Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness

By Frederic Laloux

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For thousands and thousands of years, people have lived on the brink of famine and in fear of plagues, always at the mercy of a drought or a simple flu. Then suddenly, almost out of nowhere, modernity has brought us unprecedented wealth and life expectancy in the last two centuries. And all this extraordinary progress has come not from individuals acting alone, but from people collaborating in organizations: *

Teachers, doctors, and nurses are leaving their field of vocation in droves. Our schools, unfortunately, are for the most part soulless machines where students and teachers simply go through the motions. We have turned hospitals into cold, bureaucratic institutions that dispossess doctors and nurses of their capacity to care from the heart.

If it turns out that it is possible to create organizations that draw out more of our human potential, then what do such organizations look like? How do we bring them to life? These are the questions at the heart of this book.

Our way of conducting business has outgrown our planet. Our organizations contribute on a massive scale to depleting natural resources, destroying ecosystems, changing the climate, exhausting water reserves and precious topsoils. We are playing a game of brinkmanship with the future, betting that more technology will heal the scars modernity has inflicted on the planet.

Economically, a model of ever more growth with finite resources is bound to hit the wall; the recent financial crises are possibly only tremors of larger earthquakes to come. It is probably no exaggeration, but sad reality, that the very survival of many species, ecosystems, and perhaps the human race itself hinges on our ability to move to higher forms of consciousness and from there collaborate in new ways to heal our relationship with the world and the damage we’ve caused.

If we accept that there is a direction to human evolution, then we hold here something rather extraordinary: the blueprint of the future of organizations, the blueprint to the future of work itself.

If we are to overcome the daunting problems of our times, we will need new types of organizations—more purposeful businesses, more soulful schools, more productive nonprofits.

In the course of history, humankind has reinvented how people come together to get work done a number of times—every time creating a vastly superior new organizational model.

Every time that we, as a species, have changed the way we think about the world, we have come up with more powerful types of organizations.

We are not like trees that grow continuously. We evolve by sudden transformations, like a caterpillar that becomes a butterfly, or a tadpole a frog.

We increasingly come to see that much of this economy based on fabricated needs is unsustainable from a financial and ecological perspective. We have reached a stage where we often pursue growth for growth’s sake, a condition that in medical terminology would simply be called cancer.

In light of the corporate scandals of the last decade, some would add that the most obvious shadow of the modern organization is individual and

collective greed. A small circle of CEOs grant themselves ever higher salaries; they lobby government for favorable rules; corrupt regulators; play off governments to pay little or no taxes; and merge in a frenzy to dominate their industries and abuse their power over suppliers, customers, and employees.

It seeks fairness, equality, harmony, community, cooperation, and consensus.

The most exciting breakthroughs of the twenty-first century will not occur because of technology, but because of an expanding concept of what it means to be human. John Naisbitt

The ultimate goal in life is not to be successful or loved, but to become the truest expression of ourselves, to live into authentic selfhood, to honor our birthright gifts and callings, and be of service to humanity and our world.

Behind the understanding of vocation is a truth that the ego does not want to hear because it threatens the ego’s turf: everyone has a life that is different from the “I” of daily consciousness, a life that is trying to live through the “I” who is its vessel. … It takes time and hard experience to sense the difference between the two—to sense that running beneath the surface of the experience I call my life, there is a deeper and truer life waiting to be acknowledged.

Slowly, this shift is making profound inroads in different fields, from management to education, from psychology to health care—starting with the premise that, as human beings, we are not problems waiting to be solved, but potential waiting to unfold.

Many of the corporate ills today can be traced to behaviors driven by fearful egos: politics, bureaucratic rules and processes, endless meetings, analysis paralysis, information hoarding and secrecy, wishful thinking, ignoring problems away, lack of authenticity, silos and infighting, decision-making concentrated at the top of organizations, and so forth.

Imagine what organizations would be like if we stopped designing them like soulless, clunky machines. What could organizations achieve, and what would work feel like, if we treated them like living beings, if we let them be fueled by the evolutionary power of life itself?

The widespread lack of motivation we witness in many organizations is a devastating side effect of the unequal distribution of power. For a few lucky people, work is a place of joyful self-expression, a place of camaraderie with colleagues in pursuit of a meaningful purpose. For far too many, it is simply drudgery, a few hours of life “rented out” every day in exchange for a paycheck. The story of the global workforce is a sad tale of wasted talent and energy.

Why is it then, we might wonder, that most organizations today rely so heavily on staff functions? I believe that there are two main reasons for this: Staff functions provide economies of scale, or so goes the usual rationale. Economies of scale can easily be estimated in hard dollar figures, whereas it is virtually impossible to peg a number to the diseconomies of motivation. Staff functions give CEOs and leaders a sense of control over employees working out in the field. Rarely do leaders invoke this reason for putting staff functions in place, but it is very real.

Yet it is often an illusion of control: from the perspective of headquarters, rules and procedures always make sense; one must be in the field to experience the counterproductive and dispiriting results they often produce and to realize how often people find creative ways around them or simply ignore them.

When trust is extended, it breeds responsibility in return. Emulation and peer pressure regulates the system better than hierarchy ever could.

When people work in small teams of trusted colleagues, when they have all the resources and power to make the decisions they feel are needed, extraordinary things begin to happen. *

Ultimately, it comes down to this—fear is a great inhibitor. When organizations are built not on implicit mechanisms of fear but on structures and practices that breed trust and responsibility, extraordinary and unexpected things start to happen.

Our schools today are probably further away from self-management than most other types of organizations. We have turned schools, almost everywhere, into soulless factories that process students in batches of 25 per class, one year at a time. Children are viewed essentially as interchangeable units that need to be channeled through a pre-defined curriculum. At the end of the cycle, those that fit the mold are graduated; castoffs are discarded along the way. Learning happens best, this system seems to believe, when students sit quietly for hours in front of all-knowing teachers who fill their heads with information. Children can’t be trusted to define their own learning plans and set their own goals; that must be done by the teachers. But, teachers cannot be trusted either; they must be tightly supervised by principals and superintendents and school districts and expert commissions and standardized tests and mandatory school programs, to make sure they do at least a somewhat decent job. This factory-like system seems increasingly out of date.

Self-organization is not a startling new feature of the world. It is the way the world has created itself for billions of years. In all of human activity, self-organization is how we begin. It is what we do until we interfere with the process and try to control one another. *

Self-management requires an interlocking set of structures and practices.

We need answers to some very basic questions: if there is no longer a boss to call the shots, how do decisions get made? Who can spend * company money? How is performance measured and discussed? What prevents employees from simply slacking off? Who gets to decide who deserves a salary increase or a bonus?

If there is no formal hierarchy, how are decisions made? Can anybody just make any decision?

Almost all organizations in this research use, in one form or another, a practice that AES called the “advice process.” It is very simple: in principle, any person in the organization can make any decision. But before doing so, that person must seek advice from all affected parties and people with expertise on the matter. The person is under no obligation to integrate every piece of advice; the point is not to achieve a watered-down compromise that accommodates everybody’s wishes. But advice must be sought and taken into serious consideration.

We often think that decisions can be made in only two general ways: either through hierarchical authority (someone calls the shots; many people might be frustrated, but at least things get done) or through consensus (everyone gets a say, but it’s often frustratingly slow and sometimes things get bogged down because no consensus can be reached). The advice process transcends this opposition beautifully: the agony of putting all decisions to consensus is avoided, and yet everybody with a stake has been given a voice; people have the freedom to seize opportunities and make decisions and yet must take into account other people’s voices. The process is key to making self-management work on a large scale.

The advice process is a simple form of decision-making that transcends both consensus and unilateral action.

Consensus comes with another flaw. It dilutes responsibility. In many cases, nobody feels responsible for the final decision. The original proposer is often frustrated that the group watered down her idea beyond recognition; she might well be the last one to champion the decision made by the group.

With the advice process, the ownership for the decision stays clearly with one person: the decision maker. Convinced that she made the best possible decision, she sees things through with great enthusiasm, trying to prove to advice givers that their trust was well placed or their objections immaterial. While consensus drains energy out of organizations, the advice process boosts motivation and initiative.

Traditional hierarchies and their plethora of built-in control systems are, at their core, formidable machines that breed fear and distrust. Self-managing structures and the advice process build up over time a vast, collective reservoir of trust among colleagues.

In hierarchical organizations, managers are responsible for delivering the numbers. Their area of responsibility is their turf. Just as they won’t mess with somebody else’s business, other managers had better stay out of theirs.

But in a self-managing organization, people have roles, not turfs, and no one can formally shut out a colleague by saying, “This is none of your business.”

Perhaps it boils down to this: when employees are empowered to make all the decisions they want, the urge to climb the ladder recedes.

Research shows that when people pursue a meaningful purpose, and when they have the decision-making power and the resources to work toward that purpose, they don’t need pep talks or stretch targets. Unfortunately, in many traditional organizations, people work under the opposite circumstances; they don’t see much purpose in their work, and they feel restricted in their potential for self-expression by rules and bosses.

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. This is usually referred to as “complexity” or “chaos theory”.

But even though we are only now starting to get our heads around it, self-management is not a startling new invention by any means. It is the way life has operated in the world for billions of years. Self-organization is the life force of the world.

For a long time, we didn’t know better and thought we needed to interfere with the life’s self-organizing urge and try to control one another. *

And yet self-management is still such a new concept that many people frequently misunderstand what it is about and what it takes to make it work. *

What often puzzles us at first about self-managing organizations is that they are not structured along the control-minded hierarchical templates of Newtonian science. They are complex, participatory, interconnected, interdependent, and continually evolving systems, like ecosystems in nature.

Self-management goes a long way toward helping us show up more fully. With no scarce promotions to fight for, no bosses to please, and no adversaries to elbow aside, much of the political poison is drained out of organizations.

In self-managing organizations as well as hierarchical ones, trust is the secret sauce of productive and joyful collaboration. But it’s hard for trust to flourish when everyone is hiding, to some degree, behind a professional mask. We don’t just lose productivity; at a deeper level, our humanity feels cheated by the shallow relationships we have when we don’t engage with each other at levels that truly matter.

When it feels unsafe to speak our truth, we shut down our inner voice, we lose personal integrity, and we fail to set in motion changes the world is crying out for.

“Success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side-effect of one’s personal dedication to a cause greater than oneself.”

A few of the founders of organizations in this research didn’t set out to create a business at all, initially. Their pursuit of a purpose happened to take the shape, at some point, of a business; in a very literal sense, purpose came before profits.

It’s business that has to take the majority of the blame for being the enemy of nature, for destroying native cultures, for taking from the poor and giving to the rich, and poisoning the earth with the effluent from its factories. Yet business can produce food, cure disease, control population, employ people, and generally enrich our lives. And it can do these good things and make a profit without losing its soul.

If we accept that an organization has its own energy, its own sense of direction, and that our role is to align with it rather than direct it, how do we find out where it wants to go?

The simplest answer: do nothing special. Let self-management work its magic.

The paradigm of predict and control naturally prompts us to look for perfect answers. If the future can be predicted, then our job is to find the solutions that will reap the best results in the future we foresee. Predictions are valuable in a complicated world, but they lose all relevance in a complex world.

Making predictions gives us a comforting sense of control. But the reality is that organizations and the world we live in have become complex systems. In such systems, it becomes meaningless to predict the future, and then analyze our way into the best decision. When we do, out of habit, we only waste energy and time producing an illusion of control and perfection.

Most of today’s organizations are primarily concerned with self-preservation and the bottom line, hardly a good setting for people to explore their calling. In such a setting, employees also view work in terms of self-preservation—as a way to get a paycheck that pays the bills. In contrast, when colleagues are invited to listen in to their organization’s purpose, they are likely to wonder about their personal calling too.

Today, there is almost too much focus on leadership, mainly because it is widely thought to be the key to economic success. In fact, the degree to which a leader can actually affect technical performance has been substantially overstated. … On the other hand, the importance and impact of moral leadership on the life and success of an organization have been greatly underappreciated.

Having a CEO and a board that “get it” are necessary, but not sufficient, conditions. There is a common belief in organizational development circles that if we could only get leaders to be more enlightened, all would be well. That notion is too simplistic; enlightened leaders don’t automatically make for enlightened organizations, unless they also embrace structures, practices, and cultures that change how power is held, how people can show up, and how the organization’s purpose can express itself.

A radical inner transformation and rise to a new level of consciousness might be the only real hope we have in the current global crisis brought on by the dominance of the Western mechanistic paradigm.

The ideology of leadership and management that underpins large-scale human organizations today is as limiting to organizational success as the ideology of feudalism was limiting to economic success in the sixteenth and seventeenth centuries.

Einstein famously said that we cannot solve a problem using the same consciousness that created it. If that is true, then we won’t be able to deal with the impending crises brought by modernity (global warming, overpopulation, depletion of natural resources, collapse of ecosystems) with organizations molded in modernity’s thinking.

Many thinkers—futurists, economists, ecologists, mystics—have taken a stab at predicting how society might (have to) evolve.

For now, let’s stick with the most reasonable and widely shared predictions.

Increasingly, people accept the once controversial notion that the future calls for a society with no economic growth. A planet with limited resources cannot host unlimited growth * .

It’s not just oil and gas that will run out at some point, however deep we dig for them. We are depleting essential minerals just as fast, and sometimes faster.

We are getting short on land and fresh water, but we nevertheless continue to pollute much of both. Due to lack of an alternative, it’s a safe bet to assume that society will have to operate near the ideal of a closed-loop economy with zero waste, zero toxicity, and 100 percent recycling.

Zero economic growth does not mean no growth. The tragedy of our times is that we’ve * mistaken prosperity with growth.Societies might have zero or even negative GDP growth but be much richer emotionally, relationally, and spiritually. In all these domains, we can pursue growth and never worry about hitting a wall.

Schools and universities, which today mold students through uniform, factory-like batch processes, will in all probability be completely reinvented in a way that every learner co-creates his or her unique learning journey.

Our current interest-bearing form of money needs continuous growth in order to sustain value. The monetary system is so fundamental to the way we deal with life today that I find it hard to wrap my head around the prediction that we might one day operate with an entirely different type of currency.

Does this mean we might enter a world where, at an individual level, we discontinue stockpiling wealth to protect us from future misfortunes?

Could it be that the economic system will lend us a helping hand in not worrying about the future and in living truly in the present?

In a closed-loop economic world, does it still make sense for an individual or an organization to own land, raw materials

Humanity’s astounding growth and prosperity since the Industrial Revolution has been fueled by cheap coal, oil, and gas. Unfortunately, we have become so addicted to fossil fuels that we will soon have burnt our way through them. All in all, in only 200 years, we will we have used the energy reserves that were built up through fossilization over several hundreds of millions of years.

We are now entering a new wave of job destruction and creation that is having an impact not just on routine work, but also on cognitive and creative tasks. A tipping point seems to have been reached at which advanced robotics and artificial intelligence are beginning to render even many middle-income jobs obsolete.

Society could be entering a new phase—one in which fewer and fewer workers are needed * population has had to perform less-than-exciting work to make a living. For the first time in history, we can contemplate a future where all people, not just a happy few, are free to follow their calling, to live a life of creative self-expression.

The fixed religious belief systems of traditional societies have been challenged by the scientific and materialistic outlook of modernity.

People are satisfied neither with religious dogma nor with the exclusively materialistic outlook of modernity.They seek unity and transcendence through personal experience and practices. This offers the perspective of societies that heal previous religious divisions and re-enchant the materialistic world of modernity through non-religious spirituality.

Will we sail through the transition more or less unscathed? Or are we bound for a shipwreck, a collapse in civilization? Never before in history have we faced such a perfect storm of predicaments that each on its own could cause widespread decline of human life: after just a bit more than a century of modern living, 95 percent of the large fish are gone, along with 75 percent of the forests and about 50 percent of the oil.

An increasing number of people believe that technology alone will not save us and that a change in consciousness is needed.

Imagine a society and a monetary system where people don’t try to accumulate wealth, and where ownership gives way to stewardship.

The best way to predict the future is to create it. Due to the work of researchers and psychologists, we have a good grasp of the emerging stage of consciousness that will help us create a different future.

We have, perhaps for the first time, a good grasp of the structures, practices, and cultures that are needed to create purposeful and energizing ways to come together in organizations.

I no longer believe that we need to design and shape organizations in the way we design machines and buildings—objectively, from the outside. What we can do is evoke new ways of being, new ways of operating, from within an organization.

We can create radically more productive, soulful and purposeful businesses, nonprofits, schools or hospitals,and we can transform even an entire industry. We are not dealing here with a theoretical model or a utopian idea, but with a reality waiting to be imitated and propagated. *

These are extraordinary times to be alive. I can only wonder: If we can be in the world in the fullness of our humanity, what are we capable of?