ormer McKinsey & Company partner and MBA holder Frederic Laloux based his typology on the theory of spiral dynamics , the foundation for which was laid back in 1966 by psychologist Dr. Clare Graves. According to his concept, a person goes through certain stages in his development.
Graves designated these stages of development with colors – from beige to coral. He used warm colors (beige, red, orange and yellow) to mark value systems centered on individualism and self-expression. He designated those systems based on the collective and the public with cold colors (violet, blue, green and turquoise).
Fifty years later, Frederic Laloux applied this theory to modern companies. He suggested that they, like people, can evolve, become more successful, more conscious, and more sustainable.
Laloux borrowed some colors and names from the theory of spiral dynamics, while others he assigned to types of companies himself. His book had a wide resonance and is still a reference book for many businessmen.
The company, according to Lalu’s idea, “turns green” as it develops. The redder the organization, the more conservative and less promising it is, and the colder the shade, the closer it is to the ideal.
In total, Laloux identified seven stages of organizational development, the first two of which could only be found in ancient times:
Infrared stage. One hundred thousand years ago, people lived in small groups of several dozen people. They were gatherers and did not need a leader – there was no division of duties, no hierarchy.
Magical or purple stage. Fifteen thousand years ago, the first tribes of up to a hundred people began to form. Since many laws of nature were unknown to people, they attributed everything that happened to higher powers. Hurricane, famine, diseases – all this is the punishment of the gods.
Over time, intermediaries between spirits and people began to appear in the tribes – shamans and priests. They had some power over the rest, as they had exceptional skills. But they did not manage anyone and were not responsible for distributing responsibilities, so it is difficult to talk about a full-fledged type of organization here. But the next five types are distinguished by recognizable management models, so we will dwell on them in more detail.
Red Organizations: Power, Strength, Fear
The first forms of organizations appeared about 10 thousand years ago, when people began to form large tribes. The fundamental principle of these groups was the concentration of power in the hands of one person – the leader, who used force and instilled fear in the rest of the tribe.
Like any other form of organization, the red one is created to achieve certain goals: for example, to unite around a leader against a common enemy, and the authoritarian type of management is well suited for this.
However, red organizations have a number of disadvantages. All decisions depend on only one person, and they are usually impulsive. With such a rigid hierarchy, the interests of the team are not taken into account, relationships within the group are weak, there is no incentive to establish routine processes – the red type works well only in times of crisis, but is ineffective when it is necessary to perform everyday tasks. Examples of red organizations today include the mafia and street gangs.
Amber Organizations: Stability and Limitations
Amber associations emerged about a thousand years ago. They are characterized by a ranking system, stability, and the rule of law. Amber formations still exist today — they can be found in budget organizations, public schools, the army, and the church. They are characterized by a pyramidal structure with clear ranking levels and vertical chains of command. Participants identify themselves exclusively by their positions. The leader’s management style is “command and control.” All decisions are made at the top and implemented at the lower levels. Subordinates know their place and carry out orders, otherwise they will be punished.
The problem with amber organizations is that it is difficult for their employees to show off and develop. Promotion is possible only for formal achievements – length of service, a diploma – or origin and friendly connections. Rigid frameworks prevent the company from adapting to changing conditions, since order is preferable to risks. However, some people are close to the amber form of management: as a rule, everything is stable and predictable in it.
Orange Organizations: Profit Oriented
Orange organizations also have a pyramidal hierarchy at their core, but they differ from red and amber ones in their openness to innovation. Orange companies compete for customers and profits, so it is important for them to test and implement new practices, which requires a greater degree of freedom. This way, employees get additional opportunities to achieve the organization’s goals. New departments are operating: HR, marketing, development, product control. However, power in orange companies is still often concentrated in individual headquarters, rather than in the departments themselves.
The orange color is characterized by the cult of success. It is important for the company to earn as much as possible, to exceed the plan, to show its superiority over competitors, and if the employee does not share these values and does not impress the management with the results, the system will reject him. But it will also reward him if he demonstrates his effectiveness – for this there are bonuses, premiums and the 13th salary. The problem is that motivation with rubles and fear of punishment may not cover the level of stress in an orange company and lead to employee burnout.
“The living embodiment of orange is large multinational corporations,” writes Laloux. “Pick any well-known modern brand, say Walmart, Nike, or Coca-Cola, and you’ll likely come across an organization whose structure, internal processes, and culture are inspired by the competitive orange worldview.”
Green Organizations: Pluralism, Equality, Chaos
In this form of organization, employees are empowered: middle and senior management give up total control and share power. Such organizations first appeared in the early 20th century. At that time, people were trying to combat the inequality that arose after the Industrial Revolution, and in the 1960s, they built communes.
In green organizations, employees are satisfied with their work and committed to its values. Leaders operate according to the principles of agile and lean management, and the companies themselves are characterized by a pluralistic corporate culture.
Green organizations have their limitations: decisions can take too long to reach consensus, and hierarchical structures can conflict with employees’ desire for more autonomy.
According to the author of the concept, the American airline Southwest Airlines can be considered a green organization. Its employees seek creative solutions to problems that arise for passengers, while their colleagues from other airlines cannot deviate from job descriptions. One of the eight mandatory instructions for Southwest Airlines employees is to “accept the family” of the company. Lalu notes that the main metaphor of the pluralistic green model is a family where everyone is always together, ready to help and stand up for each other. The coach also names the American ice cream manufacturers Ben & Jerry’s and the Container Store chain in the United States as green organizations.
Olga Lermontova, career coach and strategist, founder of the EdTech platform Careerum:
“There is currently a global trend for companies to move away from rigid hierarchies to more flexible and adaptive structures. This is largely due to the coming of age of millennials and the entry into the market of the zoomer generation, who are no longer ready for an exclusively vertical team structure.”
The expert notes that each individual organization rarely corresponds to one specific color 100%. Often, one can observe a mixture of shades and their transitional forms.
Teal Organizations: Agility and Collective Intelligence
The metaphor of a teal organization is a “living organism.” It is a complex adaptive system with distributed powers. Pyramidal structures are destroyed and replaced by more natural hierarchies: power goes to those who have the most experience, passion, and interest in their work.
Employees have autonomy in their area and are responsible for coordinating with others. Authority is not distributed from above – instead, the company’s work is built on self-management.
“From an evolutionary turquoise perspective, the right question is not how can everyone have equal power. Rather, how can everyone be powerful?” writes Frederic Laloux in his book.
Management processes in turquoise organizations are structured as follows:
Decision making. To solve a problem, an employee needs to ask for advice either from an expert in the field or from people who will be directly affected by the decision. This way, the employee will not receive a ready-made answer, but the information necessary to make an informed decision.
Crisis management. During difficult times for a company, information is communicated so that everyone, including rank-and-file employees, knows about the problem. This not only keeps people informed, but also helps them collectively think about how to get out of the situation.
Absolute transparency. All processes in a turquoise company are maximally open and known to everyone. Each employee knows what their salary consists of and how it is calculated for others, how much profit the organization received this month and what difficulties it faced. Access to information builds trust in the team and gives employees more information to make informed decisions.
The direction is set by the employees themselves. In turquoise organizations there are rules, but they are developed not by the bosses, but by the employees themselves. Moreover, the rules are created in such a way that everyone is comfortable.
“A turquoise organization is a rather rare and ambitious model,” says Olga Lermontova. “I would rather talk about organizations with elements of the turquoise style. A good and at one time sensational example is the American online shoe and clothing retailer Zappos, known for its corporate culture focused on serving customers and employee well-being. The company adheres to the principle of holacracy. This is a management system that distributes authority and decision-making across different circles (teams), rather than through a strict hierarchy. Elements of the turquoise style can be found in startups, socially-oriented projects and any other areas where high autonomy of “horizontal” expertise is required.”
Another example of a turquoise company is the largest network of district nursing services in the Netherlands, providing care for the sick and elderly. At Buurtzorg, doctors work in teams of 10-12 people in small but clearly defined areas. Each group is assigned about 50 patients. Nurses themselves decide how many and which patients they will serve, they independently plan their work, draw up a schedule of shifts and vacations, choose where to rent an office and how to furnish it, which local pharmacies and hospitals to cooperate with. Team members plan individual and team training and redistribute tasks if there are too many or too few patients. Care at Buurtzorg is not limited to medical manipulations: employees take into account not only the physical, but also the emotional, family, and spiritual needs of their wards. In 2009, a study by the sociological company Ernst & Young showed that Buurtzorg requires on average about 40% fewer hours to serve a patient than other nursing organizations, although the staff manages not only to give the patient an injection, but also to devote 10-15 minutes of attention to him and his relatives over a cup of tea. The Ernst & Young study also found that if all nursing organizations in the country achieved the results of Buurtzorg, the savings for the Dutch social security system would amount to about €2 billion.
Laloux also includes the copper foundry FAVI in France, the American tomato processing company Morning Star, the international hydraulic power unit manufacturing group Sun Hydraulics, the non-profit organization Resources for Human Development in the USA, and the Berlin Evangelical School among turquoise organizations.
Why classification is needed
Olga Lermontova explains that understanding Laloux’s classification helps managers more consciously select strategies that are suitable for their stage of evolution. For job seekers, this classification gives them the opportunity to understand how well the company’s cultural and management approaches correspond to their personal values and expectations.
For example, a company with a strong commercial focus in a competitive market may want to hire only goal-oriented candidates with a medium or low salary range, but with a large bonus for meeting the sales plan. This would correspond to the orange development phase. However, candidates accustomed to the red culture of “orders and subordination” may not fit in with such a team. Applicants focused on partnership and teamwork, which corresponds to the green type, will find the orange environment overly ambitious and competitive.
“If you correctly adapt all processes within the company, including hiring processes, according to its development phase, then the chances of finding and retaining the right people in the team increase,” the expert explains.
Laloux’s theory, which recognized “turquoise” as the pinnacle of his classification, has been criticized more than once. For example, Professor Pawel Korzynski, head of the Department of Human Resource Management at Kozminski University in Warsaw, views turquoise organizations as “an extreme concept that does not bring positive effects to the company in the long term.” “The blurring of responsibilities, the lack of a clear division of responsibilities and, as a result, the lack of goals are some of the negative consequences of turquoise management,” he notes.
“Turquoise” is not really to everyone’s taste. For example, in the bank “Tochka”, which was created as turquoise, about 20% of the managers could not accept this model of organization and left the company. But other domestic companies are still trying to get closer to the turquoise model. Among them are “VkusVill”, Mindbox, “Fabrika okon”, “Askona”.
Olga Bolbat, leader and curator of optimization projects and projects in the direction of innovations at VkusVill, commented to RBC: “There are three main principles that determine that an organization is turquoise. These are the evolutionary goal, self-management and integrity. Only one of these principles is fully implemented in VkusVill – the evolutionary goal. According to this principle, the purpose of the company’s work should lie outside the activities of the organization itself, that is, rather reflect what the company exists for its clients, what benefit it brings to society.”
The company uses quite a lot of practices that are similar to those used in turquoise organizations, says Olga Bolbat. For example, open salaries, no work schedule and control over it, no fines, no approval protocols, no regulations and job descriptions, decision-making on the spot, the ability to communicate with any colleague, no KPI.
“But all this brings positive results only with a comprehensive change in the approach to management,” explains Bolbat. “The introduction of individual elements can, on the contrary, provoke a decline in the company’s results.”
The turquoise management model may not be suitable for all types of businesses or corporate cultures, warns Olga Lermontova: “It is difficult for me to imagine the implementation of such a principle in industry and production, where there are strict processes and standardization; in the military and security forces, in industries with a high regulatory burden – aviation, healthcare, pharmaceuticals.”
To move towards a green model, organizations need to develop a strong culture of collective decision-making and concern for social impact, but in some cases, as in the examples above, this may prove to be of little or no justification and lead to worse business performance.
Olga Lermontova recommends that companies check what type of culture their business corresponds to and where it will be most effective. The transition to the turquoise model requires huge changes and investments, and before taking such a step, it is worth checking with the commercial goals and the true mission of the business.
“The same advice for candidates: don’t try to work only in turquoise companies – it’s important to understand yourself, know your characteristics and triggers, and choose a corporate culture based on yourself, not on fashion,” the expert advises. “If you feel that you are more comfortable in a competitive environment or in a rigid hierarchy, then so be it. There is no shame in that. It will be much sadder to get stuck for months or a year in a place that is not yours.”
