Many businesses who are moving to a distributed model are also jumping on the “Reinventing Organizations” bandwagon of less top-down management. The first question to ask when considering a move to self-management for your organization is simple, but it requires some background: What color is your company?

“Reinventing Organizations,” a New Look at Corporate Power Structures

The traditional model of management has always involved some sort of chain of command. Even in the most transparent and open companies, there’s still someone steering the ship—decisions that an individual employee or team can’t make are sent up to the next level, to someone with the power to make the call for the company. There’s a CEO, a CFO, and maybe more people who are steering the ship.

Recently, however, corporate thinking has begun to catch up with trends in developmental psychology, philosophy, and developmental theory to begin to question the necessity of any sort of hierarchy at all.

With his 2014 book Reinventing Organizations, Frederic Laloux casts a light on groups that have successfully cast off the hierarchical model in favor of a self-management model and reaped the benefits. He calls them “teal organizations.”

Developmental Theory and the Move to Self-Management

Historically speaking, in the scale of human history, the top-down hierarchical model of business management is a relatively new invention. At its most basic level, it started with the idea that the strongest should be the leader.

As human society developed and settled, organizations became bigger and the need arose for nuanced power structures: first in the form of replicable processes derived from a central authority, and then later on for promotion based on one’s achievement rather than one’s place within the hierarchy. Pretty sweeping generalizations, but I’ll expand on these ideas in a moment without going all Foucault on you.

These sorts of major shifts in the evolution of how humans organize themselves are studied in the field of developmental theory, and provide a primary groundwork for what Laloux is talking about when we talks about an organization’s “color,” which is based on the work of philosopher Ken Wilbur, who wrote the foreword for Reinventing Organizations. Wilbur gives each stage of human organization a color: red, amber, orange, green, and teal. Going over how they work involves a quick dive into human history.

Red Organizations: The Wolf Pack

Going way back to human society at its earliest state, about 10,000 years ago, we started out as tribes of hunter-gatherers. Gradually over time the weaker tribes were conquered by the stronger tribes, and the first stage of human organization was born, the Red stage.

In a Red Organization, a single chief has obtained power by being the strongest. Everyone underneath her is motivated by fear of that strength, and the structure can easily be upended when someone thinks that they might be more powerful and decides it’s time to make a change in the management.

An important thing to understand about these systems of organization is that they still exist today as a potential method for management. Typical examples of Red Organizations include gangs, crime syndicates, and middle school cliques.

Amber Organizations: The Army

As technology evolved, so did the models of organization we used as a society to get things done. Around 6,000 years ago, we made the leap into an agrarian society (as in, the cultivation of land), which enabled us to feed more people than ever before. Larger farming operations and more people required a more nuanced way to manage them than simply fighting it out for the top spot.

A system of laws were established, and the traditional pyramid of hierarchy was created, with power flowing from the top and then distributed throughout different levels of management. These are Amber Organizations.

Some examples of Amber Organizations today include armies, the Catholic Church, and many public education systems or government institutions. Think rigid structure and hard lines of management. The usefulness of such hierarchies is the ability to pass along stable, replicable processes to large groups of people.

Orange Organizations: The Machine

With the Renaissance, the Age of Enlightenment, and moving full steam ahead into the Industrial Revolution (no pun intended), we developed the Scientific Method and began to believe in the value of the individual.

Instead of making decisions based on morality, we started to approach decisions based on asking what was most effective based on the evidence. This is an Orange Organization, and it’s the model for most large companies today. We started using the process of innovation to figure out how to improve upon how we do things. Accountability allowed us to measure achievements against the overall objectives. The idea of meritocracy provided individual motivation: those who do well will get ahead.

Orange Organizations treat the company as if it’s a machine. It’s about optimization, setting goals, breaking those goals down into benchmarks, and then hitting them.

Green Organizations: The Family

In the past 50 years or so, a new model has popped up, the Green Organization, with an emphasis that has shifted away from competition and into one of cooperation. Employees are treated more like family—they share in decisions and share in the benefits of those decisions. Companies like Ben & Jerry’s and Whole Foods have some version of this model.

A Green Organization is based on the ideas of empowerment and egalitarian management. There is a tension between these two ideas, because ultimately managing is based on an imbalance of power in a relationship.

Teal Organizations: The Living Organism

All of the previous colors of organization have one thing in common: bosses. A Teal Organization, on the other hand, has no managers—because everyone is a manager. Workers generally divide themselves into teams of 15-20 people, and these teams are in communication with and accountable to each other.

Rather than worrying about pleasing a boss, workers are worried about helping each other and getting the job done well. If a process isn’t going smoothly, or something could be improved, they have the autonomy and authority to fix it themselves. If it’s a useful change for more of the company, they can let other groups know about it, who can then decide for themselves whether or not it makes sense for what they do. Like a living organism, the company makes the best decisions for itself based on the many smaller decisions employees are empowered to make for themselves.

Companies as diverse as Morning Star (30 to 40% share of the North American tomato market), Buurtzorg (a Netherlands-based healthcare nonprofit with 60% market share), and ESBZ (an internationally recognized grade 7-12 school in Berlin) have adopted this model with enormous success. Recently, Buffer has moved to a self-management model and, as usual, have written an excellent blog post about their experiences.

Distributed teams are in a key position to take advantage of this new model, because the architecture and real estate of a physical workspace can’t play into reinforcing a hierarchy. There’s no corner office to fight over. Sococo can help by increasing transparency in your organization and encouraging autonomy. Collaboration happens effortlessly because you can see what people are up to, and find the time to drop in for a quick chat or to share information.

Is it time for your company to go teal and empower workers to manage themselves?