Laloux Culture Model

Originated from Frederic Laloux’s famous book “Reinventing Organizations,” Laloux Culture Model has been widely used as a guiding tool in agile transformation and as an influential reference in agile related discussions. As its name implies, this model not only distinguishes different management philosophies in various businesses, but also sheds light on the aspect of culture change that goes side by side with organizational evolution.

In agile context, Laloux Culture Model reveals five levels of maturity in terms of organizational agility in correspondence to agile culture development:

Level 1: Red Organizations

Red organizations are analogized to a wolf pack. Power is highly concentrated in one or a few persons — the chieftain(s), and exerted through generating fear. They’re highly short-term focused and very effective in chaotic environments. Typical examples are mafia, street gangs, and tribal militias.

Level 2: Amber Organizations

Amber organizations are similar to armies. They are featured by a strict hierarchy with highly formal roles and straight reporting lines. This type of organization thrives in stable and predictable environments. Good examples include public schools, traditional churches, and government agencies.

Level 3: Orange Organizations

Orange organizations are metaphorized to machines. They aim at beating competition and achieving profit and growth through innovation. They are result-oriented; accountability and meritocracy based on delivered results are reflected in their management processes and reward systems. Representative examples are large corporations and public universities.

Level 4: Green Organizations

Green organizations resemble families. Although still operating in a hierarchy, they focus on empowerment and motivate people by a shared purpose and value-driven culture that are beyond profit — creating value for all stakeholders in a balanced way. This type of organization applies participative, servant leadership that encourages consensus decision making and employee engagement. Good examples include Ben&Jerry’s, Southwest Airlines, etc.

Level 5: Teal Organizations

The best metaphor for teal organizations is a living organism. Power is shared and decentralized into autonomous teams. Hierarchical pyramid is replaced by self-management, as people are trusted to make major decisions themselves and to be held accountable for business results. The organization is truly like a living system that adapts and evolves organically and continuously. The best examples are Morning Star, Buurtzorg, and Patagonia, etc.

Note that these five levels are not ranked in the order of superiority, i.e. a higher level is not absolutely better than a lower level. It’s more a matter of suitability — some types of organizations thrive in Green or Teal models, while some are better off staying in Orange or Amber zones. For example, it’s impossible to manage a military force in Teal organizational model — self-management simply isn’t compatible with army whose very existence relies on a well-defined hierarchical structure and disciplines.

On the other hand, more and more organizations worldwide are initiating enterprise-wide agile transformation that requires not only adoption of IT-related agile methodologies, but also all-inclusive mindset shift towards embracing agile culture and leadership. For these organizations, self-managing companies such as Morning Star are their exemplars and Teal zone (or Green zone) is their aimed destination.

Source:

Ulrich Gerndt. (2014 March). Frederic Laloux „Reinventing organizations“ [PDF file]. Retrieved from http://www.reinventingorganizations.com/uploads/2/1/9/8/21988088/140305_laloux_reinventing_organizations.pdf

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Maggie Sun

MBA, certified agile coach and experienced strategy analyst, specializing in business agility, agile leadership, Beyond Budgeting, and general management.