Leading the Relational Inversion: From Ego to Eco by Otto Scharmer | Omega

In Leading From the Emerging Future: From Ego-System to Eco-System Economies, Otto Scharmer and Katrin Kaufer contend that meeting the challenges of this century requires updating our economic logic and operating system. They propose shifting from an obsolete “ego-system” that focuses entirely on individual well-being to an ecosystem that emphasizes the well-being of the whole. In this excerpt, they focus on a key element of this change: learning how to see ourselves through the eyes of others and of the whole.

One of the biggest challenges we face in moving toward an ecosystem economy is to act collectively in ways that are intentional, effective, and cocreative. Over the past several years, I (Otto) have watched executives participate in a climate change simulation game at MIT, designed and led by MIT Professor John Sterman. He splits the group into small teams, with each team representing a key country group in the ongoing United Nations-sponsored negotiations over carbon emissions. The negotiators’ agreements are fed into a simulation model using actual climate data. After the model calculates the likely climate change outcomes, the negotiators go back to the table for a second round. After three or four rounds, they are presented with what is inevitably the devastating and destabilizing impact of their collective decisions on the climate worldwide. Then the group reflects on what they have learned.


Three Obstacles: Denial, Cynicism & Depression

During their post-negotiation reflection session, I noted that the participants had three habitual reactions of avoidance that prevented the consequences of their actions from sinking in deeply: (1) denial, (2) cynicism, and (3) depression. The most common strategy for reality avoidance is denial. We keep ourselves so busy with “urgent” issues that we don’t have time to focus on the one that may in fact be the most pressing. We are simply too busy rearranging the deck chairs on the Titanic. The second response is cynicism. Once the outcomes of an agreement become obvious, cynicism is an easy way out. A cynical person creates distance between himself and the consequences of his actions by saying, “Hey, the world is going to hell anyway; it doesn’t really matter what I do.”

But even if these first two strategies of reality avoidance are dealt with, there still is a third one waiting: depression. Depression denies us the power to collectively shift reality to a different way of operating. Depression creates a disconnect between self and Self on the level of the will—just as cynicism creates a disconnect on the level of the heart and denial creates a disconnect on the level of the mind. And into that void slips doubt, anger, and fear. Fear inhibits us from letting go of what is familiar, even when we know it doesn’t work and is holding us back.

Conversations Create the World

Learning how to deal with these three types of reality avoidance requires self-reflection and a conversation that bends the beam of attention back onto ourselves. We call this Conversation 4.0—a conversation that allows for embracing the collective shadow…and for unleashing our untapped reserves of creativity.

The main problem today is that we try to solve complex problems like climate change with traditional types of conversation, which results in predictable outcomes. The collapse of the climate talks in Copenhagen in 2009 and of the MIT climate simulation game are just two of many, many examples.

All complex modern systems—health, education, energy, sustainability—deal with both individual and collective entities, the latter often through government. Accordingly, the figure “Four Levels of Stakeholder Communication in Economic Systems,” which shows how stakeholders communicate within our society’s systems, differentiates between individual and collective entities on the one hand, and suppliers and consumers on the other hand. The four levels of conversation are represented by four rings.


The most common types of conversation, represented by the outermost ring, are:
  1. unilateral and linear; 
  2. low on inclusion and transparency; and 
  3. organized by an intention to serve the well-being of the few. 

At the center are the rarest and most precious types of conversation, which offer a major acupuncture point for future change. They are:

  1. multilateral and cyclical; 
  2. high on inclusion and transparency; and 
  3. organized by an intention to serve the well-being of all. 

Level 1: Unilateral, One-Way Downloading & Manipulating

Level 1 stakeholder communication is unilateral, one-way downloading with the intent to manipulate, rather than to serve the well-being of, the other side. Most of what we call corporate or professional communication strategy in business and election campaigns is organized this way. Market research segments citizen and consumer communities into specific target groups that are bombarded with customized messaging and communication strategies. The flood of commercials that hits consumers and citizens every day is mind-boggling. According to a survey in 1993, the average child in the United States sees 20,000 commercials per year. The average 65-year-old in the United States has seen two million commercials.

One-way communication focuses on “selling,” on making the target buy something or vote in a particular way. But the target has no opportunity to talk back. Lobbyists and special-interest groups operate the same way. Their influence often is based on privileged access and excluding other relevant parties from the conversation.

Level 2: Bilateral, Two-Way Discussions & Exchange of Viewpoints

Level 2 stakeholder communication is a bilateral, two-way discussion with the intent to provide and receive information, and includes a response or feedback mechanism. In markets, the buyer talks back with her money. In democratic elections, the voter talks back by casting her vote. Both are excellent examples of two-way communication.d

Level 3: Multilateral Stakeholder Dialogue: Seeing Oneself Through the Eyes of Another 

Level 3 stakeholder communication is a multilateral conversation characterized by reflection, learning, and dialogue. Dialogue is a conversation in which you see yourself through the eyes of another—and in the context of the whole. The examples are manifold, from roundtables and “world cafes” to interactive social media. The conversations need a form, a process, and a holding space to operate well. Some companies, like Natura, Nike, and Unilever, have internalized level 3 communication to their benefit.

For example, Eosta, an international distributor of organic fresh fruit and vegetables in the Netherlands, and also one of the first companies to be climate-neutral and use compostable packaging, wants its customers to see the “invisible” processes behind its products. A three-digit code on each of its products leads the consumer through the Eosta website to the producer. For example, the code 565 on a mango leads to Mr. Zongo in Burkina Faso, who then responds to the consumer comments online on his wall. This mechanism is an excellent example of level 3 communication because it allows consumers to see themselves in the context of the whole value chain.

Examples of multilateral stakeholder communication also include town hall meetings in New England, where citizens discuss local issues, and UN efforts such as the Framework Conventions on Climate Change. To work well, these stakeholder communications require enabling technologies and facilitation.

In the end, all of these approaches deliver the same result: They help stakeholders in a system to see themselves in the context of the other stakeholders and the larger whole. They bend the beam of attention in ways that help these distributed communities to see themselves as part of a bigger picture.

Level 4: Cocreative Ecosystem Innovation: Blurring the Boundary of Ego & Eco

Level 4 stakeholder communication is a multilateral, collectively creative ecosystem conversation that helps diverse groups of players to cosense and cocreate the future by transforming awareness from ego to eco. Examples include transformative multistakeholder processes like the World Commission on Dams and the Sustainable Food Lab.The outcomes of these processes deliver not only astonishing breakthrough results, but also a shift in mindset and consciousness from ego-system awareness to ecosystem awareness—from a mindset that values one’s own well-being to a mindset that also values the well-being of one’s partners and of the whole.

Leverage Points

Although there are some inspiring examples of level 4 innovations, it is quite clear where the main leverage points are today for shifting the system to a better way of operating:

  • We need to get rid of the toxic layer of level 1 communication (bribery, soft money, commercials, and other forms of propaganda and manipulation that keep intoxicating the communication channels of our society today).
  • And we need to develop new spheres of level 4 cocreative stakeholder relationships, in which partners in an ecosystem can come together to cosense, prototype, and cocreate the future of their ecosystem.


Excerpted from Leading From the Emerging Future: From Ego-System to Eco-System Economies by Otto Scharmer and Katrin Kaufer. © 2013 Otto Scharmer and Katrin Kaufer.

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