Modern organizations—governments, religions, major corporations—have produced social and technological advances that have lifted humanity into an age of abundance. However, those same organizations restrict individual growth and have led to rampant consumption of resources. Recognizing this, some emerging organizations now operate from a new set of rules that veer away from hierarchical structures based on power and achievement and instead embody self-direction, authenticity, and a collective higher purpose.
In Reinventing Organizations, Frédéric Laloux traces the history of organizational structures to show that each leap forward in how we build our institutions corresponds to an equivalent shift in how we view ourselves and the world. Laloux argues that these advances are accelerating and that we’re on the cusp of a new paradigm. In this book, he recommends strategies to adapt to this transition that will elevate both how we work and how we live.
Laloux is a business consultant whose work gave him an understanding of how organizations function. While looking at companies that were successfully pioneering new approaches to work and management, he found an emerging pattern that prioritizes workers’ inner motivations and makes better use of their full human potential.
In this guide, we’ll trace the stages of organizational development from ancient kingdoms to modern corporations. Laloux uses a color-code shorthand to denote the different organizational models (Amber, Orange, Green, and Teal), but for clarity, this guide will instead use the terms traditional, modern, inclusive, and visionary. We’ll go into detail about the practices and values that Laloux says are inherent in the next level of human organization while touching on the steps needed to implement these practices today.
In addition, this guide will contrast Laloux’s findings to those of other business and leadership experts. Because Laloux ties his claims to the development of human consciousness, we’ll also compare his ideas to those in anthropology, psychology, and personal well-being.
In order to understand the future shape of organizations, it’s important to look at how they’ve developed. Laloux traces a series of paradigm shifts in organizational structure over the past 10,000 years, arguing that each transition goes hand in hand with a change in how we think about the world. These changes can be traced from our nomadic forebears to modern-day companies and nonprofit groups that function as part of a wider, global whole.
(Shortform note: Other business experts recognize several more types of organizational structures than Laloux does, including functional structures, matrix structures, and network structures. Though technically more varied than the ones Laloux describes, the majority of structural options share a top-down chain of command.)
Laloux doesn’t imply that certain types of organizations are superior to others, only that certain stages embrace more complex worldviews. Each type of organization evolved to fill a niche and may still be the best option under certain circumstances. Laloux also makes it clear that each stage of development incorporates the advances that came before while making new breakthroughs that enhance how we work. Organizations commonly share aspects of several different paradigms at once, including traditional, modern, and inclusive structures.
(Shortform note: The evolution of human organizational structures mirrors the evolution of another important human feature: the brain. As new features developed in the brain over time, they encompassed the older evolutionary structures rather than supplanting them. Because the older structures in our brains serve vital functions, such as regulating autonomic functions or triggering our “fight or flight” response, they coexist with more recent evolutionary features, such as the neocortex.)
Since prehistory, humans have gathered into bands for mutual survival and protection. With the birth of agriculture and the end of humanity’s nomadic lifestyle came bureaucracies, organized religion, and the development of a fixed ruling class.
(Shortform note: Laloux actually lists three earlier paradigms before traditional organizations—nomadic family groups, larger tribal affiliations, and proto-kingdoms marked by one individual’s ability to dominate a collective by force. In this guide, we skip over these stages as they’re no longer functioning models except on the far outskirts of modern civilization.)
According to Laloux, these first formal organizations were rooted in strict hierarchical authority structures that maintained their power through tradition and adherence to collective norms. These traditional structures can still be found today in government agencies, militaries, religions, and schools.
(Shortform note: In The Dawn of Everything, David Graeber and David Wengrow challenge the idea that the development of formal human organizations coincided with the agricultural revolution; they find that it occurred much earlier. However, they agree with Laloux that hierarchical structures started to form within pre-agricultural nomadic tribes.)
Laloux writes that one key innovation of traditional organizations was that authority became invested in positions instead of persons, and that rules were encoded into systems of laws. While these systems conferred ultimate authority upon one individual at the hierarchy’s peak, the will of that individual’s ego was subsumed into a collective “us vs. them” mentality. Belonging to the group was paramount, and individuals internalized the organization’s social norms.
The invention of agriculture also coincided with the invention of writing, which Laloux claims gave humanity a new concept of time that let us predict the future by studying patterns of the past. This development allowed for long-term planning, which reinforced the importance of tradition, but also made early organizations vulnerable in periods of unpredictable change. Tradition-based groups thrive best in times of stability, when rules are obeyed and no one deviates from their roles.
The Cognitive Revolution
In Sapiens, Yuval Noah Harari identifies an earlier shift in human development that Laloux skips over—the cognitive revolution that came about with the development of language. This revolution impacted our communal nature as a species by granting us the ability to create imagined realities and belief systems shared by whole groups.
It’s this ability to create a communal narrative that Harari argues is vital for the establishment of lasting institutions. While agreeing with Laloux that these institutions enforce their rules through coercion, Harari states that without the shared narrative upon which an organization exists, there would be no common drive to maintain the institution.
Because traditional organizations relied heavily on long-term stability and unquestioned authority, they faltered when the Scientific and Industrial Revolutions launched a period of accelerated change. Modern organizations developed, and they prized innovation over tradition, inquiry over dogma, and the merit of individuals over their preordained social class.
Laloux writes that fixed hierarchies of power were superseded by collective business enterprises, the precursors of modern corporations. Instead of trapping people in traditional roles, these new enterprises allowed them to question procedures and devise better ways of moving forward. The triumphs of this age include scientific progress and the freedom for people to choose their own purpose.
The Pros and Cons of Modern Business
Ironically, because modern organizational structures allow people to question established modes of operation, the benefits of corporate systems and free-market capitalism have themselves come under increasing fire in recent years.
The long-standing argument from Nobel Prize winner Milton Friedman in Capitalism and Freedom is that economic and personal liberty go hand-in-hand, while rigid, authoritarian power structures act as a barrier to both. However, many people no longer accept this belief at face value. In The Shock Doctrine, Naomi Klein illustrates that free-wheeling capitalism and corporatism are themselves merely another form of unchecked hierarchical power, citing modern corporations’ disastrous impact when their values are forced upon different systems.
Laloux notes that modern organizations retain a hierarchical structure, but in the modern model, previously rigid barriers in class and status are less strict. Direction, goals, and objectives come from the top, but it’s those at the bottom who determine how those goals are put into practice.
(Shortform note: These principles can even appear in otherwise strongly traditional structures, such as military organizations. For example, in Superforecasting, Dan Gardner and Philip E. Tetlock cite the methods of the 19th-century Prussian commander Helmuth von Moltke. He trained his officers to think on their feet and question their orders, in direct opposition to other armies’ traditions, which relied on strict obedience and rote memorization of strategies.)
Laloux acknowledges that the innovations brought about by modern organizations are responsible for our current age of abundance, in which agriculture, healthcare, and leaps in technology allow our planet to support a population that would have been unthinkable in the past. However, modernity exacts a heavy toll in the form of greed and overconsumption.
(Shortform note: It’s not hard to take potshots at modern society. However, in Zero to One, Peter Thiel argues that progress is our only path forward, and that we should pursue advances that empower individuals and reduce the drain on our planet’s resources. Similarly, in Doughnut Economics, Kate Raworth underscores the problem of unchecked growth while advocating for a more democratic economy that prioritizes human happiness and prosperity.)
In response to the soulless nature of modern organizations, inclusive groups took root in the 1960s, following the model of prior centuries’ movements to expand human rights. Laloux claims that inclusive organizations break down traditional and modern power structures by emphasizing group consensus. These organizations made strides in empowering individuals and broadening our understanding of our impact on the world.
Whereas modern organizations’ obligations are to their shareholders, inclusive organizations have a wider scope of duty to their employees, their communities, and the environment. In inclusive organizations, many of which are nonprofit groups, those at the top are “servant leaders” whose role is to support those who work beneath them. Decisions are often based on the organization’s values and culture, which they place at the center of their communal identity.
The Responsible Corporation
The idea that business leaders serve those beneath them has gained much traction over the years. In The Leadership Challenge, James Kouzes and Barry Posner define leadership as a relationship dependent on the entirety of a team and contend that leaders are responsible for empowering others in their organizations.
Likewise, the concept of “corporate social responsibility” is now touted as a beneficial model that not only serves the interests of society and the environment, but also provides value for traditional shareholders by increasing brand recognition, improving worker morale, and reducing the risk of legal action against the company.
Laloux says that while inclusive organizations subvert the power structures of tradition and modernity, they haven’t been successful at coming up with workable replacements. Being consensus-driven, they’re easily bogged down by their need to honor every point of view. Still, Laloux doesn’t see inclusive structures as a failure but rather as a necessary stepping stone to the next stage of humanity’s organizational development.
(Shortform note: Also referred to as the bottom-up business model, inclusive practices have been implemented at national newspapers and consulting firms. While Laloux suggests that employee-driven decision-making is the trend that will replace hierarchical leadership, business writer Mark Lukens says the choice is a false dichotomy—each approach can be valid in different situations, and leaders should adopt whichever works best at the moment.)
Laloux dubs all previous structures as “ego-driven” organizations, whereas what follows is the beginning of a different kind of development. He predicts that next-level visionary organizations will see themselves as living things not beholden to the egos of individual members. The ongoing shift in human consciousness away from the ego-driven mindset will change how we and our organizations set priorities, deal with conflicts, and interact with the world. Future organizations may do this by placing a guiding purpose above concern for profit, while emphasizing community and allowing their members to grow into their fully actualized selves.
(Shortform note: Other authors also see the importance of setting aside egos in organizations. In Ego Is the Enemy, Ryan Holiday argues that ego-driven ventures lead to failure more often than success. Holiday backs up Laloux’s assertion that a driving purpose is more valuable to individuals and society than satisfying the ego’s desire for power and recognition. Similarly, in The Infinite Game, Simon Sinek lists developing an idealistic institutional purpose as the first guiding principle for building a resilient business. A “just cause,” in Sinek’s words, provides a strong motivation for workers and buy-in from customers and clients. Staying true to such a purpose takes courage, because it often means prioritizing people over profit.)
Visionary organizations, according to Laloux, will merge the enlightened aspects of inclusivity with the practical savvy of modernity. They will be based on principles of self-management, with no structured hierarchy or push for group consensus. (Shortform note: The Covid-19 pandemic thrust self-management principles onto many industries by forcing companies to allow their staff to work without direct managerial supervision. By working from home, employees can be more productive while saving their companies money on technology, infrastructure, and facilities.)
In his research, Laloux studied 12 present-day organizations that model the attributes he believes will characterize this new type of organization. While he recognizes that his research lacks enough statistical power to draw firm conclusions, he believes his results suggest the path that future development may take. In the following sections, we’ll explore Laloux’s ideas about visionary organizations.
(Shortform note: In Built to Last, Jim Collins and Jerry I. Porras conduct a study similar to Laloux’s, but focusing on companies’ success and longevity rather than paradigm-shifting business practices. While their results agree with Laloux on some points, such as debunking the value of ego-driven leaders, they disagree on others, such as whether a successful business should feel like a safe space to be your authentic self. It should be noted that Collins and Porras use the word “visionary” differently than we do in this guide.)
In order to establish a better view of visionary organizations, Laloux surveyed successful companies that embody the mindset he believes will epitomize the next stage of human evolution. Though the companies he researched developed in isolation, Laloux identified a common thread of practices and philosophies that unites these groups in outlook and approach. These include new assumptions about how people work, fluid power structures, self-management, peer-driven performance, and healthy techniques for conflict resolution.
Underlying the way visionary organizations operate is a change in our basic attitude toward how humans behave in the workplace. Ever since the days of autocratic monarchs, leaders have assumed that people need the heavy hand of authoritarian rule in order to behave and get anything done. Visionary systems reject this idea in favor of the less cynical view that people are generally reasonable and can be trusted to make good decisions. (Shortform note: This sentiment is backed up by historian Rutger Bregman, who writes in Humankind that our species evolved to be compassionate and cooperative, and that the darker side of human nature flourished because of the structures imposed by civilization.)
Laloux argues that when trust replaces regulations and mandates, it unleashes workers’ inner potential. When we’re set free with the trust that we’ll work toward a purpose, Laloux finds that we’re revealed to be creative, intelligent, and willing to hold ourselves accountable for our own mistakes. Visionary companies assume that when mistakes occur, people will own and learn from them in a way that benefits the whole organization. (Shortform note: In Start With Why, Simon Sinek elaborates on the benefits of trust, such as allowing workers to take creative risks and invest more fully in the company’s goals. Sinek also notes that by tapping into the brain’s limbic system, trust gives valuable emotional weight to decisions made by others.)
Furthermore, says Laloux, peer pressure is a far better regulator than punitive action from a battery of bosses. As we assume responsibility for the organization’s goals, we stop merely working for money. We work for the quality of the work itself. (Shortform note: The idea that peer pressure can be a positive force may be counterintuitive, but has been gaining attention among those who study adolescent behavior. Peer pressure can help teens make positive choices, adopt healthy habits, and share moral support. The same has been shown to be true of professional colleagues who treat each other as coaches and collaborators.)
Visionary organizations’ most radical departure from modern structures is the elimination of the top-down pyramid. Visionary structures aren’t “flat” but fluid, with complex interrelationships determining how power and resources are shared. Laloux identifies three different structural approaches that visionary organizations use based on their size and the nature of their work.
Approach #1: Organizations are divided into small, autonomous teams who work in parallel. For example, Laloux describes the Dutch nursing company Buurtzorg, whose employees work in self-governing teams serving patients at home in defined geographic areas. Instead of middle managers, Buurtzorg has “team coaches” who advise local groups but cannot make decisions. Team members perform organizational staff functions, such as bookkeeping and human resources, instead of relegating them to a central office.
The Buurtzorg Model
A 2022 study reported on nursing companies outside the Netherlands that were attempting to copy Buurtzorg’s success. These companies reported improved care and relationships with their patients, while building stronger networks with other healthcare professionals. However, full implementation of self-managed nursing also requires a great deal of training on non-nursing duties as well as some changes to national healthcare policies.
Non-nursing companies employing aspects of Buurtzorg’s autonomous team structure include FedEx and 3M. FedEx found that self-managed teams increased employee motivation and engagement. 3M experimented with levels of team autonomy and found that peak efficiency came from striking a balance between autonomy and managerial control.
Approach #2: The individual contractors who make up the organization negotiate their roles and define their duties through one-on-one agreements. Laloux explains that these agreements are formalized into written commitments that the members of the organization make to each other. For example, at the agricultural company Morning Star, employees formulate personal mission statements that encompass the roles they plan to take on. They negotiate these commitments with members of their teams as well as workers from other divisions.
(Shortform note: Proponents of this approach claim that management is the most inefficient component of a workplace. A 2011 article inspired by Morning Star’s business model describes management as a “tax” on the organization that increases the risk of large-scale, poor decisions. Morning Star’s system of one-on-one contracts provides a web of checks and balances that reduces the likelihood of catastrophic error. However, Brian Robertson, founder of Holacracy (see below) says that Morning Star’s model is difficult to duplicate because its practices are enforced by that company’s specific cultural norms.)
Approach #3: The structure recommended by the Holacracy management system involves nested teams that work together when full autonomy isn’t possible. In this system, Laloux explains, groups of different size and authority take shape to address different levels of responsibility—a team of members from all parts of the company pursues the organization’s overall purpose, while smaller teams focus on specific aspects of it. One company that adopted Holacracy’s model was the online shoe retailer Zappos.
(Shortform note: Laloux’s description of Zappos comes from 2014; by 2020, Zappos reverted to a management-oriented approach. Zappos’ new structure divides the company into teams that function as small businesses within the larger organization. Zappos explains that they adapted to reflect the real-world marketplace.)
In addition to moving away from hierarchies, visionary organizations do away with job descriptions that spell out each person’s duties. Instead, a member of a visionary organization has “roles” they can pick up, create, or discard. Laloux says that these roles emerge organically from the combination of a person’s talents and the company’s needs.
(Shortform note: As opposed to job descriptions, roles can be described as small, indivisible cells of decision-making. Letting employees hold roles that would not necessarily fit into one traditional job description allows an organization to make the best use of each individual’s particular set of skills, competencies, and proficiencies. For example, a retail worker with strong interpersonal and design skills might be able to split their time between serving customers and creating advertisements without having to choose between career paths.)
Changeable roles give an organization flexibility to quickly adapt to situations. Without restrictive job descriptions, team members who identify opportunities or problems are responsible for dealing with them, either by assuming a new role or bringing it up with their team. Some companies even have a marketplace for roles, letting workers trade for projects that more closely match their talents. (Shortform note: Emphasizing roles instead of titles places the focus on the value employees add to the company, rather than merely their responsibilities. Flexible roles also let employees make better use of new skills they develop, whereas strict job descriptions set limits on whether workers are able to apply new knowledge.)
This isn’t to suggest that everyone is equal in influence or importance. Rather, says Laloux, people accumulate respect and reputation over time. As they gain experience, they take on more demanding roles, but their authority is strictly context-specific. Promotion becomes a meaningless concept—people advance by growing more fully into their own potential.
(Shortform note: The trouble with progressing based on reputation rather than traditional promotions is that reputation isn’t completely under your control. Hard work and integrity may not be enough without a dose of strategic self-promotion. In The 48 Laws of Power, Robert Greene says that reputation is something you must cultivate and protect. However, many tips on how to improve your reputation boil down to “be a decent human being.”)
Laloux states that leadership roles are inhabited by coaches who, unlike managers, have no coercive power. By necessity, there is always one person tasked with the role of taking the largest view of the company, usually dubbed the CEO. However, this position is vastly different than in modern corporations, as will be discussed later in this guide. (Shortform note: In The Coaching Habit, Michael Stanier differentiates between coaching and merely giving advice. Coaching actively empowers team members while helping them focus on the organization’s purpose. Especially in an organization defined by roles rather than job descriptions, coaching can help guide employees as to when to say “yes” or “no” to new roles.)
The most counterintuitive aspect of visionary organizations is their approach to making decisions. Laloux explains that anyone can make a decision for the company, so long as they seek advice beforehand. Because everyone in the company has this power, it increases everyone’s responsibility, demands cooperation, and mandates the need for transparent communication.
Laloux says that theoretically, anyone in the company can make any decision, regardless of scope. This includes creating new roles, spending company funds, finding new clients, and implementing new systems. What’s important is that the size of the decision determines how much advice must be sought. Everyone impacted by the choice should be consulted, all the way to the CEO for decisions that affect the whole company.
The Netflix Model
One highly visible company that grants its employees a free hand to make decisions regarding their own projects is Netflix, as described by CEO Reed Hastings in No Rules Rules. By letting workers make (and be accountable for) crucial decisions that benefit the company, Netflix has been able to adapt to an ever-changing entertainment landscape.
Agreeing with Laloux’s advice-seeking model, Hastings emphasizes that Netflix employees are expected to make well-informed decisions after gathering feedback from managers and colleagues. Because absolute candor is necessary for this process, it’s considered bad form for a colleague to withhold a skeptical or contrary opinion. However, it must be noted that Netflix employees aren’t able to make company-wide decisions, as is the case with the model Laloux advocates.
Laloux makes it clear that the advice-seeking process is not a quest for consensus. Once the appropriate advice has been given, the employee can make whatever decision they feel is right. The advice process gives everyone a voice, but it doesn’t give anyone a veto, not even the CEO. In fact, even the CEO must go through this process before making decisions. Not doing so is a sure way to get fired.
Distributing so much power throughout the organization means it’s absolutely necessary that everyone employed has access to all available information. Laloux says that keeping information compartmentalized would be lethal to companies in which anyone can steer the ship. Visionary organizations make use of intranets, blogs, and all-hands meetings to keep staff apprised of the company’s initiatives, as well as any difficulties it’s currently facing.
The Bridgewater Model
In Principles: Life and Work, Bridgewater CEO Ray Dalio describes seeking advice from others as a process of setting aside your ego. He emphasizes that your goal should be to find the best answer to a problem, no matter where it comes from. It’s important to judge every source’s credibility, but you should also be aware of your own blind spots and accept that other people may have better ideas.
Dalio is also a proponent of extreme transparency, to the point that Bridgewater records all meetings and interviews, and makes them available to all employees. This practice reduces bad behavior and self-serving politics, while providing teachable examples for staff.
When everyone is free to act as a self-regulated agent, it may be hard to imagine how individual performance is measured. For the most part, claims Laloux, it isn’t. Performance in visionary organizations is measured at the level of teams, whose results are available for all to see. Individual feedback is given by peers, and that pressure is often sufficient for individuals to judge their own performance. Laloux describes specific processes that visionary organizations use to give feedback, resolve conflicts, and determine worker compensation.
Laloux is quick to point out that visionary companies strive not to use fear or coercion as a motivator. Instead, they approach interpersonal feedback sessions from a perspective of teaching and learning. These sessions are structured around active listening and effective communication—skills in which all employees are trained. If a colleague has trouble fitting into a role, feedback can help guide them to a different one in which they might actually blossom.
Feedback From Every Direction
In Thanks for the Feedback, Douglas Stone and Sheila Heen make the point that how you receive and incorporate feedback is just as important as how you give it. This is true at the organizational level as well, where they explain that it’s necessary to create a culture of learning and for there to be multiple routes feedback can take, either officially or otherwise.
For example, in No Rules Rules, Reed Hastings elucidates Netflix’s formalized framework for feedback, with written appraisals that can be given for anyone by anyone in the company, as well as live, in-person group appraisals that reveal the interpersonal dynamics of each team.
Conflict between colleagues is inevitable, and the companies Laloux studied have structured procedures to address it. The first step is for colleagues to attempt to resolve their issues on their own. Failing that, two people in conflict can nominate a mediator whom both of them trust. The mediator can guide the process, but cannot enforce a solution. If the mediator’s help isn’t enough, a panel can be convened, conferring with the CEO if needed.
(Shortform note: In Difficult Conversations, Douglas Stone, Bruce Patton, and Sheila Heen lay out the ground rules for holding the type of sessions mentioned above. They recommend you adopt a position of curiosity by discarding the certainty that you’re right. You should differentiate between intent and results, practice active listening, and acknowledge the other party’s feelings.)
Another process unique to visionary organizations is how they determine compensation. Without formal hierarchies or HR departments, pay is either set by peer review or by the employees themselves, writes Laloux. In practice, many of these companies have found that people are good at accurately judging how much they should earn.
(Shortform note: Allowing self-managed employees to determine their own pay may not be as fair in practice as Laloux claims. A 2019 study reveals that in self-managed teams, women earn 25% less than male colleagues. The study’s authors attribute this discrepancy to men and women’s different negotiating styles and prosocial behavior in the workplace.)
The practices that define visionary organizations—flexible roles, self-directed decision making, a non-hierarchical sharing of power, and team-centered feedback and conflict resolution—can only be maintained within a certain kind of culture. Though cultures are unique to every organization, Laloux identifies many commonalities among the companies included in his research. These include placing a meaningful purpose at the core of the company’s mission, encouraging all employees to be their authentic selves at work, and building an air of transparency and trust that permeates the whole organization.
(Shortform note: Marcus Buckingham and Ashley Goodall offer a contrary view in Nine Lies About Work. They argue that overemphasizing a company’s culture can be harmful, especially if the culture only addresses surface-level issues and makes employees feel the need to conform. Instead, Buckingham and Goodall place more value on healthy, supportive teams.)
The strongest driver of the company’s culture is its overriding purpose in the world. As Laloux explains, this purpose is not dictated from on high but emerges organically from the work the company does and the values of its members. This purpose replaces profitability as the reason for the company’s existence, while guiding how it interacts with competitors, clients, and the community at large. For example, a software company whose higher purpose is to raise computer literacy in impoverished areas might offer discounts to elementary schools and libraries, or partner with them to seek grants for funding.
(Shortform note: In Start With Why, Simon Sinek argues that a defining purpose is not only valuable for organizational structure, but is also an essential component of connecting with customers. Without a clear, inspirational purpose, marketers must rely on manipulation tactics that may lead to short-term gains but don’t establish long-term trust.)
Laloux asserts that from a visionary perspective, organizations have a calling, just as do people. While an organization’s calling is initially determined by its founders, it can change. The job of those in leadership roles is not to dictate what that calling will become but to allow the company’s purpose to emerge and shift organically over time. The needs of the world may align with the company’s values in surprising ways, pushing the organization in new directions.
(Shortform note: More has been written about individuals’ search for purpose than that of entire organizations, but many of the same ideas apply. In The Success Principles, Jack Canfield states that you can derive a statement of purpose by articulating your positive traits and aligning them with your ideal vision of the world. In Who Will Cry When You Die?, Robin Sharma recommends regularly stepping back for a big-picture view of your place in the world (or in our case, your organization’s) and how your overriding purpose creates meaning.)
The shift from “profit” to “purpose” as the prime motivator means that fear for survival is no longer an underlying factor. Laloux says that visionary organizations act from an attitude of abundance. When the mission is paramount, visionary companies will often aid their own competitors, if doing so helps them achieve their goals.
(Shortform note: Even companies operating from the modern paradigm can engage in this practice. For instance, Microsoft’s guiding purpose is “to empower every person and every organization on the planet to achieve more.” In Hit Refresh, Microsoft CEO Satya Nadella describes how in order to better focus on this goal, they began cooperating with Apple and Google, turning their rivalry into strategic partnerships that emphasize long-term goals rather than short-term competitive gains.)
To be sure, profits are necessary, but visionary organizations view them as a byproduct of fulfilling the company’s purpose. For example, the companies included in Laloux’s study all perform very well against their rivals. Nevertheless, Laloux admits that his research may be colored by survivorship bias—he did not survey any companies that implemented visionary practices and failed. (Shortform note: In Built to Last, Jim Collins and Jerry I. Porras conclude that strong core philosophies are essential to long-lasting organizations and that organizations don’t have to choose between purpose and profit. Collins and Porras argue that a core philosophy has two components—values and purpose—both of which must be concise and actionable.)
The culture of visionary organizations goes beyond merely furthering the company’s mission. Laloux claims that these organizations put a priority on enabling their workers to grow into their own potential. Visionary companies are places where employees find a safe space to show up as themselves, be treated as adults, and flourish in an environment of healthy collaboration.
(Shortform note: In The Power of Now, Eckhart Tolle argues that we must be fully present with others (putting aside the mask of our ego) in order to truly connect with and relate to the people around us. Tolle asserts, and Laloux would agree, that engaging as our whole, authentic selves not only benefits us, but is necessary for the world’s well-being.)
Laloux points out that in modern organizations, everyone is forced to close off part of themselves in order to present a mask of professionalism. Managers treat employees as parents would a child. On the other hand, companies with visionary cultures encourage people to be fully present, quirks and all. With no hierarchy, colleagues relate to each other as adults and are able to see each other as people, not merely cogs in a machine.
(Shortform note: In Built to Last, Collins and Porras take a different view. The companies in their study benefit from hiring people who are already in alignment with the company’s culture and indoctrinating them to feel like members of an exclusive group. Collins and Porras argue that assimilating workers into a culture—rather than accepting their authentic selves—allows a company to trust them with autonomy while upholding the organization’s values.)
Without having to impress a boss every day, workers are more likely to simply be themselves. But in order for people to bring their whole selves, the company must be a safe space to do so. Laloux shows that visionary companies accomplish this by training everyone in leadership skills such as listening, coaching, gratitude, and authenticity.
(Shortform note: Encouraging colleagues to open up about themselves requires the courage to set aside the management/employee power dynamic, but it can reap great benefits. In Dare to Lead, Brené Brown gives the example of Air Force colonel Dede Halfhill, whose honest conversations with her airmen about their emotions successfully stemmed a drop in performance by revealing their feelings of exhaustion and loneliness.)
Visionary organizations also create avenues for personal development by allowing for learning and growth at company meetings, onboarding sessions, and in the workplace. (Shortform note: Because everyone in a visionary organization is expected to take on some leadership responsibility, the learning curve may be steep. In The First 90 Days, Michael Watkins lays out even more areas of training than Laloux mentions, including the company’s history, its present composition, and where it’s currently heading.)
These companies’ high-minded ideals rely entirely on the trust between workers and the organization. Therefore, says Laloux, it’s imperative that organizations demonstrate their trust by allowing everyone to act responsibly without a system of controls, in particular doing away with the compartmentalization of information. Laloux argues that total transparency is essential in building trust between an organization and its members. Trust allows workers to grow, gives them a sense of freedom, and challenges them to lead others by example.
(Shortform note: In Principles: Life and Work, Ray Dalio encourages total transparency while admitting that it can be painful in the short term. He also spells out several scenarios in which full transparency isn’t appropriate, such as when information is private or personal, or when it puts the long-term interests of the company or its clients at risk.)
Another benefit of transparency is that it allows every employee to see the organization from the CEO’s point of view. Keeping information on a “need to know” basis infantilizes workers by suggesting they can’t be trusted. Transparency lets employees honestly evaluate their own teams and others, while increasing their sense of ownership of the company’s successes and failures. (Shortform note: In No Rules Rules, CEO Reed Hastings identifies several key areas in which transparency is especially important for building trust and accountability—financial information, any possibility of downsizing, and admitting to leadership’s mistakes. According to Hastings, this level of transparency breeds confidence and loyalty in addition to trust.)
Laloux writes that visionary companies discard the illusion that any one person can control all the needs of the group. Instead, by distributing power, they make use of the whole organization’s intelligence while forcing tough decisions on individuals and teams who otherwise would have been told what to do. While this can be intimidating, it also lets workers come up with solutions far better than those from executives unfamiliar with their day-to-day work.
(Shortform note: Increasing everyone’s sense of responsibility for the organization’s well-being can also reduce fault-finding and blame. In The Oz Principle, Roger Connors, Tom Smith, and Craig Hickman argue that in general, we need to reassess our definition of accountability by identifying how we contribute to situations. This will empower us with a sense of agency that lets us take action to address any given problem.)
While many people, especially business leaders and managers, may find these organizational concepts to be intimidating, impractical, or even naive, others may see ways these practices and ideas can benefit their own workplace. Laloux concludes by suggesting ways that visionary concepts can take root in organizations. Leaders can build visionary companies from the ground up or transition them from older management paradigms.
First, Laloux addresses the topic of upper management. For an organization to function from a visionary perspective, it’s vital that the CEO, the board, and principal investors buy into the concept. If that commitment can be established, then the CEO can create and maintain the space for visionary processes to develop, while holding back the pressures that will try to fit the company into a top-down hierarchical structure. (Shortform note: In Good to Great, Jim Collins expands this idea to include everyone on the management team. He argues that the right people have to be in place before change can occur and that those involved in company leadership need to see themselves as a group of equals working toward a common purpose.)
Laloux stresses that in visionary organizations, the role of the CEO differs greatly from that in other institutions. While the CEO acts as the company’s public face, their job is to refrain from using power. Instead, CEOs should model visionary principles, such as going through the advice process before making decisions, being transparent in communications, and holding themselves accountable. The CEO must bring their whole, authentic self to the workplace, even though that means showing vulnerability and not hiding behind a managerial demeanor.
The role of leadership in enabling visionary practices is so crucial that Laloux identifies the mindset of the CEO as a necessary precondition for all that follows, while admitting that resisting the urge to take charge is the hardest part of the job for business leaders to accept. Trusting staff to make broad-ranging decisions is so counter to modern culture that the CEO must affirm it continually by acting as an advisor only, not relying on traditional mechanisms of power.
Leading From Vulnerability
By demoting the CEO to a kind of organizational figurehead, Laloux’s ideas are pretty far from mainstream. In The 21 Irrefutable Laws of Leadership, John C. Maxwell presents a more traditional view—that people follow leaders, not visionary ideals, and that strength, character, and respect are paramount. However, in Dare To Lead, Brené Brown says that vulnerability is the defining characteristic of courageous leadership.
Being vulnerable lets leaders engage in difficult conversations with honesty and clarity, reduces their emotional reactivity, and enables them to build trust with the whole organization. It also helps the organization develop failure resistance if the CEO normalizes failure and lets employees know they’ll be supported for taking risks. Failure is so important to learning that Ryan Holiday (in The Obstacle Is the Way) says you should encourage small, frequent risks in order to fail as soon as possible while minimizing the cost to individuals or the organization.
Aside from describing the ideal CEO, Laloux also insists that visionary companies be very selective about who serves on their boards. They will have to understand the organization’s higher purpose and not put pressure on the organization to please investors to the detriment of following the company’s higher calling. Investors who share the organization’s values may be difficult to find, but in the long run, they’ll support the company’s mission.
(Shortform note: Creative management decisions may be needed to maintain a company’s vision through future changes in leadership. In 2022, Patagonia founder Yvon Chouinard gave his $3 billion company to a nonprofit trust instead of selling to investors, ensuring that all of Patagonia’s future profits would be used to fight climate change and protect undeveloped land. This unconventional move had the added benefit of letting Chouinard’s family maintain an interest in the company while avoiding the taxes they’d have owed had they sold it.)
Once the necessary leadership is in place, you can then set visionary practices in motion. Whether you’re starting a new company or steering one that already exists, Laloux suggests introducing workers to concepts of self-management, extolling the virtues of wholeness in the workplace, and embedding the company’s purpose into every aspect of work.
To do this, Laloux recommends you begin by educating all team members in the self-management practices the company will adopt. When members push back against these new ideas, reframe the conversation to talk about the positive assumptions about human nature that underlie self-management principles, such as that people are trustworthy, or that the best solutions often come from the front lines, not some lofty corporate office.
(Shortform note: Many of us may have trouble embracing Laloux’s positive outlook of human nature. However, in The Laws of Human Nature, Robert Greene argues that we sabotage ourselves by adopting irrational attitudes, such as holding onto needlessly negative views about ourselves and others. On the other hand, he explains that choosing positivity is empowering.)
The next components that Laloux says should be put in place are the advice process for making decisions, a method for conflict resolution, and tools for peer evaluation. In conjunction with this, leaders should implement safe space guidelines and provide training in collaboration and communication skills. From there, the organization can set a foundation to foster authenticity in the workplace and allow the company’s higher purpose to emerge.
(Shortform note: Showing up as your authentic self to work is a radical departure from the cultures many of us are used to. In Lean In, Facebook COO Sheryl Sandberg recommends delicate honesty when voicing your truth, but not hiding behind a professional persona. In The Coddling of the American Mind, Greg Lukianoff and Jonathan Haidt argue that safe spaces should not come at the cost of silence, and that diverse viewpoints must be honored.)
Companies based on an older paradigm will have to implement self-management gradually, with the full approval of the board and investors. Guiding an organization, or even one person, into a more elevated mindset is a twisting and bumpy process. However, Laloux contends that visionary organizations represent the wave of the future and that adopting their practices now may better position modern-day companies to weather the changes of tomorrow.
(Shortform note: Business experts agree that implementing sweeping changes is difficult, yet worthwhile in the end. In Principles: Life and Work, Ray Dalio estimates that it can take up to 18 months for employees to adjust to new mindsets such as extreme transparency. In Good to Great, Jim Collins compares the process of transformation to driving a flywheel that requires a lot of effort to get going but eventually starts to spin on its own.)
Laloux asserts that employee self-management will be an essential part of the next stage of organizational development. If you’re self-employed or have ever worked from home, you’ve already experienced self-management to some extent. Compare self-management as described in this book to jobs in which you’ve worked under direct supervision.
Do you feel more comfortable managing yourself or receiving direction from others? Describe a situation in which making a crucial decision about your job either caused you stress, made you feel empowered, or both at the same time.
If you were to be completely in charge of your schedule, how would you plan your typical work day? Would you coordinate any of your activities with others?
Laloux says that visionary organizations have a defining purpose beyond making profits and providing value for shareholders. This may be true of many organizations that have not yet adopted a visionary mindset.
Consider an organization that you contribute time to, either as an employee or volunteer. Outside of financial gain, what does that organization hope to accomplish? What tangible effect on the world does it hope to achieve?
Imagine that you founded an organization of your own. What purpose would you hope for it to accomplish? What personal values would you want the organization to embody?