This article is an excerpt from the Shortform book guide to "Reinventing Organizations" by Frédéric Laloux. Shortform has the world's best summaries and analyses of books you should be reading.
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Are middle managers necessary? What are some ways to get around a top-down structure?
In Reinventing Organizations, Frédéric Laloux describes “teal organizations.” The most radical departure of these visionary organizations from modern structures is the elimination of the top-down pyramid. They aren’t “flat” but fluid, with complex interrelationships determining how power and resources are shared.
Read more to learn about three different structural approaches that non-hierarchical organizations use based on their size and the nature of their work.
Approach #1
Some non-hierarchical 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 this type of non-hierarchical 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 non-hierarchical organization 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 sizes 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.)
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Here's what you'll find in our full Reinventing Organizations summary:
- The practices and values that are inherent in the next level of human organization
- A look at the paradigm shifts in organizational structure over the past 10,000 years
- How to implement visionary practices at your company
