From Huffington Post
Last week, Amazon acquired Whole Foods in a move that has many wondering what this means for the direction of the economy. In my view, Amazon’s acquisition of Whole Foods does to organics what Uber did to the sharing economy: it takes something that was born out of a different economic logic (a grocery store dedicated to healthy food) and then molds and morphs it to fit into an economic operating system that is firmly based in the old paradigm—i.e. in a paradigm that aims for world domination rather than serving a goal of shared prosperity and well-being for all.
In this post, inspired by a number of gatherings with change makers across sectors in China, Europe, and the Americas during the past few weeks, I outline a framework for understanding how the current limits of capitalism we are bumping up against in sectors such as food, finance, health, education and business are all related to the same outdated economic logic or “operating system” (OS). We need a new economic operating system, one that reinvents how we work together as neighbors, as businesses, as cities and as larger systems. Below I describe briefly the evolution of these five sectors from OS 1.0 to where we are today, which in most cases is OS 2.0 or 3.0.
The pressing challenges of our time, i.e. the challenge of losing our environment (ecological divide), our societal whole (social divide), and our humanity (spiritual divide) calls for reinventing our systems of food, health, education, finance and management towards 4.0. This essay lays out the rationale for OS 4.0 and a possible way to get us there through an Asian-American-European initiative called 4.0 Lab.
Five Sectors, One Problem
As the labels of the new economy have gone mainstream (green, organic, sharing economies) the underlying economic reality stays the same. That is to say, the immense buying power of giants like Amazon squeeze the supply chain, workers, farmers, and the planet through the same patterns of exploitation and structural violence that gave rise to the movement for a new economy in the first place.
On one level you could describe the problem by saying that companies like Amazon and Uber misperceive the new economy as just another app that runs on their old corporate operating system (i.e. world domination through economies of scale). In reality, though, the new economy is not just another app—it’s a radical upgrade of their entire operating system. The difference between the old and the new paradigms can be summarized in three words: ego vs. eco. Ego-system awareness means “me first”, while eco-system awareness means an awareness that focuses on the well-being of all.
There is a profound systemic barrier that exists in all major sectors today. It’s not only the mainstream players like Amazon and Uber that are stuck in their current economic operating systems; many of the innovators who once broke through that model are now also stuck. The global food system is still profoundly destructive. The health system is still sick. The educational system is unable to learn. The global financial system is heading full throttle into the next crash—as if 2008 never happened. Foundations and philanthropists still place their assets in the old economy, thereby harming people and planet, in order to use some of the profits to fund projects that alleviate symptoms but don’t deal with root causes. The innovators in all these spaces are stuck in the niches that first gave them space to develop something new. But now these niches are increasingly crowded, and mainstream players adopt the new labels and sound bites while often perpetuating the old models.
Table 1 summarizes how, over time, the operating systems have evolved in five major sectors: health, food, finance, education, and management. Around the world these systems face the same situation: As the mainstream begins to move from OS 2.0 to 3.0, two challenges arise:
- Amazon and the other mainstream players urgently need to learn that these types of moves to simply download another app (e.g., acquiring Whole Foods) and build a system of last-mile distribution centers is not good enough. What they need is an upgrade of the entire operating system—that is, of all collaborative procedures and protocols—and simultaneously shift to an eco-system way of operating.
- The second challenge concerns the innovators such as (at least until last week) Whole Foods. Many innovators are stuck—stuck in stakeholder-centric 3.0 ways of operating. They’re losing their distinctive edge as the mainstream begins to invade the same space. ‘What’s next?’ these 3.0 innovators are asking themselves. Do we stay in our own small niche until it disappears? Or do we reinvent ourselves once again in order to make ourselves relevant for the emerging future?
Health: From pathogenesis to salutogenesis
In health we saw a shift from traditional doctor-centric to managed care and evidence based medicine. Realizing that only 20% of health depends on health care services, while 60% depends on social, environmental and behavioral factors, major health system innovators like Kaiser Permanente have begun to refocus from pathogenesis (focusing on the 20%) to salutogenesis (to also focus on the 60%) by strengthening the sources of health and well-being in communities. As the mainstream health organizations have been moving into 2.0 (evidence-, standards-, and science-centric), we have seen the more innovative health care providers shift to organize around the actual patient journey (3.0). While that patient-centric way of delivering health care services is moving more mainstream, we see yet another frontier of health innovation at the horizon: a system that strengthens the sources of well-being both individually and collectively (4.0).
Read the full post at Huffington Post.
Otto Scharmer is a Senior Lecturer at MIT Sloan, a Thousand Talents Program Professor at Tsinghua University, and co-founder of the Presencing Institute.