Working together for societal transformation

The Presencing Institute was founded in 2006 by MIT Sloan School of Management Senior Lecturer Otto Scharmer and colleagues to create an action research platform at the intersection of science, consciousness, and profound social and organizational change. Over the past two decades, we have developed Theory U as a change framework and set of methodologies that have been used by thousands of organizations and communities worldwide to address our most pressing global challenges: climate change, food systems, inequality and exclusion, finance, healthcare and education.

What they do: ULabs

The Presencing Institute via ULabs helps change makers and leaders from across sectors to find new solutions in an era of unprecedented disruption and potential for transformation.

Innovation labs supporting real world change initiatives that enable stakeholders from business, government and civil society to collectively respond to the disruptive challenges of our time. One of our recent Labs was:

  • GAIA:  an on-line, multi-local/global learning infrastructure, created in response to the Covid-19 epidemic and the call for action on climate change, that has mobilized thousands of people to reimagine and reshape the future that we want to embody and enact, both individually and collectively in the face of this global crisis.

The ULabs work consists of ‘one particular’ intersecting activity that the Earth-Haven Collective has adopted for group meetings to ‘nut-out’ the, if’s, but’s, and maybe’s of developing new and ‘pop-up’ communities around Australia


ULabs Acupuncture Points

Here we lay out eight areas or visible symptoms of problems in the underlying structure of today’s global economy. The table below lists each issue as it appears on the surface. Row 1 describes the symptom broadly; row 2 explains the structural disconnect that gives rise to the issue in row 1; and row 3 spells out the limits that the whole system is hitting.

Addressing the root causes of these structural disconnects is like touching eight acupuncture points of economic and social transformation. If addressed as a set, these acupuncture points hold the possibility for evolving our institutions in ways that bridge the three divides. Let’s take a closer look at each one.

    • The ecological disconnect. We consume resources at 1.5 times the regeneration capacity of planet earth because of a mismatch between the unlimited growth imperative and the finite resources of the planet. As a consequence, we are hitting the “limits to growth,” as the title of the Club of Rome study famously suggested, calling for a better way to preserve increasingly scarce resources.
    • The income and wealth disconnect. The top 1% of the world’s population own more than the bottom 90%, resulting from wealth concentration in one part of society and unmet basic needs in another. As a consequence, we are reaching dangerous levels of inequality, as we discuss in more detail below. This calls for a better realization of basic human rights through a rebalancing of the economic playing field.
    • The financial disconnect. Foreign exchange transactions of US$1.5 quadrillion (1,500 trillion) dwarf international trade of US$20 trillion (less than 1.4 percent of all foreign exchange transactions). This disconnect is manifest in the decoupling of the financial economy from the “real” economy. As a consequence, we are increasingly hitting the “limits to speculation.”
    • The technology disconnect. We respond to societal issues with quick technical fixes that address symptoms rather than systemic solutions. As a consequence, we are hitting the “limits to symptom-focused fixes”—that is, limits to solutions that respond to problems with more technological gadgets rather than by addressing the root causes.
    • The leadership disconnect. We collectively create results that nobody wants because decision-makers are increasingly disconnected from the people affected by their decisions. As a consequence, we are hitting the “limits to leadership”—that is, the limits to traditional top-down leadership that works through the mechanisms of institutional silos.
    • The consumerism disconnect. Greater material consumption does not lead to increased health and well-being. As a consequence, we are increasingly hitting the ”limits to consumerism,” a problem that calls for reconnecting the economic process with the deeper sources of happiness and well-being.
    • The governance disconnect. As a global community we are unable to address the most pressing problems of our time because the coordination mechanisms are decoupled from the crisis of common goods. Because markets can’t fix the problem of the commons, we are increasingly hitting the “limits to competition.” We need to redraw the boundary between cooperation and competition by introducing, for example, pre-market areas of collaboration that enable innovation at the scale of the whole system.
  • The ownership disconnect. We face massive overuse of scarce resources, manifesting the decoupling of current ownership forms from the best societal use of scarce assets, such as our ecological commons. As a consequence, we are increasingly hitting the “limits to traditional property rights.” This calls for a possible third category of commons-based property rights that would better protect the interest of future generations and the planet.

These issue areas share common characteristics. Among them are that they (1) embody systemic structures that are designed not to learn, (2) are unaware of externalities, (3) facilitate money flowing the wrong way, and (4) allow special interest groups to rig the system to the disadvantage of the whole.

The Ego to Eco framework is an invitation to look at the entire set of disconnects as a whole. What do we see when we contemplate them as a system?

We see ourselves. The problem is us. It is we who burn resources at 1.5 times the capacity of our planet to regenerate them. It is we who participate in economic arrangements that replicate the income divide and consumerism and burnout bubble that comes with it. And it is we who use mostly traditional banks for our financial transactions in spite of our knowledge that these banks are a big part of the problem. Each area represents a part of the system that has lost the connection to the whole.


The Ego to Eco framework begins with the “iceberg model” of the current socioeconomic system. It assumes that beneath the visible level of events and crises, there are underlying structures, mental models, and sources that are responsible for creating them. If ignored, these deeper layers of reality will keep us locked into re-enacting old patterns time and again.

Like the tip of an iceberg, the symptoms of our current situation are the visible and explicit parts of our current reality. This symptoms level includes a whole landscape of issues and pathologies that constitute three divides: what we call the ecological divide, the social divide, and the spiritual divide.

The Ecological Divide. We are depleting and degrading our natural resources on a massive scale, using up more nonrenewable precious resources every year. Although we have only one planet earth, we leave an ecological footprint of 1.5 planets; that is, we are currently using 50% more resources than our planet can regenerate to meet our current consumption needs.

The Social Divide. Two and a half billion people on our planet subsist on less than $2 per day. Although there have been many successful attempts to lift people out of poverty, this number, 2.5 billion, has not changed much over the past several decades. In addition we see an increasing polarization in society in which the top 1 percent has a greater collective worth than the entire bottom 90 percent.

The Spiritual-cultural Divide. While the ecological divide is based on a disconnect between self and nature, and the social divide on a disconnect between self and other, the spiritual divide reflects a disconnect between self and Self—that is, between my current “self” and the emerging future “Self” that represents my greatest potential. This divide is manifest in rapidly growing figures on burnout and depression, which represent the growing gap between our actions and who we really are. According to the World Health Organization (WHO), in 2000 more than twice as many people died from suicide as died in wars.

The ecological, social, and the spiritual-cultural divides represent three different tips of the iceberg of massive institutional failure.

Below the surface of what we call the landscape of social pathology lies a structure that supports existing patterns. For example, in an organization, a departmental structure defines the division of labor and people’s professional identities. In a modern society, the governmental, business, and non-governmental sectors all develop their own ways of coordinating and self-organizing in a rapidly changing and highly intertwined world. A structure is a pattern of relationships. If we want to transform how our society responds to challenges, we need to understand the deeper structures that we continue to collectively re-enact.

For more detail on the structural disconnects that characterize our modern global economy, see the section on Acupuncture Points.

In order to meet the challenges of our time, we need to shift our thinking as individuals and as a society. The profound changes that are necessary today require a shift in our paradigm of thought and a shift in consciousness from an ego-system to an eco-system awareness. The deeper we move into the complex, volatile, and disruptive challenges of the twenty-first century, the more this hidden dimension of leadership moves to center stage. The blind spot in the 20th century toolkit of economics and management can be summarized in a single word: consciousness.

Today’s economy is a set of highly interdependent eco-systems, but the consciousness of the players within them is fragmented into a set of ego-systems. Instead of encompassing the whole, the awareness of the players in the larger eco-system is bounded by its smaller subparts. The gap between eco-system reality and ego-system consciousness may well be the most important leadership challenge today – in business, in government, and in civil society.

When the leader of a company works with the departments that need to improve their collaboration around a common core process, that person is trying to move the departments from ego-system awareness (of their own departmental needs) to an extended stakeholder awareness (of their shared process needs across the firm). When a group of leaders convenes the key players in the value chain in order to facilitate cross-institutional collaboration and innovation, they are doing the same thing: extending the ego-system awareness in their institutions to an eco-system awareness of the entire extended enterprise. When an NGO such as Oxfam or the World Wildlife Fund (WWF) campaigns against child labor or environmental destruction, it tries to extend the awareness of everyone in the system (including consumers) to include the well-being of others, particularly the most marginalized groups.

Facilitating this sort of shift is not an esoteric or peripheral endeavor by people on the fringes. It’s a mission-critical process for millions of institutions and enterprises that is being facilitated by leaders, change-makers, coaches, and consultants. Despite their practical relevance consciousness and awareness are not variables in the framework of mainstream economics and management. They are a blind spot. With the notable exception of some recent work in behavioral economics, economic theory has build models of competition and transactions based on assumptions about given preferences. Little knowledge is being developed or attention being paid to the conditions that allow a system to shift from one state of operating to another – for example, from ego-system awareness to eco-system awareness.

Mainstream economic theory and the traditional management toolkit assume a two-dimensional “flat” space for economic action that is limited to a single state of operational awareness. But there are multiple states of awareness and consciousness that economic and managerial actors can operate from. If these different states of awareness were incorporated into economic theory, and if policymakers paid attention to their impact on what outcomes we create, a whole new dimension of policy, innovation, and collective action would emerge.

For more detail, have a look at the Matrix of Economic Evolution.

One of the core ideas of Theory U is that form follows attention or consciousness. We can change reality by changing the inner place from which we operate. The first step in understanding the impact of attention on reality is to look at how we operate on the individual level.

Economic Evolution

Our economies evolved around challenges and responses. Societies responded to the challenges of instability, growth, and domestic externalities by updating their economic logic, by innovating, and by introducing new coordination mechanisms (hierarchy, markets, networks, eco-system awareness). Each new stage came with an evolution in consciousness from traditional, to ego-centric, to stakeholder- centric, to eco-centric.

The 3 divides and eight acupuncture points represent social pathologies that affect our lives today and that originate in the underlying architecture of economic thought.

All economic systems deal with three processes: the (1) production, (2) distribution, and (3) consumption of goods and services. Societies in different regions, times, and cultures have developed different ways of structuring these processes.

The Ego to Eco framework identifies five approaches to managing them:
●  1.0 : Organizing around centralized power: the state (one sector, centralized state)
●  2.0 : Organizing around competition: state + market (two sectors, decentralized markets)
●  3.0 : Organizing around special interest groups: state + market + NGOs (three sectors, conflicting)
●  4.0 : Organizing around the commons (three sectors, co-creating)

The economic logic of each earlier stage continues to exist in the later stages—but mitigated by a new meta-context that is defined by 2.0, 3.0, and sometimes 4.0 practices.

Following Thomas Kuhn’s work on scientific revolutions and Arnold Toynbee’s work on the rise and fall of civilizations, we can state that whenever an economic paradigm is unable to provide useful answers to a period’s biggest challenges, society will enter a transitional period in which sooner or later it replaces the existing logic and operating system with an updated and better one.

What then is the driving force for moving an economy or a society from one operating system to another? We believe that there are two primary ones: exterior challenges (the push factor) and the development of consciousness (the pull factor). Societal evolution happens when the forces of push and pull meet: the external challenge that can no longer be ignored and the internal resonance with human consciousness and will. Wherever these two forces collide, we see mountains move, as they did in 1989 with the collapse of the Berlin Wall; in 1991 with the collapse of the Soviet Union; in 1994 with the collapse of the apartheid system in South Africa and in 2011 with the collapse of the Mubarak regime in Egypt.

We believe that there is no more important research challenge today than to invent, prototype, and scale the economic logic and institutional innovations that will power, scale, and sustain Economy 4.0. In other words, we need to upgrade the economic operating system from ego-system to eco-system awareness.