RCO: Remembering responsibility and reintroducing enough in business
This post proposes an argument for looking at responsibility and enoughness in business. It also points out how the RCO can assist us in centering on those things as we address our worlds challenges.
There is that Jim Rutt quote that's stuck with me. He says in his characteristic dialect, and I am paraphrasing "I remember back when I was active in business, business was about staying on the right side of the law and adhering to our ethical principles. I do not know when it became about doing whatever you can get away with, regardless of the consequence?"
As a response I hear Schmachtenberger speak his paragraphs explaining the strange attractors and the detrimental, competitive dynamics we seem to be stuck in. In my mind, there is no doubt that we are pretty stuck. But I don’t believe us to be irreversibly stuck. Not by a long shot.
Actually that is why I am spending my time and energy around unfolding the RCO. I would not call it THE antidote but it is an antidote, and the deeper I dig into it the more powerful I find it to be.
I want to look closer at two different aspects that I believe are important to recover in our personal lives and in business. Two areas that the RCO addresses and assists us in keeping at the center of our attention. It not actually that radical yet it might seem radical to talk about them in a business context, given where we are at the moment. What I'll be looking at in this piece is responsibility and the concept of enough.
Navigating the paradox of responsibility
You as an individual have no power to change the system. Yet if we look at it, you are the system and with every action you take you uphold the world as it is. By enacting the collective stories or imaginaries that uphold our culture, as Yuval Harari puts it in Sapiens, you ensure their continuity. That makes responsibility a true paradox: as an individual you are fully responsible and yet not responsible at all.
I lean on the thinking of Paul Chefurka, he has an excellent paper on what he calls The Ladder of Awareness (it also overlaps nicely with another favourite journey of the soul of mine: The 10 Ox Herding Pictures, a Buddist heroes journey). He proposes a journey for the individual awareness. The first step is from asleep to afraid. The fear is paralysing. After the fear comes the fight or resistance. In the resistance we define ourselves in relationship to the one big challenge of our times or the one big challenge of our lives. That challenge defines our entire world. The ladder then moves from there and get more complex, something that resembles Tier 2 in Wilburs terminology. In the 4th step, there is a realisation that there is more than one issue, in fact there are several and they are all interdependent and interconnected. Yet these challenges live ‘out there’. We are still separated from them. In the final step there is the realisation that whatever it is that is going on out there is actually a consequence of what is going on in here. It is a walking up to our personal responsibility. In this case it is not stipulated that any individual can fix it all, it just says that we are all co-responsible since the systems that are destroying our planet is a result of our particular interbeing at this moment in history.
So what do we do? It is just that, that is the wrong question. We cannot ask that yet. There is actually no one thing to do yet.
It is still too entangled and messy, addressing one single issue puts us on the path to creating more problems rather than solving them. Instead we need new questions. One of the most succinct ones are: How can we find a way? With a little more complexity we could als ask: who would I like to become, or would I have liked to have been in these times between worlds?
Navigating the paradox of responsibility is not simple but starting with self seems to be a reoccurring theme in psychology as well as in systems thinkers. Building one’s own agency, deepening one’s own understanding of the world is key to becoming something different.
My friend and professor of economics Michael Dahlén has shown that feeling good is contagious. It affects people in several degrees of separation. That implies that taking responsibility for how we engage with the world could potentially have effects far beyond ourselves.
In other words, if you are drowning in fear, despair, fighting for survival while saving the world, that is the energy that you will propagate. No matter how "right" your fight is. No matter the content of what you are fighting for. That gets the very heart of the paradox. In order to truly aspire to be a force for good in the times we are in, what you do matters less than how you go about it.
If you are connected to the entire population of earth by 6 degrees of separation and good vibes (lacking a better word) spreads significantly, measurably in 3 degrees. Imagine the potential. Addressing whatever issue you are addressing, not fighting for it, spending every waking hour and resource obsessing over it. But rather engaging with it in a way that maintains relationships, your well-being and sets you up to work on your calling for the rest of your life, is probably more constructive. And you will bring about more change as a side-effect; your wellbeing will influence your entire sphere of relationships. Probably not directly. Probably not in a way that will put you on the front page of Forbes magazine but still tangibly.
This is where the RCO comes in. It is a structure that actually point us towards that how. It helps us engage and stay engaged in a large issue worth addressing. It also helps us do differently, balancing multiple capitals and goals. It aligns with what we are finding out in psychology that we are not one person, we are many, and we do need a healthy balance between multiple identities to actually be able to remain effective over time. The RCO helps us in significant ways with that responsibility. It keeps us respons-able without putting the burdens of the world directly on your shoulders. To carry the world is not an individuals task. Remember, the world is a collective thing.
Enoughness in business: Creating win-win-win’s
"There are plenty of things that you can do. Not all of them are worth doing."- Common Sense
As that Jim Rutt quote I started with reminds us of, there has been a shift in business logic over the past 3-5 decades. It is seemingly more transactional, harder, more competitive and less responsible than it has ever been before. What I just described in terms of the personal dynamics of responsibility for individuals applies equally for companies. An individual company will probably not change the world but how we do things can have an outsized impact on the world and that may spread far beyond our individual product or solution.
I will not dive deeper into the deterioration of the business climate. Others have done that eloquently. I will however attempt to make the case for my second revolutionary concept: enoughness.
I believe enough to be one of the secret keys to happiness. Enough carries a path into thinking that the world is abundant (we have enough), it carries a way of setting boundaries (I have had enough!) and it carries a path to balance (knowing when to stop and smell the flowers).
Enough is an invitation to find out the consequences of my expectations, it invites me to imagine and also to anchor in the potential cost associated with those imaginations. Like I might want to be a good parent and successful entrepreneur. Well those things on their own will mean something, feeding both in into "the algorithm" will yield a quite different optimum. If I then add in things like health, partner, friends into that equation the optimum shifts again. Especially if we take what we just discovered around responsibility seriously.
Cultivating a capacity for enoughness in business means that I can turn down that most cutthroat investor because I will not just consider the opportunity, the capital they bring. Instead I will consider the entire balance of the offer that is on the table. Both opportunities and costs. And that is the key in what Jim Rutt was talking to as well. There was a time when businesses took into account things beyond what it was formally obliged to account for. Yet somewhere along our path towards "peak Cartesianism" (don't know if we're there yet) we forgot that there are things that we do not measure that still matter. Probably more than the things we measure if we believe the onslaught of research that is being published on the topic of wellbeing and firm performance for example. That means that it makes sense to rely on the internal compass and feel into when we have enough of the things we want, because leaving a little of that profit "on the table" means we get to play another day. Thinking we got enough (rather than it all) might actually be the key to what the negotiation literature calls a win-win-win situation.
There is much more I could write about the concept in general, and I still might in other posts going forward. I have only really covered one of the aspects of enough that I mentioned earlier. Hopefully I've begun to make the case that it makes sense to think about enoughness even if you are still ‘just’ invested in your own personal success through the venture you are building. With that, I think this might be the time to move on into the RCO as a structure and where enoughness comes into it.
The RCO, structure that directs attention and liberates
The RCO aims to be a structure that directs attention in liberating ways. It is a joining of three powerful entities. A limited company that is aiming to be profitable in a specific field, serving a specific purpose. An association of passionate people burning for the purpose of the association and furthering its cause in the world and the purpose, principles and processes that we agree upon to approach that purpose - what we call a source code. The source code weaves these two legal entities together, puts them in relationship through a joint commitment to achieve and enact a particular thing in a particular way. Something that the employees and the members believe is worth doing in the world.
An RCO invites the entire community (as you define it) those that you wish to be accountable to. They will have a window into your organisation. They will not be able to tell you what to do. They will be able to stop you from going completely off the rails. The association gets veto power over a couple of crucial decisions in our basic model but mostly it relies on transparency for regulation. Are you behaving and doing things that you would like your community to know that you are doing?
The association is an owner and therefore has the possibility to audit and look into most aspects of the company's operations. The responsibility therefore lies with the individuals, and there is a structural reminder and incentive to take that responsibility. You are visible. And that visibility will motivate peoples trust and loyalty towards the product or service you are building. If you are worthy of their trust that is.
But isn’t it crazy to build a company and an association at the same time? With the current logic it might be if we were still in a modern, linear world. Yet in complex times we have to consider Chefurka. We are in a world of interconnected, interdependent, simultaneously unfolding crisis. Solving one thing is not an option. We need to focus on the larger context also and be part of that through our own responsible actions.
The RCO also invokes the concept of enoughness through its lifecycle. A company as other living organisms evolve over time through a series of needs. It sprouts, matures, it might go through a succession and then it dies.
We propose that a company in its sprouting phase should have as much resources directed to itself as possible. The start up needs to create a position from which to be resilient and create enough of a position in the world to be able to generate resources and act as a lighthouse. That is the best way that a start up can serve the community initially, through its success.
A company that is in the next step of the life cycle, maturing, will probably be more interested in diversifying, complexifying and growing the pie. It is important to create a wider ecosystem and a wider market while at the same time growing the operations to some (smaller) degree. This is to some degree informed by classic portfolio theory - hedge your bets. It is also where we propose mechanism for paying back financial owners and resourcing the ecosystem through the association - strengthening the resources that is available for the association to deploy towards the purpose.
After that we propose that there might be time to consider a potential succession. Either a management buyout, exit to community or perhaps the company will do better in another context with different owners? Finally we are saying that the entire ecosystem, the association and the purpose as it was initially conceived might be void. It is resolved or the world has moved on. The movement s no longer alive and people are no longer engaged in the RCO. That is where we allow for decay and propose a mechanism for the nutrients to flow back into the system.
These different points of transition are defined upfront. Not finally but directionally. These are open points of discussion in the community but they center around the concept of enough. How big are we when we start diversifying and directing resources to the purpose? That is probably a discussion among founders and then financial investors. What do each of them need in financial, spiritual, intellectual and social returns to feel that the venture was worth it? It is then for the association to approve that the levels seem reasonable to them and that they are willing to support the company in its endeavours given these ambitions.
The second transition is probably about an exit for founders and for investors. Making themselves less critical and crucial. How do we ensure that we build a company that is a healthy living organism on its own that delivers value to the contexts that its trying to serve regardless of the founder or ownership structure? When are we at that point? Where does our resources give most ‘impact’, inside this venture or through other opportunities in the budding ecosystem? Considering the company, when should we start considering succession? When has the company done what it was meant to do in this particular ecosystem? The answer may be never or it may be a clear transition point when we know that we have made a difference that we care about. Succession could be an MBO, an exit to the association, a merger, acquisition or an IPO etc.
The final transition is about when we have done what we came for. Either because we were successful and the problem was ‘solved’ or because people have moved on. The world has changed and we need to change with it. Instead of holding on to whatever is left because it is there we are proposing a mechanism of death and distribution of resources back into the ecosystem so that whatever the world looks like when we are there, we will serve that. And we leave to the board of the association then (whomever that may be) to decide what serving that world means, in line with our original purpose of course.
As you can see each transition holds an aspect of enoughness in it. It also holds an aspect of responsibility. Are we still being who we aimed to be while engaging in what we are doing?
It also means freedom. Investors get to be as cut throat as they want to knowing that the association will have to approve the contract and that they will see the hooks and leverages they are extracting from the founders in exchange for funding. That will hopefully make them think twice. Perhaps that type of investor is the right type for our venture regardless of the cost. Or perhaps it isn’t. That is for the RCO to decide.
Does it sound a little fluffy? As if its something we just dreamt up? Actually something similar just unfolded in the Microsoft / OpenAI deal (one can argue about the levels set in that deal but still). OpenAI will in the end turn back into a foundation. Once Microsoft and the founders have earned what they think they should earn. We are proposing something like that in principle. With the modification that the community, through the association, gets to have a say on what a high enough earn out levels are.
The punchline?
Enough is a word that allow us to discover boundaries, abundance and balance. The RCO have mechanisms to pragmatically support processes for balancing the different interests and types of capital over time, so that we optimise for the long term, evolutionary purpose rather than short term profits. The RCO is designed to evolve so that focus points and goals shift over the life cycle of the entity. Much of those mechanisms rely on transparency and making up front commitments. This allows the RCO to shift with the culture as it hopefully transforms in line with the transformation of our world.
Responsibility is a paradox. Whatever you are aiming to do is probably not going to change everything but you can take care about how you go about your work. No one person can change the system but that does not mean that we are not responsible for the world we live in. Doing responsibly, is even more important based on research that shows that how we feel (when we act) is contagious. It affects at least our friends and our friends friends measurably . The RCO supports that too, it invites us to make explicit commitments, think through and stating in what we "need" and allows a larger group of people to look into what we are doing. People that are not directly in the culture of the company but rather in the wider community. It makes it more difficult to keep things from our peers and co-workers. The transparency encourages us to stay responsible.
Want more?
If you get curious about the RCO and long to work in or create a company along these lines, take a look at the first of a 4 part series that details the RCO, surf into RCO.life to look at some of the video materials, articles and presentations we have set up so far.
We’re hosting an event during Stockholm Impact Week about the Future of Organisations (13th September 2023) and the RCO structure. Sign up to the waitlist here.
We are also developing a course for founding teams and we are open to support founders directly. Curious about that? Send me an e-mail or subscribe to stay up to date.