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1-Page Summary of Reinventing Organizations

Overview

The authors help leaders and managers understand major scaling challenges. They also show how to identify excellent niches, spread them and cultivate the right mindset within their organizations. The principles they set out guide leaders in their daily decisions on what to do at work. Why is this the case? Most of us still work in hierarchical organizations with a CEO at the top followed by layer upon layer of management, and employees at the bottom.

Today’s systems are outdated. We need to change them. Which system works better? Read on for the answer! You’ll learn why you should be able to bring your dog to work and why one company pays new employees $3,000 if they leave within a month of being hired. The main job of CEOs will be not exercising power in the future.

Big Idea #1: Over time, human organizations have evolved. They are constantly changing and adapting to new circumstances.

In the past 10,000 years, humans have made huge advancements. From hunter-gatherers to organized cities, we’ve come a long way. In fact, social scientists have identified several stages of development that explain how this has occurred (and they’re color coded).

In the past, leaders had to be aggressive and assertive in order to survive. They needed to constantly prove their dominance over others. Agriculture developed into a more organized system of work, but it still relied on violent hierarchies.

For example, the Catholic Church was founded on dogma and strictly guarded hierarchies. This structure was considered God-given, which is still the case today. Heretics are no longer hanged, but leadership’s status is still unquestioned. ORANGE organizations came next to foster innovation and creativity by operating according to management by objectives (MBO).

Organizations can be broken down into three types: ORANGE, GREEN, and BLUE. The ORANGE type is common at large companies with a hierarchical structure. In contrast, GREEN organizations are the opposite of ORANGE ones because they have less hierarchy and more culture-based work groups.

For example, Southwest Airlines has a fun and friendly culture. One of their flight attendants plays the harmonica to entertain passengers on board. However, there’s an even more progressive organization that you will learn about in the next section.

Big Idea #2: In a flat organization, decision making is on everyone’s shoulders.

New kinds of companies are emerging worldwide. They’re called teal organizations and they take self-management to a higher level.

In self-managed companies, the hierarchy is flattened and bosses are eliminated. This allows employees to independently make decisions on what they want to do. One example of this type of company is Buurtzorg (Dutch for neighborhood care). In these types of organizations, management tasks are distributed across all nurses so that each person can decide which priorities to follow based on their own judgment.

Buurtzorg is an efficient way to provide home care services, and it’s also cost-effective. They spend 40 percent less time per visit than other agencies, which means they can serve more people without increasing costs. It also helps that the nurses have a social aspect in their jobs; they are friends with their clients instead of treating them as just another “product.” This approach could save up to $2 billion Euros every year if everyone used this model for home care services.

As you can see, the TEAL model is effective. It’s based on removing bosses and middle management, which stimulates employees’ personal abilities and makes them more motivated workers. This leads to a more professional workforce that doesn’t dump its problems on others but faces them head-on. Although this system demands much more of every employee, it also rewards everyone with better work environments and opportunities for growth.