The book „Reinventing Organizations“ by Frederic Laloux is a very special kind of economy book: it talks about self-organization in modern companies. This is a very hip topic today and one of the mega trends of the current decade.

Interestingly the author gives first the sociological and historical context of mankind since Stone Age. He relates to each context the types of organizations that have been possible and that have mainly existed in this context: their basic assumptions about the world and about human beings, their ability to plan, to scale, to deal with complexity and to react to unexpected events. During all these ages, it was possible that organizations with totally different value systems and organization level co-exist and compete, and today they do as well. Now in the last couple of decades organizations emerge that are only possible because of the complex experience in the modern world, and that are able to self-organize on team level and organization level and evolve their own organization in very short cycles. He gives all these organizations roughly spectral colors to distinguish them.

In the context of companies, the following colors apply:

• The amber organization is ordered hierarchically, and the hierarchy level of a person is already clear from the beginning. This is traditional school, army, church, and the start of industrialization.
• In the orange organization, there is as well hierarchy, but a person can grow if he/she meets the goals that the company has set for him, and can earn more. These companies see mainly selfishness as driver for doing better and receiving a bonus. Both orange and amber companies have a “machine” model of the company.
• The green organizations give everybody the same, rely on consensus, and want to do good things for the world. These are mainly social organizations, they can also be companies like the famous Berlin newspaper “taz”.Only good people can work in such organizations.

Now the new evolutionary-teal organizations have a fundamentally different view of the world and the human being: they trust in the common sense and the social sensitiveness of the individual, without postulating that everybody needs to be similar or even have similar needs and wishes. They trust people to collaborate across different goals and needs, and to bring all this into a common context that makes sense for all of them. They trust people to make different contributions and they trust the team to evaluate these. Human beings in a teal organization are trusted to be able to learn nearly without limits, going beyond job titles and role names in self-organizing cross-functional teams, learn about their customers and their needs, and improve the ability of their company to fulfill these needs. Seeing the company as a growing, living organism helps them to take much more good decisions than in the machine context.

This is no speculation – the author gives lots of examples from the work life of more than a dozen very different companies, here are four examples:

• Buurtzong – a social company for elder care in the Netherlands with 7000 people
• FAVI – a producer of special metal parts in France with 500 people
• Morning Star – a food processing company from the US with 400-2400 people depending on the season
• Sun Hydraulics – a global company for hydraulic components with 900 people

All these organizations, however different in location, purpose and size, have solved a couple of fundamental problems in similar ways.

• Their basic structure is team oriented, with teams that are self-organizing and self-administering.
• The teams care about hiring, pay and personal feedback
• There are no middle managers, mainly there are only coaches, or they elect project managers for a certain project for a limited time
• There is a high transparency of all information for everybody
• Decision taking is not based on consensus, rather decisions can be driven by an individual after consulting, listening to and considering input from all relevant colleagues
• A basic principle is trust instead of control – any adult can be trusted to take reasonable decisions
• Most of the companies have an explicit value system that they have created with the members, and which new members will learn in trainings
• Important training topics are communication, collaboration and handling conflict

In an earlier blog post I wrote about the Brazilian company Semco SA which started already beginning of the 1980 to transform into a self-organizing company. It does also a lot of things similarly. All of these companies are also very successful compared to competitors in their area, in growth, margin, and customer satisfaction. It also seems that they have a much higher ability to manage crisis and adapt to changing markets and situations than traditional hierarchical companies. So it can happen that these companies will be the most important actors in the 21^st century’s markets. It would at least not be a surprise to me, because in the same way as the modern democracies are more able to sense things happening and react to them than it was the Soviet Union with their top-down 5-years-plans, a self-organized company relies on the senses, minds and hearts of many people, not of a few.

Strangely, no software companies are mentioned in Frederic Laloux’ book. – Looking to the area of software development, the combination of self-organizing company culture with agile methods and lean startup principles seems to be the most successful in the last couple of years. In principle, lean startup and agile companies have the self-organizing company culture in their DNA. However, it can happen that it gets lost when the company grows, or the CEOs do not have a real good value system. An interesting case of a rapidly growing company with a genuine agile culture is Spotify – at least according to their agile coach Henrik Kniberg. In this presentation (video here, and the slides) he is talking about their agile company culture. There are many others said to fall into this category, like Google, Twitter, salesforce.com, Dropbox, Netflix, Streetspotr – at least all of them are using agile and lean startup methods from the beginning, yet it is not guaranteed that all these companies have also a self-organizing company culture in the organization above and around the teams. But there are much more of them than we know, and I am sure that soon there will be much more of these companies around, looking forward to it!