Ego to Eco

Meeting the challenges of this century requires updating our operating system from an obsolete “ego-system” focused entirely on the well-being of oneself to an eco-system awareness that emphasizes the well-being of the whole.

The Ego to Eco framework applies a Theory U lens to the transformation of the economy and its key social systems. This framework explores the following questions:

  • What are the deeper root causes of today’s ecological, social, and spiritual crises?
  • What do we see when we look at the evolution of the economy as an evolution of human consciousness?
  • If we are to meet the challenges of our generation, what are the “acupuncture points” of the global economy that could help accelerate transformation?

The Iceberg Model

Visible Behaviors or Symptoms

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 a current “self” and the emerging future “Self” that represents one's greatest potential. This divide is manifested in rapidly growing figures on burnout and depression, which represent the growing gap between our actions and who we really are.

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


Below the surface lies a structure that supports existing patterns. 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.


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.


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.


Societal Evolution: from Ego to Eco

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.

Societies in different regions, times, and cultures have developed different ways of structuring the three processes that are at the core of all economic systems: the (1) production, (2) distribution, and (3) consumption of goods and services.

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.

Check Acupuncture Points for Social and Economic Transformation

Acupuncture Points

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.

- Otto Scharmer