BOOK REVIEW: Frederic Laloux – Reinventing organisations

https://www.goodreads.com/book/show/20787425-reinventing-organizations?ac=1&from_search=true

The book was recommended to me by Dima and I bought this as an audiobook. It is about the new way of building up an organization upon self-management principles. It is hard to summon the principles in a few paragraphs but I strongly believe there is so much sense in all that, so I try.

The author has studied several of this “new type” organizations. In these org-s everybody has equal power as well as equal responsibility. Everybody is free to contribute in the areas where they feel most beneficial and where they feel their heart belongs. How it works in most important aspects of the company’s everyday life? Just a few examples and ideas that I have filtered from the book.

Decision making process

Everybody is free to make the decisions that are needed – no matter how big or expensive. There is only one ground rule and mechanism that control how this works – the person taking the decision should before consult with at least one fellow team member who understands the issue. The decisions do not have to be unanimous, in fact they almost never can be for different reasons and still everyone can make them, but like I mentioned they have to be discussed with other team member(s) upfront.

NB! What is a decision in this context is not explained. To reply to a customers e-mail or not is also a decision. In fact, every action is followed by some type of decision, but actually in lot of the cases you are just following the previously agreed principles of action (that we will respond to customers e-mails, for instance). To my mind decision-making in this context is needed when something new and previously unagreed arises.

Power and responsibility

Since everybody is free to make decisions, this also means that everybody in the team has full power and full authority. The author of the book states that if everyone has power rather than only one person (the CEO), this empowers the whole organization. Everyone can feel important and that their input really matters.

Also, the responsibility in this case is not a zero-sum game. Everybody is fully responsible for everything that happens, since everybody has their own say or possibility to influence the outcome. If the decision was made by colleague in our team, what did we do to prevent this happening? If it was made in other teams, did we care enough to join that team and give our input?

Conflict situations

The conflicts between team members are solved mainly in three phases:

  1. One team member tells another that he has problem with something (perhaps the other person regularly fails to deliver their promises). Team members discuss among each other and find the resolution.
  2. If this phase fails, they call in a third team member as a mediator for the conflict.
  3. If this phase fails there will be made a commission of team members that debate the issue and find out a solution.

Hiring and firing

All hiring is made by the team that needs a new team member, not by CEO or HR department. This type of organizations don’t even have an HR dept.

Firing is handled like all other conflicts. Usually team members understand the reasons and most probably do not feel the right motivation anyway to continue. Firing is a very rare case, since everyone can generally find a place in the organization where they can do what they enjoy and where they are valuable. Usually employees in these organizations also do not slack off due to the fact that they enjoy their work environment too much.

The structure of company

There are no mid-level managers in this type of companies. There are teams inside company for different purpose and tackling different issues. Everyone can actually be in these workgroups/teams where they feel most beneficial and most motivated. Teams can have leads but all members of teams are equal and bear equal power and responsibility. CEO is just another employee and in workgroups/teams is just another team member.

The main tasks of CEO, outside these groups, are to represent a company in public and to be a link between owners/board and employees to make sure the board and owners understand the principles how these type or org-s work and would not kill these practices.

Teams are not usually operating on some pre-fixed budget. It is assumed that team members are responsible and all expense is made for the sake of getting the results and revenues will follow.

Meetings

There are almost no team meetings. Meetings are organized within team ad hoc, in case the need arises.

The purpose of being

The driving purpose for these organizations is not profit. It has to be something more meaningful the team. To heal some big problem in the world is a great purpose but actually to create and carry enjoyable work culture and jobs is also fine. The profit is needed to fulfill that purpose and keep activities sustainable.

The results

The business results of these teams are not at all average. Generally, this type of companies are still hugely profitable and this is the reason in several organizations why boards and investors also accept this (in case this was not their initiative) – since the company is not working for profit but for a purpose.

Why they are not more dominant in the ecosystem? In lot of times Usually board and investors are eager to cancel these type of setup right after there is recession in economy and the economic results are not that good.

Summary

To summarize this interesting book, I would tell that I liked most of these ideas a lot and they made sense to me. They cannot be implemented with one huge campaign but gradually most of this is doable. I would definitely recommend the book. Especially for Kadri (How does our most titled psychologist think about it from organization psychology point of view) and Mehis. But also to others who are interested in how organizations should and could work.

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