Conscious Capitalism and Reinventing Organizations, Bringing Cultural Evolution to Business

By Steve McIntosh

This week I attended the Conscious Capitalism organization’s CEO-Summit in Austin, Texas with my ICE colleague Carter Phipps. Our ICE colleague John Mackey, co-author of the book Conscious Capitalism and co-founder of the movement was also there too, of course.

Conscious Capitalism began about ten years ago and has now become a large and vibrant movement. Its high-energy CEO-Summit was attended by close to 400 leaders who are dedicated to raising consciousness in businesses around the world. In addition to its annual conference, the movement now includes local chapter organizations in over 20 States, numerous international chapters, and ambitious plans to increase its profile and impact.

This new approach to business is based on four key tenets: 1) higher purpose, 2) stakeholder integration, 3) conscious leadership, and 4) conscious organizational culture. Unlike other approaches to “corporate social responsibility,” Conscious Capitalism helps identify and harness the intrinsic service value or transcendent meaning, beyond just making money, that can be found at the heart of almost every human enterprise. Once clarified, this intrinsic higher purpose is then used to bring all of an organization’s activities into alignment with its underlying transcendent mission.

The CEO-Summit featured many inspiring examples of people and organizations that are making the world a better place. But for me, the most interesting experience was hearing bestselling author Frederic Laloux present his 2014 book, Reinventing Organizations. This book describes the stages of development in culture and consciousness, which have been previously outlined by the authors of Spiral Dynamics, as well as others, including me. Laloux adds to this well-established stage theory his contention that self-managing teams are the quintessential feature of organizations that embody the “integral” or “post-postmodern” stage of development. The power of self-managing teams has been popularized by the Holocracy business management system, which is now used by innovative organizations such as the Zappos online shoe store.

As several presenters at the Conscious Capitalism conference emphasized, self-managing teams can be a worthwhile innovation in certain types of organizations. And by inviting Laloux to give both a keynote presentation and a breakout session on his book, the conference organizers clearly signaled their encouragement of his work. However, there were also some interesting tensions which are worth reporting on.

Laloux stated that integral-level organizations (or “Teal organizations,” as he calls them, following Ken Wilber’s color scheme) are not concerned with competition. When I originally read this in his book I balked, so I was keen to ask him about it. Answering my question during the breakout session, he explained that when a company is truly mission-driven, forwarding the mission is its primary concern, even at the expense of preserving itself as an organization. Laloux used the example of a government funded, self-managing Dutch nursing company that provides free consulting to its competitors to help them adopt its best practices and imitate their success. According to this “Teal cooperation strategy,” when this nursing company selflessly helps its competitors get bigger and better, the company can then in turn borrow these improvements from its competitors, forwarding its larger mission of improved healthcare for everyone.

However, while I agreed that this strategy of unconditional cooperation is noble and worth pursuing in certain circumstances, I suggested that the value-creating capacity of cooperation is ultimately tied together with competition in an interdependent polarity. That is, when competition and cooperation work together in a mutually correcting relationship that provides for both challenge and support, the value-creating potential of both poles of this polarity are maximized. In business, competition drives excellence and prevents organizations from devolving into complacent bureaucracies. So if Teal organizations eschew any competitive motivation, not only will they be less dynamic and effective, they will fail to adequately serve their stakeholders, which include not only shareholders, but also employees, suppliers, the community, and the environment.

Beyond my critique of Laloux’s failure to recognize or incorporate the value-creating polarity of competition and cooperation into his description of Teal organizations, others pointed out that a truly integral-level organization should be flexible enough to employ different management structures in different situations, rather than seeing self-managing teams as the only way to go. As my colleagues and I discussed the presentation afterwards, we agreed that Laloux’s emphasis on cooperation, to the relative exclusion of competition, was essentially an expression of the progressive postmodern values frame. Indeed, healthy competition is an indispensable aspect of the “heroic spirit of business” that has improved our world immensely. And while business overall certainly needs to become more conscious, in order to improve it we need to clearly recognize its strengths as well as its weaknesses.

In his bio for the Conscious Capitalism conference program, Laloux wrote that “Reinventing Organizations has sold 200,000 copies and is considered by many to be the most influential business book of this decade.” The Conscious Capitalism book, however, is far more influential, and in my opinion more authentically integral because it better integrates the creative optimism of modernism. Despite Laloux’s “competitive” claim that he has surpassed Conscious Capitalism in his management theory, by giving him a prominent place at their conference, it is the Conscious Capitalism folks who in fact best demonstrate the power of inclusive “cooperation.”

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  • Anna
    Reply

    Thank you for this summary Steve. But disappointing that you are still in the mindset of competition, even in the review above. Rather than seeing what both have to offer you pit one against the other. There is no doubt that capitalism has brought us many advantages, at the expense of those it has exploited. The competition which you extol as giving business ts creative energy, runs right through the whole economic structure. While there are some winners, there are many losers. Serving the shareholders will in many cases take priority over serving the public at large. Competition in business is still based on growth, which is destroying the planet. Laloux book introduces a new possibility of collaboration which may help to turn things around.

  • Blake Ludwig
    Reply

    I’ve heard Laloux speak and his research and resultant book on “emergent” organisational structures is captivating, especially the Dutch nursing example. It’s unfortunate that he’s utilised spiral dynamics and Ken Wilbur’s forward to frame his book as it takes away from the significance of what is happening in business as dominator hierarchical structures are showing their true inflexibility and archaic inability to encompass the social and integrative nuances required now in our world.
    I disagree that competition is needed as a driver. Perhaps that is an American view. Darwinian in nature and divorced from its past and shadows, business can be untethered, optimistic and innovative and also wholly blind to its effects on the bigger whole. America and it’s reliance on capitalism and competition and growth now more than ever needs to slow down, to reflect and allow a larger social and unknown humble component into its perspective before it spirals into its own silos of destructive chaos.
    I think Steve misses the value of the Dutch example. As one who is immersed in coordinating care for a mother with dementia I am shocked by how wholly unprepared, disjointed and relatively uncaring our social and health system is here in the UK. Even worse in the USA where home health care for the aged and sickly is for the priveledged only. The Dutch model actually confronts our current social and economic models, as well as our philosophical views. It shows there is a humane way to reintroduce values of care concern and perhaps love to society, moving forward without the dark trappings of competition bottom lines end efficiency measures.

  • Evan Hadkins
    Reply

    “Competition” increases particular kinds of performance. It is popular in sport (though even it largely relies on co-operation) and business (also mostly reliant on co-operation) where the measures are one dimensional (faster, higher, more money).

    For complex tasks competition usually gets in the ways and leads to tunnel vision. The focus goes to the competing rather than pursuing the goal. In business the famous example of this is the two people who need to run away from the bear — one stoops down to put on a pair of running shoes. The other says that this won’t make the bear less angry or hungry. The guy who stooped down points out that he only has to outrun the other guy.

  • L. Barton Goldman
    Reply

    Not surprising that the Dutch example provided by Laloux would be more of a nonprofit model in a smaller, more homogeneous, and socialized business climate where it would make perfect sense to consider a pseudo Teal post modern approach. Totally agree that this theory presents some nice progressions in a postmodern direction but does not fully integrate the best of modern and even some elements of premodern organizational structures, tactics, and strategies that are not only essential for optimizing business organizational efficiencies in different cultures and settings , but absolutely necessary in order to compete against and with the modern business organizations that dominate much of the current landscape for the for seeable future.

  • Dan Montgomery
    Reply

    Thanks, Steve. I remember having a discussion about Laloux’ work with you last year. Two thoughts: First, I agree that what Laloux has labeled “teal” sounds to me more like “green” as I understood it from numerous workshops with Don Beck. I have done follow up interviews with two of the companies in Laloux’ book myself as I’ve been writing my own book on strategic agility, and happened to know key leaders in each. To me, a truly teal adaptation is a response to a complex market environment that demands an approach to strategy formulation that must integrate both a clear declaration of intent from the leadership with a more collective expression from everyone as to how to carry that out, all with lots of feedback built in. Far from being an adaptation to a complex market, both companies I interviewed (I won’t name them here) are actually in fairly stable environments in which big strategic decisions are made infrequently, and generally by the senior leader.

    Second, I think that Wilber’s prismatic color scheme lost something in translation from Spiral Dynamics with its more dialectic framing. If one were to view teal as an antidote to the failings of green, rather than a simple progression, there wouldn’t be this confusion between what each level is about.

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