The Blind Spot of Leadership: How to Create Deep Innovation Through Moving from Egosystem to Ecosystem Awareness Oct 23, 2010, SVN Fall Conference Otto Scharmer MIT Presencing Institute

“I think there are good reasons for suggesting that the modern age has ended. Today, many things indicate that we are going through a transitional period, when it seems that something is on the way out and something else is painfully being born. It is as if something were crumbling, decaying, and exhausting itself – while something else, still indistinct, were rising from the rubble.” Vaclav Havel

2.0: ego-system awareness HierarchyTraditionalVilleinage Tradition- bound AutocraticLow 1.0: habitual awareness MarketsCommodity MBOInformed Negotiation/ dialogue Regulated commodity Regulated commodity Money as regulated commodity Regulated IPR Participative Conscious consuming, investing 3.0: stakeholder awareness 7 Acupuncture Points: Infrastructure innovations for 4.0  Leadership for innovating at the scale of the whole system ©2009 Otto Scharmer  Civic infra- structures for empowering consumers + deepening democracy  Governance 4.0  Relinking economic w. ecological cycles (closed loop design; prop. Rights for commons)  Relinking economy with basic needs (economic human rights)  Relinking financial with real economy  Collective Knowledge and Technology creation infrastructures Fields of Awareness 4.0: eco-system awareness ABC (Awareness Based Collective Action) Commons- based property rights; natural capital Human rights, human capital Intentional, dedicated capital Open source Co-creative Co-creative consuming, investing Coordina- tionNatureLaborCapitalTechnologyLeadership Consumer Awareness Field 1.0 Habitual awareness Field 2.0 ego-system awareness Field 3.0 Stakeholder awareness Field 4.0 Eco-system awareness 7 Acupuncture Points: Infrastructure innovations for 4.0 Financial Security Leadership Civilization Spiritual CRISIS: Health Poverty Climate Energy Food Water Education

Four Levels of Responding to Change 1. Reacting: quick fixes 3. Reframing: values, beliefs 2. Redesigning: policies 4. Regenerating: sources of creativity and self Source of energy, inspiration and will Manifest action Thinking Process, structure

Two Sources of Learning, Two Learning Cycles A. Learning by reflecting on the experiences of the past act - observe - reflect - plan - act B. Learning from the future as it emerges (presencing)

On the Core Process of Profound Innovation Brian Arthur, Santa Fe Institute

3 Movements of the U Downloading Observe, observe, observe Retreat and reflect: Allow the inner knowing to emerge Act in an Instant: prototype

“The success of an intervention depends on the interior condition of the intervenor.” William O’Brien, former CEO of the Hanover Insurance Company

The Blind Spot of Leadership Source: Who Blind Spot: Inner place from which we operate Process: How Results: What

Levels of Listening disconfirming [new] data LISTENING 2: from outside Factual listening noticing differences seeing through another person‘s eyes emotional connection LISTENING 3: from within Empathic listening reconfirming old opinions & judgments Downloading habits of judgment LISTENING 1: from habits connecting to an emerging future whole; shift in identity and self LISTENING 4: from Source Generative listening (from the future wanting to emerge) Open Will Open Heart Open Mind

Theory U Seeing with fresh eyes Sensing from the field Prototyping the new by linking head, heart, hand Crystallizing vision and intention Presencing connecting to Source Downloading past patterns Who is my Self? What is my Work? Performing by operating from the whole VoF VoC VoJ suspending redirecting letting go embodying enacting letting come Open Will Open Heart Open Mind

I-in-me 1.0: habitual awareness I-in-it 2.0: ego-system awareness I-in-you 3.0: stakeholder awareness I-in-now 4.0: eco-system awareness Field: Structure of Attention Mundo: COORDINATING (global systems) Listening 1: Downloading habits of thought Listening 3: Empathic listening Listening 4: Generative listening Downloading: Talking nice, politeness, rule-reenacting Centralized: Machine bureaucracy Listening 2: Factual, object-focused Debate: Talking tough, rule-revealing Decentralized: Divisionalized Dialogue: Inquiry, rule-reflecting Networked: Relational Negotiation +Dialogue: Mutual adjustment Collective Creativity: Presencing, flow, rule-generating Eco-system: Context, field-based Awareness-Based Collective Action (ABC): Acting from the whole Macro: ORGANIZING (institutions) Meso: CONVERSING (group) Micro: ATTENDING (individual) Hierarchy: Central plan, regulation Market: Competition

Theory U Seeing with fresh eyes Sensing from the field Prototyping the new by linking head, heart, hand Crystallizing vision and intention Presencing connecting to Source Downloading past patterns Who is my Self? What is my Work? Performing by operating from the whole VoF VoC VoJ suspending redirecting letting go embodying enacting letting come Open Will Open Heart Open Mind

2. Co-sensing: observe, observe, observe connect with divers people and places to sense the system from the whole 4. Co-creating: prototype the new in living examples to explore the future by doing 3. Co-inspiring: connect to the source of inspiration and will go to the place of silence and allow the inner knowing to emerge U-Process: 1 Process, 5 Movements 1. Co-initiating: uncover common intent stop and listen to others and to what life calls you to do 5. Co-evolving: institutionalize the new in practices by linking micro, meso, macro change

Theory U Fields of Awareness Ego-system: Markets + Competition Habitual: Hierarchy Stakeholder: Networks + Negotiation © 2010 Otto Scharmer Eco-system: Collective Awareness- based Action Sectors of the Current Institutional Transformation Mono sector Dominating state Traditional value-based banking Centralized: hierarchy- driven Centralized, advocacy Medieval university (unity of teaching) Two sector Dormant State Externality blind markets for money, capital Decentralized, market driven Decentralized, advocacy Driven Classic university (unity of research + teaching) Tri-sector Welfare state Partly externality aware markets for money, capital Network: stakeholder driven Networked, multi- stakeholder- driven Modern university (unity of research, teaching + practice) Tri-sector-eco- system Dialogic state Fully externality aware markets for banking, capital Ecosystem- awareness driven Cross-sector innovation- driven 21 st -century university (unity of research, teaching, practice + social renewal) Economy / Society Government / State Capital / Banks CompaniesNGOsUniversities

Resources and Literature Scharmer, C. Otto (2007). Theory U: Leading from the Emerging Future As It Emerges. The Social Technology of Presencing, Cambridge, MA: SoL Press. Senge, P., C. O. Scharmer, J. Jaworski, and B. S. Flowers. (2004). Presence: Human Purpose and the Field of the Future, Cambridge, MA: SoL Press