Systems Leadership succinctly says, “Systems drive behaviour”.

I often refer to a fish tank analogy to make this point. You can keep polishing the fish when they appear “sick” or perhaps unmotivated, send them on a training course etc,  but unless you fix the water (i.e. environment) that is making the fish sick in the first place, you will at some point end up with fish floating around belly up, or they might make a break for it and jump into another fish tank.


To do a good job as a manager you must understand the system of work that you are accountable for. How else could you improve or transform it? Understanding and knowing how a system operates and why it behaves in the way it does is fundamental for good management. So there is no surprise that the first part of Deming’s System of Profound Knowledge (SoPK) is: appreciation of a system.

With all these assertions that understanding systems is important you might ask why this is and where is the evidence for these outrageous claims?  Why can’t we just keep going as we have been? Surely it is all about getting good people in place?  And what do you actually mean when you say system, another IT “solution”?

One would be foolish enough to think we could start with defining what a system is. This task, however, is bigger than Ben Hur. The fantastic LinkedIn group Systems Thinking World, has a great number of remarkably bright thinkers in the field of systems thinking. Yet they cannot agree on a definition of what constitutes a system. Unfortunately the discourse about this often ends up being a competition of who’s smarter than whom and the language often becomes violent (from a nonviolent communications perspective).

I am of the school of thought that considers systems to be mental constructs; we choose what we define as a system by the boundaries we set and what we choose to include and they can change depending of what we are trying to achieve by doing so.

Having said all that, we still need to understand what it is that we are supposed to appreciate if we are to get a handle of Deming’s first point.  Since we are dealing with organisations we need a definition that is pragmatic for this field.

The definition of a system in Systems Leadership Theory is:

“A specific methodology for organising activities in order to achieve a purpose”

This involves directing flows of work, information, money, people, materials and equipment. The system provides the framework within which these flows take place.  An addition to make here is that we are discussing Organisational Systems not natural systems, so there will be a defined purpose for the system, be it the organisation as a whole, the recruitment system, or an operational system (if the defined purpose it is achieved or not is a different question).

A more general definition of a system:

1. A set of connected things or parts forming a complex whole, in particular.

2. A set of things working together as parts of a mechanism or an interconnecting network.

(a quick point to make about the second definition is that there is a huge difference working on a mechanistic system and a networked system)

For a definition of what systems thinking is about, the host of STW Gene Bellinger makes a very succinct statement and explains it with one word – AND!

There are many reasons why a shift in thinking is required. For one, we now understand that the mechanistic view of organisations, where analysis (without synthesis) and improvement of the parts in isolation, is not a good fit with the reality of organisational life.

Deming demonstrated the importance through the Red Bead experiment. The Red Bead experiment shows that performance (in this case quality of output) is a function of the system rather than the skills or capability of the individual. Deming even went as far as claiming that the variation in performance was to 95% down to the system, hence the 95-5 rule. Even if those numbers should not be taken literally for every single system, they certainly provide some insight to where the greatest leverage for improvement is.


Image Courtesy of Gaping Void

This is obviously a very simple system but it ought to make the point pretty clear and more complex systems have even more complex behaviour. Dave Snowden’s Cynefin framework (pronounced kuh-nev-in) is very helpful for framing your thinking on how to best proceed based on the type of system you are operating in.  We will come back to this later but before we do let’s get some sage advice on what constitutes a system and systems thinking in this video of Russell Ackoff.

Ackoff is an authority on the topic of systems, and systems thinking in particular. He focused mainly on systems thinking in an organisational context so his thinking is very relevant.

To further elaborate on Ackoff’s point about shifting our thinking and the value of this shift. I cannot remember where I came across this equations but I think it is a great way of highlighting the importance of how our mental models influence what we see in organisations and how we think about performance and productivity.

Organisational Performance = ƒ(organisational mindset)

What I hope becomes clear with the function above is the validity of the old (paraphrased) Einstein statement:

“the problems of today cannot be solved by the same level of thinking that created them”

John Seddon from Vanguard Consulting makes the point in the simple model below.


In most of the organisations I work with there is a pretty poor understanding of the work. I don’t mean that people have no idea what customers want or that they lack technical competency in what they are doing. It is more in the sense of why things are happening the way they are.  In my next post we will dig into this a bit deeper as understanding the work is fundamental for all good Managers.

I’m ok, you’re ok – let’s fix the system (borrowed from Michelle Malay Carter)

a model for participatory decision making

Decision Making

Let us start with a strong and perhaps bold assertion, based on Richard Barber’s tremendous work on systemic risk management.

“The greatest risk to an organisation is the quality of its decision-making!” 

The standard risk management approach assumes ALL risks can be identified, placed in a matrix, be allocated a pretty colour and by some magical process risks are “managed”.  How many organisations have risk matrices or risk registers where the quality of decision-making is mentioned? I would think only a few. There are a few that I know of, but only because they have worked with Richard and have been made aware of how narrow their view of risk has been.

If the quality of decision-making is the organisations greatest risk, then it is by default the greatest point of leverage for success. So how can an organisation support its leaders in making better decisions? Well for starters, a helpful decision making model will certainly go a long way.

Depending on the domain you are operating in (using the Cynefin framework as reference) there might be multiple plans or approaches  (A, B, or C) that are equally as good. It is the role of the leader to make the decision on which plan to proceed with. I have deliberately used the work leader here, as the Manager might not be the one leading the task. How that plan is developed with the contribution of the team is explained in the decision making model below.

Before I get to the model some assumptions about participative decision-making must be made explicit.  The model is based on the idea that better decisions are made when:

  • We assume that everyone on the team (and others) can add unique insights to the situation.
  • Challenging our assumptions can lead to unique and powerful outcomes and is therefore a valuable contribution.
  • Spending time and effort into really understanding the nature of the problem is critical.
  • Options, ideas and critical issues are explored openly as part of the process.
  • Good use is made of both analysis and intuition.
  • The leader is clear about the final decision and their accountability for it.

SETED  – A participative leadership decision-making model

  • Share Context and Purpose
  • Explore Critical Issues
  • Test Mental Models and Assumptions
  • Explore Options
  • Decide on Option

Share Context and Purpose

Context aims at setting the scene and provide clarity about what brought about the task, linkages to other tasks, and anything that could in any substantive way influence what we are trying to achieve. Depending on the size of the task at hand the context could vary in length and detail. Sometimes there is already shared understanding of the context but it is a good habit to always check this by assuming it is not.

The purpose is the reason for the work – not the work itself. It clarifies why we are we doing this and what do we hope to achieve by doing so?

Effective leadership behaviours at this stage include:

  • Taking the time to brief others properly.
  • Inviting questions and alternate views about the context.  Listening and reflecting.
  • Using dialogue to make sure the purpose makes sense to everyone, in the same way.
  • Avoiding setting filters or limiting exploration.
  • Making sure context and purpose are well understood before moving on to the next stage.

Explore Critical Issues

Critical issues are also known as showstoppers or challenges that unless resolved threatens the purpose.  They are different from constraints, as constraints are already known.  Critical issues are not certain and need be identified so that you can develop actions to address them – contingency planning.

A good way to frame Critical issues is to use the language of “What if…” and “How to…” The reason for this is to depersonalise the issue raised and to objectively analyse it. It is really good practice to develop the skills to identify critical issues as it can push the thinking to a higher level.  It may take a few iterations before you reach clarity of an issue.

Identifying and understanding critical issues a step that differentiates this particular model from many others. It is also the most difficult step to do well.  Part of the problem is that people want to move quickly to solution (ready-fire-aim) and become frustrated when asked to continue exploring critical issues.

This jump to action mentality is often very destructive and can create unintended consequences that due to the delay (see fixes that fail system archetype) are not connected and the hero fire-fighter can come save the day and get promoted even though they might have caused it. Unfortunately for the careful planner, diligent in planning for critical issues and with few or no fires, the reward is little, or no recognition.

Effective leadership at this stage behaviours include:

  • Staying in the “critical issues” stage until certain that there are no more to identify (at this point in time). Remaining disciplined, strong – avoid moving to solution too early.
  • Exploring views, inviting different thinking, challenging assumptions.  Listening, reflecting.
  • Seeking analysis, maverick views, and independent opinions – anything that might open new possibilities.
  • Matching the effort to the complexity and value of the challenge.
  • Ensure that critical issues and associated ideas are documented.

Test Mental Models and Assumptions

Mental models are “rules” we unconsciously apply to make it easy to make rapid decisions in familiar situations.

Assumptions are beliefs we apply without testing.

Effective leadership behaviours at this stage include:

  • Accepting that everyone has limiting mental models and make untested assumptions.
  • Valuing and exploring the perceptions and ideas of others even when they seem to be a ‘misfit’ to what we believe is possible.
  • Explicitly acknowledging and discussing assumptions and mental models and use conversation to try to generate new insights.
  • Reviewing the impact of identified assumptions on critical issues, context and purpose.
  • Actively listening to what everyone is saying and encouraging different views.

Michael Stange, a fellow Sydney Lean Coffee member  mentioned how he had his team view their assumptions from a different perspective. They had all written down the things they took for granted for a specific project. They were then asked to negate all those assumptions to see if that brought about any new critical issues. This could be a simple yet powerful method to get the ball rolling.


Image courtesy of Gaping Void

There is a possibility that this stage can identify that you are trying to address the wrong issue. This is of course a very powerful insight but often this stage is not even in the back of minds of people.

Edward de Bono’s Six Thinking Hats is another process used to generate deeper insights and better decisions.


Explore Options

By Options here I refer to the possible approaches or parts of approaches to dealing with the critical issues and the activities that need to be completed to deliver on the task.

Effective leadership behaviours at this stage include:

  • Getting organised to capture ideas, possibilities, and options
  • Listening to and exploring ideas
  • Probing the views, concerns and ideas of all stakeholders
  • Building an overall approach, strategy or theme and testing it with others
  • Critical review, testing and challenging even of obvious options
  • Continually bringing people back to solving the critical issues
  • Reflecting on and adapting the purpose and critical issues, as new insights come to light


Decide on Option

With multiple options or pathways available someone has to make a decision on which option to proceed with. Obviously my view is that the person accountable makes this call and in doing so accepts to be held to account for judgments and behaviours exercised when delivering on the task.

The decision making model is a tool that both leader and team member can refer back to if either is concerned the team is getting off track. Furthermore, not all decisions require participation and input from the team. The leader has to exercise judgement depending on the specific circumstances surrounding the decision.

Before I move on to a Task Assignment model, let me be very clear. The model above does not assume that the leader or Manager makes ALL decisions, far from it in fact, what is can do is support a social process of decision making. It is aligned with a view of organisations that believes that decisions in general should be made at the lowest possible level.

The decision making model is linked to the Task Assignment model as the options or plan will contain tasks that need to be clarified and assigned. When a task has been assigned (and accepted) a decision has to be made on how to deliver on the task.


Systems Leadership Theory consider this the work, i.e. working out the how and work is subsequently defined as “turning intention into reality”.

As this post ended up being longer than anticipated, I will continue with the Task Assignment Model and work as a social process in the next post.