50 shades of teal management: practical cases

The author of the translation Andrew Freeburg

Translation Editor Ksenia Kutuzova

© Valera Razgulyaev, 2022

ISBN 978-5-0059-3450-5

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Foreword

Who is this book for?

I’m not a guru, a prophet, a clairvoyant or a scientist. I’m a practitioner who has been following the path of teal management in a single specific company, VkusVill. I don’t have a goal of selling this approach to anyone, since I devote 100% of my time to our organization. But every day, I answer questions related to this new approach – both to myself and everyone else who asks me about it – and I’ve noticed that my answers seem to change sometime in the feelings and actions of those around me. That’s why I took it upon myself to write this book. Of course, I must admit that I hope you read this book to the end, and that it turns out to be useful for you! And if not? Oh well. Send it back to me: Valery Yuryevich Razgulyaev, ulitsa Tayninskaya, 12, apartment 93, Moscow, Russia, 129345. Make sure to leave your phone number or email address, and please tell me how much money you spent on it and the best way to return it to you.

In order to minimize the number of returns, I want to warn you right away: this book is by no means about "teal" organizations. I believe that "teal organizations," just like "teal people," can’t exist even in theory: these are just stupid labels that somebody pins on companies or their employees. Teal management tools are a different matter entirely: they have already been developed and can be applied in practice in any organization. My book’s goal is to answer key questions regarding teal management: "Why is it necessary?" "What is it?" "How can we transition to it?" "Why is it worth it?" It’s structured around answers to all of these.

In the first chapter, "Why bother?" I describe the problems of traditional management systems, all of which gave rise to the need to invent something new. These are the exact factors that led to the appearance of teal management and continue to inspire more and more new followers to study it.

In the second chapter, "What?" we will examine the main tools of teal management and break down their advantages. The situation is complicated by the fact that many definitions in this sphere have yet to become established. After all, it’s generally accepted to first agree on terminology, and only then begin discussing problems. But since a book does not presume the possibility for such a dialogue, I am forced to offer my own combinations of terms, which I will start to use in the hopes that you will accept them for at least as long as you read this book and we can exist in a single conceptual field. In order to make it easier for you to refer to them, I italicized all of the definitions in the text, and at the end of the book, I’ve included a glossary.

The third chapter, "How?" suggests approaches and mechanisms for transitioning to teal management that have proved themselves in practice to interested managers. To be fair, there’s no single algorithm for such a transition, but I will suggest several different options that each reader can use creatively in their own specific use cases – after all, every individual case is always unique.

In the fourth chapter, "Why?" I tried to put together a theoretical foundation for the problem, gathering scientific studies and explaining particular effects that make teal management not just possible, but as successful and even necessary in the modern world as it has become. This part might not seem to add anything from a practical perspective, but I’m sure that for some people, reading it will serve as an additional reason to get up and start the necessary transformations in their companies without delay, while allowing others to understand more deeply – and, therefore, use more effectively – what I describe in the first three chapters.

Throughout the entire book, I’ll be giving you tasks: they will always be in a separate frame, with the task number indicated. I know I can’t make you do anything, but I sincerely advise that you honestly complete all of them. This will give me more chances to get through to you with my message. If for any reason at all you have any questions, I’ll be happy to answer: send them to my email, razgv@mail.ru.

There’s one more important element. I write about things that differ sharply from your current management practice. For that matter, I’m sure that your practices are successful! That’s why your mind will, more likely than not, desperately resist any attempts to interpret what’s written here. What’s more, the more useful that a given bit of text would be for you, the greater inner resistance you will experience. Your consciousness will start helpfully explaining why everything written in this book isn’t even worth reading further. I beg you: as soon as you feel something like this, stop and try to figure out what’s making you freak out. In order to do this, you have to imagine what would personally happen to you if what you had just read were to turn out to be true. That way, you can understand something important about yourself. Only after you change can you achieve any of the other results of your work.

Finally, I’m not pushing for anyone to move toward teal management. Moreover, this book won’t even come close to working for everybody who thought they’d be interested in it! You can understand whether it will work for you by working through the following color system of management styles.

Color scheme of management styles

There are various approaches to management. They can be conveniently divided into eight main types which completely describe all possible variations and are differentiated by the following colors.

Blue

A group of top-notch experts (we’ll call them experts) who are forced to work together because they sequentially participate in the process of creating value for the client, all while constantly arguing (openly or not) whose functions are more important. Everyone sticks to their narrowly specialized field and takes responsibility for what they know best, but they insistently do not want to leave that comfort zone; therefore, shared tasks are accomplished only with difficulty. This system of management works excellently for associations of experts in various industries.

Green

A family where people are the most important element. Many of them are forgiven their imperfections. A family business where everyone is appreciated for their personal qualities: this means that relationships between employees are good, but results sometimes fail to measure up – since everyone is responsible for everything, nobody is specifically responsible for anything. For companies based in the family model (just like an actual family – they need to be managed, too), this system is irreplaceable.

Red

One person single-handedly manages everybody else – and they, figuratively speaking, are that person’s legs, arms, eyes… Even when a hierarchy technically exists among their subordinates, this person gives everybody orders and personally demands results from them. The "monarch" takes full responsibility for what takes place in their "kingdom" and directly controls all of their "subjects," criticizing their loyalty and becoming a bottleneck for everything. However, this system can be useful for doing dirty work that demands the joint efforts of a group of people.

Yellow

A classic bureaucracy, with all the respective pluses and minuses of predictability for every employee. Everything by the rules, plain and clear, and everyone takes responsibility for whatever processes take place within their respective job descriptions. Unfortunately, this leads to formalism ("when you do your job, fill out the paperwork; when you don’t, fill out more"), but this can be useful in situations where limited resources need to be distributed, and fairness must take precedence.

Purple

A classic corporation where internal wars are constantly being fought, seemingly for the benefit of the corporation itself; however, the losses are also considerable. A constant race for perfection, cutthroat competition and the embodiment of the inhumane principle of "the end justifies the means" – when anything goes, so long as you get results.

Teal

A complete rejection of managers. In the best-case scenario, they can fulfill the roles of assistants: without forcing anything on anyone, they limit themselves to merely training self-management skills in their team. Here, everyone takes responsibility for the fulfillment of those promises that they take on for themselves, which ideally suits companies in constantly changing situations that demand a flexible approach. (The teal management strategy will be described in more detail in the second chapter.)

White

The ideal management system of the future, where subordinates voluntarily obey managers that they personally choose in the name of unlocking as much of their potential as possible, when everyone takes responsibility for the decisions that they make within the framework of such obedience. This contains all of the advantages of the other forms of management, without any of their downsides. Unfortunately, at the current stage of our social development, this is an unachievable dream – we can only strive towards this model for now.

These colors aren’t usually found in their pure form. What’s more, in any company, they are all always present – the only question is which of them takes priority. If it’s still hard for you to figure out which of the colors is dominant in your organization after taking into account the above information, then you can take a test online at http://biryuzovie.ru. The only thing is that practice has shown that in order to get the right answer, you have to answer honestly, without passing off what you want as what you have.

Is this book right for you?

Based on the aforementioned color scheme, it stands to reason that companies that want to transition to teal management might currently use blue, green, red, yellow or purple management styles. Currently, the most widespread styles are purple corporations, yellow bureaucracies and green family businesses. For them, there are already well-trodden paths that allow them to make a successful transition to teal management. In fact, the second chapter of this book will focus specifically on managers in organizations that primarily use purple corporate management. Of course, others are by no means forbidden from reading; what’s more, it might even turn out to be useful for them. But in order to realize the practical side of the matter, I advise using different approaches, which I’ll outline for each of the colors below.

Holacracy is an approach to organizing a company based on organizing holons, a kind of circle for solving every kind of recurring task: within these circles, there are roles which various employees can fulfill, who receive these roles fully and independently make decisions within them.

For a yellow bureaucracy, a formalistic method works best, and the holacracy is the clearest example of such an approach. This is an approach to organizing a company based on organizing holons, a kind of circle for solving every kind of recurring task: within these circles, there are roles which various employees can fulfill, who receive these roles fully and independently make decisions within them. Brian Robertson’s book ⁽¹⁾ outlines all the protocols for meetings to move a company into teal management. There is also a "lighter" version, sociocracy, which welcomes the consolidation or alteration of work protocols by employees themselves, through a single required element of every meeting: a reflection on any process and its final results.

Sociocracy – a “lighter” version of holacracy, which welcomes the consolidation or alteration of work protocols by employees themselves, through a single required element of every meeting: reflection on any process and its final results.

A green family business is best helped by a psychological method, in which professional psychologists work with the team, both as a whole and with each individual member, over the course of two or three years. The goal is to achieve such integrity in each unit of the company as to make any other management style (save for teal management) can hardly be possible. For that matter, all of the employees voluntarily take on additional responsibilities connected with this management style – or voluntarily leave, having understood that they are driven by something else and they don’t want to continue doing their current job if they can’t find another suitable task within the organization. Of course, it’s far faster to simply divide everyone into those who are simply out of their league and those who pull double the weight, but companies aren’t organized in this way by accident. For that reason, these post-flight analyses will depend on the people who are willing to take part in them and support them – with specific examples from specific employees rather than generalizations.

For blue and red organizations, there are no established successful paths of transitioning to teal management, since such a transition happens extremely rarely. But based on the logic of the color scheme, we can suggest the following.

• Blue: it might seem that in order to get a teal company, all you need to do is add some green, but it’s not that simple, as each of the experts in such an organization has successfully protected their position many times. As a result, a separation of competencies and spheres has occurred: nobody gets in their neighbor’s way, but simultaneously doesn’t let anyone get close to themselves, either. In order to change the situation for the better, you have to start doubling your responsible parties (there will be more about this technique in the second chapter). Additionally, you need to start finding a common goal and establish shared responsibility for its achievement. This will be constantly disputed, since each person in the company will habitually begin to demonstrate that work is going just fine on their own individual front, but the point of this initiative is to make all of these top-flight specialists, with their widely varying specializations, understand that the most important front is a shared one.

• Red: since everything in such an organization is tied up in its leading figure, that’s the person that you have to work with – specifically, through a professional business trainer and psychologist who will help the boss to gradually understand themselves and restructure the company’s management to allow more delegation of power and less worry over potential theft. You can start by getting acquainted with Dennis Bakke’s “The Decision Maker.” ⁽²⁾ Unfortunately, you can’t get away with just reading a book, since you’ll have to prove to the “monarch” over and over again the advantage that they’ll receive from passing their work off to other people – even if they do it worse – over and over again, using specific examples.

Chapter One. Why bother?

The majority of the definitions will be given in the following chapter, but at the beginning of the book, we still have to agree on what we understand as "management." We often use this word in everyday life, while hardly even thinking about how we might explain the concept clearly.

✎Task 1

In your opinion, what is management? Try to come up with a definition for this concept.

Stop! Don’t skip this first task, or any of the ones that follow it. I’m certain that you don’t like theoretical work all that much, and you might even complain about how much hot air and how little practical material is in most management and leadership books. But here’s the practice you wanted, and it will allow you to make sense of your own management. Please don’t ignore this task; stop and do it honestly, and only then go on reading. Believe me, I’m insisting on this for your own good.

Management — a meaningful action that leads to a necessary and expected result.

So now we come to management. In the general sense of the word, we’re always talking about a certain meaningful action that leads to a necessary and expected result. The simplest example: when we drive a car, obedient to every movement of the steering wheel in our hands and pedals under our feet, nobody has any reason to doubt that we’re not controlling it. That management has certain limitations related to the physical capabilities of the car, which can’t speed up past a certain point or stop instantaneously. But we can clearly distinguish this situation from another, where we might say that driver lost control of the car: when turning the wheel or any manipulations of the pedals don’t have any result, as the car is being carried in a direction where we have no desire to go. I believe that the exact same thing can happen in any other situation: when we get an undesirable result over some length of time and can’t do anything about it, we have to honestly admit to ourselves that we aren’t controlling that situation. There are two options here. Either we’re in a case like with the car, where we have lost control and can first formulate, then organize the necessary conditions for returning that control – or we never actually controlled the situation in the first place, and the fact that it was in some way advantageous in the past is in no way connected to any actions of our own.

I stopped and devoted so much attention to these seemingly obvious things because right now, the majority of readers will face a serious battle with themselves. I’m going to assert things that are so sad, your subconscious will start trying to convince you of practically anything under the sun – anything to avoid believing these realities. Then mechanisms of self-deception, refined by all of your accumulated life experience, will come into play: well, of course you’re right, and not the author at all. What’s more, how could he possibly compare if he’s in a totally different job, or region, with different people, all in a different industry… And who is this author anyways, and why is it worth listening to him?! No matter what regalia and qualifications I might have, they won’t be weighty enough to warrant listening to; my experience won’t be suitable, and my education will seem insufficient. Therefore, I won’t even bother talking about them; instead, reader, I ask the following of you.

Task 2

For some time, turn off your inner critic and remember someone who held a great deal of authority in your eyes, whose words you always listened to, at the very least; imagine that that person is the one telling you all of these things, and then read the text in their voice.

I think you’ll agree that over the entire course of the 20th century, the very best leaders on our planet tried to create a certain kind of autopilot within their individual companies, all in the hopes of achieving the optimal result. But a cursory overview of business statistics would show you that nobody ever found this "sorcerer’s stone": companies both large and small, from around the world continue to run themselves into the ground, which we can hardly call a desirable result of their management strategies. I’ll go on to bring in examples of negative phenomena in your organization: those that you know and don’t like, but can’t influence in any way, shape or form. How do I know about them? They’re everywhere! For me, this means one thing in particular: leaders in companies have lost control, just like in the aforementioned example with the driver and the car. I understand that this is really hard to accept: after all, others judge us by how well we manage, and you probably measure your own success by the very same criteria. We spend lots of time and energy on this, and if we’re not the owners of a company, then we even get paid for this management! But how can we admit here that we don’t do this? Still, I ask you to judge yourself not by the amount of time spent or how tired you are, but by the results of your actions. So let’s look at what we have in the following categories.

Span of control: the average number of subordinates underneath a single manager.

Management expenses

A traditional system of management resembles a pyramid, where the chief executive is at the very top, and rank-and-file workers make up the foundation. Between them lie many layers of sub-managers. Their quantity depends on the size of the organization and its span of control: the average number of subordinates underneath a single manager.

Once you know the number of employees in a company and its span of control, you can always count the number of levels and the number of managers on each of them. For example, with a span of control of 5 and 156 employees, we have:

• 125 rank-and-file employees;

• 25 middle managers;

• 5 upper managers;

• and one chief executive.

What might the expenses of managing such a system be? In order to compare companies amongst themselves, it would be best to use the percentage of total expenditures on managers out of total payroll. For example, if a manager in our example company earn on average twice as much as their subordinates, then:

• 125 rank-and-file employees receive 1 salary each = 125 base salaries;

• 25 middle managers receive 2 base salaries = 50 base salaries;

• 5 upper managers receive 4 base salaries = 20 base salaries;

• 1 chief executive receives 8 base salaries = 8 base salaries.

In total, all of the managers in this company receive a total of 50 +20 +8 = 78 base salaries, which makes up 78 / (78 +125) = 78 / 203 ≈ 38% of the company’s overall payroll – which is a considerable line item of expenses for any company! What’s more, the bigger the organization, the more levels of management and managers, which means a higher percentage that their salaries make up out of the overall payroll, even though they do not create any of the added value for the client. Doesn’t sound too inspiring, does it? But this is the most insignificant problem in a classical system of management.

Constantly overloaded management

In my consulting days, I thought that many managers didn’t want to start the projects that their companies obviously needed due to their insufficient competency and lack of desire to admit as much in order to start studying the topic at hand. The reality turned out to be far more banal: extremely competent, hard-working, knowledgeable and industrious managers are in constant time trouble: they don’t even have enough time to finish with the current routines being imposed upon them, like an avalanche in the mountains. All this happens, I’ll remind you, because of the classical management system, where problems are escalated from the bottom up. As a result, the higher a manager’s level, the more subordinates they have and the more problems end up on their plate.

They physically don’t have time to solve all of them, which leads to overwork during the week, regular work during the weekends and a lack of relaxation, even on vacation. But none of this helps, and tasks start to get stuck on a waiting list, and some of them get lost from sight forever in favor of more urgent and important ones. Meanwhile, the manager understands that the problem they themselves don’t solve might result in serious losses both for the whole company and for themselves personally, leading to a state of constant stress that the manager or boss begins to project outwardly. This is especially true for those employees who inform them about new problems or are in any way, shape or form party to them. As a result, a confrontation between bosses and their subordinates begins, which only worsens the situation, since the manager must now spend their energy on that, too.

Slow problem solving

Meanwhile, the organization’s real problems begin to get solved more and more slowly. After experiencing an inappropriate reaction from their managers, subordinates share information about new problems less and less frequently with the higher-ups, while lacking the necessary privileges and resource to solve them at lower levels. What’s more, due to the fear of having the dogs set on them, information starts to transform in order to protect the person sharing it – or, when such shielding is impossible, it gets completely stuck without ever reaching the boss. Interestingly, decisions traveling in the opposite direction experience their own losses as well. I conducted an analysis which showed that in transitioning from one level of management to another, around 30% of information gets lost. This means that if only 70% of information remains when an order gets to your direct subordinates, then in transmitting this order to the next level of management, you have to take 70% of these 70%: 0.7 × 0.7 = 0.49 = 49%, or less than half! Unfortunately, the information doesn’t merely get lost, but also gets twisted: this means that the remaining 51% is filled with something else, often contradictory to your thoughts, words and desires.

Task 3

Multiply this 0.7 by as many layers of hierarchy there are underneath you, and understand how little of what you say gets through to those who will have to directly carry out your orders, and how much distortion is introduced in the process.

Is it clear now why nothing ever happens the way that you planned it?

Now let’s look at the situation from the client’s side, who has encountered some insignificant, minor problem and lets your subordinate know about it. Your subordinate can’t solve the issue themselves and escalates it higher – what else can they do, when that’s always how they act? But the problem isn’t critical, you have more important and urgent tasks, and as a result, you put it off over and over again until at the end of the day you simply forget about it altogether. Then the exact same client runs into the exact same problem half a year later and understands that nobody even tried to take care of him. They tell the exact same employee, now with some surprise, that the problem could have been solved over all of this time. Your subordinate justifies their behavior, saying that they passed the client’s wishes along to their bosses and assures them that they’ll bring up the issue again. But even if they do exactly that, the result will be the same: you just won’t get around to it. And after some time, the exact same client will run into the aforementioned problem. Now put yourself in that client’s position: it’s not hard to imagine what they think about your company and its attitude toward its customers…

Demotivation of rank-and-file employees

All this time, your subordinates find themselves in a very unpleasant position of being wrongly accused. If they report up, then they can be turned into a sacrificial lamb; if they conceal the information, they can be asked at any moment why such a problem exists, but nobody knows about it. As a result, the poor fellow is in a constant state of stress, and even if their manager still had some power to influence the situation, then the subordinate will only lose motivation, stuck in a position of dependency.

What happens as a result? We hire specialists to work on motivating our personnel and pay them salaries, but in actuality, everything that they concoct doesn’t work for long. There’s some mysterious important reason that demotivates people within the framework of a traditional management system. This reason is learned helplessness. We’ll talk in more detail about this reason in the fourth chapter. Now I’ll just say that the essence of this phenomenon comes down to the following: if we take an employee’s rights away, but nevertheless continue to ask as much of them as before, they will start fearing responsibility of any kind and begin to avoid it by any means necessary. This gives a person who is extremely demotivated and dodges responsibility as best they can, lacking any desire to make decisions. Meanwhile, it’s very important to understand that we are the ones who made them that way. After all, in everyday life outside the workplace, everything in this person’s life is the polar opposite: they take responsibility for where they live and what they eat – and if they have children, they’re responsible for their lives, too! So why in the world do they turn out to be "insufficiently responsible" to be worthy of the permissions necessary to make the simplest decisions for the company?

Mass irresponsibility

What’s going on inside the organization? Both managers and their subordinates are becoming hostages of a system of management under which it’s best not to be responsible for anything at all. This became the reason for an unbelievable dearth of good managers, despite a surfeit of qualified specialists. After all, who would be clamoring to take on additional responsibility for other people, too? In such a situation, those who are solely interested in career growth and power begin to flourish. As a result, the situation gets even more complicated: after all, such people consciously surround themselves with others who can’t compete with them and intentionally inflate their staff numbers to seem like more significant managers.