What Is a Teal Organization? Five Organizational Types and Success Stories Explained

“What is a Teal Organization?” “What are the five stages in a Teal Organization?” — do these questions sound familiar?

This article addresses those questions by covering the following topics:

• The basics of Teal Organizations
• The five organizational models by color
• Teal Organizations in Japanese society
• Three key benefits of Teal Organizations
• How to avoid failure when introducing a Teal Organization

Each topic is explained in a clear and accessible way.

This article is designed for anyone interested in learning more about Teal Organizations. We hope you read it through to the end.

What Is a Teal Organization?

A Teal Organization is a new organizational model that operates without traditional hierarchies or managerial roles, where individual members act autonomously while maintaining a sense of unity as an organization.

This concept was proposed by Frédéric Laloux in his book Reinventing Organizations, which garnered widespread attention. Laloux reviewed the historical stages of organizational development, color-coded each phase, and positioned “Teal” (blue-green) as the most evolved form.

In conventional companies, executives and managers are central to decision-making, and employees follow their instructions. In a Teal Organization, however, there is no such top-down relationship. Instead, each individual confronts the fundamental question of “why am I part of this organization?” and acts by aligning the organization’s purpose with their own values.

The Five Organizational Models Including Teal — Explained by Color

Laloux divided organizational phases into the following five categories:

Organizational Phase	Overview
Red Organization	Fear-based domination by a ruling class with overwhelming power
Amber Organization	Military-style hierarchical organization with strict top-down authority
Orange Organization	Hierarchical organization where promotion is possible based on performance
Green Organization	Bottom-up organization that emphasizes human relationships
Teal Organization	The entire organization, including individuals, continues to evolve

Let’s explore the details of each organizational phase below.

1. Red Organization

A Red Organization is a fear-based, domination-style organization ruled by a group with overwhelming power. It is sometimes compared to a “wolf pack” and can be seen in organizations like mafias and gangs.

The defining characteristic of a Red Organization is the dominance-based management exercised by a single powerful individual. Others are viewed as threats, and the organization can only move toward immediate goals — it lacks long-term sustainability.

2. Amber Organization

An Amber Organization is one that relies on power, class hierarchies, and established systems and rules. Examples include government agencies, religious institutions, and the military.

In an Amber Organization, individual roles are clearly defined, and members act to fulfill those roles rather than pursue self-centered desires.

It is more reproducible than a Red Organization and therefore more sustainable. However, the rigid rule-based structure means it often struggles to adapt in an era of rapid change.

3. Orange Organization

An Orange Organization is one that seeks to adapt to environmental change. Most contemporary businesses are considered to fall into this category.

Like Red and Amber organizations, Orange organizations still have hierarchies, but promotion is possible based on performance.

Because performance is the primary goal, members are forced to compete, which tends to lead to issues such as overwork.

4. Green Organization

A Green Organization places more emphasis on human values than an Orange Organization.

Rather than prioritizing results, it first calls for respect for individual diversity, allowing each person to act with a degree of autonomy.

Decision-making follows a bottom-up style that emphasizes consensus among diverse members. However, the process can be time-consuming, which may cause the organization to miss business opportunities.

5. Teal Organization

A Teal Organization views the organization as a living entity. There is no centralized power in a Teal Organization; decision-making is carried out by members on the ground.

Rather than seeking consensus among all members, resolving the challenge at hand takes priority — so decision-making is faster compared to a Green Organization.

It is essential that “actions taken for the organization” and “what individuals want to do” are aligned. The personal growth of each individual contributes to the growth of the organization as a whole.

Teal Organizations in Japanese Society

Teal Organizations are structured so that individual members make autonomous decisions and act in line with the organization’s purpose.

In contrast, most Japanese companies have clear hierarchies. A culture of control centered on managers is deeply rooted, creating a fundamental gap with the philosophy of Teal Organizations.

Here, we examine the gap between Japan’s current organizational structures and Teal Organizations, and explore the reasons why adoption is challenging.

1. The Persistent Orange-Type Organizational Structure in Japan

Most Japanese companies today fall into the Orange-type organization, centered on meritocracy and hierarchy. In Orange-type organizations, numerical goal management and performance evaluation systems are emphasized, and promotion and compensation tend to be determined by results.

Top-down decision-making by managers is the norm, and a structure has developed where employees focus on executing assigned tasks. While this style has functioned well in pursuit of management efficiency and market competition, it tends to suppress spontaneity and creativity.

Within the Orange framework, authority is clearly divided by position and department, and members often act according to their respective lines of command.

While this can be effective for speeding up decision-making, it tends to undervalue frontline judgment and may lack the flexibility needed in a fast-changing era.

2. Differences Between Teal and Orange Organizations

The differences between Teal Organizations and the Orange-type organizations common in Japan extend to structure, values, and methods of decision-making.

While the Orange type is based on hierarchy and places importance on evaluation by position and performance, the Teal type eliminates positions and operates as a decentralized system where each individual makes autonomous judgments.

Hiring methods and information transparency also contrast sharply. These differences are summarized clearly in the table below.

	Orange Organization	Teal Organization
Organizational Structure	Hierarchical	Flexible team composition
Titles/Positions	Positions exist	No positions
Decision-Making	Top-down	Decided by each member
Compensation	Determined by managers based on performance	Determined by members based on mutual balance
Hiring Method	Formal interview	Informal conversation/dialogue
Information	Strictly confidential	High transparency

What Is the Difference Between a Teal Organization and Holacracy?

Here, we explain the differences between Teal Organizations and Holacracy by focusing not only on their structural characteristics as systems, but also on the philosophies behind what each aims to achieve.

1. Holacracy Is a System; Teal Is a Philosophy

Holacracy is an “organizational management framework” that defines how a company should be operated. It has a codified set of rules that organizations follow, making it possible to implement incrementally as a structured system.

Specifically, it is characterized by a structure of “roles” and “circles” (teams), where each person has a defined area of responsibility and decisions are made through regular governance meetings.

A Teal Organization, on the other hand, is closer to a “philosophy” than a system. Rather than prescribing how to operate an organization, it views the organization as a “living entity” — one in which individuals remain whole, engage authentically, and evolve naturally in alignment with purpose.

There is no explicit implementation manual or rulebook; each organization is expected to explore its own unique approach.

2. Differences in Decision-Making and the Distribution of Authority

There are also clear differences between Holacracy and Teal Organizations in how decisions are made.

In Holacracy, meetings and consensus-building follow predefined processes, enabling a structured form of decentralized management.

In contrast, Teal Organizations offer greater freedom — strict rules are not imposed, and each member makes autonomous judgments in alignment with the organization’s purpose.

Decision-making spaces arise organically as needed, and discussions are held among those involved, grounded in trust rather than formal process. This works precisely because values and dialogue are prioritized over rules.

The Three Core Elements of a Teal Organization

Simply eliminating job titles is not enough to establish a Teal Organization. It requires a fundamental rethinking of the philosophy the organization embodies, how individual members show up, and their relationship to the organization’s purpose.

Three elements are considered indispensable for this: “Wholeness,” “Self-Management,” and “Evolutionary Purpose.”

1. Wholeness: An Organizational Culture That Respects Individuality

Wholeness refers to a state in which individuals can express their full selves within the organization.

In many companies, wearing a professional “mask” — suppressing emotions and individuality in order to focus on the job — has been considered a virtue. In a Teal Organization, however, bringing the full range of one’s humanity — emotions, intuition, and values — into the work is welcomed.

Achieving wholeness requires an environment with high psychological safety. In Teal-type organizations, practices such as emotion-sharing workshops and habits of mutual self-disclosure among members are incorporated, so that the workplace functions not merely as a place for performance, but as a space where humanity is respected.

When wholeness takes root, the organization evolves from a mere labor collective into a collaborative body founded on trust and empathy between people. This fosters genuine teamwork that transcends self-interest, which in turn tends to enhance organizational flexibility and creativity.

2. Self-Management: Decision-Making Without Hierarchy

Self-management is a structure in which each member autonomously makes judgments and manages the organization without relying on hierarchies or top-down instructions.

In conventional organizations, decisions are made at the top and executed by subordinates.

In a Teal Organization, there are no job titles and anyone can exercise leadership. This creates a structure where the person closest to the frontline can make the most appropriate decision in a timely manner.

For self-management to function, members must have a high degree of autonomy and ethical awareness, and the organization as a whole must maintain transparency. Without open information, proper judgment is impossible; without trust, a culture of seeking advice from others cannot emerge.

More important than any formal system is cultivating the belief that “everyone can participate in decision-making” and nurturing a culture that supports it.

3. Evolutionary Purpose: A Sense of Purpose That Evolves with Change

Central to the Teal Organization is the concept of Evolutionary Purpose. Rather than adhering to a fixed, predetermined mission or vision, it is a philosophy that values purpose as something that naturally changes in response to the environment and the organization’s internal growth.

The underlying view is that an organization is not a “machine for achieving goals” but an “evolving living entity.”

This sense of purpose is not set from the top down, but something that everyone involved in the organization senses and shares together. Accordingly, regular dialogue within the organization is emphasized — asking “What do we care about right now?” and “Is this direction truly what we want?”

What Are the Benefits of a Teal Organization?

Here, we explore the three main benefits of adopting a Teal Organization from different perspectives, explaining in concrete terms why it has attracted so much attention.

1. Higher Levels of Initiative and Creativity

In a Teal Organization, each member can be directly involved in decision-making, which dramatically increases the sense of personal ownership over one’s work.

Rather than simply completing assigned tasks, members begin to act from the perspective of “why are we doing this?” and “how can we make it better?” As a result, initiative is cultivated naturally. This represents a significant shift that cannot be achieved within a structure of following a manager’s instructions.

Furthermore, because individuals can reflect their inner motivations — “this is how I want to be” or “this is the kind of work I want to do” — in their daily work, enthusiasm for the work itself increases and long-term motivation is sustained.

For companies, this brings the major advantage of naturally cultivating self-driven talent without the need to bolster formal evaluation systems.

2. Flexible Adaptation to Organizational Change

In a Teal Organization, because each member holds the authority to judge and act, the organization is able to respond speedily to changes in the external environment.

In today’s era often described as VUCA (Volatile, Uncertain, Complex, and Ambiguous), the ability to adapt to change is what determines a company’s competitiveness.

In Teal-type organizations, change is embraced as something to be welcomed, and internal systems and direction naturally evolve as needed. This capacity for self-transformation is the greatest strength — one that is difficult to achieve through fixed organizational models.

3. Improved Engagement and Sense of Well-Being

In a Teal Organization, because individuals are encouraged to bring their own values and emotions into their work, the job itself becomes a means of self-expression and self-actualization. This means work and life are no longer separate — they are integrated — allowing people to experience a rare kind of environment where they can “work as their authentic selves.”

As a result, more members are able to feel psychological safety in the workplace, leading to a sense of well-being that is sustained over the long term.

The meaning and fulfillment of work become clear, and the organization can also enjoy benefits such as higher employee engagement and lower turnover rates. The fact that motivation is driven by internal conviction rather than short-term incentives represents a fundamental difference from traditional motivation management.

What Are the Drawbacks of a Teal Organization?

While Teal Organizations have many appealing qualities, they are not a one-size-fits-all solution for every company or team member. Implementation and operation come with certain challenges, and in some cases, the risks of unintended consequences are real.

1. Members Who Struggle to Adapt to Autonomy

Teal Organizations require a high degree of autonomy from all members. Rather than waiting for instructions from a supervisor, members must find problems themselves, devise solutions, and take action.

In practice, however, not everyone is accustomed to — or comfortable with — autonomous ways of working. Those used to a directive, top-down culture may feel anxious about having to think for themselves.

In such situations, autonomy can become a burden, causing members to freeze up or become unable to act. Particularly during organizational transitions, voices such as “I don’t know what I should be doing” or “I’m anxious because evaluation criteria are unclear” may arise, and the possibility of overall team productivity declining cannot be ruled out.

2. Decision-Making Can Take Time

In Teal Organizations, the culture of valuing advice processes and dialogue means that decision-making can take a certain amount of time.

In conventional top-down organizations, matters that could be resolved with a single call from a supervisor require consultation with relevant parties and mutual understanding before proceeding in a Teal context — which can feel slow in terms of speed.

Particularly in a culture where everyone is encouraged to voice their opinions, it can become unclear “who decides and how.” The locus of responsibility for decisions becomes vague, giving rise to moments where people feel there is “no one to make the call.”

In urgent situations or cases requiring a swift response, this structure can become a hindrance.

3. Risk of Opaque Evaluation and Growing Dissatisfaction

In Teal Organizations, the conventional top-down evaluation system does not exist, which means the process for determining compensation and evaluation can become vague. Rather than formal appraisal sheets or ranking systems, compensation is designed through dialogue and agreement among members — but ensuring transparency and fairness in that process is a highly sensitive issue.

Especially in the early stages of Teal adoption, suspicions such as “doesn’t the loudest voice just win in the end?” can arise.

Additionally, when individual contributions are not quantified, there is a risk that those who work hard may feel unrewarded, leading to accumulated frustration. Paradoxically, the freedom of the environment can make it harder for individuals to see where they stand.

How to Avoid Failure with a Teal Organization

Teal Organizations hold the potential to realize an ideal way of working, but adoption does not guarantee success automatically.

Here, we introduce three concrete points for establishing a Teal Organization without unnecessary friction.

1. Start Small and Introduce Gradually

Attempting to roll out a Teal Organization across the entire company at once can cause significant disruption.

It is important to first introduce it on a pilot basis within a single department or project team, accumulating successful experiences incrementally. A phased approach allows knowledge and success stories to build up within the organization, making it easier to expand to other departments over time.

Having members experience firsthand how Teal-style operations actually function also helps drive shifts in mindset and build trust relationships more effectively.

2. Build a Culture of Psychological Safety

To achieve “Wholeness” — the core of a Teal Organization — psychological safety in the workplace must be secured.

Psychological safety refers to the sense of security that one’s thoughts and feelings can be expressed honestly without being denied or blamed. Without it, members cannot act autonomously or voice creative ideas, and Teal-style structures will become hollow.

It is also critically important to nurture a culture of feedback. Rather than one-sided evaluations from above, when members convey constructive opinions to each other with mutual respect, trust deepens and a healthier, more open organization takes shape.

It is no exaggeration to say that the success of a Teal Organization depends, above all, on the “quality of human relationships” rather than on formal systems.

3. Make Evaluation and Decision-Making Processes Visible

While freedom and flexibility are among the appeals of a Teal Organization, if systems and rules are too ambiguous, confusion can result.

In particular, when the criteria for evaluation and decision-making are opaque, a sense of unfairness can easily develop among members, ultimately putting trust relationships at risk. Even without being overly rigid about formality, it is important to clarify — at least as a working structure — “how will we be evaluated?” and “how will decisions be made?”

Three Success Stories of Teal Organizations — Specific Examples

So how are companies actually implementing Teal Organizations in practice?

Here, we introduce success stories of Teal Organizations.

1. Net Protections

Net Protections has built an evaluation system called “Natura” to support its autonomous, decentralized organizational structure that eliminates hierarchies.

The role of manager was abolished, and on the premise that all employees engage on an equal footing to create value, a five-tier band system was adopted to minimize anxiety about compensation and job grades. This has created a foundation where anyone — regardless of age or background — can confidently take on challenges by leveraging their strengths.

The evaluation process is designed around 360-degree feedback and individual conversations. Rather than one-sided evaluations from above, multifaceted feedback from colleagues provides more accurate assessments.

This system enables both a culture of co-creation and highly convincing evaluations to coexist.

Reference: Net Protections, Inc. “HR Evaluation System Natura”

2. nexocode

nexocode, an AI and software development company based in Poland, was founded in 2017 and began its full transition to a Teal Organization in 2018.

To overhaul conventional management and create an environment where all members can make autonomous decisions, the company introduced an “advice process.” This system means that anyone in the company can put forward ideas and proposals, and has a voice in decisions that affect them.

The company also makes financial and salary data available internally, and operates a system where employees set their own salaries based on compensation levels defined for each department. This allows employees to compare their own salary with those of colleagues and with market rates, helping them identify areas where they need to develop their skills.

Through these practices, nexocode has realized purpose- and values-driven operations across the organization and continues to grow as an autonomous, decentralized Teal-type organization.

Reference: nexocode “Building Tech-Focused Teal Organization – Founder Story“

3. Buurtzorg

Buurtzorg, based in the Netherlands, provides home nursing care through entirely self-governing nursing teams — not a structure where “nurses are managed by managers.”

Each team consists of 10–12 nurses with no supervisors or managers. All aspects of the work — task allocation, patient care, and scheduling — are decided by the members themselves through discussion.

Buurtzorg’s model aligns with the three pillars of a Teal Organization — “Wholeness,” “Self-Management,” and “Evolutionary Purpose” — and has gained worldwide recognition as a model example of organizational reform.

The company’s official website repeatedly uses the phrase “self-managing teams,” making their commitment to autonomous operation explicit.

Reference: Buurtzorg “The Buurtzorg Model“

4. The Morning Star Company

The Morning Star Company is a tomato processing company headquartered in Woodland, California, USA.

At Morning Star, all employees hold the same level of authority as managers, and each person has considerable discretion. A system has been put in place where each individual sets personal goals, practices self-management, and takes responsibility for their work.

Reference: Join our Team – Morning Star Careers

5. Gaiax

Gaiax Co., Ltd. is a company operating businesses related to social media, the sharing economy, Web3, and DAOs. The company’s corporate philosophy is “connecting people,” and it provides services that facilitate communication between people.

Gaiax operates under the principles of “Free, Flat, and Open,” which means that open publication of meeting minutes, employee-initiated department transfers, and even the independence of business units as separate companies are all permitted.

The company also respects the lifestyles and individuality of its employees, actively working to create an environment where people can discover their authentic selves. Specifically, a “Life Work Mission Training” is held at onboarding to provide employees with a space to explore their own individuality.

Reference: Introducing Teal Organization Case Studies: Three Companies in Japan and Overseas and Their Processes of Change › Gaiax Co., Ltd.

6. Zappos

Zappos.com is a company headquartered in Las Vegas, Nevada, operating an apparel e-commerce site. It attracted attention from many quarters after being acquired by Amazon for approximately $800 million USD.

Zappos has adopted a style where all members can act through discussion rather than through a hierarchical structure. Rather than following instructions and commands, the will of each individual employee becomes central — which helps cultivate employee initiative.

Additionally, the company uses assigned seating rather than a hot-desking arrangement. This is part of an effort to respect employees’ individuality, as there is a policy of allowing people to place whatever they like on their desks.

There are no specific regulations regarding employee dress code or hairstyles.

7. Yoho Brewing

Yoho Brewing Co., Ltd. is a beer manufacturer headquartered in Nagano Prefecture, Japan. The company produces a variety of beers, including “Yona Yona Ale,” “Indian Blue Goblin (Indo no Aoni),” “Wednesday Cat (Suiyoubi no Neko),” and “My Beer, Your Beer (Boku Beer Kimi Beer).”

Yoho Brewing espouses a culture called “Gahho (Go for it, Yoho!).” This is a philosophy that aims for the ultimate customer focus through flat, relationship-first communication.

To realize this philosophy, Yoho Brewing places importance on three elements: “think and act for yourself,” “sharpen each other’s skills,” and “enjoy the work.”

Furthermore, to create flat relationships, the company uses a “nickname system.” The company president’s nickname is “tencho” (store manager), aiming for a relationship that feels approachable and familiar.

8. OzVision

OzVision Co., Ltd. is a company operating services such as the point shopping mall “Hapitas” and the simple selling service “Pollet.”

It has garnered widespread attention as the only Japanese company featured in Laloux’s book Reinventing Organizations. The book highlighted two initiatives: “Thanks Day” and “Good or New.”

Thanks Day is a system in which employees can take a day off to thank someone. If employees publish a blog post explaining their reason for taking the day off, they receive 20,000 yen.

Good or New is an initiative in small-group meetings where members share either a recent piece of news or a positive trait about another member. It has since been discontinued because it began to feel obligatory, but it served as a catalyst for increasing conversation between employees who would not normally interact.

Reference: What’s Not Written in Teal Organization | OZ MEDIA | OZVISION – OzVision Co., Ltd.

Conclusion

A Teal Organization is distinct from conventional hierarchical organizations and represents an innovative organizational model operated on the basis of individual autonomy and organizational purpose.

At its core are three fundamental values — Evolutionary Purpose, Wholeness, and Self-Management — making it not merely a structural reform but an endeavor that questions the very nature of work and the organization itself.

However, a Teal Organization is not suited to every company, and sufficient preparation and understanding are required before adoption. Even if an organization is attracted to the idea of abolishing job titles and liberalizing systems, if the underlying culture and values are not aligned, it can actually result in organizational confusion.

When implementing, a careful and strategic approach is essential: “start small and scale gradually,” “establish psychological safety,” and “make evaluation and decision-making processes visible.”

Using the case studies introduced in this article as a reference, carefully assess whether your organization is truly suited for a Teal model and whether there is value in adopting its philosophy.

Because a Teal Organization places its focus on “ways of being” rather than formal systems, it demands a perspective that grasps the essence rather than the form.