In the colour-coded world of organisational science, ‘teal’ organisations are said to be more efficient and effective than the traditional hierarchies of business. Replacing the classic pyramid of conventional organisations with empowered teams, self-directed decisions and rapid solutions, truly evolved organisations are changing the way business thinks about business. 

Everyone has experienced the limitations and/or frustrations of conventional organisations. The politics and power struggles. The endless, often pointless meetings. The gatekeepers and road blocks. The difficulty of getting anything done. Even when you’ve got good bosses and well-meaning managers.

Surely, there’s a better solution? And there is.

Evolving from the tech world and holistic systems thinking, there’s a new movement towards a culture of self-organisation – putting unprecedented trust in people and pushing control down towards the customer coalface.

Extraordinary order

One of the common misconceptions is that chaos will ensue. Managers worry that, without ‘management’, self-organisation means disorganisation.

Nothing could be further from the truth. Under self-organising systems such as Holacracy, a formal public accord outlines mutual responsibilities. This ‘constitution’ replaces the often hazy (and sometimes conflicting) expectations embodied in the variable person and practices of the individual boss or team leader.


Each colleague is encouraged to do what they feel is right. Decision-making is delegated down the ranks, freeing senior executives to concentrate on high-level strategy.

If this seems like madness, consider this. Morningstar is the business which controls about 40 per cent of the USA’s tomato paste market. It has a $700m turnover and a board of directors, but it’s self-organising. With no supervisory management, staff agree their own job responsibilities. They work and innovate as they will, and can even invest in equipment. And Morningstar is not alone.


8,000 staff

In the Netherlands, Buurtzorg has 8,000 community nurses in around 700 self-organising teams. These nurses are now 40% more efficient than the old ‘time and motion’ methods. They’re also more effective – patient services have improved along with staff morale.


The secret is that self-organisation is not the same as disorganisation. In fact, all of these ‘teal’ organisations have very similar operating systems. Mutual responsibilities are made clear. Through proven concepts such as Holacracy, distributed decision making becomes highly practical.


Under self-organisation more senior and talented people can be re-energised. Freed from endless meetings (and making up numbers to appease the City), they can concentrate on what matters to the business. They have the time and space to develop skills, talk to customers, and ensure the company’s holistic commitment to a higher, customer-centric path.

And that seems to be the difference. Higher level thinking shapes a better class of organisation. By serving customers, this creates a better way to make a living – and a better way of living.


Within the evolution of organisations, there are 5 basic colours: red, amber, orange, green and teal. Across history, the nature of organisations has reflected the mindset of its community. Different organisational structures emerge from different ways of thinking and create different ways of being.

Accordingly, many of the operating assumptions are like the water in a goldfish bowl – invisible to the goldfish. People tend to assume that their current model is ‘correct’ and ‘how things are’ – and fail to see its man-made nature.


The red organisation

Consider the Mafia or even Shakespeare’s Macbeth. These societies often show the most basic and regressive form of ‘management culture’. Violence and fear predominate. Like the men who operate them, such systems are dangerously unstable.


Each iteration tends to be short-lived. For obvious, blood-soaked reasons, they’re described by organisational theorists like Frederic Laloux as ‘red’ organisations.

The participants find themselves in thrall to the usually unwritten codes. That’s true even as societies evolve – from warring tribes to agrarian settlers to industrialism to ‘knowledge working’. The organisational structures with more effective, evolutionary outcomes win through.


The amber organisation

The next evolutionary level in system thinking is ‘amber’. (The Catholic Church would be a classic example.)

Such organisations have formal roles, standardised processes and reporting. Obeisance and hierarchical stability are achieved by promotions and punishments, spiritual and otherwise. Less lethal than the mob, this ‘command and control’ approach is also more sustainable.


Yet, ‘amber’ organisations also have a fixed view. Innovation is unwanted. They follow the rules and repeat what worked in the past. These stolid institutions – typical of government bureaucracies, armies, traditional schools – may not be popular or effective, but they are good at persisting. You may find yourself working with them, even today.


The orange organisation

What ‘amber organisations’ are not, of course, is meritocratic. You rise by compliance. But, in the competitive context of 20th-century capitalism, just doing what worked in the past gets you killed, commercially-speaking.


So more modern ‘orange’ organisations arose. Seeking profit and growth through innovation and accountability. you get rewarded for what works. This mindset can be seen at work among the ‘intellectual barbarians’ of investment banking. But it breeds cynicism and short-termism. The aim is to ‘get-rich-quick’, and hang the consequences and costs for society.


Yet the pursuit of loot as an end in itself tends to turn out badly.The individual freeloader may get away with personal gains but social ignominy often follows. Titanic captains of industry have been dragged over hot coals in public inquiries. Society is losing patience with industrial-scale selfishness. In response, we’re seeing the evolution of ‘considerate capitalism’ or ‘profit with purpose’ across many businesses.

The more evolved organisation

You may be lucky enough to work for a ‘green’ organisation. The approach is driven by wider considerations than the short-term interests of shareholders.


And, since people tend to work better when they don’t feel like a cog in a faceless machine, the company does better too.

A large scale study published in 2015 by the Harvard Business School suggested that a stock portfolio composed of firms which invest strongly in key sustainability issues such as human capital can outperform their less evolved counterparts by 2.5 per cent to 7.5 per cent annualised.


As a result, the motivation within these more evolved organisations is often commercial as well as cultural.

Indeed, you sometimes find ‘orange’ organisations painting themselves ‘green’.

The business pays lip service to their ‘internal culture’. However, the dead giveaway is the formality with which ‘vision and values’ are mandated top-down rather than growing out of a softer, more individualistic mindset.


The teal organisation

What’s next in the evolution of the organisation? What kind of structure will be best adapted to this strange new world?

We all know there’s too much information. We know there are too many complexities.


And there’s not enough time for any ‘big boss’ to be consulted, never mind to do all the deciding.

So, a new breed of ‘self-organising’ organisations is emerging, colour-coded as ‘teal’.

In these set-ups, the old-fashioned idea of ‘the boss’ has been killed off.


Serious decision-making is delegated across the organisation. Each colleague is encouraged to do the right thing by the customer.


The future isn’t orange

Organisational development and employee engagement are intellectually interesting but also very serious issues.

That’s because, in the long run, the internal alignment of your business has a massive impact on external delivery.

The focus on ‘what matters’ at the customer coalface incites effective action – helping you be more-or-less right today, rather than perfectly wrong tomorrow.


From the viewpoint of customer experience, we recognise that effective ‘buy-in’ and deployment are essential across the organisation.

But it matters most where effective customer-facing actions can’t wait on complex approval loops.

And, these days, that’s more or less everywhere.


Regardless of your current organisational model, our proven programmes can help embed new thinking and ignite customer-centric practices.