Designing from Trust in the Never Normal

Jerry Michalski is one of my favorite thinkers inside the nexxworks family. He’s an expert on (mis)trust, the curator of the world’s largest mind map and has been working for more than 30 years in the tech industry. I absolutely wanted to add him to the interviewee list of this newsletter, to talk about my two favorite subjects of the moment: phoenix companies and how to navigate in the Never Normal.


The Never Normal

For those of you less familiar with the Never Normal, first some background. The concept started out as a play on words on my book the New Normal that I wrote about 10 years ago. It explained how digital – which was still a new and exotic thing back then - was becoming the new normal. And when the pandemic hit us, this Never Normal took on a whole new meaning. Some of us were hoping that we would go back to the Old Normal, post pandemic. But we have all come to understand that that won’t happen. At the same time, I believe that this is not the last seismic shock we're experiencing. We’ll see technological, biological, ecological, social, labor, geopolitical and all kinds of other shocks following. It's only going to get more intense.

That’s why I really like ecological futurist Alex Steffen’s term “transapocalyptic”, with which he means that we’re constantly transitioning from one unstable environment into another. We’re not at the end of the world but it is the end of the world as we know it, in some kind of continuous repetitive dynamic. And so how do we make sense of that? How can we try to keep ourselves relevant in this unpredictable future?

Punctuated equilibrium

When I talked to Jerry about this Never Normal, he told me about the interesting "punctuated equilibrium" theory of Niles Eldredge and Stephen Jay Gould. Unlike Charles Darwin, they believed that evolution is not a slow, continuous movement but that it tends to be characterized by long periods of virtual standstill ("equilibrium"), "punctuated" by episodes of very fast development of new forms. He gave the example of the typically flat and static Egyptian way of drawing which endured for about 2000 years, even if so many things changed socially and politically during that period. “Things can stay the same for a very long time, and then something changes the situation dramatically and profoundly and all what we took for granted - the old normal - is just no longer present. And then, we have to figure out how to live in that new world. But humans, being these crazy adaptable creatures, always do and those new worlds wind up becoming understandable and comfortable and then, again, static.”

“Humans can and will adapt to really bad, difficult and stupid situations”, he said. “We will even normalize very abnormal behaviors. Advertising, for instance, the business model that drives so many of the highest valued companies on the planet, systematically involves a series of violations of privacy in order to convince people to buy stuff they probably don't need. But weirdly enough, we have come to find this ‘normal’. But when you really think about it, it’s not. At all. I love how philosopher Jacques Attali puts it: “when you fill my world with sounds and ads and everything else, when instead it could be beauty, that's a form of violence”. But we don’t clearly see these trade-offs for being modern, ironically, because of our adaptability.”

A tale of two broken stacks

Jerry believes that we are currently living through such a period of punctuated equilibrium and that, at some point in the near future, we might have a dramatic shift into a new system. When it comes to system shifts, Jerry likes to borrow an analogy from the LAMP (Linux, Apache, MySQL, PHP/Perl/Python) solution stacks, asking the question “what will be our next two stacks?”.

“Right now we have a civilizational stack and an organizational stack. The civilizational stack comprises voting, democracy, journalism, a court system, nation states, capitalism, geopolitics, etc. The organizational stack, then, is about corporations, nonprofits, value, profit maximization, processes, leadership, culture etc. But a lot of these substacks seem broken, right? Organizations are trying to figure out how to fix the type of capitalism that has gone rogue. Where all water in Bolivia is privatized and costs more than people actually can afford. And so we find ourselves in a transition period where we need to rebalance the stacks and where we are trying to figure out what the new stories or narratives could be.”

“We see a lot of people experimenting with the next platforms, for instance. One of these could obviously be the Web3 approach. Radical Web3 believers expect nation states to vanish because people will get sovereignty over their own data, power will be decentralized and crypto doesn't care about national boundaries. They believe it will bring privacy, security, empowerment, democratization and basically deliver us from a lot of the broken mechanics of both the civilizational and the organizational stack. And I do like distributed open ledgers, but they're also melting the planet with how much energy they consume.”

“Others believe the metaverse to be the next big platform”, he continued. “And it could, but we also need to beware of some pretty dysfunctional visions of the metaverse. Like the one from Mark Zuckerberg, which is basically an immersive and potentially even more addictive version of what he has been doing until now. That’s a future we want to avoid.”

I feel the same way as Jerry about coupling these almost religious narratives around new solutions or platforms like Web3 and the metaverse. On the one hand you see people pushing the idea that they will solve everything. And then you see some of the commercial activities that are being set up around them. And there’s a huge disconnect between both. I do think Web3 and the metaverse hold immense potential to solve some of our biggest current challenges, but I also believe that we can’t just put them on top of old models.

Jerry feels hopeful about the many different protest movements surfacing, trying to find an answer to our broken structures and mechanics. Many they are: the Indignados, the occupy movement, the Arab spring, the gilet jaunes, the truckers in Ottawa or even the Trump movement and the tea party. However different their discourse, all of them believe that the social contract is broken and that their children's future looks worse than their own future.

A shift in responsibility

While I agree with Jerry about the power of many small movements combined, I’m also deeply fascinated by the role of companies in redesigning the system. I had the chance of moderating a debate with Paul Polman, who was the CEO of Unilever and wrote that book ‘Net Positive’. He truly believes that businesses can no longer afford to be innocent bystanders anymore. That they should be heavily involved.

He could be right, but that’s a huge transition. For the last 200 years, the nation state was responsible for keeping society - and anything influencing it - afloat. And then 50 years ago, corporations became more and more powerful, without nations states asking much from that in return. To the contrary, we see corporations mostly trying to avoid taxes. And now people like Polman are demanding that companies do not try to work around the system - to their own benefit - but use their power to reinvent themselves to add value to the system. That's really noble, but it’s also incredibly difficult to get a critical mass of them together to really make a difference.

Jerry agreed that we need to reimagine the relationship of corporations to the rest of us. “Ironically, corporations have the benefits of legal personhood, but not the penalties or responsibilities of legal personhood. That’s very weird, right? And so shifting how corporations act requires a mind shift and a change in attitude.” One of the things that Jerry was thinking about in that aspect, was to make their interactions “sacred”. Not in the sense of religious, but that they start to see their interactions as significant in some highly interconnected way. And that’s where Jerry’s concept of “designing from trust” could play a really major role.

Designing from trust

“What most of us don't see is that we've normalized a whole bunch of violations of trust”, he explained. “I call these the hidden architectures of mistrust and they're everywhere, once you start noticing them. So we need to carefully and deliberately redesign the whole system from trust. Not blind trust, but engineered trust, like in the case of Wikipedia or Airbnb. That approach would fix how technology is hurting us. That would fix geopolitical nightmares. That might fix crypto. But this will also take a huge mind shift. People might resist at first, but when the systems work, I believe they will adapt."

"And of course, systems that are designed from trust are not perfect, but they’re still better than the alternative. There's a lot of dark sides to Wikipedia, but it's still better than Britannica. Designing from trust could really mean a change in civilization. And understanding that dynamic is a gateway drug: when people start to realize that connecting and collaborating and community actually creates these huge benefits, they will start wondering “How do I get more of this “drug”?”.

Redefining how we organize

A great example of designing from trust, explained Jerry, is the way Ricardo Semler completely re-engineered phoenix company Semco into a flat and empowered organization or an industrial democracy, as they themselves call it. A lot of people thought that this would be impossible to implement. But somehow it worked: under his leadership, revenue grew from 4 million US dollars in 1982 to 212 million US dollars in 2003.

This “we can’t do that” mentality when it comes to organizational change reminds me of how people reacted when we talked about technology innovation 10 to 15 years ago. Since then technology innovation is no longer considered alien science but a logical instrument. But the shift on the organizational side really hasn't happened yet. Even when you look at the famous holacracy experiments: the fact that some of them failed were a good reason for a lot of HR departments to say “see, it doesn't work, so we'll just do everything the way we've done it for the last 150 years”.

Jerry agreed that it was really interesting to see that few companies have taken the pandemic as an opportunity to redesign how we work. And the Great Resignation shows that a lot of people have started asking questions that they did not ask before: “Do I like my company?”, “Do I like my colleagues?”, “Do I need more time with my family”, etc. And yet too little companies are really paying attention to this.

Redefining value

But redefining our systems - work or civilization – clearly won’t work if we don’t redefine value. Jerry pointed out something really interesting about using money as a metric. “Capitalism requires three fictitious commodities - land, labor and money - to materialize and eat the world. And once that happens, we can no longer imagine the world before. So for instance when we focus on SDGs, we try to solve poverty by expecting everyone to have more than a certain sum of money per day so that they can buy stuff. And when I look at that, I can’t help but think “actually, no, I want people to be fat and happy and lead really great lives and not necessarily need a dime”. I'm sad that money is the metric that did that to us. And we end up with policies like universal basic income and other measures where we seem to be backing into some weird world where money is somehow decoupled from work again, but it's not happening in a particularly healthy way.”

And in many ways, I agree with Jerry. For instance, we do couple a lot of the SDG goals to old metrics that we will absolutely need to rethink. Take the whole idea of GDP and GDP growth, which has basically become a popularity contest amongst nations, but doesn't say anything about the wealth and health of your population at all.

It’s also really fascinating to see how the ESG trend is clearly growing in importance yet so few companies know how to really deal with it, beyond some marketing endeavors. Here too, we seem to reside in a similar phase as going digital was 10 years ago: everyone knows you’ll need to get on board at one point, and that it is becoming the New Normal, but no one really knows how. And it’s really remarkable that the E part - environmental - is relatively well understood, even if the metrics and the data could do with a lot of improvement. And yet the S - social - and the G - governance - remain mostly untouched. We’re getting there, but it may be a while still.

So, I fully agree with Jerry on the whole need for redesigning our systems - or our stacks as he likes to call them - for the Never Normal. And trust may very well turn out to play a crucial role here.

Want to learn more about innovation and phoenix companies? Read my latest book The Phoenix and the Unicorn.