A Brief History of Organizations

I’ve been reviewing concepts in an interesting book that looks at the history of organizations. I believe that if we’re going to find better ways of working together in organizations, we’ll need to revise the assumptions that we’ve been using for managing people.

Author Frederic Laloux looks at stages of organizational development throughout human history, in his book, Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness (Nelson Parker, 2014).

In my previous posts here and here, I summarized four previous stages of organizational development, Reactive – Infrared, Magic – Magenta, Impulsive – Red, and Conformist – Amber. Only Red and Amber principles show up in organizations as we know them today.

Here are the next two stages.

Achievement – Orange Paradigm

As people evolve, they become aware of the world as more complex, with no absolute right or wrong, but realize that some things work better than others. Effectiveness replaces morals as the decision-making yardstick. The goal in life is to get ahead, to succeed in socially acceptable ways.

With the Age of Enlightenment and the Industrial Revolution, Orange thinking emerged and became the significant stage for a majority of the population in the Western world after the Second World War. Orange is today the dominating worldview of most leaders in business and politics.

Orange thinking spurred scientific investigation, innovation and entrepreneurship, bringing unprecedented prosperity in the timeframe of just two centuries. Yet every paradigm has its dark side. The Achievement-Orange paradigm has brought corporate greed, political short-term thinking, overconsumption and reckless exploitation of resources and ecosystems. It’s guided by materialism and driven by individual egos.

Orange Organizations

The global corporation is the embodiment of this paradigm. In terms of outcomes, orange organization have achieved more than any others, primarily through three breakthroughs, innovation, accountability and meritocracy. Orange organizations are process and project driven, retaining the pyramid as their basic structure, but with project groups, teams, cross functional initiatives to enable faster innovation.

Such organizations aim to predict and control, inventing tactics such as management by objectives, key performance indicators, strategic planning, budget cycles and scoreboards to track progress. The reigning metaphor is the machine and people are resources managed with incentives.

The third breakthrough of Orange organizations is meritocracy – in principle, anyone can move up the ladder. Individual success is highly valued.

Leadership at this stage is goal-oriented, focused on solving tangible problems, putting tasks over relationships. Dispassionate rationality is favored over emotions.

One of the downsides of Orange organizations is “innovation gone mad,” or growth for growth’s sake. When success is driven year after year by numbers and targets, milestones and deadlines, people can end up bereft of meaning and fulfillment. Another shadow of living life in this paradigm is collective greed.

Achievement-Orange is clearly the dominant paradigm of business corporations today. But not all organizations have been satisfied operating in this paradigm.

Pluralistic – Green Paradigm

Pluralistic Green organizational practices are making increasing inroads and not only in the world of nonprofits. This worldview attempts to fill the void of individual success based on achieving goals by being highly sensitive to everyone’s feelings. Instead of the traps of materialistic obsession, in the Green stage the emphasis is on social equality and community. All people deserve respect, fairness, and harmony through cooperation and consensus.

While Orange is predominant in business and politics today, Green is strong in postmodern academic thinking, in nonprofits and community activists. Green strives for bottom-up processes, gathering input from all to achieve consensus.

Green Organizations

The Green perspective is uneasy with power and hierarchy. But consensus among large groups of people is inherently difficult. Here are three breakthroughs that Green Organizations have contributed.

1. The first Green breakthrough is empowerment. Although they retain the pyramidal hierarchical structure, Green leaders push a majority of decisions down to frontline workers. Top and middle managers are asked to share power.
2. Furthermore, there is an emphasis on creating a culture of shared values and purpose, the second Green breakthrough. Research shows that values-driven organizations can outperform others by wide margins.
3. The third breakthrough of Green Organizations is a multiple stakeholder perspective. While Orange companies strive to increase shareholder value, Green looks to benefit all stakeholders: employees, customers, suppliers, communities and the environment.

If Orange businesses use a machine metaphor, the metaphor for Green is the family.

What do you see in the organizations where you work today? It’s probably steeped in Orange principles, isn’t it? Even those businesses that say they’re value-driven, keep their major focus on the bottom line and increasing shareholder value. Only a few for-profit businesses are truly value-driven (Southwest Airlines, Zappos, Ben & Jerrys).

What’s your opinion? I’d love to hear from you. You can contact me here and on LinkedIn.