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Strategy

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The topic of Strategy covers how the traditional process of strategic planning plays out in Teal organizations.

A new perspective

Every historical stage has given birth to a distinct perspective on strategy, and to very different practices:

Red Organizations

Red organizations don't typically develop long-term goals or strategies beyond survival. The chief(s) seek short-term gains to maintain power, and to respond to threats and opportunities as they arise.

Amber Organizations

Amber organizations can develop strategies but do not emphasize them, as the world is viewed as relatively unchanging and predictable. The emphasis is rather on processes. To the extent strategies are developed, this is done very much at the top of the hierarchy only. Decisions are handed down to workers at the bottom, with information shared only as needed.

Orange Organizations

In an Orange organization, strategy becomes much more important, as the world is viewed as increasingly dynamic. However, while the world is considered increasingly complicated, it is still viewed as predictable. Strategy is still generally a very top-down process but transitions from command and control to predict and control. In order to maintain competitive advantage, the Orange paradigm concludes that large parts of the organization must be empowered and given some room to think and execute on their own. This gave rise to management by objectives – top management formulates an overall direction and cascades down objectives and milestones to reach the desired outcome. This has resulted in familiar processes such as regular strategic planning, yearly budgeting, balanced scorecards and key performance indicators.

Green Organizations

In Green organizations, the organizational structure is further decentralized: lower ranks are increasingly empowered and a key responsibility of leaders is to facilitate this empowerment. However, Green organizations typically maintain some sort of hierarchical structure with strategic direction principally coming from the top. Strategy is also now enlisted in the service of purpose, which goes beyond Orange objectives of winning and profit.

Teal Organizations

In Teal organizations, power is diffused. Self-management replaces the hierarchy. Strategic thinking can come from anywhere, not just the top. Team members can offer advice, suggest initiatives, recommend change--as long as they consult with interested parties along the way. The use of the 'advice process' is the crucial enabling ingredient. Strategy is also inextricably linked to purpose, and conventional strategic planning is replaced by “listening to purpose”.

In practice

Strategy as an organic process

In traditional organizations, long-term strategy is decided by those at the top -- typically the CEO and senior management team. Strategies are developed through a process that begins with top management examining tightly held, sensitive information. This information may consist of long-term predictions and plans and solutions to capitalize on the opportunities they forecast. The plans become annual objectives, with divisional targets. Detailed documentation outlines the pre-chartered course. The new-direction/plan is communicated top-down.

In Teal organizations, there is no strategy process in the conventional sense. Instead of a direction set from the top, people in these organizations “listen” for the organization’s purpose and thereby gain a broad sense of where the organization might be called to go. A more detailed map is not needed. It would limit possibilities to a narrow, pre-charted course.

With the purpose as a guiding light, everyone, individually and collectively, is empowered to sense what might be called for. Strategy happens organically, all the time, everywhere, as people toy with ideas and test them out in the field. The organization evolves, morphs, expands, or contracts, in response to a process of collective intelligence. Reality is the great referee, not the CEO, the board or a committee. What works gathers momentum and energy within the organization; other ideas fail to catch on and wither.[1]

Workable solutions, fast iterations

Teal organizations don't rely so heavily on the predict and control model. While predicting the future may be helpful in a complicated world, it is less relevant in an increasingly complex world. Out of this understanding, Teal organizations tend to move to implementing workable solutions, today, that can be improved at any point. Companies are not chained to strategic planning processes, or driven to achieve targets that might be quickly out of date. These companies are freer to progress quickly, via fast iterations, and revise strategies as necessary.

Jean-François Zobrist at FAVI uses the following metaphor to explain the difference. An airplane like a Boeing 747 is a complicated system. There are millions of parts that need to work together seamlessly. But everything can be mapped out; if you change one part, you should be able to predict all the consequences. A bowl of spaghetti is a complex system. Even though it has just a few dozen “parts,” it is virtually impossible to predict what will happen when you pull at the end of a strand of spaghetti that sticks out of the bowl.[2]

Dynamic Steering

Brian Robertson at Holacracy uses a metaphor from the world of agile software development to describe how the planning process differs in Teal organizations:

Imagine riding a bicycle the way we manage most modern organizations. You would hold a big meeting to decide the angle at which you should hold the handlebars; you’d map your journey in as much detail as possible, factoring in all known obstacles and the exact timing and degree to which you would need to adjust your course to avoid these. Then you would get on the bicycle, hold the handlebars rigidly at the angle calculated, close your eyes, and steer according to plan. Odds are you would not reach your target, even if you did manage to keep the bicycle upright for the entire trip. When the bicycle falls over, you might ask: “Why didn’t we get this right the first time?” And maybe: “Who screwed up?”

That ridiculous approach isn’t so far from the approach many organizations take to strategic planning. By contrast, Holacracy helps an organization operate more like the way we actually ride a bicycle, using a dynamic steering paradigm. Dynamic steering means constant adjustment in light of real feedback, which makes for a more organic and emergent path. If you watch even the most skilled cyclist, you’ll see a slight but constant weaving, as the rider constantly takes in sensory feedback about his present state and environment, and makes minor corrections to direction, speed, balance, and aerodynamics. Weaving arises because the rider maintains a dynamic equilibrium while moving forward, using rapid feedback to stay within the many constraints of the environment and equipment. Instead of wasting a lot of time and energy predicting exactly the “right” path in advance, he instead holds his purpose in mind, stays present in the moment, and finds the most natural way forward as he goes. That’s not to say the rider doesn’t have a plan or at least some sense of his likely route, just that he gains more control, not less, by surrendering to present reality continuously and trusting his capacity to sense and respond in the moment. Similarly, we have the opportunity to get more control in our organizations by more relentlessly facing reality and adapting continuously. When we become attached to a specific predicted outcome, there’s a risk we will get stuck fighting reality when it doesn’t conform to our prediction. [3]

Internal communication

In Teal, strategy emerges organically from the collective intelligence of everyone in the organization. This collective intelligence is encouraged by sharing company data and information. As everyone is 'in the know', information is available to all to offer strategic suggestions.

Teal organizations may use 'all-hands meetings' to share important information, and to discuss the organization's response. This reflects trust in the organization's collective intelligence. It also rejects the notion that a only small group of people at the top could master all the complex information necessary to make sound strategic choices. [4]


Frequently asked questions

How does Strategy link with the three Teal breakthroughs?

Self-management

In Teal organizations, thousands of decisions are made by individuals and teams who are trusted to do the right thing. Plans are not handed down from the top with little room to maneuver. People are trusted to plan, make improvements, and execute.

Wholeness

In Teal, employees are encouraged to bring their 'whole self' to work: the emotional, the intuitive, and the spiritual are all welcome. The workplace becomes more holistic as a result. This allows for, and encourages, reflection and mindfulness. Reflection on the company's purpose and direction is encouraged.

Evolutionary purpose

Because Teal organizations are driven by evolutionary purpose, traditional strategic planning is replaced by the process of listening to purpose. The purpose of an organization is a manifestation of its collective intelligence, and so its direction cannot be mandated from the top down.

Does that mean that in Teal organizations, anticipatory thinking is viewed as a waste of time??

Brian Robertson offers the following on this topic:

While Holacracy’s approach to strategy resists relying on predictions, that’s not to say all forward-looking projections and anticipatory thinking are useless. In this regard, it’s helpful to understand the difference between a prediction and a projection. “Predict” comes from the Latin præ-, “before,” and dicere, “to say”— thus it literally means “to say before,” or “to foretell, prophesize.” “Project,” on the other hand, is from the Latin pro-, “forward,” and jacere, “to throw”— thus, “to throw forth.” In order to throw forth, you must be firmly grounded in the place you are starting from: the present reality. Getting real data and “throwing it forth” to get a sense of where events are headed is often useful to better understand your context, and it is different than “foretelling and prophesizing” where reality will be in the future.[5]

Concrete examples for inspiration

Here are some practical examples from organizations that have adopted a Teal approach to strategy.

Buurtzorg

Healthcare - Netherlands - 9,000 employees - Nonprofit

Employees are empowered to self-manage and make changes when needed.

Two nurses on a Buurtzorg team found themselves pondering the fact that elderly people, when they fall, often break their hips. Hip replacements are routine surgery, but patients don’t always recover the same autonomy. Could Buurtzorg play a role in preventing its older patients from falling down? The two nurses experimented and created a partnership with a physiotherapist and an occupational therapist from their neighborhood. They advised patients on small changes they could bring to their home interiors, and changes of habits that would minimize risks of falling down. Other teams showed interest, and the approach, now called Buurtzorg +, has spread throughout the country.[6]

AES

Energy sector - Global - 40,000 employees - For profit

Strategic decisions can be made by anyone, often through an advice process.

A recently hired financial analyst at AES informed the CEO, Dennis Bakke, that he was intending to leave his role to go back to his native Pakistan and research the opportunity for electricity-generating capacity there on behalf of AES. Bakke expressed skepticism, telling him that despite encouragement from the U.S. Department of State to expand into Pakistan several years earlier, they declined due to concern over high levels of corruption there.

Despite the CEO’s recommendation, the analyst decided to go to Pakistan, effectively creating a new position for himself as business developer, retaining his previous salary. Six months later, he invited Bakke to Pakistan to meet the prime minister. Two and a half years later, a $ 700 million power plant was running.[7]

Heiligenfeld

Health care - Germany - 680 employees – Non profit

Strategy is developed through sensing rather than forecasting.

Heiligenfeld uses large group meetings at regular intervals to sense into its future. From one such session, the vision emerged of bringing Heiligenfeld’s holistic approach to mental illness to families with children and adolescents. Wouldn’t it be wonderful if patients could be treated together with their close family members, in a way that would specifically address and honor the family ties in the therapy? A year later, they opened, a new mental health hospital specifically dedicated to therapy for families.[8]

Holacracy

Consulting Services - United States - For profit

Strategic plans are replaced with "rules of thumb"

Holacracy has a practice of developing “rules of thumb” in lieu of strategic plans. Brian Robertson explains:

We may not be able to map the perfect route to the ideal future, but we can often ascertain some orienting principles for navigation. Without trying to predict exactly what forks in that road we will encounter, we can ask ourselves what will help us to make the best decisions when we do come to a fork. When we step back to look at the broader context and the general terrain and options in front of us, we can often come up with guidelines, such as “Generally head east,” or “Choose the easy roads even over the most direct roads.” A rule of thumb like this really helps when we’re confronted with a choice and want to benefit from wisdom generated when we had the luxury of pulling back and analyzing the bigger-picture context. When we distill that wisdom into memorable guidelines, we can apply them more easily and more regularly amidst the hustle and bustle of day-to-day execution. This, then, is the form that strategy takes in Holacracy— an easy-to-remember rule of thumb that aids moment-to-moment decision-making and prioritization (the technical term for such a rule is “heuristic”). I’ve found it useful to express these decision-support rules in the form of a simple phrase such as “Emphasize X, even over Y,” in which X is one potentially valuable activity, emphasis, focus, or goal, and Y is another potentially valuable activity, emphasis, focus, or goal.

Now, to make that useful, you can’t just have X be good and Y be bad. “Emphasize customer service, even over pissing off customers” is not helpful advice. Both X and Y need to be positives, so that the strategy gives you some sense of which one to privilege, for now, given your current context. For example, one of HolacracyOne’s strategies earlier in our company’s development was “Emphasize documenting and aligning to standards, even over developing and co-creating novelty.” Notice that both of those activities are positive things for an organization to be engaging in, but they are also polarities, in tension with each other. Our strategy is not a general, universal statement of value— in fact, if we tried to apply it forever it would undoubtedly cause serious harm eventually. There are times when it is essential to emphasize developing and co-creating novelty over documenting and aligning to standards. But for HolacracyOne, given our context at the time, and the recent history before that, and the purpose we’re serving, that was our best sense of what to privilege, at least for a while: standardization, even at the expense of pursuing new and exciting opportunities.[9]

Related topics

Notes & references

  1. Laloux, Frederic (2014-02-09). Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness (Kindle Locations 4506-4509). Nelson Parker. Kindle Edition.
  2. Laloux, Frederic (2014-02-09). Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness (Kindle Locations 4577-4581). Nelson Parker. Kindle Edition.
  3. Robertson, Brian J. (2015-06-02). Holacracy: The New Management System for a Rapidly Changing World (Kindle Locations 1765-1781). Henry Holt and Co.. Kindle Edition.
  4. Frederic. Reinventing Organizations (pp110-112). Nelson Parker, 2014.
  5. Robertson, Brian J. (2015-06-02). Holacracy: The New Management System for a Rapidly Changing World (Kindle Locations 1834-1842). Henry Holt and Co.. Kindle Edition.
  6. Laloux, Frederic (2014-02-09). Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness (Kindle Locations 4396-4401). Nelson Parker. Kindle Edition.
  7. Laloux, Frederic (2014-02-09). Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness (Kindle Locations 2245-2254). Nelson Parker. Kindle Edition.
  8. Source:Laloux, Frederic (2014-02-09). Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness (Kindle Locations 4460-4463). Nelson Parker. Kindle Edition.
  9. Robertson, Brian J. (2015-06-02). Holacracy: The New Management System for a Rapidly Changing World (Kindle Locations 1800-1818). Henry Holt and Co.. Kindle Edition.