We have discussed our purpose-driven approach on a number of occasions, and there is no doubt that leading with purpose at the forefront can support organisations in countless ways.
Evidence suggests that purpose-led businesses, when compared to non purpose-led businesses, benefit from greater global expansion (66% compared with 48%), more product launches (56% compared with 33%) and success in major transformation efforts (52% compared with 16%) (Harvard Business Review). An article by Forbes also suggests that in purpose-driven businesses, employees are “happier and more productive”.
However, if we look beyond purpose, and start to consider more widely the best ways in which to run an organisation, there are some very interesting theories. Kirsty Mclardy, Livingston James’ Head of Research, takes a look at Frederic Laloux’ model for reinventing organisations.
In his book “Reinventing Organizations”, Laloux presents a historical overview of organisational development, identifying different stages of organisational evolution, each characterised by distinct ways of thinking, managing, and operating:
- Red corresponds to the first organisational form which centred around power, fear and submission
- Amber relates to the shift to authority being linked to formal roles or status rather than powerful individuals and this is where hierarchy, stability and long-term outlooks were king
- Orange organisations remain hierarchical but with a slight increase in autonomy; however, this organisation type is still regarded as being a ‘machine’
- Green organisations look to empower employees and have a stronger focus on the wellbeing of all stakeholder groups
Laloux argues that traditional organisational models have limitations and proposes a more evolved approach to running an organisation: the Teal organisation. There are three pillars to a Teal organisation:
- Self-management: Teal organisations operate without relying on traditional organisational hierarchies. Rather than relying on a central control, they look to the collective and individual intelligence of their employees. Removing the typical boss-subordinate relationship, a Teal organisation is instead managed by distributing authority amongst peers. This allows for a more fluid approach and for the most appropriately skilled individuals to take influence.
- Wholeness: Historical organisations typically expect individuals to bring only their professional self to work, often rejecting vulnerability and more emotional aspects of personality in favour of strength and confidence. Employees of Teal organisations are encouraged to portray and develop themselves in a more rounded way, as opposed to purely professionally.
- Evolutionary Purpose: Teal organisations are constantly evolving and striving to improve. Taking the idea of being purpose-led one step further, the evolutionary purpose ensures that there is a deeper reason for the business’s existence. This purpose should involve striving to make a difference for the community in which the business operates, remaining unconcerned by competitors and their performance.
Teal Organisations in Action
Laloux poses some compelling case studies for successful Teal organisations, including Patagonia, Morning Star and Buurtzorg.
Buurtzorg is a Dutch home-care organisation that truly encapsulates all things Teal. The business operates 1,000 autonomous, self-managed teams that run and manage the whole healthcare process; it works to bring solutions that lead to increased independence and improved quality of life for the self-managing clients (or patients). It has been so successful that other countries (including Sweden and Japan) have since replicated the model, and there are many health and care organisations in Britain and Ireland also adopting the approach.
Patagonia is renowned for its exemplary business in terms of purpose, having run the well-known Common Threads Partnership project; encouraging consumers not to make purchases they don’t need, to repair any Patagonia clothing that may be damaged, and to reuse or recycle products – appearing to discourage sales in the short term. It could be argued however that Patagonia is not truly Teal as they do have a more typical hierarchical structure.
Becoming a Teal Organisation
Comparing case studies got me thinking about whether we could adopt some aspects of the Teal organisation approach, or a version of the idea behind it, rather than having to reinvent our organisation completely. Whilst being a truly Teal organisation may be the ultimate goal, practically this requires a great deal of change and could be challenging to embrace completely in the short to medium term.
If I consider our own journey within Livingston James Group, I would suggest that becoming employee-owned could potentially be considered a small step towards Self-Management. Whilst we still have a form of hierarchy (including a Board, CEO and Management team) and could not claim to be ‘self-managing’, we are all now equal Partners in the business, and all have a say in ensuring the business is run for and on behalf of all employees. I believe we are further along the line in terms of Wholeness and particularly our Evolutionary Purpose; however, we still have a way to go before we could define ourselves, in Laloux’ terms, as a Teal organisation.
What type of organisation are you? Or perhaps more importantly, what type of organisation do you aspire to be?
At Livingston James Group, our purpose is to support our clients and candidates to realise their potential. If you are looking for advice from a client or candidate perspective, please get in touch with Kirsty Mclardy, Head of Research, at [email protected].