Exploring Self-Management as an Organizational Structure for Startups

This article describes how startups can better respond to the need for more organizational structure by knowing real alternatives to conventional hierarchy, and when to make a deliberate operating system change.

For most startups, there are obvious stages in their development where fundamental decisions need to be made. In the beginning, founders may meet at university or get together with friends to explore a business idea. After a period of experimentation, those who do not fail in the early stages (which is most startups) will reach a stage where the product-market fit increases.

How do you know if this is already the case? Quite simply, the fact that this question is being asked at all means that the optimal market fit has certainly not yet been achieved. Because once it is, there is an unmistakable pull of the market that runs through the entire organization, ensuring that there is rapid growth to meet demand. Organizations in the growth phase are more likely to die of constipation than starvation. There are too many opportunities and there is a risk of biting off more than the organization can chew. The team needs to grow in a relatively short period of time to keep up with increasing demand.

“Help, we need structure!”

This is where startup founders enter a common dilemma: As the team grows, so does the complexity of the organization, and it becomes clear that some kind of intermediate hierarchy is structurally required. At the same time, this calls into question the basis of the company’s previous success, its agility, its interpersonal closeness and looseness, and the feeling of being part of a self-chosen family.

But not wanting to have a problem ultimately doesn’t solve it. “What the heck, in the end, we don’t have a choice anyway — so bring on the full-time leaders, managers, ‘head-of’s’, etc.”, you pragmatically tell yourself as a founder, and let fate take its course, while you swear to yourself that you will practice “servant leadership” and other lofty leadership ideals, and never let yourself be seduced by the dark side of power. Good luck!

A Choice That Is Not a Choice

Strictly speaking, the decision in favor of the classic management hierarchy is not really a decision, because a “decision” assumes that I can choose from at least two viable options. Letting the organization slide into hopeless chaos is not a viable option, however, and so most startups are left with the motto “close your eyes and get through it” and impose the unloved management hierarchy, with all its interpersonal entanglements, and hope that everything will work out in the end.

The good news is that there is in fact a viable alternative to the classic management hierarchy. It is called self-management.

The good news is that there is in fact a viable alternative to the classic management hierarchy — and therefore there is a real choice to be made, provided that one is aware of this alternative. It is called self-management, or self-organization, and it is gaining visibility in the mainstream. But unfortunately, the majority of companies are still relatively ignorant of this alternative or do not (yet) dare to break new ground.

A Real Alternative: Self-Management with Holacracy

The variant of self-management we favor at Xpreneurs is called Holacracy. It’s a robust peer-to-peer practice of distributed authority without traditional managers, developed in 2006 by Brian Robertson and the company HolacracyOne, and now practiced in thousands of organizations worldwide. The rules of this practice are codified in the “Holacracy Constitution.” The goal of this article is not to explain Holacracy (you can read about that elsewhere, like in the Holacracy blog), but to highlight the fact THAT a realistic alternative to the classical hierarchy does exist, for or against which one can make an actual meaningful decision. This makes the classical management hierarchy no longer without alternatives, and the decision a real choice between two viable options.

The Problem of the Right Timing

Assuming that Holacracy-style self-management is seen as the right choice, when should the alternative operating system be introduced in the organization? One can roughly distinguish three phases in a startup’s growth:

1) the naive early days when everyone is part of a Happy Startup Family;

2) the phase when the product-market fit has been optimized, leading to a growth spurt and increased complexity; and

3) a consolidation phase when the organization has to structurally digest its growth (if it doesn’t want to perish from constipation).

Phase 1: Happy Startup Family

In phase 1, there isn’t usually awareness that the growth spurt in phase 2 will come and lead to a need for structure. People think they can work together forever in the garage with friends as a Happy Family. Although it would be ideal to build the organization on a sustainable foundation with a Holacracy operating system at this early stage, other things are more likely to demand attention:

• Verify the hypothesis that the organization’s products are needed.
• Develop income streams to have a financial runway long enough to bring a product to market.
• Get the right people with the right skills on board.

In phase 1, the need for self-management is not high, because you are still working well with your colleagues at eye level (and all needed tasks are being done), and there are not usually enough financial resources to get thorough Holacracy training and professional mentoring (though there may be exceptions). So this is not usually the right time.

At the same time, there are substantial benefits being missed. As soon as the questions arise as to what work actually has to be done, who is accountable for what, and who makes what decisions, one would have the opportunity to make these decisions using Holacracy. Most startup founders unconsciously and unintentionally create a practice that will later harm the organization, and from which they have often tried to escape by, ironically, creating yet another company.

Phase 2: Market Maturity

Even in the market maturity phase (2), by definition a turbulent phase, a radical change in the organizational operating system is not recommended because such a change requires an investment of time and attention. However, this is not viable here, because the phone doesn’t stop ringing. In addition, the sudden increase in complexity only becomes noticeable toward the end of this growth phase, which means that the structural deficit will suddenly become acute. And so this is not usually an ideal time either.

But from another perspective, this is the first real stress test for the company. If you can already build on solid self-management practices from the early stages here, there will likely be significantly less collateral damage.

Phase 3: Consolidation

In phase 3, you have mastered the first rush of customers and recognized the need for structure. At this point, most founders choose the path of classic management hierarchy. But, as we have learned before, there are other paths available: it is also possible to follow the lead of a growing number of pioneering companies from all over the world in the direction of self-management. In phase 3, you have sufficient resources, you have a working product, and you know that a suitable organizational structure will not build itself. From this plateau, you can either passively drift along with the flow of traditional hierarchy, or you can completely rebuild your organization with self-management.

Conclusion

If you value startup qualities such as agility, decentralized decision-making, maximum autonomy, and working at eye level and want to scale, but don’t want to forgo role and process clarity, a consistent self-management system such as Holacracy is an option to seriously consider in the last consolidation phase.

However, if you consistently think ahead, you will consider the question of system selection from the very beginning, because it will inevitably arise on its own. The earlier you practice alternatives, the easier it is to establish a new pattern of collaboration that can ultimately withstand changes in the organization (e.g., consultants, new colleagues, VCs) — without responding purely reactively to the need for structure by establishing a management hierarchy because “that’s just how a professional organization works.”

To the contrary, the traditional management hierarchy is not a fate that one has to endure. But you can only make a real decision when you know real alternatives.

This article was first published in German on Feb 9th, 2022 under the title “Selbst-Management als Organisationsstruktur für Startups” on the Xpreneurs blog.

Get Started with Holacracy

To learn more about Holacracy, find practice resources, or connect with a coach, visit Holacracy.org.

Choosing Your Startup’s Operating System was originally published in HolacracyOne Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

What would a new political decision-making process have to look like to honour all layers of cultural values in a nonexclusive way?

In his book “Developmental Politics,” Steve McIntosh develops a new political philosophy to help overcome the extreme hyper-polarization that plagues western democracies — the United States in particular. He argues that there is a cultural war raging between the proponents of major value systems that have emerged throughout history. In his view, the values of “traditionalism,” “modernism,” and “postmodernism” form the central “bedrock values” of the American society (and comparable Western societies).

Modernism itself has, over time, further divided into two camps in the United States: “Liberal Modernists” and “Fiscally Conservative Modernists.”

The problem is that these camps are at each other’s throats. The challenge is to encompass them in a higher order system that honours the strengths of each worldview, while at the same time preventing their excesses.

McIntosh views these value systems as existing in both a developmental as well as a polar relationship with each other. By referencing the theory of polarity management, he points out that in any polarity in which both poles are positive, no one pole can ever “win” since both poles challenge as well as complement each other. Each pole has its upsides and downsides, as summarised in this diagram.

Getting rid of, say, traditional values doesn’t help postmodern values, because it would rob society of the social cohesion and order that is ultimately required for postmodern values to emerge in the first place. Likewise, modernism “winning” against postmodern environmentalism would maybe enhance some people’s profits in the short term, but ultimately saw off the branch we’re sitting on in terms of the carrying capacity of the planet.

Now, all of these values have emerged for good reasons and need to be harmonised in an overall system for each of them, and the greater whole of society, to be able to flourish. None of them can be safely excluded from having a seat at the political table — nor should they be flippantly discarded. Instead, polarities of this kind have to be continuously managed.

Values Integration

McIntosh calls the corresponding political process “values integration.” Apart from the issue of marijuana legalization, he gives the example of gay marriage to illustrate how an additive process of including all “bedrock values” can lead to wider social acceptance of new policies:

Advocacy for the right to marry has been instrumental in the larger success of the gay rights movement overall because the cause of gay marriage integrates important values from each of the four major value systems illustrated by the
charts. Gay marriage advances caring values, fairness values, liberty values, and crucially, traditional family values (heritage values). Traditionalist who otherwise object to “decadent homosexual lifestyles” find it much harder to
resist calls for the basic right to make a family commitment through the institution of marriage. While perceived traditionalist interests are not included in the new right for gays to marry, traditionalist values are included nonetheless. It was thus through values integration that this previously polarized issue has not only become law, it has also gained widespread social acceptance.

It’s a bit like playing guitar: if you don’t hit all the strings, the chord just won’t sound as good as it could.

A Robust Political Process for Integrating Values

While McIntosh does a great job of providing a broad outline and the philosophical underpinnings for how this higher integration might occur, he is less clear about what specific process could be used to make day-to-day political decisions.

That said, my guiding questions for this exploration were:

What are the conditions for integrating representatives of these value systems in a political decision-making process that is both constructive and has the potential to honour the fundamental concerns of each party involved?

How can we make sure that each party can bring their gifts while relying on the watchfulness of the other value systems to curb their potential excesses (the negative aspects of their value pole), whenever needed?

How can we design a decision-making process that implicitly teaches the value of each of the bedrock values to the other parties?

How can we integrate the wisdom of all these perspectives while avoiding political stalemates and ideological trench warfare?

Luckily, we don’t have to completely reinvent the wheel when it comes to decision-making processes. From my background as a Holacracy Coach, I am very familiar with the Integrative Decision-Making process (IDM) that is used during governance meetings to integrate conflicting views on the best way forward in organizations. My sense is that by tweaking and experimenting with this process, it can be successfully exported to work as an initial answer to the questions raised above.

Integrative Decision-Making

IDM is a robust process that is described in detail in the Holacracy Constitution. It reliably leads to workable outputs that have been checked for potential harm. It does so by following clearly delineated rules. An elected Facilitator ensures that the circle (the team) sticks to the rules of the process.

Essentially, IDM is a recipe for a well-run and civil discussion which is highly outcome-focused.

Here’s an excerpt from the Holacracy Constitution (v5.0):

§5.4.5 Integrative Decision-Making Process

The Facilitator must enact the “Integrative Decision-Making Process” as follows:

• (a) Present Proposal: First, the Proposer may describe the Tension and present a Proposal to address it. On the Proposer’s request, the Facilitator may allow others to help craft a Proposal. However, the Facilitator must focus this help solely on getting to an initial Proposal to address the Proposer’s Tension. The Facilitator must disallow discussing other Tensions or concerns about the Proposal.

• (b) Clarifying Questions: Once the Proposer makes a Proposal, others may ask questions to better understand the Proposal or the Tension behind it. The Proposer may answer each question, or may decline to do so. The Facilitator must stop any reactions or opinions expressed about the Proposal, and prevent discussion of any kind. Participants may also ask the Secretary to read the Proposal or show any existing Governance, during this step or at any other time when the participant is allowed to speak, and the Secretary must do so.

• (c) Reaction Round: Next, each participant except the Proposer may share reactions to the Proposal, one person at a time. The Facilitator must immediately stop any out-of-turn comments, any attempts to engage others in a dialog, and any reactions to other reactions instead of to the Proposal.

• (d) Option to Clarify: Next, the Proposer may share comments in response to the reactions and make amendments to the Proposal. However, the primary intent of any amendments must be to better address the Proposer’s Tension, and not Tensions raised by others. The Facilitator must immediately stop comments by anyone other than the Proposer or Secretary. Any engagement by the Secretary must focus solely on capturing the amended Proposal.

• (e) Objection Round: Next, each participant, one at a time, may raise concerns about adopting the Proposal. The Facilitator must either capture these concerns as Objections, or test them to see if they meet the Objection criteria and capture any that do. If there are no Objections, the Proposal is adopted. While testing concerns and capturing Objections, the Facilitator must stop and disallow discussion or responses of any kind from anyone other than the Objector.

• (f) Integration: If there are Objections, the Facilitator then focuses on each one, one at a time. For each, the participants brainstorm to find a potential amendment to the Proposal to resolve the Objection. The Facilitator marks an Objection resolved once the Objector confirms that the amended Proposal would not trigger the Objection, and the Proposer confirms that it still addresses the Tension. During this step, the Facilitator must apply the rules of integration described in this Article. Once all Objections are resolved, the Facilitator moves back to the Objection round with the amended Proposal.

A key piece of the process is the Objection Round (e), sometimes also called the “safety check” of the proposal. Here the Facilitator asks each person whether they have concerns with regard to the proposal. In an organizational context, each person speaks as a sensor for the organizational role it is inhabiting, sensing into whether the proposed change would hinder them in expressing the purpose or accountabilities of their roles. In this way, this step acts as a safety net, eliciting concerns from the group before the proposal gets implemented. But not every concern necessarily constitutes an objection that needs to be integrated. That’s why the Facilitator tests the concerns according to the following four criteria.

§5.3.2 Objection Requirements

A concern about adopting a Proposal only counts as an Objection if the Objector can provide a reasonable argument for why it meets all of the following criteria:

• (a) The Proposal would reduce the capacity of the Circle to enact its Purpose or Accountabilities.

• (b) The Proposal would limit the Objector’s capacity to enact the Purpose or an Accountability of a Role the Objector represents in the Circle, even if the Objector filled no other Roles in the Organization.

• (c) The concern does not already exist even in the absence of the Proposal. Thus, a new Tension would be created specifically by adopting the Proposal.

• (d) The Proposal would necessarily cause the impact, or, if it might cause the impact, the Circle wouldn’t have an adequate opportunity to adapt before significant harm could result.

However, regardless of the above criteria, a concern always counts as an Objection if adopting the Proposal would violate a rule in this Constitution.

§5.3.3 Testing Potential Objections

The Facilitator may test whether a concern counts as an Objection by asking the Objector if the concern meets the required criteria, and how. When assessing responses, the Facilitator may only judge whether the Objector presented arguments for each criteria using logical reasoning. The Facilitator may not judge on the basis of an argument’s accuracy or the importance of addressing it.

Necessary adaptations of the IDM process for a political context

These rules work in a certain context: that of Holacracy, a role-based organizational operating system. To make it work in a political context, some of the basic parameters would have to be tweaked.

In Holacracy, people are sensors on behalf of their organizational roles.

In the adapted version of the process, people would act as sensors on behalf of one of the essential bedrock values. Usually, that’s what politicians have been voted into office for — to represent a certain set of values (often regardless of particular political platforms, policies, or election promises).

Before entering the process, participants would self-identify as a “sensor” representing at least one (or more) of the bedrock values from the list above. This would have the beneficial side-effect of implicitly teaching them the contours of the positive expression of all of these value poles (the upper quadrants of the diagrams above) which they often never pause to even consider.

The Facilitator would highlight that while participants can not necessarily expect their preferred solution (their proposal) to be accepted as-is, they can expect their original impulse to resolve a problem and that their bedrock values will be honoured and protected. Every participant will be able to raise objections, and for a proposal to be ultimately adopted, all objections would have to be integrated first.

In Holacracy, the objection requirements act as an effective filter against highly subjective and unproductive objections. It’s not a filibuster situation in Holacracy. There are no personal vetoes that can grind the process to a halt. Objections must be rooted in the organizational role, not just in a personal agenda. Every concern is rigorously tested against the criteria outlined above (§5.3.3). Concerns that do not satisfy all four criteria do not qualify as objections that need to be integrated. They may be independent concerns, but none that would constitute a reason why the proposal on the table would create harm if it was adopted.

To work in a political setting, the objection requirements would have to be modified:

• (a) The Proposal would violate one of the bedrock values as sensed by the value’s representative.

• (b) The concern does not already exist even in the absence of the Proposal. Thus, a new Tension would be created specifically by adopting the Proposal.

• (c) The Proposal would necessarily cause the impact, or, if it might cause the impact, the governing body wouldn’t have an adequate opportunity to adapt before significant harm could result.

As you can see, I replaced the first requirement, erased the second one (it does not really apply), and slightly altered the fourth (now third) requirement.

The test question for criterion (a) might hence sound like this:

“Does the proposal violate a particular bedrock value… OR … do you find it unnecessary or incomplete?”

Further, the Facilitator would ask: “If yes, which value and how?”

Here, an argument needs to be presented by the person raising the concern. It is important to mention that the Facilitator only judges whether a reasoned argument has been presented, not whether they personally agree with it. Presenting a reasoned argument that would justify a violation of the bedrock value in the eyes of the harm-sensor would be sufficient at this point of the testing process to satisfy this criterion.

If the objector merely finds the proposal unnecessary or incomplete, their concern doesn’t constitute an objection according to these rules. Hence, it would be disregarded in the integration step. At this stage, the Facilitator is only testing for harm with regard to bedrock values the representative claims they want to protect.

If a concern has passed the test and qualifies as an objection, this does not mean that it stops the proposal at hand. The tension behind the original proposal is still being honoured. It simply means that the objection raised needs to be integrated during the integration step. The goal of the integration step is to explore the solution space together with the original proposer as well as all the objector(s). They work together as sensors for the specific values they are pursuing. An amended proposal has to satisfy both sides: the proposer and the objector. If there are difficulties or resistance to integration attempts, the “Rules of Integration” (§5.3.4) give the Facilitator some more teeth to arrive at a solution.

This process of joint solution-seeking gets us out of WIN:LOSE territory into WIN:WIN or “OMNI:WIN” territory.

The process described above would give us a basic setup that can be used to run experiments in political contexts where representatives are willing to enter a good-faith dialog to overcome difficult stalemates and reach more integrated solutions.

Obviously, my proposal leaves many questions open, such as who can participate under which condition, how is the Facilitator elected, etc. But it could catalyse a process of experimentation among the open-minded in each party, starting a recursive learning loop in which the rules of the process can be tweaked and refined along the way — similar to the continuous evolution of the Holacracy Constitution. Let me know what you think.

Who knows, maybe it could even be a catalyst to evolve the American Constitution as well?

I would like to thank Steve McIntosh for permission to use the charts from his book “Developmental Politics”.

Values Integration via the Integrative Decision-Making Process was originally published in HolacracyOne Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Synergies between DAOs and FPEs

• PART 1: The Emergence of Decentralized Autonomous Organizations
• PART 2: There Has To Be A Better Way … And Somebody Already Found It
• PART 3: Synergies between DAOs and FPEs

As we explored in the previous articles, there are a lot of commonalities between DAOs and FPEs. In this article let’s have a closer look at what the obvious points of synergy between both models are.

What FPEs have to offer to DAOs

Systematic PowerShift

The seat of power shifts from a collection of people to a collection of rules. The rules bind everyone equally with no personal authority over the rules themselves or over others.

Scalable Holarchical Structure

The embedded Holacracy® framework replaces a hierarchy of people with a nested hierarchy of organizational roles and circles (“holarchy”) that is highly scalable.

High Agency and Autonomy for Role-Leads

The rules of the game empower Role-Leads to make decisions with a high degree of autonomy within clear bounds.

Robust Governance Process

The Holacracy Constitution provides clear rules and an efficient process on how each circle governs itself and can develop the expectations and boundaries on its roles.

Dynamic Equity and New Financial Instruments

The FPE frameworks legally encode a way to account dynamically for the inputs of different partners during the start-up phase using the Slicing Pie methodology. The various units of account (Dynamic Equity – A-Units, Deferred Interests – D-Units, Profit Interests – P-Units, Capital Interests — C-Units) provide greater financial flexibility.

Clarity on the Legal Framework

The company encode.org already managed to encode its principles of Purpose, Structure, Awareness, Agency, and Transparency in the legal documents of its Nevada-based LLC container. It is currently adapting it to fit the brand-new Wyoming LLC DAO solution. This will make encode.org “a legally registered power-shifted DAO, operating as an FPE” — a solution that could be highly attractive for any existing DAO and its members as well.

What DAOs have to offer to FPEs

On-Chain Representation of Governance Records

DAOs live on the blockchain. Currently, FPEs and organizations that practice Holacracy still store their governance records in software tools that are hosted centrally by the respective tool providers, GlassFrog and Holaspirit. A decentralized app (“dapp”) version of these tools could make them tamper-proof and would increase trust in their veracity. This would be especially relevant for larger organizations with many hundreds or thousands of people.

Elaborate Tokenomics and Well Working Incentive Systems

The crypto space in general and DAOs, in particular, have figured out how to create well-working incentive systems. They have managed to attract a huge inflow of money, skill, and attention. FPEs could definitely use more of all of those.

Summary

It is an exciting time and technological, as well as organizational innovation is moving at neck-breaking speed. For anyone with eyes to see, it is obvious that DAOs and FPEs have many points of convergence that should be explored for mutual benefit. Their respective value sets are overlapping to a large degree: both value radical transparency, aspire to distribute power systematically, encourage participatory decision-making, and enable peer-to-peer collaboration for a common goal or purpose. It’s a match made in heaven — a legally registered power-shifted DAO, operating as an FPE.

• PART 1: The Emergence of Decentralized Autonomous Organizations
• PART 2: There Has To Be A Better Way … And Somebody Already Found It
• PART 3: Synergies between DAOs and FPEs

Would you like to learn more about how to become a For-Purpose Enterprise™?

Are you participating in a DAO and would like to explore the possibilities?

Visit encode.org

DAO meets FPE (3) was originally published in encode.org on Medium, where people are continuing the conversation by highlighting and responding to this story.

There Has To Be A Better Way … And Somebody Already Found It

• PART 1: The Emergence of Decentralized Autonomous Organizations
• PART 2: There Has To Be A Better Way … And Somebody Already Found It
• PART 3: Synergies between DAOs and FPEs

Meanwhile, in another corner of the organizational innovation space, there exists a different lineage and tradition of self-organization that has been around since 2016 and shares many similar features with DAOs:

• purpose-driven / commons-driven
• distributed authority, peer-to-peer
• values individual liberty
• creates strong community affiliation /loyalty
• focus on “power-with” instead of “power-over”
• high transparency and awareness
• participatory decision-making
• no traditional management structure
• operating with encoded rulesets

Holacracy — a new social technology for organizations

This lineage started around 2006 with the Holacracy® operating system — a new social technology to run an organization differently, based on clear rules and processes that distribute power from the top of the former management pyramid to mutually defined roles and circles. The rules of the game — the “code” of the Holacracy ”OS” — are enshrined in the Holacracy Constitution, a living document, open-source and collaboratively built by the worldwide Holacracy community of practice on GitHub.

Although Holacracy got rid of managers and bosses it didn’t collapse into a “flat” structure like the DAOs. Instead, it replaced a hierarchy of people with a hierarchy of work functions (circles, roles, and accountabilities) that capture different scopes in which the work of the organization lives. It replaced the CEO as a centralized force of alignment with an organizational purpose statement: purpose is the new boss. All work is organized around purpose, all roles and circles fractally reflect the overarching purpose of the organization. Roles are filled with “Role Leads” (people) and Role Leads are granted a lot of autonomy and authority to act on behalf of the organization:

As a Role Lead, you have the authority to take any action or make any decision to enact your Role’s Purpose or Accountabilities, as long as you don’t break a rule defined in this Constitution. When prioritizing and choosing among your potential actions, you may use your own reasonable judgment of the relative value to the Organization of each. (Art. 4 — Holacracy Constitution v5.0)

This simple authority to act on behalf of your role already takes care of the thousands of small decisions in an organization that need to be taken and executed — without having to call a freaking town-hall meeting every time.

A Superior Governance Process

But how are roles and circles and policies created in Holacracy? Who decides about that? In a Holacracy-powered organization, each one of the fractally nested circles holds regular Governance meetings to update the mutual expectations in the circle. Each of these expectations is invalid unless it is written down in the Governance records and is the result of the due Governance process as prescribed by the constitution. Anyone who fills a role in a circle counts as a member of that circle and is eligible to bring a new Governance proposal for that particular circle. (This takes care of the fuzzy boundaries problem that some flat organizations struggle with where everyone and their mum can vote on virtually anything.)

A proposal must seek to address a “tension” sensed from a role that the person fills in the organization — not just from a personal agenda. A “tension” is any gap between what currently is and what could be. A proposal in which the proposer cannot explain how it would help his role address a similar tension in the future will be discarded by the Facilitator of the circle. In Holacracy all proposals need to be grounded in real organizational tensions. Proposals lacking a proper definition of the problem will get filtered out.

Once the tension and the proposal are established the elected Facilitator leads his circle members through the Integrative Decision-Making Process specified in the rules. I won’t go into too much detail here, but simply present the sequence of carefully calibrated steps that maximize the efficiency of the overall outcome:

1. Present Proposal

2. Clarifying Questions

3. Reaction Round

4. Option to Clarify

5. Objection Round

6. Integration

Nobody can use vetoes to block the process. Aspects like job seniority or the number of tokens owned are irrelevant to bringing proposals or voicing concerns against proposals. Concerns are tested whether they qualify as objections according to strict criteria. All legitimate objections must be integrated by amending the proposal, while the original tension still needs to be addressed. Once all objections are integrated into an amended proposal and no new objections surface, the proposal will get adopted and become an official part of the governance records of the circle from then on.

Please note that this elaborate method is not used to make all those itsy-bitsy operational decisions. Operational decisions are still being made autonomously by Role Leads while interpreting the purpose of their roles. The Governance process only answers the meta-question “Which role can be expected to make which decision and under which constraints?” These are considered to be questions of governance in Holacracy.

Again — every circle updates its structure of expectations and authorities (its roles, accountabilities, domains, and policies) via the Governance process in a regular rhythm (usually monthly). This way, the governance process scales across all circles throughout the organizational holarchy. A “holarchy” is a nested structure of holons — wholes, arranged in a growth hierarchy — think atoms — molecules — cells for example. Holacracy mimics the way natural systems deal with complexity — via holarchies.

Co-Owning a Self-Organized Entity: The For-Purpose Enterprise™ (FPE)

Holacracy was a giant leap forward. It gave an organization a clear way to structure its work according to its purpose. Along the way, it differentiated “role from soul” — the organization from its people. While Holacracy says a lot about organizing the work it remains silent on how to organize the community of people. Also, it left the legal framework, the ownership, and the investment structure untouched. You can adopt the practice regardless of which legal container you have chosen. But of course, every legal container comes with its own requirements and limitations — oftentimes detrimental to the intentions of self-management. For example, most legacy structures create a distinction between two classes of people, owners, and employees, which undermines peer-to-peer relationships needed for self-management.

Tom Thomison, a co-founder of HolacracyOne, sensed these tensions and quickly found purpose allies who felt the same way and wanted to address them. The result is the For-Purpose Enterprise™ model first developed and embodied by the company encode.org, which covers three spaces or contexts. It addresses the need for a systematic powershift beyond just organizing the work of the Organization Context. It creates a space for the people as well, the People Context with its distinct rules and agreements. The third space, the Company Context, encodes the legal framework and embeds decentralized Governance mechanisms directly into the operating agreement. In an FPE all members of the Organization (“the Partners”) are simultaneously legal members of the Company (“the legal entity”) and associates of the People Context (“the people”). The highest circle, called Anchor Circle, replaces the legal Board and contains representatives from all three contexts. The Anchor Circle integrates and balances the needs of each context against the enterprise’s overarching purpose using the Governance protocols of Holacracy. Each context has its own explicit ruleset. Currently, the FPE model runs on top of a modified Nevada-based LLC structure.

Slicing Pie for Startups — the Many Currencies of a For-Purpose Enterprise

A huge problem for startup founders is that at some point they will have to determine which of the multiple founders owns which percentage of the company. Usually, they sit down upfront and agree on a percentage, maybe 50/50 in the case of two owners — or 70/30, if it is clear that one of them invested much more in terms of time and personal cash (both of which is risky to different degrees). With three founders you might have a simple 33/33/33 split, or 40/30/30, and so on … you get the picture.

The reason why this often becomes problematic is that things change — especially in the busy world of startup ventures. One founder drops out because his spouse got sick, one works his ass off day and night, while the other takes it much slower. Suddenly some extra cash investment is needed which only one of the founders is able to make from his own pocket to keep the business afloat, etc., etc. The variables are ever-shifting until the business becomes profitable, but when it eventually does, the profit shares are fixed due to a decision made blindly and predictively at the very beginning of the journey. Dynamic Equity is an alternative way of arriving at the capitalization table and percentages of shares among the investors of a company.

At encode.org swapped out this old predict and control equity model in favor of the Slicing Pie Dynamic Equity model by Mike Moyer. In fact, we love Mike’s work so much that we baked Slicing Pie principles right into the operating agreements. We encoded Dynamic Equity into the operating agreement by creating a new class of membership interest, the Allocation or “A Unit”. But there are three others as well. Here’s a list:

• Dynamic Equity, A Units
• Deferred Interests, D Units
• Profit Interests, P Units
• Capital Interests, C Units

To find out more about the different units and what they are there for check this in-depth article.

Baking and Slicing the Pie of Shares, Yummy and Fair

Together these units of account provide founders with new financial vehicles and instruments to play with, bringing a high degree of flexibility to navigate a broad range of situations — especially during phases with low cash flow.

These different “currencies” of an FPE were conceptualized before blockchain technology really took off in a big way. Now they literally scream to be tokenized and put into a distributed ledger.

• PART 1: The Emergence of Decentralized Autonomous Organizations
• PART 2: There Has To Be A Better Way … And Somebody Already Found It
• PART 3: Synergies between DAOs and FPEs

Would you like to learn more about how to become a For-Purpose Enterprise™?

Are you participating in a DAO and would like to explore the possibilities?

Visit encode.org

DAO meets FPE (2) was originally published in encode.org on Medium, where people are continuing the conversation by highlighting and responding to this story.

How Decentralized Autonomous Organizations can benefit from operating as a For-Purpose Enterprise™

• PART 1: The Emergence of Decentralized Autonomous Organizations
• PART 2: There Has To Be A Better Way … And Somebody Already Found It
• PART 3: Synergies between DAOs and FPEs

PART 1: The Emergence of Decentralized Autonomous Organizations

Imagine an organization in the cloud, radically decentralized, without bosses. Its rules are written in code, so-called “smart contracts” and enforced automatically, secured by cutting-edge distributed ledger technology — aka the blockchain. Its participants flock around it from all over the world, launch proposals for what projects to work on, and share the spoils in the form of cryptocurrency tokens, distributed via smart contract after successful completion of the deliverable.

This alien creature is called a DAO — a decentralized autonomous organization — and it is a hungry beast. Since its first major emergence in 2016 it has captured the imagination of thousands of people worldwide — mainly software developers — who devote their time, energy, and skill to various DAOs, often crypto projects, such as MakerDao that revolutionize and disrupt the finance industry and created the field of DeFi — decentralized finance. Anyone with an internet connection and the necessary skill can join in and contribute to and earn in these new organizations.

Blockchain technology dramatically eases coordination and collaboration between strangers, since the economic actions are executed by software code in a ‘trustless’ manner. There is a high degree of transparency and auditability since anyone can check the records on the distributed ledger, which is highly tamper-proof due to it being stored on decentralized nodes of a network instead of centralized on a single server.

It is an exciting time for pioneers, but it can be very messy as well, as evidenced in the major hack of “The DAO”- the first noteworthy instantiation of this new form of organization. A hacker had found a way to exploit a bug in the code and siphoned off the equivalent of 70 million dollars. This forced the Ethereum developer community (the number two cryptocurrency after Bitcoin) to make a hard fork, leaving the old fork, Ethereum Classic, behind to rewrite and fix the code.

Challenges that DAOs are struggling with

Apart from Black Swan events like the one above there are more mundane challenges that DAOs haven’t quite solved yet. In an article for Decrypt, Matt Hussey and Adriana Hamacher summarize the main challenges as follows:

🏢 Flat structure — by not having a clear authority figure, or chain of command, decentralized organizations are slower to operate as decisions take longer to make.

😡 Disagreements — when the community disagrees strongly, it could split the organization into two.

👸🏽 No change — in some DAOs, those with the most tokens call the shots, so governance looks very similar to traditional organizations.

⚖️ Legality — minefields abound in relation to token projects that might be deemed to be securities.

The Governance Myopia of DAOs

DAO Consultant Grace Rachmany identifies several problems related to governance and decision-making in DAOs. Usually, there’s only one (crude) pathway offered for making all decisions: token voting by all the users that hold governance tokens in the DAO. But majority decisions are rarely the best way to make decisions. Who gets to define the problem to be voted upon? Who gets to frame the voting options? What if you can only choose between bad proposals?

Beyond that, she points out that winner-takes-all voting quickly devolves into exacerbating our already dominant competitive tendencies, thereby weakening the spirit of cooperation. It turns out that even a highly skilled and intelligent crowd of software engineers mainly work with default assumptions about how to do governance (majority vote, vote weight based on token share size) that prove to be too unsophisticated for running a complex multi-million dollar operation with thousands of decisions to be made.

The Unclear Legal Status of DAOs

As we saw, many DAOs are used to launch crypto projects. Developers that put in their time and work can earn tokens of that project as a way of payment. Should the price of the token skyrocket later, this could be a massive opportunity for the developer. For those not familiar with the difference between the terms “cryptocurrency” and “tokens”, here’s a definition by Sheba Karamat, which I found helpful:

“While a cryptocurrency operates independently and uses its own platform, a token is merely a cryptocurrency built on top of another pre-existing blockchain. All tokens are cryptos, but not all cryptos are tokens.” (Coinrivet.com)

As the Decrypt article quoted above states, token projects might be deemed to be securities by state regulators. Securities are usually highly regulated. Currently, there are a lot of legal grey areas in the crypto-space, but with trade volumes and market capitalization steadily increasing year by year, the players in the industry increasingly fear an impending government crackdown. Regulators demand formal legal structures, especially in the Decentralized Exchange or “DEX” space. Without formal legal standing, DAOs are at risk of being labeled a default partnership with potential liability implications for all of its members. As everyone knows, two things in life are certain: death and taxes. If there are huge flows of monetary value involved, the state will sooner or later knock on the DAO’s doors — or knock them down.

• PART 1: The Emergence of Decentralized Autonomous Organizations
• PART 2: There Has To Be A Better Way … And Somebody Already Found It
• PART 3: Synergies between DAOs and FPEs

Would you like to learn more about how to become a For-Purpose Enterprise™?

Are you participating in a DAO and would like to explore the possibilities?

Visit encode.org

DAO meets FPE was originally published in encode.org on Medium, where people are continuing the conversation by highlighting and responding to this story.

How the Dutch Company “NRG Circles” is Transforming the Oil and Gas Industry

“You know, Grandpa,” said his nine-year-old granddaughter from the backseat to Robert Annaars while they were driving, “Electric cars are actually worse for the climate than cars with petrol, because of the production of batteries.” Robert works in the valve industry sourcing all kinds of highly specialized valves that are used by the “super-villain” — if there is any — as portrayed by the likes of Extinction Rebellion or Greta Thunberg: the rich and powerful oil and gas industry.

Yet, it is high time for drastic changes, as evidenced by the rapidly growing number of news stories documenting the devastating effects of global warming — from melting pole-caps, torrential rainfalls, devastating killer heatwaves to ravaging wildfires tinting the sky in apocalyptic orange hues. Despite the warning lights blinking like crazy, and despite the fact that we individually have a clear sense of what would have to be done, more often than not, on a collective level we seem to be unable to take what we sense and express it in the form of decisive organizational action.

Instead of sensing into a higher purpose and acting on it, most organizations still seem to be under the sway of the shallow pseudo-purpose of “maximizing profits”, while gradually turning our only planetary home into an uninhabitable hellscape and — how ironic — thereby ultimately destroying the only environment where any of these wonderful profits could be enjoyed. Collectively, we’re on a path of self-destruction.

“If we can transform this industry, we can transform any industry” — Robert Annaars

From “Oliver Valves Nederland” to “NRG Flow”

As popular wisdom goes, “be the change you want to see in the world” and — to throw in another feel-good truism — “every journey of a thousand miles starts with the first step”. In 2000, the Dutch company “Oliver Valves Nederland” started out as a supplier of valves for the oil and gas industry. In 2016 the company was acquired by Raëma de Lange and Robert Annaars through a management buy-out from NRG Circles. The operating company Oliver Valves Nederland is currently undergoing a brand transformation from “Oliver Valves Nederland” to “NRG Flow” as it intends to make a greater impact in the transformation of the oil and gas industry, sourcing their needs through collaboration with an eye for the greater benefit for all.

From traditional management to self-organization powered by Holacracy

The new owners strongly felt that the traditional management hierarchy was not working for them. Reading the book by Tony Hsieh, “Delivering Happiness”, they were inspired to find out about the online shoe retailer Zappos. In January 2014, Zappos had drawn the attention of the press by abandoning their traditional management hierarchy and instead adopting the self-organization practice Holacracy across their 1500 employees. Subsequently, for their first “Workation” — short for “work-vacation” — in spring 2018, Raëma and Robert together with the majority of the team, spent time in Las Vegas at Zappos and learned about the importance of personal development.

Holacracy is a wholesale replacement of the traditional management hierarchy. It comes with an explicit rule set that encodes how work is to be done in a peer-to-peer self-organized way, aligned with the overall purpose of the organization. This purpose gets broken down into circles and roles that express a smaller part of the overall purpose. Each role comes with clear and explicit accountabilities. But the biggest shift is the baked-in empowerment that is being granted to each role-filler by virtue of the rules which are enshrined in the “Holacracy Constitution’’. As a role filler, you have the authority to use your best judgment to interpret the purpose and the accountabilities of your role and express them as you see fit best. Holacracy’s inverse authority structure means that you are allowed to do anything in service of your role that is not explicitly forbidden by the rules of the game or the rules that the company created as internal restrictions on their roles via governance.

From a conventional point of view, this inversion of authority is mind-blowing.

Instead of you having to ask for permission to act, others will have to act to create new rules to limit you from acting as you see fit. It’s on the others to try to stop you from serving your roles according to your best judgment. Even if you think you understand your new freedom, in early practice you really don’t. But once you do and it sinks in, you get the opportunity to experience true autonomy, deep engagement, and real mastery at work.

The larger degree of freedom within such a structure necessitates a higher degree of discipline while working together. Every circle holds two types of meetings: “Tactical” and “Governance” meetings which are led by an elected facilitator. The Tactical meeting helps to synchronize the daily operations, while a Governance meeting is an opportunity to fine-tune general expectations such as the structure of circles, roles, and accountabilities on a recurring basis. This way the self-imposed structures stay dynamic, flexible and relevant in the light of recent needs and developments. People usually fill several roles for the organization, sometimes in several circles. Overall, Holacracy practice helps to disentangle and clarify what belongs to the work of the organization and what are personal or interpersonal preferences. In that way, it helps to differentiate “role” and “soul”.

Going beyond just self-organizing the work

This felt like a liberation, so NRG Circles implemented Holacracy in 2016 with the support of an external Holacracy Coach. Key people received training and spread the practice throughout the organization. But at some point, they encountered an irritation of sorts as Robert Annaars remembers:

“During the subsequent years, we improved our skills and got to a point where we were missing the people side of the organization since Holacracy is just about organizing the work. Time and time again we found that roles were created that didn’t really have anything to do with actual work according to the purpose, but rather with the people side of an organization. If we honestly asked and answered the question, ‘Does the company care?’, we would have to say ‘no’ and yet the people did care of course.”

Another tension arose in relation to the question of what constitutes fair compensation in a model that strongly bases the work on peer-to-peer relationships of equals.

“Having been in the position of being employed before and seeing the perceived unfair advantage of income between a shareholder (providing equity) and the people doing the actual work and creating the success, made us think about alternatives to create more fairness”, says Robert.

At first, they experimented with trying different payroll schemes. In one of these experiments, they even used age as an overall indicator of experience and seniority, yet found it much too crude and inappropriate in practice.

Despite self-organizing the work in a peer-to-peer way and getting rid of classical managers, NRG Circles was still stuck with the legal distinction of owners/employers vs. employees effectively but unintentionally creating two classes of people.

The For-Purpose Enterprise to the rescue…

In their quest of solving these problems, Raëma and Robert encountered the work of encode.org and its model of the “For-Purpose Enterprise”. Not unlike Holacracy, a For-Purpose Enterprise (FPE), puts purpose front and center. Yet its scope is broader than merely self-organizing the context of work, which is the great strength of Holacracy practice. An FPE therefore happily incorporates the Holacracy Constitution (or any comparable self-organization ruleset) as the agreement for its work context. Since this is still an incomplete picture, an FPE extends its key principles of purpose, structure, awareness, agency, and transparency to the people context and the legal context as well and provides companies with concrete templates of how to do so.

For the people context, it provides the template for an agreement that regulates what members can expect from each other as members, how interpersonal disputes are settled, what values should be expressed, how mentorship and personal development are organized, and anything else that helps a group of individual people, attracted by individual resonance to a shared purpose, associate with each other effectively.

The legal context comprises the ownership and investment container of a For-Purpose Enterprise and connects to the local legal code of a given jurisdiction. The operating agreement of an FPE modifies the legal container (e.g., an American LLC, a Dutch cooperative, a German GmbH & Co KG, etc. …) making it literally “for-purpose”. It integrates and encodes new Holacracy-style governance mechanisms at the Board or Anchor Circle as it’s known in Holacracy.

The Anchor Circle encompasses all three contexts, the work, the people, and the ownership, and aligns them with the overall purpose. What is unique is that in the Anchor Circle of an FPE the people show up in their various roles as workers, as investors, and as …well, people, and integrate and harmonize all of these crucial perspectives at the top level by using integrative decision-making processes (as in Holacracy practice). This is especially relevant for determining a fair compensation model while incorporating all relevant perspectives of investors, the people, and the organization, without one being able to simply overrule or outvote the others.

As Robert remembers, “The light bulb lit up, realizing that putting purpose central and finding the reason for the existence of the company was the driver for success. With the FPE structure, we saw that the People also had their place in an organization again. To complete the picture, it would become much easier for people to also connect in other contexts, such as an investor context, building an even stronger connection between people and company purpose.”

Taking a leap of faith and becoming fit for purpose

After a journey of discovery, in fall 2019 NRG Circles formulated their purpose as “Transforming the Oil and Gas Industry”. They completed an FPE readiness assessment with Tom Thomison of encode.org and in spring 2020 NRG Circles decided to become the first For-Purpose Enterprise in the oil and gas industry (and at that time the 8th company in the world). Currently, they are in a transitional phase in which the employees get an opportunity to become co-investors in the business until February 2022.

A collaborative supply-chain model in the oil & gas industry

On the business side of things, NRG Flow as the operating entity of NRG Circles, — developed a Collaborative Relationship Framework (CRF) to supply its valves to its customers. That means that NRG Flow representatives focus on the relationship over the transaction. This relationship is built on trust and the desire for both parties to be better off than before they met each other. “The lowest price is never the lowest total cost” explains Robert. Since the customer doesn’t know the specialized products as well as NRG Flow does, they closely collaborate on projects and offer advice on the highly specialized kinds of valves the customer needs in order to reduce energy and operational expenditures. This often helps the customer to considerably lower the total cost of ownership. The full implementation of a CRF relationship also means that both sides decide on the earnings together. So far, the first steps of this process have been really successful with customers testifying “It’s a joy to deal with you.”

The endgame

But the endgame is — as the purpose of NRG Circles indicates — to transform the oil and gas industry. Fossil fuels have been instrumental in catapulting humanity to unprecedented levels of complexity and wealth — so there is a lot to be grateful for. But as an industry, its peak is behind it. Since fossil fuels are no longer a viable path forward for humanity, it is clear that we will need to wean off of them soon.

So, in that sense, Robert is certain that NRG Flow will move into the consultancy business direction in the future. Without the need to demonize a whole industry and having established a trust-based relationship, NRG Flow will be instrumental in helping customers reduce their inefficiencies and assist the industry in finding its new purpose moving away from the use of fossil fuels.

By aligning people, investment, and the work with an evolving purpose, For-Purpose Enterprises like NRG Circles will inspire and guide the way for others to follow.

“If we can transform this industry, we can transform any industry”, says Robert.

May the first domino fall.

Are you curious to learn more about the For-Purpose Enterprise (FPE) model?

Consider taking an FPE readiness assessment, which will help you determine if this is the right option for your organization. Contact encode.org and take your first step toward transforming your organization.

Leave a few claps and share this article to help others benefit from it as well. Thanks!

New Energy for a Power-Shifted World was originally published in encode.org on Medium, where people are continuing the conversation by highlighting and responding to this story.

“3D Management — An Integral Theory for Organisations in the Vanguard of Evolution” by Marco A. Robledo

The first thing you need to know is that this is a passionate book, written by a passionate author. And, full disclosure, Marco Robledo is a good friend of mine. We met in integral circles and he is a really sweet guy, very knowledgeable, curious, and generous. In this book, he undertakes the bold task of laying the theoretical foundations of an entirely new way of looking at business and organizations today.

His main source of inspiration is the AQAL integral model by Ken Wilber (who also wrote the foreword), not unlike the influential book by Frederic Laloux, “Reinventing Organizations”, which also draws on integral concepts, especially developmental theory. Both books are similar but also different in important ways. Laloux chooses an inductive, bottom-up approach, by observing what he calls “Teal Organizations” in the wild and extrapolating three breakthroughs of these kinds of organizations from his observations (self-management, wholeness, evolutionary purpose).

Robledo chooses a different angle. His approach is rather deductive compared to Laloux, with the integral model and the four quadrants as a starting point for building a new meta-theoretical foundation for business and theories about business. Yet it is not mere speculation or lofty theorizing. Robledo includes tons of practical examples (also drawing on many companies featured by Laloux) which underline the theoretical points he makes.

Those examples also include a community-run cinema in Mallorca, CineCiutat, which Robledo was practically involved in transforming. This shows that Robledo is not just a professor of management and the director of the MBA at the University of the Balearic Islands, he is also a citizen, who gets down into the nitty-gritty details of actually bringing these kinds of organizations to life for real. One would expect no less degree of embodiment from a truly integral practitioner of 3D Management.

So, let’s look at this peculiar term of “3D Management” and what Robledo wants to convey with it.

The “3D” refers to “The Big Three” of Art, Morals, and Science; or I, We and It; or the Beautiful, the Good, and the True according to Ken Wilber’s integral theory.

These three dimensions are a condensed version of the four quadrants (simplifying the two “exterior” quadrants by treating them as one). The backbone of 3D Management then is to take into account these three fundamental dimensions whenever you are running a business.

“Are the processes of the organization functional and efficient?” is a question pertaining to the objective dimension — Science (“it” and “its”).

“Is the company creating value for the larger community (and future generations)?” is a question that would have to be asked from the intersubjective dimension — Ethics (“we”).

“Is the company enabling creativity and innovation and makes the world more beautiful?” could be a question coming from the subjective dimension — Arts (“I”).

Those dimensions form the 3D Management Triangle. The name “3D” also suggests a higher dimensionality, which is fitting since according to Robledo most organizations are managed in a purely scientific “flatland” manner, devoid of depth and interiors.

Robledo dedicates a chapter to each of the three dimensions in which he explains what the respective dimension means in the context of organizations, provides examples, supporting theories, and uses vivid metaphors for illustration that are fun to read.

To round it off, the three dimensions are anchored in a “Fantastic” fourth dimension, Spirit. Spirit, as the ground of all being, encompasses the objective, subjective and intersubjective dimensions and manifests in companies in the form of purpose and community. Robledo mentions the “For-Purpose Enterprise” model by Encode.org as “a particularly good fit for 3D management”. It builds on the practice of Holacracy in the container of the “Organization” (work matters) and then adds containers for the “Association” (people matters) and the “Company” (legal matters) — all tied together by clear and explicit agreements.

To summarize, “3D Management” is a compelling case for more integral ways of organizing and doing business that take into account all Quadrants (the dimensions), all Levels (of development), all Lines (of development), all States (of consciousness) and all Types (of orientation, e.g., masculine-feminine).

Robledo’s work provides a theoretical meta-framework, capable of believably interweaving multiple theories about business at the vanguard of evolution.

He discusses the most prominent approaches in the field, honors their contributions as well as criticizes them, where it seems necessary. His grand integral map is not just an elegant theory pleasing readers with academic inclinations, it also helps to guide business leaders and practitioners in asking and answering the most important questions with regard to their practical endeavors.

By openly talking about things like Spirit, purpose, wholeness, Art, and Ethics, Marco Robledo dares to stick out his neck and risks to stand outside the academic and business mainstream in a daring move that calls us, the readers, to also take a step and move beyond our comfort zones.

May this book be a match that lights a fire in the hearts of fellow business pioneers yearning to get rid of bullshit jobs to live lives that truly matter and help to bring more wholeness into our lives.

Links:

Hardcover Edition of the book

Kindle Edition of the book

Book Reviews on Goodreads

The Whole That is Greater Than the Sum of its Puzzle Pieces

Like many of my peers, I am constantly wrestling with the question: What does it take to steer the world into a saner, more sustainable direction? This text is not a definitive answer to that question, simply a summary of what puzzle-pieces I have found so far that seem relevant. I will release it in the form of a series of posts. My hope is that by putting my pieces on the table that others will pick them up and link them to theirs so that this act of distributed cognition can move the whole forward.

Part 1 — Introduction + The First Piece of the Puzzle: Ken Wilber’s Integral Methodological Pluralism (IMP)

Part 2 — The Second Piece of the Puzzle: Daniel Schmachtenberger’s Analysis of Existential Risks

Part 3 — The Third Piece of the Puzzle: The SIMPOL Campaign by John Bunzl

Part 4 — The Fourth Piece of the Puzzle: Holacracy + Integrative Decision Making by Brian Robertson

The Whole That is Greater Than the Sum of its Puzzle Pieces

Let’s recapitulate the journey through the various puzzle pieces presented in this article series. Each article contained a guiding question, the answer to which sparked a new question that led to the next puzzle piece promising to hold a potential solution. To bring this series to a (preliminary) close, we will now bring all the pieces together and look for the Emergent Whole which is bigger than the mere sum of its parts.

Larger quantum leaps of evolutionary novelty always arrive in an entirely new configuration of what was already there right in front of our very eyes. Cumulative progress hits a tipping point and a paradigm shift announces itself. That’s the nature of evolutionary emergence. We have to have confidence that the answer is already out there waiting for us to be unveiled. The trick is to find the pattern that connects — the integral element. For that, we have to overcome the mental illusion of separateness in every conceivable way and render reality diaphanous or transparent so that the hidden light of wholeness can shine through and lift the veil of our blindness and illusion. Please follow me. We can do this together.

1) “What is the case?” Ken Wilber’s Integral Methodological Pluralism (IMP)

We started out by stating that the world is currently in a major state of crisis, with various crises coagulating into a global Meta-Crisis expressing in many forms. The growing complexity is overwhelming us on many fronts. If we want to have any hope of addressing it, we will need to start keeping track of the many interwoven threads (and threats) we need to deal with as humanity. The best tool we’ve developed to figure out what is the case is the scientific method. But there is not just science of the exteriors, but also science of the interiors, both individual and collective.

Ken Wilber’s Integral Theory offers a framework broad enough to welcome and cherish truths from all possible disciplines, enacted by the entire smorgasbord of hundreds of methodologies for producing data, insight, and knowledge. Integral Methodological Pluralism (IMP) can become an invaluable guide to coordinate research efforts across all kinds of disciplines in a systematic and coordinated fashion so that we don’t fall prey to all kinds of disciplinary absolutisms. Instead of fighting truths derived by different methodologies than our own favorite ones, we can create a bigger tent, a framework in which all of them are welcome, where their specific perspective is acknowledged and cherished while at the same time their absolutistic claims are curbed. “Freeing methodologies by limiting them”, as Ken says.

A non-fragmented, non-exclusionary approach in which contributions to the whole are indexed across the grid of the 8 major methodological families (the “8 zones”) described by IMP will help to simultaneously track phenomena across multiple zones. Triangulating their co-occurrence across methodologies will enact a deeper space of insight into the interrelationship of the various phenomena under research. This form of integral trans-disciplinary science will illuminate our understanding of reality in a deeper way and give us a wider space to roam in search of practical solutions to concrete problems resulting from the Meta-Crises.

2) „What is the root cause of the most pressing global problems? “ Daniel Schmachtenberger’s Analysis of Existential Risks (X-Risks)

Drawing on the work of Daniel Schmachtenberger we can gain deeper insight into all the existential risks we are currently facing as humanity. The main takeaway from the analysis of various troubling issues is that there seems to be an underlying commonality, a hidden pattern, or shared “Generator Function” driving all of them and preventing us from making any substantial progress on solving any of them. Climate Inaction, Erosion of Environmental and Work Standards, Proliferation of Weapons of Mass Destruction, Tax Evasion, Increasing Wealth Gap, and Erosion of the Information Ecology are all just the tip of the iceberg. Under the surface, they are all connected by a similar pattern.

This pattern is well-known in game theory as “Tragedy of the Commons” or as “Prisoner’s Dilemma”. Daniel Schmachtenberger calls it “a collective action problem” that results from a misalignment of individual incentives with what would be best to do to preserve the commons. Anticipating the other player’s selfishness, we fear losing out and by virtue of that help to create the very situation in which everyone loses in the long run through our own behavior. We use “plausible deniability” to defend our actions to ourselves and to others while collectively our behavior slowly but surely erodes the shared commons, be it the resources of the natural world, financial means, our attention, our trust, our truthfulness, or other values that all of us are supposed to benefit from.

While it is not impossible to “do the right thing” as an individual actor, in the long run, the honest brokers run the risk of being at the sucking end of all the games they play with others who are not as ethically-minded. In the end, they usually give in and take refuge in “plausible deniability” as well, since their defection on the common good seems justified by the behavior of the others. It is a vicious cycle, a true downward spiral.

3) „How can we solve the Tragedy of the Commons politically? “ — The SIMPOL Campaign by John Bunzl

Like Daniel Schmachtenberger, John Bunzl of SIMPOL arrives at the same conclusion: there is one central dilemma that keeps the world in constant political gridlock. It is the same “Tragedy of the Commons” dynamic. He calls it “Destructive International Competition”. In order to stay competitive, national governments have entered into a destructive downward spiral with each other, competing for capital, investments, and workforce (and other things) on a global level. In a race to the bottom, they lower taxes, their work standards, and environmental standards to not lose out to other nations. They are being had by a pattern they either don’t understand or don’t have an idea how to overcome.

The Simultaneous Policy campaign (SIMPOL) introduces such an idea. If all nations simultaneously implement the same rules to solve a certain global issue (that is otherwise unsolvable due to the game-theoretical gridlock), no single nation has to worry about losing out by introducing policies that constrain powerful corporations or investors. The playing field has been leveled and there is no place left to evade such restrictions for these actors. There would still be competition amongst nations, but not destructive competition that plays out nations against each other.

For example, the whole world could agree on a minimum tax rate for companies of a certain size that would kick into effect simultaneously everywhere. Moving jobs elsewhere wouldn’t cut it anymore for companies. Since their competitors face the same taxation, they wouldn’t lose out to international competitors in this regard. With the surplus money, national governments would receive enough funds to finance crucial projects for the common good of their citizens. Political trust, eroded by decades of neoliberalism, could slowly be rebuild, reanimating political culture worldwide and helping to give birth to a new political identity beyond the nation-state level: global citizenship — an emerging identity that is already “in the air” for many cosmopolitans, yet hasn’t manifested in a shared global political project yet. SIMPOL could become that project.

The SIMPOL campaign is a bottom-up campaign that is driven by a relatively small number of citizens in democratic countries. They pledge to give strong preference for any politician or party in their national election which also pledges to support the SIMPOL campaign. Those politicians would only have to make good on their promise as soon as there are enough nations on board that have also signaled support to implement policies simultaneously. So there is no risk involved for the particular politician or party to sign up. But there is a risk in not signing up since the political competitor might do so. In that case, he or she runs the risk of losing the growing block of voters that favor SIMPOL and have pledged to support any candidate within reason that also does. Cleverly, the campaign leverages competition to enforce cooperation on a higher level. Once every party in a given country supports SIMPOL we have another pearl for our global necklace, ready to be strung on the unifying thread of simultaneous implementation of policies on a global level. The Global Governance Gap would finally be closed.

Not unlike the organelles like mitochondria and chloroplasts one day woke up amazed to find themselves to be suddenly enveloped by a cell membrane, nation-states one day might wake up amazed to find themselves to be suddenly enveloped by a pattern of coordinated action that is beneficial to everything within this new higher membrane around “spaceship earth”.

That is the nature of the evolutionary emergence of greater and greater wholes.

4) “Which process should we use to craft policies to efficiently integrate key concerns?“ — Holacracy & Integrative Decision Making by Brian Robertson

With any attempt at tackling complex global problems, it is clear that a multitude of perspectives will need to be integrated in order to reach a shared goal. But instead of coming up with the usual dull and watered-down “compromises” and “meeting halfway in the middle” type of solutions, which leave every party feeling like they lost out on the deal (while moving the needle only little to nothing), we will need much better ways to explore the design space of potential solutions in an intelligent way, staying on track with solving the original tension or problem, while taking care to integrate any issues that would be caused by adopting the new simultaneous policy.

We will need much better ways to explore the design space of potential solutions in an intelligent way

Luckily, Brian Robertson and his Holacracy colleagues have developed a very robust way of reaching a highly integrated solution by using a process called “Integrative Decision-Making” (IDM) that is being used by companies to define and refine policies of organizational governance. It is a highly disciplined process led by a trained facilitator, which works in an additive “yes, and” way instead of an oppositional “yes, but” manner and no team member can block the process through a veto. Instead, concerns with regard to the adoption of policy proposals undergo a thorough testing process and only those objections need to be integrated that satisfy certain objection criteria that have proven to be useful in filtering out irrelevant concerns.

As I indicated in the article about Holacracy, the rules of the process might have to be “exapted” from the organizational context and refined for the SIMPOL context of trying to craft proposals for simultaneous policies that are highly integrative with regard to the needs of all the stakeholders involved. But the process wouldn’t have to be invented entirely from scratch. IDM is already demonstrating its capacity to bring results in thousands of Holacracy-powered companies around the globe every day.

And just like the Holacracy community of practice has joined to evolve the code of the Holacracy Constitution together on an open-source platform, the operating system of the Global Commons, the “SIMPOL Constitution” that encodes how simultaneous policies are formed and implemented, could be continually refined in an iterative fashion by the constituents affected by it — the global citizens.

Putting it all together

One morning I woke up with a hazy vision of how to fit these lingering puzzle pieces together which were floating around in my mind. Writing it out helped me to gain more clarity for myself. I hope the result is useful for you and that you do something with it. I will certainly try to fill out the gaps, holes, and overlooked pieces, the known unknowns, and the unknown unknowns.

I think that each one of us holds unique insights and perspectives that can help create a saner, more whole world. Each one of us is a unique intersection of experiences in the grand Kosmic web of existence.

Nobody is quite like me. Nobody else could have written this. This fact confers a felt moral obligation for me to share my particular and maybe exotic favorite puzzle pieces and not to withhold the gift that is only mine to give. I encourage you to do the same so that we all discover an ever-extending pattern of wholeness and start healing a world that is utterly broken.

Stepping up and owning your puzzle pieces publicly takes courage. It means exposing yourself to the criticism of others who might want to poke holes into your fragile construction. But let that never stop you from building the foundations of a future that works for all of humanity and the planet. Cynicism is cheap and lazy, just like plausible deniability. Instead, start constructing, make errors along the way, but start erring in the right direction.

Learn to play the infinite game and have fun along the way!

PS: If you liked this post, don’t forget to leave some claps. It will help others to find it. The algorithm gods (and me) will thank you!

The Fourth Piece of the Puzzle: Holacracy + Integrative Decision Making by Brian Robertson

Like many of my peers, I am constantly wrestling with the question: What does it take to steer the world into a saner, more sustainable direction? This text is not a definitive answer to that question, simply a summary of what puzzle-pieces I have found so far that seem relevant. I will release it in the form of a series of posts. My hope is that by putting my pieces on the table that others will pick them up and link them to theirs so that this act of distributed cognition can move the whole forward.

My previous article in this series focused on the simultaneous implementation of policies on a global level in order to defuse the effects of the “Tragedy of the Commons” dilemma. This well-studied pattern from game-theory entraps politicians, business leaders, and individuals worldwide and chains them to a downward spiral across a range of crucial issues, such as climate change, wealth inequality, the proliferation of weapons of mass destruction, and other thorny and seemingly intractable problems. The Simultaneous Policy Campaign by John Bunzl (SIMPOL) identified a mechanism to overcome the negative incentives that this dilemma places on individual actors. It achieves that by introducing binding rules globally and simultaneously so that nobody loses out in what otherwise would be the usual pattern of Destructive International Competition.

How could we craft and decide upon global policies?

Let’s assume for the sake of the argument, that such a global campaign was successful and could really help international leaders to see how we can break out of the political deadlock that prevents us from making any progress on these issues of global interest. Let’s further assume that these leaders are now ready to sit down around the negotiation table to discuss and decide upon the specific global policies that are to be implemented simultaneously.

It seems obvious that such an endeavor would require a clear and structured process in order to help all parties involved to explore the design space of possible omni-win solutions in a disciplined and efficient way. If no such structured process existed, chances are that any policy negotiation would default to the individual negotiation skills of the political leaders involved. A quick review of the meager results of previous Climate Summits reveals the relative inefficiency of standard negotiation processes. Precious time would be wasted with the risk of a lack of agreement on simultaneous policies and the failure of the entire project looming. There has to be a better way.

Enter Holacracy

Incidentally, “there has to be a better way” was also the very thought Holacracy pioneer Brian Robertson had in mind when he created his own software company after having suffered the effects of typical bureaucratic top-down organizing and decision-making in classical companies. What followed was a frenzy of experimentation on what he calls “the operating system” of his nascent organization. After many years of highly focused, evolutionary trial-and-error, he and his colleagues cracked the code for such a system and encoded its rules in a Constitution for any organization that wishes to commit to the practice of self-management. Holacracy® was born. (If you get irritated by the trademark: it is licensed only for people who want to sell Holacracy®-branded services, but its Constitution is completely open-source and any company can freely practice it).

What is Holacracy?

First of all, it is a practice for organizations. Like any real practice, be it horseback riding, medicine, tantric sex, playing the piano, soccer, or giving physiotherapy, it can be difficult to fully explain it without the listener having a corresponding interior experience of the practice first-hand. But of course, there are plenty of things you can say to describe it from the outside. I won’t even attempt to give a ‘complete’ description, so here’s a thumbnail version to provide a bit more context, before I make my point of why this puzzle piece is crucial for a world in crisis.

Holacracy is a wholesale replacement of the classic top-down management hierarchy. The overarching purpose of the organization is broken down into its sub-components and expressed as a series of nested circles, roles, and accountabilities. Roles and circles are self-organized and authorized to make autonomous decisions about how they want to express their part of the overall purpose.

The larger degree of freedom within such a structure necessitates a higher degree of discipline while working together. Every circle holds two types of meetings as prescribed by the Holacracy Constitution (the rulebook): “Tactical” and “Governance” meetings which are led by an elected facilitator. The Tactical meeting helps to synchronize the daily operations, while a Governance meeting is an opportunity to fine-tune general expectations such as the structure of circles, roles, and accountabilities on a recurring basis. This way, the self-imposed structures stay flexible and relevant in the light of current needs and developments. People usually fill several roles for the organization, sometimes in several circles.

If you feel intrigued about Holacracy, I encourage you to learn more about it. For this purpose, I included a few clips you can watch if you want to go a little deeper down that particular rabbit hole.

The Integrative Decision-Making Process (IDM)

During so-called “Governance Meetings” in Holacracy a very elaborate process is used to arrive at decisions that integrate the key arguments and concerns of all the roles of a given circle. It is used to craft clear expectations by defining specific roles, accountabilities, domains, or policies of that circle. It is called the “Integrative Decision-Making Process” or IDM for short. An elected facilitator guides the group through the process and makes sure everyone adheres to the rules (not unlike a referee in a soccer match). Here’s an overview of the basic steps

1. Present Proposal

2. Clarifying Questions

3. Reaction Round

4. Option to Clarify

5. Objection Round

6. Integration

1) Present Proposal: First, the proposer is invited to describe the specific “tension” (in Holacracy, a “tension” is the gap between what is and what could be) that led to bringing the proposal and then present a proposal that would resolve the tension for the proposer. Notice that the proposal doesn’t have to be perfect at all at this stage. It simply has to be able to resolve the issues in the eyes of the “sensor” (i.e. the proposer) of the particular tension. At this stage only the proposer is allowed to speak, the others listen.

2) Clarifying Questions: During this step, anyone may ask the proposer questions with the sole intent of better understanding the underlying tension or the proposal. Any “fake” questions that are really comments or try to convey information to the proposer (instead of eliciting information from the proposer) are disallowed by the facilitator or relegated to the following “Reaction Round”. The proposer may answer but is also is free to reply to any question with the words “not specified in the proposal”. This removes pressure and the need for defensiveness from the proposer. The proposer doesn’t have to have the answer to all (or any) questions at this point.

3) Reaction Round: During this step, everyone, in turn, is invited to share his or her reaction to the proposal. Any kind of reaction is allowed even emotional outbursts. The facilitator disallows any direct reactions to previous reactions or talking out of turn (discussions/cross-talk). The proposer simply listens.

4) Option to Clarify: Now it is the proposer’s turn to speak, while everyone else has to remain silent. It is his/her opportunity to make quick clarifications by reacting to what was said during the Reaction Round or by slightly tweaking the wording of the proposal. But that is completely optional without any pressure to integrate anything that was said during the Reaction Round. The proposer is reminded to stay true to solving only his/her original tension, nothing else at this point in time.

5) Objection Round: The purpose of the Objection Round is to surface issues with the proposal that would create harm for the organization if they were left to be unaddressed. The facilitator asks one person at a time (including the proposer) whether they see any reason why adopting this proposal might cause harm or reduce the capacity of the circle to express its purpose. If they have any concerns, those concerns get captured and tested whether they qualify as “objections”. Objections are defined according to criteria outlined in the Holacracy Constitution. (I include them here for the interested reader, although I am aware they may be a little overwhelming due to their technicality. In that case, don’t worry too much and simply skip ahead.)

Objection Requirements:

(a) The Proposal would reduce the capacity of the Circle to enact its Purpose or Accountabilities.

(b) The Proposal would limit the Objector’s capacity to enact the Purpose or an Accountability of a Role the Objector represents in the Circle, even if the Objector filled no other Roles in the Organization.

(c) The concern does not already exist even in the absence of the Proposal. Thus, a new Tension would be created specifically by adopting the Proposal.

(d) The Proposal would necessarily cause the impact, or, if it might cause the impact, the Circle wouldn’t have an adequate opportunity to adapt before significant harm could result.

These Objection Requirements represent a relatively high bar for any argument that claims that the proposal at hand would cause harm. They serve as an effective filter to make sure that only relevant objections make it into the next step of Integration. It introduces a kind of evolutionary fitness-function for memetic expressions during negotiations that ruthlessly filters out

· arguments that are not grounded in concrete descriptions of harm (e.g. mere opinions),

· arguments that are not anchored in the roles (and purposes) of the organization,

· arguments for potential harms that are not caused by the proposal itself (because the pre-existed), and

· arguments that are merely expressions of “future fear” — while we could try to experiment with the proposal at hand and adapt along the way instead).

All concerns that survive the test-questions get charted as objections to be integrated into the proposal, while the rest get discarded. If no objections surface, the proposal at hand is officially adopted at this point already. If objections occur, the circle engages in the following Integration step of the process.

6) Integration: At this point in the process, everyone is “unmuted” and allowed to speak freely or jump in if they have a helpful idea. Integration is an open discussion with the clearly delineated goal of integrating every objection, one at a time until all objections have been resolved and the proposal is amended while still solving the original tension. It is a dance between the proposer who serves as a sensor for the original tension and the objector that serves as a sensor whether or not the objection has been resolved. By checking in with the respective sensors and trying to get “green light” from both sensors for every amended version of the proposal, the facilitator systematically works down the list of charted objections one at a time while staying laser-focused on solving only the tensions at hand, to not fall into the trap of over-optimization (trying to solve additional tensions or “perfecting” the proposal).

Once the list of objections is cleared, the group returns to step 5, the Objection Round, to verify that the amended proposal doesn’t create any harm for the Circle. If no further objection surfaces, the proposal is adopted. If new concerns surface, they are tested and all valid Objections are carried into another Integration. This process of circling between Integration and Objection Round continues until no further concerns surface. In this case, the proposal gets adopted.

Download facilitation cards for tactical and governance

IDM — An Evolutionary Winner

The Integrative Decision-Making process is a robust process that has been reworked through practical trial and error evolution countless times. It has been shown to be highly effective in creating organizational clarity and arriving at workable decisions. It is not a nice theory; it is a tried-and-true practice. I would like to stress this point. Integrative Decision-Making is not a pie-in-the-sky dream, it is a robust practice forged in the fires of high stakes organizational reality by a large community of practice. It is an evolutionary winner. Evolutionary selection with skin-in-the-game reaches deeper solutions than any superficial process-design from the ivory towers of academia or from “clever” minds.

Evolution is way smarter than our capacity for deliberate processing from our mind.

That is true for the survivors of biological selection and equally true for memetic selection like in the case of the Holacracy Constitution and its sub-set, the process of Integrative Decision Making. So be careful before you laugh it off as irrelevant — unless you don’t mind ending up at the sucking end of evolutionary selection.

From Governance in Holacracy-Powered Organizations to Global Governance via SIMPOL

That said, let’s turn to the question of how this peculiar puzzle piece of IDM might be helpful for Global Governance via simultaneous policies (SIMPOL). If it is not obvious by now: IDM could be “exapted” to serve the purpose as the engine of the policy-crafting process during the negotiation stage of the SIMPOL-process, where the world-leaders convene in order to reach breakthrough agreements on behalf of humanity. (The dictionary defines “exaptation” as “the process by which features acquire functions for which they were not originally adapted or selected”.)

Since IDM evolutionarily originated in an organizational and not in a political context it would likely have to undergo several mutations in order to become an optimal fit to support such a crucial function on the world stage, but I am confident that the evolutionary process will deliver those design specifications to us if we only dedicate ourselves to such an action-research and refine it in practice in lower-stakes political contexts. This is reminiscent of the old joke: “How do I get to Carnegie Hall?” — “Practice, practice, practice!”

“The future is already here — it’s just not very evenly distributed.“

– William Gibson

The Other Puzzle Pieces

Part 1 — Introduction + The First Piece of the Puzzle: Ken Wilber’s Integral Methodological Pluralism (IMP)

Part 2 — The Second Piece of the Puzzle: Daniel Schmachtenberger’s Analysis of Existential Risks

Part 3 — The Third Piece of the Puzzle: The SIMPOL Campaign by John Bunzl

Part 4 — The Fourth Piece of the Puzzle: Holacracy + Integrative Decision Making by Brian Robertson

Part 5 — The Whole That is Greater Than the Sum of its Puzzle Pieces

To be continued…

Follow me on Medium and watch this space for more puzzle pieces. Meanwhile, please share your own gems of insight with the rest of us. Thanks!

PS: If you liked this post, don’t forget to leave some claps. It will help others to find it. The algorithm gods (and me) will thank you!

The Third Piece of the Puzzle: The SIMPOL Campaign by John Bunzl

Like many of my peers, I am constantly wrestling with the question: What does it take to steer the world into a saner, more sustainable direction? This text is not a definitive answer to that question, simply a summary of what puzzle-pieces I have found so far that seem relevant. I will release it in the form of a series of posts. My hope is that by putting my pieces on the table that others will pick them up and link them to theirs so that this act of distributed cognition can move the whole forward.

In part two of this series, we identified a central root-problem that drives most of the most pressing issues we have to deal with in this planetary meta-crisis: the “tragedy of the commons”. At its core, it is a collective action problem. In general, we know what would be the best course of action to sustain our shared commons, yet all the individual incentives are misaligned and defecting on the common good is being rewarded under the cover of “plausible deniability”, while serving the common good is being systematically punished, due to the poor design of the architecture of choice-making we find ourselves in. This way, in the long run, we all miss out and — given the nature of exponential tech within the context of finite planetary boundaries — will likely self-terminate the human experiment one way or another (or in multiple ways). That truly would be a tragedy given how far evolution has made it in our neck of the Kosmic woods.

A Quadrant Analysis

Through the lens of Ken Wilber’s four-quadrant model, we can describe how most people look at the nature of the problems. While we trace them back to one single “generator function” — the “tragedy of the commons” — they see all the various negative symptoms or expressions of the one big issue at the surface level: climate inaction, degradation of worker rights, tax-cuts for the rich, hijacking of our attention through social media platforms, wealth inequality, etc. Yet each one of these can be explained in terms of similar game-theoretic dynamics.

For most people, the root cause of the problem is seen in terms of the upper-left quadrant, the interior of the individual, or in terms of the lower-left quadrant, the interior of the collective. Either the individual with his poor (morally reprehensible) choices is to be blamed (and shunned) or the entire culture is seen as rotten and morally degraded. While there certainly sometimes are reprehensible individual sociopaths and moral decay exists, this view is steeped in a form of anti-human sentiment. No wonder some environmentalists view their fellow species-members as a “cancer of the planet” — a rather thinly veiled expression of self-hatred.

I would rather locate the main part of the problem in the lower-right quadrant, the exterior collective dimension. This is the systems-perspective on things. Our collective action problem, our “tragedy of the commons” issue is a problem of poor/absent systems design which continually pushes individual actors to act against their own best long-term interests.

Sure, you can blame it on incompetent politicians, or greedy stakeholders, yet even those politicians and stakeholders can only pick among the choices that are on the menu. Meanwhile, the unrecognized “tragedy of the commons” dynamic makes sure to continue to generate shitty menu choices for all of us.

While it is human nature to personalize problems and give them a face, I suspect that this cognitive bias that may have worked in the savannah will do us a disservice nowadays, by distracting our attention away from the true culprit: destructive forms of competition.

Levels Matter: Developmental Issues in “Getting” Systemic Problems

Yet it is also true, that grasping systemic problems pre-supposes at least some form of systems-view, a 4th-person perspective, usually emerging around late rational and early pluralistic stages of cognitive development and blossoming at integral stages. The current estimates say that only around 15% of the population globally has developed the mental apparatus ready to even receive the message. For the rest, this very problem description is literally over their heads. They have no antenna for it. Unfortunately, objective third-person facts about systems don’t lie around in reality for everyone to see. They have to be enacted within a first-person at the right “Kosmic address” (epistemologically speaking), a term coined by Ken Wilber to index the precise (AQAL) configuration required to “light up” a given fact to make it “ex-ist”, that is “stand forth”, in the first place. Facts are only facts for someone. If you get the address wrong, the message will not be received.

This specifies an important design-constraint that any attempt of solving the “tragedy of the commons” problem would have to take into account: it would have to work regardless of the level of inner development the actors bring to the table. Any environmental movement that relies on sensitizing individuals to make the right individual choices based on the genuine understanding of the problem will never — and I repeat — never ever cut it. Development means that everyone starts at square one and skipping stages is not possible. Mastering one stage takes an individual on average 5 years — if it occurs at all. The later stages required for understanding the environmental issue may never be reached at all. It doesn’t help if only 15% of the global population cooperates in reducing carbon emissions (and gets punished by the system for doing so).

The Rule of Law

The classic answer to this conundrum has always been the rule of the law. A law doesn’t specify the (left-hand) interior preconditions for following it. It doesn’t care if you are for or against the use of masks to help prevent the spread of COVID, or if you like paying your taxes (or your carbon taxes for that matter). Your interior opinion is irrelevant. It simply mandates a certain exterior behavior you are supposed to comply with and sets up a choice of consequences in case you fail to comply with it. It doesn’t even concern itself with being “just” — that’s for politicians and moral philosophers to be discussed — it is simply a rule to bind exterior behavior for individuals and collectives. It works by significantly raising the costs on the not-favored behavior options and sometimes by incentivizing the desired behaviors. It is systems-design in action. It renders the broad menu of the most likely choices we can pick from.

Destructive International Competition in the Global Governance Gap

Modern communication technology, the internet, as well as international trade has led to a thick web of global interconnection. Information, capital, people, as well as goods and services move globally nowadays — a development we cannot turn back (as much as nationalists naively would like to squeeze the genie back into the bottle). The fact that money can move beyond national boundaries, escaping to tax-havens is one of many symptoms unveiling what businessman and creator of the international campaign for simultaneous policy (SIMPOL), John Bunzl, calls “the Global Governance Gap”. Absent any internationally binding regulation, destructive international competition — another name for the central issue of “the tragedy of the commons” — is running rampant to such degree that even some businesses that ‘benefit’ from this unregulated international space cry out “please regulate us!”

So, while information, capital, people, as well as goods and services move globally, binding legal regulation is still confined to operate on a lower level, namely the national level. The economy and capital operate on a world-centric level, while regulation is stuck in nation-centric thinking. Kind of embarrassing. Sure, there are international treaties and there are even global institutions like the UN, the IPCC, UNICEF, or the WHO but none of these entities is given enough power to effectively sanction the more powerful member-states like the USA, China, or Russia for non-compliance. This is the Global Governance Gap.

Effective Global Governance vs. a Global Government

As soon as one speaks about the need for regulations on a global level, fears about evoking a totalitarian world regime, a global government, flare up. One can easily see why that could be a complete horror scenario. One would have to flee a different planet to escape its overbearing reach (oh wait, Elon, now I get what you are trying to do with SpaceX…). Instead of this, the international campaign for simultaneous policy (SIMPOL) aims much lower. All it tries to do is to line up support for the simultaneous implementation of certain policies, effectively a form of Global Governance, not a bloated and dangerous Global Government.

A Virtuous Cycle in Exchange for the Current Vicious Cycle

It attempts to overcome the collective action problem by initiating a virtuous cycle in which individual national governments signal support for implementing simultaneous policies as soon as a sufficient number of other national governments have pledged to do the same for a particular issue. The simultaneous implementation of the policies worldwide, under the pre-condition of temporarily bracketing global competition in favor of global collaboration within a clearly specified framework, defuses the negative effects of acting unilaterally and enables a win-win-win solution as an incentive for individual nations to join the deal. That’s the carrot. Failing to globally coordinate and increasingly suffering the consequences of this failure are the stick.

Example: Carbon Tax

Here’s one illustrative example: If one single nation decided to introduce a carbon-tax unilaterally, it would be at the sucking end, suffering from the repercussions of destructive international competition. Production, money, labor, and tax revenue would simply move out and relocate internationally, leaving the local politicians hard-pressed to explain why they chose to destroy jobs while achieving little to nothing in moving the needle on global carbon emissions. It would be political suicide to act under these strong systemic disincentives of the tragedy of the commons.

Example: Appropriate Taxation of Corporations

The same is true for raising taxes for big corporations (obviously the right thing to do to close the wealth-inequality gap and secure sufficient funding for states to be able to perform needed services for the public). The nation that raises taxes significantly, disqualifies itself from being an attractive country to invest in and loses out to those that keep taxes low — a development that has led to a race-to-the-bottom in which countries compete with lower and lower tax rates while continually lowering the bar on what can be asked of corporations to tolerate in terms of taxation for every country.

How would SIMPOL help?

How would the simultaneous implementation of policies on a global level help with these (kinds of) problems? It would help by closing the glaringly open loopholes. With nowhere else to go, carbon polluters or tax evaders would have to board the next ship to Mars in order to escape regulation. Simultaneous implementation of binding rules by all nations would dramatically level the playing field and reduce evasion options for sneaky actors. At the same time, since everybody would experience the same restrictions, healthy competition (the motor of evolution and wealth creation) could return — only this time encapsulated within a framework of global cooperation. The dynamics of competition and cooperation can actually complement each other in a well-managed polarity on a higher level. But we need to build the necessary global scaffolding for that.

What kind of policies are eligible for simultaneous implementation?

Nation-states should retain the maximal amount of sovereignty to implement their own policies as needed. In order to guarantee the full amount of subsidiarity, only those policies, the implementation of which would lead to a “tragedy of the commons” problem were they enacted unilaterally by a single nation, are eligible at all to become the basis for a simultaneous policy. This filters out all those policies that attempt to impose local national values or agendas on other nations. Additionally, a given simultaneous policy only gets enacted if all (or sufficient) nations enact them simultaneously which incentivizes law-makers to explore and engage a higher design-space of solutions that lies in the interest of all nations, not just its own (otherwise it disqualifies itself and won’t get implemented anyway).

How do you convince nation-states to join SIMPOL?

The SIMPOL campaign has come up with an ingenious strategy of leveraging the very mechanism of political competition in order to motivate party politicians to arrive at supporting international political cooperation by signing the SIMPOL pledge. Since margins in national elections are often thin, a relatively small number of self-organized citizens that support the SIMPOL pledge is sufficient, expressing strong favor for any politician or party that additionally supports the SIMPOL pledge in any given local or national election. This creates an incentive for the politicians to sign the pledge, since doing so has no immediate negative consequences (it only gets implemented once sufficient nations have signed up, not before), while not doing so may mean losing the block of self-declared SIMPOL voters which could end up swaying the election in favor of your political competitors.

In the end, due to competitive pressure, both competitors end up signing the pledge. So, no matter what party (or politician) ends up winning the local or national election, it likely has signed the SIMPOL pledge — which also makes sense in itself, beyond it being a way to win more votes and not lose out to your political competitors. As this process of signing up for the pledge spreads through the population of politicians in a given country, more and more momentum and awareness for the problem of destructive international competition and its potential solution (SIMPOL) is being generated.

Proof of Concept for SIMPOL

Currently, members of parliament in eight countries + the EU have signed the SIMPOL pledge. Starting in the UK, the campaign has already managed to sign up over 100 members of the British parliament. The general mechanism has been demonstrated to work. Now it needs to be scaled worldwide.

In the end, even non-democratic nations are highly likely join the simultaneous policy implementation since they need global solutions for global problems as well and the growing global support for the campaign will not go unnoticed in the light of mounting pressures to resolve these issues. Joining the global community will increasingly be seen as advantageous.

Check out www.simpol.org and the book “The SIMPOL Solution” by John Bunzl and Nick Duffell for more details.

I also presented his approach in my article “Immunity to Climate Change”.

The Other Puzzle Pieces

Part 1 — Introduction + The First Piece of the Puzzle: Ken Wilber’s Integral Methodological Pluralism (IMP)

Part 2 — The Second Piece of the Puzzle: Daniel Schmachtenberger’s Analysis of Existential Risks

Part 3 — The Third Piece of the Puzzle: The SIMPOL Campaign by John Bunzl

Part 4 — The Fourth Piece of the Puzzle: Holacracy + Integrative Decision Making by Brian Robertson

Part 5 — The Whole That is Greater Than the Sum of its Puzzle Pieces

To be continued…

Follow me on Medium and watch this space for more puzzle pieces. Meanwhile, please share your own gems of insight with the rest of us. Thanks!

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