Niels Pflaeging (What’s wrong with hierarchical organizations and how to fix it?)

In this episode of The Judgment Call Podcast Niels Pflaeging and I talk about:

  • What’s the prototype of a ‘democratic’ (flat) organization? What companies are examples of that?
  • Is Mariana Mazzucato right that innovations are mostly based on taxpayer funded research?
  • Why the US military is a surprising example of a ‘flat organization’?
  • and much more ­čÖé

Niels Pflaeging is the founder of red42, a leadership philosopher, management exorcist, speaker, author, and advisor.

Niels’ latest book – Organize for┬áComplexity: How to Get Life Back Into Work to Build the High-Performance Organization┬á – is now available on Amazon.

 

Welcome to the Judgment Call Podcast, a podcast where I bring together some of the most curious minds on the planet, risk takers, travelers, adventurers, investors, entrepreneurs, or simply mindbogglers. To find all the episodes of this show, please go to iTunes, Spotify, YouTube, or go to judgmentcallpodcast.com for more resources, including how to become a guest, how to advertise, and to see all the lectures, podcasts, and books I would like to, would like you to listen to or read, please also go to our website at judgmentcallpodcast.com. Like this show, please consider leaving a review on iTunes or Like us and subscribe to us on YouTube that will make it easier for other users like you to find us later on. This episode of the Judgment Call Podcast is sponsored by Mighty Trouble Supreme, full disclosure, this is also my business. What we do at Mighty Trouble Supreme is to find the best travel deals for you as they happen. We do that in economy, premium economy, business, and first class, and we screen 450,000 new airfare deals every day just for you and present the best based on your preferences. Thousands of subscribers have saved up to 95% on their airfare deals. In case you didn’t know, Americans and Europeans can already travel to more than 80 different countries again, South America, in Africa, and in Eastern Europe. To try out Mighty Trouble’s premium for free, go to mightytravels.com slash mtp, that’s too much for you to type, just type in mtp4u.com, mtp4u.com to start your 30 day free trial. I’m here today with Niels Flaging, and then Niels is the founder of Red42. He is a leadership philosopher. He’s a management exorcist and speaker, author, and advisor. And he also wrote a couple of books. The latest one is Organize for Complexity, How to Get Life Back into Work to Build the High Performance Organization, which is now available on Amazon. Welcome to the Judgment Call Podcast, Niels. How are you? Thanks for inviting me, Thorsten. It’s a pleasure to be on your podcast. By the way, you gave me a great opportunity to do some marketing, cheap marketing. You said this is my latest book, which it isn’t. Of course, this is my latest book. But seriously, this is the new book. The other one is five years old. Absolutely. Absolutely. We want to know all about it. One thing that really struck me when I was going through some of your work, and I looked at a couple of your YouTube videos, you do a lot of keynotes, and I read into the book for a little bit. I admit I haven’t read it entirely. But a lot of reviews said it’s very easy to read. It’s kind of in a style that is away from the difficult management books that we have out there. And I really like the core message. But one thing that really struck me, and I wanted to ask you that first, is you talk a lot about beta. There’s a beta codex. That’s something you promote. I really don’t know, to be honest, what it actually describes, and I want to learn more about that. But the idea to promote, to go from alpha to beta, is something that kind of goes counter a lot of general culture. We want to be hedge funds, we want to be generating alpha. And sociology, you want to be the alpha in the group. How does beta fit into this? Yeah, that’s a very good point, because that is really what I’ve been promoting for more than 15 years now, overall. The beta codex, it’s the alternative to command and control. It’s the alternative to pyramid shaped organizations. It’s the opposite of management of social technology. And as you just mentioned, it’s a pretty hard sell, because we are so hooked on command and control. Our business, the metaphors, the drama, the heroism, it’s all about command and control, about people at the top pushing people at the bottom. It’s still like we are stuck in the industrial age 100 years ago, in a pre democratic age, which is, at the time of this recording, of course, a very important matter as well. How to make organizations more democratic, so that our society is like in the US, where we have this democracy crisis currently going on. How can we make the world of work and organizations more democratic? And we have totally failed, utterly failed as a scene or as a total of business people. People in business, people working, we have failed to make our organizations democratic. And that’s what beta or the beta codex is about. It’s about consistent decentralization, but giving power to the periphery. It’s about federalization of organizations instead of creating command and control steered pyramids. Yes, so that’s what I gathered from what I know so far, and that’s probably just 1% of 1%. What would you basically say is that organizations, and you refer to an org chart as the tool of, say, oppression. So there’s a hierarchy inside an organization, which I think we all take for granted. And we feel like there’s all these levels of bureaucracy and titles, and often we hand out titles because it’s cheaper to actually give people raises real attention within the company. And you say that a lot of this structure was built and coming out of the industrial age where you had a couple of people, the management, who were the only people allowed to think. And then there’s the workers who literally work the machinery, kind of work in a field or with machinery, and they shouldn’t think as little as possible. And that seems like the working model from 100 years ago, but what I felt reading through this, and I know you developed this much further. Isn’t it already the past having corporations already changed in some way, probably not all the way where we want them to be, but haven’t they already changed. Well, actually, I live in Silicon Valley in San Francisco. I can’t count of anyone who has such a very strong structure in place anymore. There’s still as bigger the company gets, there’s still hierarchies and there’s different titles people hand out. But it’s all about teams, I feel. Yeah, what you just said, it makes much sense in a way. But look at this. What if, you mentioned Silicon Valley, where you feel at home, what if the Silicon Valley were the perfect example for how shallow the transformation so far has been. How pervasive command and control still is how we are beautifying to ourselves command and control. I mean, in the Silicon Valley, there are arguably beta organizations, as I call them radically decentralized organizations. Google has been one of my most beloved examples for many years now, not as much anymore because it has also fallen into command and control into interfunctional divisionalism and so on. Of course, there are exceptions to command and control in the business world, but to claim that the Silicon Valley is a good example for how we have overcome command and control. That would be, I think we would, that would be an utterly inappropriate claim, you know, companies that are the epitome of Silicon Valley like HP, you know, how you look back at it. It’s a total command and control organization and that’s why it’s lacking utterly lacking success and has been lacking success for many, many decades, you know, since the 1980s or 90s, at least. Command and control is very pervasive. And of course, with the times is capable of changing its face, its face of beautifying and adapting to two times. Today, lots of management concepts are proclaimed as being about self organization and liberalization. Let me give an example, design thinking, OKRs, holacracy. Those are concepts that claim to be about self organization somehow or about modernism. They are exactly the opposite, certainly they still blow the horn of command and control of steering from the top. And I think it’s easy to, it’s easy in this year 2021 to be somewhat caught in the play that’s happening in the game of facades, let’s say, that is happening in organizations. I would argue that the real transformation has only happened in very few organizations, very few companies. And some companies, of course, have done beta for decades, like Southwest Airlines, Handelsbank in the Swedish Bank, Toyota. I think Davita in Colorado is a great example as well. Boards are in the Netherlands. Here in Germany, we have DM Dorgel, massive retail company, Aldi also from Germany and Trader Joe’s, of course, associated in the U.S. And those are some of the few weeks of W. Al Gore, not to forget now. And then there are several examples, you know, quite a few dozen. But most of the other organizations are still firmly in command control. And the org chart, as you said, you said it’s something we take for granted, right? Remember that Charlie Chaplin made a movie about the absurdity about, let’s say, fascist character of org charts and let’s say the disconnection of the working person from the purpose and the real functioning of the organization and the functioning of the enterprise, you know, and this disconnect, we haven’t really solved it because in the, let’s say, 1990 or 100 years since Charlie Chaplin’s movie, I think, 1890 years, we haven’t really solved the problem. And that should, and I think now this lack of democratization of work, it backfires in many of our societies and many of our countries. So it’s a serious matter. It’s very powerful what the concept you have in mind. And the thing I hated most when I still had a traditional company, so to speak, were performance reviews. As a manager, as a founder, I sat into those and then I had some of those always thought that’s just bullshit. None of this should exist. And we also see that each of our departments are a source for constant frustration, at least for founders, when they scale their companies. The weighty setup right now is a source of, I would say, politics and less. There is an administrative function, which is often now set into software, but there is a political function that kind of takes the joy out of running a company. And the last couple of years when I started companies, most of them were fully virtual, so they didn’t have an office. The people were either set up as independent contractors, all of them were remote. And some of them were working in teams, some of them are working by themselves. What I felt, and I think this is where you’re going, correct me if that’s wrong, but we kind of see a group of people, teams, and in your example, it could be a DM local retail outlet. There may be 10 people, maybe it’s 20 people that work as a local team. And from the outside, say, as someone who runs this organization, I only interact with a certain API. I define certain inputs and outputs. I give you that much and I expect that much. So often that is a P&L story, but it doesn’t have to be. For developers, when you think about GitHub, they self organize into something much more useful where their own strength come out much stronger. And there’s no milestones, there’s no project management and open source. I think this is closest to what you have in mind. I think that’s scaled really far. And there’s applied outputs and inputs to an extent to what you want from that software, what users want from it. And then the individual can choose in which area he or she wants to really work at. Is that kind of what you have in mind that you kind of take the responsibility from a manager who says, OK, this is what we need to do. And you kind of go towards a team approach where people say, OK, this is kind of what I have. This is what I can give you. This is what I can sell to the same organization or to outsiders and define those APIs and then just keep improving the product and the P&L. That’s a tough one. Because what I felt from what you just said, as much as I would like to agree with you that we are on a good track, that organizations are on a good track, that Silicon Valley is heaven. And the future of work is coming because now everybody can work from home because of COVID. As much as I would like to believe that crap, to be a little bit provocative here as well with you. I mean, this is supposed to be a session in which you can provoke me as well, of course, in the same way. But here’s the thing. I would like to believe that technology solves the problem. And you just said, you use a metaphor that companies are putting more weight on freelancers or more people become freelancers and so on and connected externally with the organization. And you use the metaphor of the API. There is an API between those freelancers and the company. And that’s lovely. The problem is that it’s not like that because the problems we solve at work are not complicated problems. The interface of an API, you can use it for complicated problems where you can have, you know, algorithms, rules, how things function. And organizations, human beings, stuff like innovation, et cetera, do not function that way. You cannot create APIs. I would give you an example that illustrates the problem very nicely. I think one of the best companies in the world once was Google. It was a brilliant company. And from the Silicon Valley as well, which we already talked about, Google was a fantastic organization. In fact, I’m not quite sure that it is still such a fantastic organization to be you. No, I would disagree. It isn’t great anymore. But it certainly was until 2010 or so. It certainly was a great company. Here’s the thing. One of the greatest insights, I think, that they had at Google was that whole office is not a good idea if you want to be innovative. Which is an idea that then Melissa, what’s her name? The CEO of Yahoo? The number one. That’s one of the first scandals that came along when she went to see, she left Google and became CEO at Yahoo. She said, home office is over. We cannot have home office. She brought that idea in from Google, actually. And it was a scandal in the Silicon Valley as far as I can remember. In the media, it was quite a scandal because of course the idea of Google always was we must keep these nerdy software workers and these super smart dudes and girls. We must keep them together on a cool campus and we must allow the dogs in their dogs. They can bring the dogs and everything. And we have these great restaurants so that they can chat. They can, as introverted and silent as they may be, we try to maximize the opportunity for encounter, for collaboration, for also the emotions that come with it so that we can enable to become a hot house for innovation. And that is very serious. You cannot run an innovative company with people with freelancers who sit in their home offices. It’s just socially impossible. Agnes, I think we’re talking about a couple of things. One is how innovation works. And I agree with you, serendipity, cross pollination, those are just very important things. I mean, just random conversations and then you make experiences, you find treasures of knowledge somewhere else and you transport it somewhere in a different sector and it certainly becomes innovative. So absolutely true. And for this, it’s good to be in the same office, but here’s the thing. Once people are remote, it’s much more scalable. So obviously the hard question to solve is how can we be in the same mindset but not in the same office? Nobody has solved that yet. I give you this. I do think this is going to happen though. There’s just little bits of innovation that already lead that way. I talked to Daniel Rose yesterday. He has a fully remote accelerator. So he never sees the teams. He never does any person do diligence. He basically only relies on data, on psychometrics as well, and gives people up to a million dollars. But I’ve never seen them, right? I mean, they’re in Africa, they’re in Nigeria. So they take some risk in this. That business will probably achieve exactly the purpose it was created for, which is to sell it to angel investors or whatever as soon as possible. And that’s okay. He is an angel. I’m not criticizing the bullshit business and the bullshit hype that is going on in the US, especially in the Silicon hype, dramatically. And I’m not criticizing that. It’s legit. As long as there are stupid people buying those fake companies, like the one you just said, it’s totally digital, totally scalable. But let me try to cut through the bullet for a moment. The idea of scaling businesses is like the, it’s like just tech hype language, you know. A company doesn’t scale because a company or an organization is a social, a living thing. It cannot be just scaled. You can scale many things, but not social stuff just like that. A company doesn’t scale because it’s not a machine. It’s not a complicated, a dead thing. It’s a living thing. So when you grow, when a company grows, you don’t really, you do not grow a company. A company grows and then you have effects. For example, if we grow our bodies, if we take the stimulants and so on and do the fitness, there will be some decay in some places. You know, and it may not, it may hurt our bodies. And the same happens to organizations. You’re going to just grow or scale businesses. That assumption, it’s part of the current hype that was, that is very much the US thing. And you know, I’m talking from Germany, you’re talking from Mexico right now. And we’re talking about a phenomenon that is pervasive everywhere in the world, of course, but especially rooted in the US. This hype, this illusion that comes along every 10 years or so, which leads to a huge bust. We overhype certain things. And the scaling, let’s say, the scaling. Yes, I think you are taking two things at once. I agree with you, the hype. I’m a big critic of the current hype, especially in IPOs. And most of the companies that go IPO are bullshit. I fully agree. And if I really only propelled them, they sell to the next idiot by there. There is very little value in most of them. But here’s the, I think a lot of people are missing. And I think there’s a lot to optimize there. When we go back to the dotcom boom, I’d say 90%, probably more than 90% of these companies were crap and they should have never gone IPO. They shouldn’t have gotten any money. But there were a small percentage, maybe 1%, maybe 5%, who truly created a lasting innovation based on lots of layers of existing innovation. And those eventually became really big. I mean, when you see the amount of traffic that goes through, and you can say, oh, traffic is just traffic, but traffic is usually connected to eyeballs. The amount of traffic that goes through infrastructure layers, say at Google or even Yahoo, this is insane. I mean, this is like 80% of the worldwide internet traffic goes through one single organization. And those obviously have found a way to monetize this over time. So most of the companies we have currently are equally crap and they cannot scale. Some figure out on a software layer, and maybe not so much on a social layer, they figure out how to grow and become the fastest growing company in the history of the world, like Google did. Yeah, but you’re just defending the ripoff economy, let’s say the value skimming economy that is the US economy right now. And it is a pattern that has been popularized internationally. There is a great book by a wonderful economist and author, Mariana Matsukato, who distinguishes this kind of economy that you are describing, which is value skimming from the value creation economy. And we are now separating this well, especially in the US, where every bank theft, every loan, hype business, all the Wall Street over acceleration that we create, all the hype we create around the new Enron Tesla all the time and other companies like that. I mean, we’re not talking organizational structures here right now, organizational models. We’re talking a little bit about the economics of the politics of economy. I picked up a book from Mariana Matsukato, the entrepreneurial state. I’m not the one that you, that you just referenced. I kind of like that. I like what she was talking about. I think I disagree with her in a lot of places, but her central thesis in that book was, and I think this is similar to your point, is that a lot of innovations come out of basic research. They form a certain layer. And then there’s a company that sits on top of that monetizes that, and very often it’s taxpayer research that created the innovation. I think that is her point of the entrepreneurial state. Which is also the history of the Silicon Valley is Navy investment, military investments. Indeed, she misses a lot of points because I think she misses very much. I think the point that’s gone missing is when we show the photos, black and white photos of garages in the Silicon Valley where supposedly the big innovation started. That’s a lie. It’s fraud. And that is what I think I want to discuss. We are claiming that private investment. You just used that narrative again saying that, oh, Google Yahoo, they created so much innovation. The big monstrous companies of now are the ones that survived the dotcom crash and then the 2008, 2009 crash. And that’s what makes the whole fraudulent ripoff economy and the boom and bust cycles that the US economy and other economies go through. That kind of justifies it all. And that’s where economists like Mariana Mazzucato step in clarifying, well, we put taxpayers money into certain industries like the Silicon Valley. And the whole Silicon Valley is really a Navy and a military animal. And to deny that and to say, oh, and then those companies don’t have to pay taxes because they are so innovative. We are really driving. I mean, that’s what makes society more divisive. I think you’re describing a popular view right now. I’m not going to go along with that. No, it depends where you look right in the US. I think there’s a certain mainstream view that have really adopted that, the failings of capitalism, so to speak. I’m not talking about what we’re trying to get at just on this point. Research happens. That’s a really interesting topic. We should talk about what Mariana misses is that these innovations, many of them are stacked in layers. Usually, because we use the existing layers of technology to create the next one, everything is dependent on everything. So basically, you can trace it back to the old testament, anything we ever invented is being used to create a modern company. And a lot of these things are not protected by patents. And I agree with you. Silicon Valley’s strength is not innovation per se. They often steal stuff and then raise a lot of money. It’s mostly figuring out how to use those innovations and put them in the hand of a consumer and get them adopted. That’s very different value proposition, I think, than sometimes companies make out there for themselves. But I think this is their core value. I’m not sure what I can say. I’m not a critic of capitalism, by the way. Not at all. I think capitalism is the perfect social technology for the problems that we are facing, economy wise. The problem is that once you create something like the military industrial complex that has really been created, especially in the US, which is more a war economy than an innovation economy. And I’m saying this as a political being. I’m saying this as someone who has lived in the United States for five years in New York. So this is not meant cynically or ironically or in any way depreciating what any country might be or what this over accentuation of winner text at all. This is really a dangerous thing and it is based on so many myths. I mean, the people who are being ripped off are not just the people who really do the innovation. By the way, somebody else I recently read about an innovative person, Hedy Lamar, the also actress who was a great inventor. The Navy actually ripped her off of her patent, which has become a core element of Bluetooth, the communication patterns that she invented. This ripping off has been going on forever, of course, historically, and we have gotten used to it. But the main problem, I believe, is that we are putting too much and this leads us back maybe to the topic of organizations. We have over accentuated heroism, you know, the CEO Elon Musk. What’s the Apple dude’s name. You know, I tried to forget it from time to time. Steve Jobs or exactly we are over accentuating as if Steve Jobs invented the iPhone. That’s that’s what business I read fast company. I had it. I read it for years actually every every couldn’t stand it anymore. This this bullshit that heroes create everything. It’s, it’s just nonsense. That’s not what innovation is innovation very much and we are circling back to the topic maybe organizations are about social density. Innovation is about social density. Human and societal advancement at democracy is about social density and that is why division is so harmful to democracy organizations innovation and social societies advancement dividing organizations into functions, or let’s say the American society become to become so viciously divided between two fractions, Democrats and Republicans. All these things will always cripple innovation, you know, racism, prejudice against others. All these things cripple our societies and human advancement we cannot have that going on anymore. And we can fight it in societies we must fight it in societies that’s a point that Mariana Mazzucato also makes. And any economist like myself must make this point, make this point from time to time. But in organizations healing organizations will mean to reintegrate integrate functional, you know, instead of having functional division to reintegrate functions into small teams in the periphery that can run their business in the independently. And there’s a parallel so to speak between what we are what we have to achieve in society and what we have to achieve in organizations. And one example for how to heal an organization would be to make sales departments human resources departments which we mentioned earlier to make them superfluous and to reintegrate into the normal work. I think your, your approach is very laudable. And I think you’re on to something big there. I feel like this is already underway, probably less in Europe than it is in the US and I agree with you every company goes. It’s probably a hybrid still, because we still a lot of CEOs a lot of entrepreneurs still have this old model in their mind and they haven’t really gotten rid of it. I think we got off the wrong track earlier. This doesn’t what I wanted to say you don’t have to be remote but remote kind of and you don’t have to be freelance you don’t be flexible and you’re working agreements in order to pull this off. It’s a way how you approach it you you have that how you approach complexity how you approach problem solving so idea idea to create small teams is fantastic. I’m not sure it lends itself to every type of organization. I know what examples you quote are really interesting. Well, I don’t know you the expert. So I don’t have an easy time to do this, but the question is, how do you do this they let me let me give you an example that’s probably a little harder. Let’s talk about Boeing. So big widespread, sometimes remote lots of suppliers value chain. How do you think it would work for Boeing? Very well. The secret of organizations is dirty secret of organizations in a way is that they already consist of many, many small teams that actually create the value and that act in. Yeah, in quasi autonomous ways. These quasi autonomous ways of course this this this level of self organization is of course hindered by budgeting or charts performance appraisal steering with fixed targets bonus systems individualization. You know, all these things and also, of course, the way that careers are accelerated and manufactured and administered in organizations in our departments all that crippled self organization, but Boeing secretly secretly as large as the company may be. It still consists of people of people of teams that have, I mean virtually, so to speak, it consists of many, many small teams that interact with each other and that create value for each other with each other. Only that you can see none of that in the org chat, only that HR knows none of that, only that department heads and whatever heads and vice presidents presidents they may have they sit on a totally different structure which has function divided silence. And the those teams that we are talking about those actually value creating teams, you know, they are not visible. They are hidden by the org chat, which is why all charts are a crime against value creation actually, they should be abolished, which is not an obvious thing how to do how to achieve that how to run an organization 200 300 400,000 people maybe without an org chat or let’s take a million people organization like Walmart. It’s not obvious. And I think we are and I think our conversation here is a great example of that in a way you doubt you doubted that it’s possible, which is okay. I know that kind of dialogue, you know, this Oh, I doubt that it’s possible, you know, you’re an expert but I still doubt it. I always hear that I’ve been hearing that for 17 years now. And it’s like, it’s like, let’s imagine a world in which the concept of race is unknown. It’s hard to imagine right because now we are all invested by this is this idea of race and division and different groups. We are what’s an idea like that is in the world. We cannot get rid of it easily. And that’s just with a with an idea of management with which Frederick Taylor perfected or created 100 or so years ago, with that idea of management and functional division and the top steering the bottom and dividing between thinkers at the top and at the bottom. This idea does not fade away easily. These ideas are manifested in so many patterns and tools, some of which we already mentioned like budgeting fixed target performance and praise. In other words, we talk of performance, top performance, high performance, low performance, high potentials, low potentials. And so these ideas are so deeply embedded in us in our concepts in our world, words and language business and language even that this this hypothesis that you offered earlier that there’s, there’s something like alpha and beta pyramid and peach decentralized organization they are, they are living well along inside modern organizations that is unfortunately, that is just a beautiful mess. Our organizations are at best schizophrenic today. I think what would you describe it. It’s already happening and it is the future. The question is how how fast is that roll out and how can we make it faster. So, I think it happened over the last 20 years already. And again, I think Silicon Valley was the proponent of this, like companies like Google. We have the same problem now with institutions in the US. I think the exact same problem applies as you say there’s a schizophrenic inside view to what a university is which is different from the actual value generation and what students want out of the university in the US. The same is true for many schools now, even for high schools, all the way down to kindergarten, where there’s new approaches that exist, but they haven’t been adopted by the institutions and it goes all the way into politics, that there is a small core value generation teams. And Jordan Peterson describes them as it is 80 20 rule. So there’s a very small amount of people in an organization that create the most value and a much more valuable than everyone else. The problem has always been, and I don’t know if this year approach can solve this. It’s often hard to figure out who are these people to who are my most productive employees and who do I really need to support them and kind of let go of everyone else. I think for a lot of organizations that has become completely invisible. And even if they wanted to take that step, they’re not able to identify those people within their own ranks. So that’s make make them bloated and in my mind, very open to, you know, political inflammation, so to speak, they’re being compromised by ideology in order to protect their profits. Not that they like one politics or the other much more, but they use this in order to create an additional marketing hype and to make more money out of a broken system, I feel. And I think what you describe, if it would get more more visibility, it will bring people together because I think the core value proposition of finding these people and having them self organized and then kind of create a bubble around them. It’s wonderful. Yeah, I’m you you have so many, so many issues and at a certain piece of what you just said, I heard Jack Welsh from the 1980s or 90s speaking, you know, I’ve never had Jack Welsh. I never met maybe something influence me. Yeah, I think I think nobody in US business today is not influenced by Jack Welsh. You know, it’s because he represented that corporate heroism for such a long time, I think 30 years that he had a massive influence on business people everywhere in the world. So it’s just that, you know, there are so many echoes from the past ringing running in our in what we say in what we think. And of course, what I’m suggesting, which is not at all my model, by the way, the beta beta codex is not my model. It is a model that we found around 20 years ago, a movement called beyond budgeting, the beyond budgeting roundtable founded an organization set were successive at the time and that didn’t have budgets and that didn’t have command control and that didn’t have org charts and so on. And of course, among the companies that this research body, the beyond budgeting roundtable of which I was a director what we found where organizations like AES from the United States, wonderful energy company that has diminished greatly diminished for several reasons. We found companies, of course, like Dell at the time, that’s a great, you know, in terms of organizational model today, but 20 years ago, it was a great case. And we found organizations like Handelsbank and WL Gore, and so on. And of course, one of the pioneers Toyota, and I think that’s that would the, you know, taking that as an example for what is happening today, and what has happened over the last 50, 60 years in the business world, I think that serves as a great example. Instead of saying, Google created something new, which I think they didn’t, you know, business organizational wise, they didn’t product wise. Yes, business wise, not so much. And I think Toyota serves as a great example to where we stand today, you know, John Uptag wrote, I think, a trilogy of novels of great novels about the rise of Toyota in the US. And everybody has heard about Toyota, right? Lean is totally derived from Toyota and so much else. Actually, the agile movement and Scrum was already also derived from Toyota. Everything that could be, or most of the things, let’s say 30, 50% of what’s great and modern in organizations comes in some way from Toyota. Now here’s the thing. Look at the car industry internationally today. The rise, I mean, I would argue that Toyota is the perfect beta organization or one of the perfect examples of a beta organization. They are not perfect, but they are the perfect example of a radically decentralized, consistently non command and control, a consistently not bureaucratic, not hierarchical organization. And here’s the thing, we know exactly how Toyota produces cars better than everybody else makes, you know, is more innovative than the conventional car companies and the other thing, so we have known all these secrets for decades. Many authors like Jeffrey Leica have written books and books and books about it, and I myself wrote a lot about Toyota as well, about the case. However, look at the car companies today. General Motors, Ford, Fiat, Volkswagen, even Daimler, BMW, Porsche, they are all very much command and control. They haven’t got rid of command and control. But they’re still around. How do you describe that they are still around? Is that the companies that they just supported by subsidies? Why are they still around there, so inept at managing? They are not, they are, of course, supported by, let’s say, considerable advantages in terms of taxation and so on. I mean, these companies have profited from politics and from lobbying. I mean, for example, Volkswagen, I think, still has the biggest market share, and that is obviously not the case because their cars are so brilliant, but because there’s such a perfectionist, you know, patterns in place that promote the success of an organization, not the success, really, but the best survival of a company like Volkswagen. And I think General Motors, the whole of Detroit, of course, is no different. If you want to learn something really about the epic struggle between command and control, alpha, as I call it, and radically decentralized organizations or beta organizations, as I call it, read the NUMMI case study from the 1980s. NUMMI was a factory in, I’m not sure where, Tennessee or something? I’m not sure where it was. NUMMI was a factory, a DM factory, with the biggest problems that you can imagine in terms of quality and morale and so on. The worst factory in the General Motors universe. And then in the 80s, I think at the start of the 80s, Toyota took 50% share in that factory. And within just 12 or 18 months, they had a stellar performance, and their problems with unions and so on, and inefficiency, ineffectiveness, and with worker strife had gone away. That is one of the most interesting examples, I think, of what a beta organization can achieve and of how easy it is to become, or how little time you need to transform an organization from command and control to beta. What you’re saying that long term, if a company is better managed, it should create better products at a lower price, right? So we might not see this for a year or two, but as you say, the management structure can be changed, and it’s relatively quick transformation in terms of KPIs. Shouldn’t we see this rollout kind of self propelled? It’s a new technology, so to speak, in your management technology, and it’s been around for 20 years, which isn’t a ton of time, but it is a bit of time, and Toyota has probably done this for 50 years, as you say. Shouldn’t it have outcompeted everything else? I don’t want to stop you from creating misperceptions. The beta codex, or the concept that I’m talking about, the name, that is recent. The beta codex network was founded in 2008, but the model, as I tried to explain, is older. It goes back to the 1970s in the case of Handelspanken and WL Gore. It goes back to the 1980s in the case of SEMCO, a Brazilian company that is a stellar example of democratic organization. It goes back to the 1950s and 60s in the case of Toyota. So these kind of radically self organized, decentralized organizations have existed for a long, long time. In fact, when the social dynamics movement was founded on the American East Coast, and its instigators were people like Kurt Levene and so on, when the T groups, the social dynamics movement were founded. At the time, the scientists behind those initiatives, they, of course, also looked at the marketplace and tried to find organizations that were radically decentralized at the time. One organization they found, that was in the 1950s, I think, and mid 1950s or so, one of the most dramatically decentralized and democratized organizations in the world they found was a British coal mine. Of course, that company doesn’t exist anymore in this shape. But at the time, in the 1950s, there were already radically decentralized beta organizations around, only that we had little understanding of the laws behind those models. Few people really understand what’s behind the organizational model of Toyota. Toyota people, at the sensei, at least at Toyota, have a great way of explaining it, but it’s little understood, often ignored. Often we reduce the greatness about organizational models such as that of Toyota or Google until 2011 or so. Often we confuse the organizational model with the tools or practices they use. For example, these days, 2021, we have something of a hype, at least in Germany, I’m not sure how it’s in the United States, around OKRs, which supposedly made Google great, which is just utter nonsense. OKRs, the method about targets and objectives. I don’t think people know what that is. I don’t know either. Relatives and key results. It’s a ridiculous, steering and monitoring method that Google has been using since its early days, and they took it from, I think they discovered it, that method at Intel in the 1990s. So Intel has been one of the pioneers of that method, and Google applied it. Again, in my opinion, it was always the worst, worst, worst practice and tools that Google used, that were successful in spite of that bullshit, not because of it. And today, there’s a certain hype and certain scene around that, of people fooling themselves at fixed targets and those indicator systems, which are heavily, that must be worked heavily, that require heavy investment, heavy overhead, and that accomplish nothing. Many people fool themselves that the methods make organizations successful, and that is one of the myths of businesses and organizations. It’s not the tools. A fool with a tool is never a tool, you say in English, and that’s a brilliant way to put it. Tools change nothing. However, we need more democratic, more federalist principles in organizations to accomplish more decentralized, more self organized, more consistently market driven organizations, that are necessary to succeed in a complex world and complex markets. That’s the point I’m making in my books and my talks. The world has changed. It changed in the 1970s or 80s. The latest, we’re not in the industrial age anymore, so we need appropriate organizational models, and organizations have not transformed that by and large. Yeah, I think it’s tough for these organizations. They’ve been around for a long time to make that transformation, especially if they’re so profitable. I think the ultimate determination is usually, are you still profitable? These days, you can always go to Congress and try to get a bailout, but before that, that was the ultimate impetus to look at things, what we could change and experiment with. Unfortunately, this is one of my big themes. This force to drive change in your own organization has been reduced by all this fake money, by another round of QE, by more inflation. That’s a real problem. I think maybe that hindered the rollout of new management technologies probably as well, as it hindered entrepreneurship. One thing I wanted to ask you, and I was having a special forces former, special forces veteran on the show a couple of episodes ago, and they have the Army or the Navy have a very, very restrictive top down system, but it ends usually at the team that’s actually like special forces, the team that’s actually in the battlefield. Those are very autonomous. There’s a huge training effort that they go through that actually isn’t training, but it’s selecting people who have the right talent because they are recruiting 18 year olds to put them in a very changing, very diverse battlefield. They need to find people who can adapt to this and still perform under that pressure. What they’ve been coming up with, they kept that old organization of the Navy or the Army in place in military, but then created these bubbles of high autonomy around that to make these teams as effective as possible. Do you think that’s a model that works consistently or is just a hyper WC for a while, and is that something that corporations also should look at? Yeah, the narrative you just offered, I think there are misperceptions in it, and the narrative that you offered is that military today is a hybrid between centralization, decentralization, maybe or so on, but I think that’s not the case at all. I think the military has been a pioneer of decentralization, consistent decentralization. Of course, in an organization that requires its employees to ultimately face death, there are some variations of the pattern of how to organize and what other kind of rituals that you need in that kind of organization to keep it consistent. So rank, for example, of course, in the military is very important, which doesn’t mean it’s a common control organization, and I think that’s the core misunderstanding that was embedded in your question. The fact that military is strong in rank and status does not mean that it is a common control. If you look at the research done by organizations on decentralization, you will find that the American military was pumped, I’m not sure how much money, but definitely millions in researching decentralization in the 1960s and 70s. Why? Because of course, the American military suffered such brutal failures, brutal defeats, starting the Korean War. I mean, every war after World War II, the Americans lost it. More and more money was spent, but all the military efforts failed. Korea, the Korean War, some in between, Afghanistan, other failures as well, the whole thing, disastrous, but also Vietnam. I think Vietnam promoted a certain shift in perception that decentralization was necessary, because of course, that general who was also at Ford and then went to the World Bank, what was his name? McNamara. McNamara was the epitome, you know, the hero of centralized decision making, of theory. And the McNamara ideal of, we just pumped the double of soldiers into that country, Vietnam, and then we will have the double results. None of that was true. In fact, you cannot scale war. We already discussed scaling, and McNamara ultimately proved that you cannot scale success, that you cannot scale an organization, you cannot scale a war and so on. So after that, the Vietnam disaster, and not in the Trumpish sense, but an actual disaster, after that experience, the military researched decentralization profoundly, and many thinkers from the field of cybernetics, Margaret Wheatley, for example, their research or their insight came from this kind of research and programs in the military to discover what decentralization could look like. What we now have is military operations everywhere in the world with soldiers that are highly, you know, that’s why we talk about intel all the time, because every soldier must be informed in the field. There are beautiful movies about decentralization in the military. One of the movies I like best is Black Hawk Down. I always remember watching Black Hawk Down, not because it’s such a great story, but because the helplessness of the general who’s in charge, who’s in command, in a situation where not a defeat is happening in the field, in Somalia, if I remember well. That is so perfectly, so crisply shown in that movie. I always recommend to understand decentralization in the military. I always recommend Black Hawk Down because it has a strong message that goes well beyond the firing. So what the American military learned in the 1970s was decentralization, you know, putting, with holding, in charge. There are many, many movies about this. One is with Jake Gyllenhaal, that’s fantastic as well, in a way. Now, organizations, corporations have not done the same. That is a tragic. The military has accomplished decentralization. I’m not saying that military operations are perfect or that there are no ethical questions about that. I’m not saying that, but organizational model wise, they have decentralized. Corporations by and large haven’t. So we still need to see that. And the big, big problem is that markets became more complex, more dynamic, more globalized in the 1970s and 80s, and most corporations haven’t done anything to decentralize. We still run the same common goal, abortion models epitomized, for example, by sales departments, HR departments, running as a show by heads of business, and COOs, supposedly running the business. I like your analysis. I think it’s spot on. And we find it now, which is, I find kind of backwards. When I was talking to Mike Sorrell, who is a former Navy CO, he runs a company now that teaches companies about recruiting, because he’s applying the training and the leadership analysis that Special Forces do to a company. And he says, you can do this. You don’t have to go. He broils it down, but I think you guys should talk, because you look at the same problem, but in a different, very different perspective, through a very different prism. He looks at it through the recruiting angle and says, basically, they’re recruiting from the wrong people. They’re recruiting basically people who fake their CVs or fake their interviews, because they’re looking for specific skills that they might have or might not have, but it does say anything about their performance. So that’s what he calls talent. And I think this comes out in this game of decentralization. And I found this kind of ironic that, when this might be your point all along, that, you know, something where you feel like it is an industry or as a whole is something relatively flexible, which is the world economy or the US economy. But I think we have this problem in lots of places that they have to learn recruiting from the military, which is a bureaucratic superstructure with millions of layers of bureaucracy in between. I find this very ironic. Yes, the business world is struggling with where to learn from, where to find the great examples. I think the sad reality is that the best run organizations are the most boring ones. Great organizations, which is why Tesla can never be a good company, and it isn’t a good company. It is not boring enough. You know, it’s not doing business. That’s what becomes visible every day, I think, if you read about what supposedly is going on at those hype companies. Let’s take Airbnb, or Airbnb, which is the next group on, of course, and Tesla is the next end run. And it’s so visible because they’re so overhyped, so sexy. A really cool company, Toyota, they’re not sexy. Nothing interesting. Nothing fancy is going on. The CEO, men or women, is not a hero. And that’s a good company. A good company is boring, you know, except of the occasional real innovation that’s happening at Toyota, for example. Of course, they are capable of innovating, and there are some sexy moments. But a command and control organization from the outside looks much more appealing, more attractive. Heroism sells. It also sells to media. And the sad reality, I think, is that due to this, like, misguidance of our attention, we look at the wrong places, for example. And I agree with you, we shouldn’t exactly look at the military for recruiting practices, because it’s not a business. If you are a business, I think you should look at companies like Southwest Airlines, Handelsbank, and WLGore, and so on. And also Google until, you know, the 2020s, or until the 2010s, I want to say. If you look at those companies, how they recruited, you find interesting patterns. For example, HR played no role in the whole process. Of course. Yeah, which is very important, never let HR people filter or decide. I have seen this first hand, how HR people have no clue of how to filter out. Oh, yeah, yeah. I’m behind the percent degree. I think any entrepreneur I talk to says the same thing. That’s the biggest enemy inside the company. Okay, I don’t want to blame HR people either, but here’s the thing. By definition, it’s not the people, it’s the role in the organization. It’s not necessarily the people. The people might be just fine. So, of course, the wisest principle for recruitment, for selection, for hiring people should be teams hiring new peers, or peer recruiting, or peer to peer recruiting, or how do you want to call it, we call it peer recruiting, or teams recruiting new members. And of course, this is something I learned from Google. It is very wise to add to that the right of the CEO or CEOs also to veto a recruitment decision. I heard of examples where Larry Osterge stopped hiring processes of individual people because they always had the right to revise, to be the last people to revise the formalities, the papers, the documentation from the recruiting process, and they sometimes rejected candidates. They were never allowed to hire people that would be rejected by the business, but after 7, 12, or 20 people had interviewed the candidates, they would review the process and had the right to reject. And then what people in the business could do is to start the whole thing over and over again. But again, going through all the recruitment phases, by the way, my ex wife, she went through all this, so I know this firsthand how this works. And it worked. That’s a good process. Peer recruiting, that’s the best process there is, which doesn’t mean that, for example, CEOs wouldn’t have no say in the process. It means that everyone who does a recruitment interview has the same right to reject a candidate, and that’s the only decision that matters, to reject candidates that you don’t want inside your team, inside your having, inside your organization. And this kind of highly democratic recruiting process, it’s not at all pervasive in organizations. What’s the contrary? What I see in organizations, I see a lot of organizations, still CEOs recruit alone, managers recruit alone, guided and aided by HR who understand nothing of the business usually. So we still have very much command control process, also of promotion. If I see that we’re still doing assessment centers and recruitment centers, and how are they called? Promotion centers, you know, these kind of standardized tests, which are among the most budget command control rituals that you can, the most important rituals in business. Yeah, I mean, you can maybe make that argument that a lot of these things are, if I compare the psychology or, you know, the way people look at the human mind changes every five years right now. The Big Five is a big deal. There was Greg Myers before. There were all kinds of tools, but they kind of go through these phases. And I think in companies, because they have so much trouble to identify who are actually those 20% who are really the effective people, who I need to support them, they go through phases where they kind of try tons of different tools, but without really taking them seriously, without really wanting any real change, because what they feel like, everything works, because I mean, the company makes money. This is what the shareholders incorporated these companies for. But they kind of want to cycle through a number of different tools that kind of keep them innovative on the surface. But I think the real management innovation and stuff you describe for some companies, this is like a wall change for a lot of companies, for startups, I don’t think it is. But for a lot of companies, I can see this is an enormous change. I almost feel they’re not interested in this. You have to rebuild most of those companies from scratch to get the people into that mindset. And I mean, competition, right? Because we have capitalists and the old companies need to die and more productive companies need to grow up. We need to be more productive. Okay, you’re throwing so many hypotheses on me. It’s hard to keep track of things. That’s the whole idea. Yeah, you’re the master of confusion. You’re confused. I get dizzy. But I’m also enchanted by your… You’re doing very well, you’re doing very well. And also, let’s not forget, we’re not supposed to be taking ourselves too seriously in this session. So let me just subjectively choose one of the topics that you just… Of course. I would argue that in the world of business, we are lacking theory, robust theory, and we’re lacking conviction. We’re lacking willpower. And let me again use the Bill of Country. The country I love so much, the United States of America as an example. It took very intelligent, brutally smart people to make up democracy and to fight for it. Sadly, in the United States, only the men are remembered and not so much the many women who played an important role in establishing, inventing democracy and establishing it. Democracy has a long history and it took democracy… Let’s say, even the French Revolution, of course, wasn’t the starting point of democracy. It was just one of the momentums, one of the notable historic moments. And then thinking the writing of the Constitution in America. I went to Philadelphia to see the important documents as well and the important sites, of course. So if you look at the history of democracy, which is really a thing that’s in the flow all the time, was to reinvent and update democracy all the time. This kind of invention of a consistent model for our time of governing societies in this case, self governing of the people, when the people being in charge. Something like that hasn’t happened in the business world. The only true philosopher, the only big philosopher that we have in the world of business is Frederick Taylor, maybe another guy from Philadelphia, a guy from the United States. And he gave us command and control a hundred years ago, which is not his fault because at the time American democracy was not perfect. And as a Quaker or a woman who protected slaves and hid away slaves to hide them from death. I think Frederick Taylor was a political person. He had a social ideal, but the means that he came up with as an engineer to make organizations more just, more fair, more balanced, more, let’s say, society promoting, democracy promoting, they were imperfect. And I think we cannot blame Frederick Taylor for being imperfect and for being a child of his time. I blame us. I think we are the problem. Not Frederick Taylor and not even Jack Welch. I think we are the problem because our societies are far more democratic than they were at Frederick Taylor’s time. And we haven’t even remotely tried to make them more democratic. That’s what I’m fighting for. That’s why I invite everyone, also you to join the Beta Codex movement. And ultimately, it’s a movement for making organizations more federalized, more decentralized, more democratic, more up for complexity and fit for human beings. And of course, to strengthen the conditions to sustain value creation, which includes innovation from my point of view. So that is what the challenge is. Yeah, I think we are definitely pulling the same string, I feel. You have a different terminology and a different way to look at the world, which I think is awesome. I want to hear all about it. There’s lots of points where I feel like I would disagree and I think I see the world differently. But it doesn’t mean that we both think this is the goal. Going towards a way to empower people is fantastic. The problem always is, and I think the corporation exemplified this so well. And I think you made that point earlier, and I want to talk about the hero myth. What you see as the hero myth is, and the US has been so good at marketing and sales their whole life, especially marketing. What that is is basically creating a narrative and making it convincing and then finding a channel that transports it to people in a convincing manner. It used to be TV, it used to be radio, now it’s the internet, and it’s these themes that come up in social media. Those are, in my mind, it’s just the former strength of American marketing genius of really talented marketers in the US that have taken those narratives. And the hero myth is one that’s in build in all of us, so we respond to it. There’s lots of other core narratives and archetypes to respond to. And people have used those and hijacked those, set it up with really cheap AI, and now push people into these, I don’t want to say boxes, but into these realities of their own, where they’re kind of helpless because there’s so much information, there’s so much AI that pre determines information and selects it for them, not necessarily within the farious idea, but in a way that these, like the hero myth, are being recycled for pure marketing gig. And everyone wants to market something, right? Donald Trump wants to market himself and his corporation. You want to appeal to voters, you want to buy stuff, you want to travel, you want to buy another Netflix account, like the amount of marketing that’s going on in the US, and now this is on the world scale, but it’s obviously the ground zero in the US. Your reality is kind of like in the movie, like Minority Report, you’re constantly surrounded by marketing messages, and at some point you don’t even know, like CNN is a pure marketing message now, obviously, it doesn’t sell computers or phones, it sells a political affiliation. And these things, what happened is we’ve used those archetypes like the hero myth and companies have hijacked those to just wrap it around, a lot of bullshit, I fully agree with you, but it doesn’t mean that these narratives are bad, and it doesn’t mean that marketing is that, it’s just, I actually don’t know how the human mind right now, and like unprotected, it doesn’t have their own AI, how the human mind can make sense of information anymore, because there’s so much out there by really powerful data giants, that just, it screws your reality, all of us see a different reality, and it gets really tricky to find out, even in a conversation with an open mind, and very few people do this anymore. What is actually the overarching picture of reality, this is like the real problem we see with these bullshit companies, that’s why they thrive, right, because they have the ability to screw reality for a lot of people. Yeah, let me overlook that you claimed, what you just said, I think you claimed that the telephone and TV and the internet were invented in the United States. I would just… No, no, not invented, it’s something that they’re being sold, not invented. But yes, the thing, I didn’t talk about inventions at all, I didn’t try to, maybe came out the wrong way. But I think you circled back to the question that matters, so many things are said, so many things are believed. There’s so much, such a big burden from the past in businesses and in societies and in our beliefs and so on, and education systems promote beliefs that seem strange today. So how to sort the whole thing, and this is exactly the point of the work that I do, so please allow me to offer a possible solution. I think the solution is practical theory. The solution is practical theory, and this is something that I got from Kurt Levine who coined this expression, practical theory. He said that there’s nothing as practical as good theory. If the world spins faster, which it doesn’t really, but if the world seems to spin faster to us, because we are so overwhelmed by information and supposed innovation and concepts and stuff that comes up and the internet accelerates everything, in the face of this kind of acceleration of information flow, at least, and maybe even of innovation, in the face of all this, we need theory. We need a will, our wanting, our will must be subjected to a higher purpose. And that is why I talked so extensively a couple of minutes ago about democracy. Only if you feel in your heart that democracy is the only way, and that the price of democracy in the US must be union first and second, as a consequence, the abolition of slavery, and so on. That’s when you become Abraham Lincoln. You need the theory, the understanding of what democracy is and what defines it, which he beautifully talked about, and also of the consequence. So only if you have a theory that’s in your heart that becomes a higher purpose or a conviction, a belief of sorts, or let’s say a strife, you know, only then can you judge what’s there. I agree, I agree, this is beautiful, but I don’t think democracy is the right layer to look at. And if you look into the founding fathers, Benjamin Franklin always said, you know, democracy is basically two wolves and one lamb trying to figure out what they’re going to have for lunch. For Benjamin Franklin, democracy was a tool to use in order to drive prosperity and to drive a process of American happiness or world happiness, so to speak. But he notices how vulnerable that is, and it is bound by deeper layers of belief. No, no, I think you misinterpret Benjamin Franklin. But that’s what the quote says, right? Yeah, okay, the quote says one thing, but you interpret it is in that it is fragile. Democracy isn’t fragile. The robustness of democracy lies in the capability of democracy to absorb the conflicts and the dilemma, the paradoxes, the different interests. That is the strength of democracy. What makes democracy far more robust than authoritarianism on the other side of fascism or Stalinism or whatever kind of authoritarianism or dictatorship you choose. Democracy, and the same goes for capitalism or marketing economy. Market economy being the actual thing and capitalism is just a fighting, fighting word, you know, to make it look dangerous and bad. But what market economies and democracies have in common that they are the best system to absorb in a, in a strife and riddles of complexity and surprise and advancement, advancements. They are capable of updating much better and faster than any other form of government on the one side or let’s say economic system on the other. That’s why market economies are superior to planned economies, they are much more likely to absorb the complexities and the conflicts within. And democracies are much better than fascism and Trump authoritarianism because democracy can always absorb the new conflicts and the new. So what Benjamin Franklin, I think, explained was the nature of democracy and not its fragility. And this is very important always to try to understand the context, Benjamin Franklin, of course, in the context of his time. So much conflict in the world, so much strife and suffering, human suffering, physical suffering. You know, we don’t, we don’t know, we know nothing, we know shit about that experience of always have your life endangered, especially in the United States at the time. So I understand where the founding fathers came from, where the language, it’s important for us to understand where the language comes from, whether the concept comes from what the context of their articulations were. And they, I think, both Benjamin Franklin and the other founding fathers, they did a great job in explaining to the American people what democracy would be about. I think you have a very, how do I say that, Eurocentric view on American democracy. And the ideals, I shared this or I used to share this, you know, I grew up in Germany, I shared the same exact worldview. I feel this is, there’s more to it. And the way Greeks and Aristotle and Socrates played out how they’ve been dealing with democracy, and obviously that’s a very different time, but the moral issues are the same. There was obviously a different culture and there was a different technology around. And democracy was a different animal, even if it has the same name. I, that’s, I fully agree with this. But I think what democracy means, and I also agree with you that it is a risk inducing ability. There’s more information in a democracy. It is adjusting itself much quicker than anything else, fully agree with this. But it doesn’t mean it is the best solution necessarily. And we can’t explain Singapore, right? Singapore has been a success story without being a democracy. We can’t explain China, which has been an economic success story. Well, you can’t. Being a democracy. Let me out of that. You cannot explain the success. You need to explain it to me. That’s what I wanted to say. No, I don’t. I can’t explain it. I mean, I don’t need to because I understand it, you know, I don’t understand it. If you want to understand it, it’s good to, you know, I’m currently reading a book. It’s so funny that you said that my view of the invention of democracy was U.S. centered or U.S. focused, which is funny. Eurocentric, Eurocentric. Eurocentric. Yes. Like the way I perceive this. And obviously this is just my own learning. This is too high. I lived in for 12 years in the United States for five years. I lived in Argentina and in Spain as well. So I lived in five countries all in all. And I’m not just as a tourist. I mean, I studied the cultures and the history as well. I had the opportunity to study that. And so, no, no, no, I might not very heavy on understanding Africa also. And I have only been to Asia quite a few times to Singapore, by the way, which teaches you a lot about the cost that the lack of consistent democracy puts on a country. It’s healthy, I think, to go there and to see what what’s the price. Tell me about your time in Brazil. I know you spent a lot of time there. Excuse me, would you go back? What do you think of Brazil as a political animal, not enemy, as an economy that always seems to be on the verge of exploding to a much higher level, but somehow doesn’t. What do you think, what is the real history of Brazil and what’s going to be the future from your own perspective? It’s a tough question to answer in just a few minutes, but I think there are two. We have time. There are two typical sayings which I think illustrate the matter. Every Brazilian will tell you, especially as a foreigner, will tell you that Brazil is something like God’s chosen country. It’s very similar to that. It’s the country where God would want to live and God would not want to live in any, okay, then Catholics, right? Fundamentally, every Brazilian is deeply convinced that Brazil is the only place where you can live. But Brazilians also think of themselves as a little bit smarter than everybody else. That’s the characteristic, I think, that it’s very important. It’s something that we in Germany do not have so much to believe that we Germans are smarter than everybody else. I mean, many of us think that, especially men, of course. I feel Germany is a huge superiority complex. So does China. There’s a small number of nations that have a huge superiority complex. Their superiority complex is beautifully combined with the inferiority complex of having begun and lost to successive world wars. That definitely helped. That definitely helped reign the ego. I think France has it too. I think it’s a short list of really high superiority complexes. And Brazil, supposedly, never fought a war, which is not true. They fought a war, a bloody war against Paraguay once. I just know nothing of that. Nothing. I wrote an entire book about it because I found it so interesting. So Brazilians are bestowed with also, which is something very similar to America, bestowed with the perception that their country is the only thing that matters. Hardly at any point would an American say, I must learn another language. Spanish or not. Spanish is just for genitors, right? So this perception of we are alone. We are fucking Ireland and everything else is very small in comparison. And we hardly ever touch it. That is a characteristic that Brazil and America share. Brazil is continental massive, just as the United States. So the perception that we are here, it’s God’s country. It’s a very peculiar setting. And another interesting thing, for me at least, I’m always talking, of course, from born in Germany, living in a country like Brazil. I lived in Spain and Argentina before, but then I moved to Brazil 12 years ago. So of course, my own view is biased and has peculiarities. But you must have liked that, right? I mean, there’s a reason. I think it’s exhilarating. But here’s the other interesting thing. And you already mentioned that very briefly, but it was very to the point. Brazil is the Brazilian thinker cell, the musician or artist said that. Brazil is always the country of the future. It’s the eternal country of the future. The next decade, Brazil has everything that’s needed. Brazil is also combined with the notion that it’s God’s country. Brazil has everything to be successful, the people, the riches of nature, the vastness of nature, the resources and so on. So always, Brazilians always think that the future is their time and the future never comes. That future never comes. Brazil hardly ever manages to exploit what’s there. The dream of the future is always what prevails, which is, of course, a sad thing. And I think America is on the route to falling into the same kind of trap, right? To become a country, eternal country of the future again. Make America great again. That’s the first sign of the thing. Well, I think we have that spirit. We were very optimistic about the future. And I think this is an Old Testament, a New Testament spirit. That’s very strong. I think this is actually a strength. So I think we disagree on this. I definitely see this in Brazil as well. For me, my experience in Brazil, and I don’t speak a lot of Spanish or Portuguese, so I was a little bit in trouble just communicating with people, especially if I went up north. So the northern communities, Fortaleza, Recife, Manaus, I found them really interesting cities. I found a little, I was surprised how little English there is, but that’s my fault, so to say. And I found that people are friendly, but there aren’t the friendliness, the stereotype friendliness that I had in my mind, right? I went to Brazil like 10 times, and every time I felt like, man, this place is quite different than it is in my imagination. And again, this might be my flawed imagination that I had of Brazil. It is an enjoyable country to an extent, but it’s very frustrating. A lot of things are, there’s a lot of areas that are really extremely poor, and you need to, you can obviously circumvent them kind of like South Africa, but the US has the same problem, not to the same extent, but has the same problem. You need to take a lot of planning as a non insider. Where do you go? At what point of time? What do you do when the sun is down? Which neighborhood can you go? Where can you cross the street? I found this exhausting. I loved a lot of places, but I found this fact exhausting, maybe because I’m such a newbie, once you get used to it, that’s probably not a big deal. And also you go to the, let’s say, you went to the locations, the cities that you mentioned, the Northeast. I went to BO2 in Sao Paulo. You went to Sao Paulo as well? Yeah, yeah, I went all over. I went a bunch of times. For short visits, I’m certainly not an expert. Again, the communication issues really tripped me up. You don’t have that problem in Sao Paulo where everyone is as fluent in English as I am. I don’t speak Portuguese, which I speak as big Portuguese, I speak Spanish fluently, so my experience is totally different from yours. And the expectation that you had, oh, it’s an easy going country. I’ve seen the news about Copacabana Beach, the big, you know, the women, the women. I wouldn’t go that far, but I thought the people are… You’re talking from… I don’t know, they have like something Mexican, you know, Mexicans are very friendly people. They’re kind of reclusive, but they’re always friendly. I didn’t feel that was the same in Brazil. They weren’t Russians, they weren’t progressive and arrogant, but they were not friendly. I wouldn’t use that word, but they were joyful, for sure. But look, Tos, you’re talking from Cancun right now, right? That’s correct, yeah. I saw Cancun and my girlfriend and I, we said, run. We would never stay there. I would never stay in Cancun, never ever. For me, it’s the least interesting, least compelling city in Mexico. I would never… I agree, I’m only here for the beaches. I’ve been pretty much any city in Mexico. If you want to go to the country, don’t go to Cancun, because Cancun is an American enclave. It’s like going to Spain, going to Mallorca and expecting… Or to the worst beaches in Mallorca, because Mallorca has beautiful beaches and the capital, Palma is beautiful. But if you stay in the beaches, the touristy beaches, you will only meet, you know, the Dutch and the Germans at the British. Yeah, no, I mean, that’s why I ventured out in the cities and pretty much any neighborhood that I had the guts to go in. Which circles us back to where would I go to find America? This was my quest, living and having an apartment in Manhattan on 42nd Street for a couple of years. You won’t find it there and you won’t find it in San Francisco either. Exactly, exactly. Of course, everybody said, wow, Manhattan, that’s not America, so I went around. And I found it. I found it. I found it in all those places, actually. I found America in all those places. But of course, America, in a way, it doesn’t exist, of course, as many poets say, you know, many American poets have already said, in a way, America is just a narrative as well. And nobody understands the South and nobody understands California, if you aren’t from there and so on. But in a way, of course, you find the country in all of those locations, you find the common myths and the common narratives everywhere in that country. From the places you live that, if you are a young person in their 20s, you read a lot of philosophy, you might become an entrepreneur, you’re not really sure what to do. Where would you send someone like that? Would you send them to Argentina, Brazil, the US, Russia, Germany? Well, what would be your first prerogative? Where would these people learn the most? As Oscar Wilde once said, you can only know a country if you know two countries. So if you are a young American and you want to understand your country, live in another country, it doesn’t matter which one. My philosophy was always, I wouldn’t want to live in the Netherlands or in Denmark to discover what German identity, what German culture and so on is. It felt too close to me. When I had the opportunity to do a traineeship in Denmark, I respectfully declined the invitation because I was more driven by, I wanted to understand cultures that would be a little more distanced in a way, which is how I ended up doing a traineeship in Argentina and Buenos Aires. And that was indeed very, very helpful to travel until the end of the world. The first thing that my Argentinian hosts or friends told me was, Welcome to the butt of the world. Bienvenido al culo del mundo. That was so beautiful. Oh, come at the world’s butt. And of course, living in such a country, working in such a country teaches you a lot about a totally different perception of the world. And that was what I found so compelling. Of course, I learned a lot about the Falklands war in Argentina as well, which is not something that Argentinians like to discuss with strangers. And it’s not exactly convenient to listen to the narratives that Argentinians have developed about the Falkland wars. Same goes for talking to British about the Falkland wars. So I think it doesn’t matter where you go. Every country is great. Every country is fantastic. The fantasticness of your own culture and country, you can only understand it, I think, once you live abroad. You live there. Yeah, that’s definitely very wise. You know, I, my goal is still to go to every single country, not just country, just to, you know, major region in the world. I do find this country. And those who don’t waste your time in Cancun. Oh, I’ve never been to Cancun before. And I was really curious about the pyramids. No, I’ve been to any major city in Mexico before. And that’s just a spot I always avoided because of, you know, it’s too ruined by tourists and it is, but it kind of isn’t. So you can still find spots that are decent. Let’s put it this way. And there is what I find countries and places that make it easier for you, not knowing the language perfectly. And as you say, it might not matter much because in the end, you know, if your goal is to really venture out, you will have to see all those places that kind of doesn’t matter where you start. That’s true. It kind of has that inherent risk that you get to put off by something they really don’t like. What people always, there’s like a hierarchy typically of people that are, you know, more of a long term satisfaction that they deliver you, but they’re hard to digest in the first place. And I felt Brazil is one good example for this. People who stayed there longer, they’re immensely enjoying it. People who only see it for limited amount of time, just a few weeks, they are not so sure if this is for them. So I think there is this point where you kind of have to jump over a hump and then you really enjoy other countries massively. I feel the same is true for Russia, for instance. Even though I speak the language, I find it hard to adjust the Russian way of life. But once you’re there, once you kind of see life through the angle of the locals, it becomes a different animal and quite satisfying to be there. Yeah, I studied cultural culturalization, cultural integration, so to say. I studied that I researched it and I gave trainings about cultural integration and reintegration to my thing is when I studied at university. I was part of ISAC, an institutional students organization, which changed programs and so there was a great, great efforts were made to. It’s not part of interrail, is it? It is what? It’s not part of interrail. Interrail, that for me is a train ticket that you can have. It is, but it says, you know, the one thing every American does to go to Europe is get an interrail ticket that used to be the case 20 years ago and see Europe. So that was very limited. No, ISAC does student exchange based on traineeship. Yeah, so I did the traineeship with them in Argentina, for example, and of course their trainees incoming and outgoing within that association. And we wanted always to train the outgoing students of Germans for, you know, to prepare them for the experience of living in another country and it connects very nicely with what you just said. Of course, the first two weeks in another country are either bliss or disappointment or whatever, but it is really irrelevant for the working experience because once you overcome the initial organizational trivial reactions, so to say. And once you as a trainee, for example, which is different than as a tourist, you have to integrate somehow. You have to get going, you know, get working and depending on if you speak the language or if you don’t, the experiences are different. And there is a, after a couple of months, maybe after nine months or so, there usually is some kind of depression. There is a kind of an exit point for many people returning to their countries because it’s the moment of truth, so to say, where you ultimately must decide if you appropriate some of the country’s concepts into your heart and stay and make good with, you know, putting another glasses with another kind of color on top of your glasses, you know, we are all there’s a beautiful metaphor for that. We are all born with a set of glasses, blue glasses. Everyone, we are born with a blue glasses on and then you go to another country and that country will inevitably invite you to put another pair of glasses on. Let’s say it’s a yellow set of glasses. So you put the yellow and you cannot do differently, you can either reject the new kind of glasses and leave, or you can put the yellow glasses on and of course then what you see will be green. So the additional layer of culture and of patterns that you learn, of which the language are great, maybe the part that matters most because it evokes different kind of thinking and so on. Once you put different glasses on, the color of your view will always change and even if you go back to your country to the blue glass country, you will never see blue again, you will still see green because you cannot put off the yellow glasses from your host country. And of course, to me that happened to you, I suppose it has happened, you know, this kind of effect. And of course we can do these things voluntarily, so we interrupt our experience at a certain time. As a tourist, it’s easy to go back to your country and say, oh, America is still the best, you know, which is the learned island, nothing reaction. I never went to live in another country or to tour another country to say, oh, this is not good, but I like imagining is, I live here and how would it be I think that’s a fascinating question, what would it be? No, that’s definitely an experiment I do immediately once I land in a new place. And for a couple of days, it kind of fascinates me. And then I definitely get frustrated at some point. There’s always something that doesn’t work. And it’s hard to overcome. I think nine months might be too long for this. Everything that didn’t work in Brazil, but in the United States, everything works? Oh, no, it’s like any other place where stuff works and certain things don’t work or extremely expensive. You’re so American. The German is in you is not, it’s not very strong, my friend. I feel the dark planning. The German is, it’s still there. Sometimes it comes out. My mom was basically Russian, so I have that too. So there’s a lot of heartbeats in there. That’s a richness that you have. You’re trying to make use of it. Yeah. It’s harder than I thought to be honest. And obviously America sees itself as this monoculture. It kind of looks at it to be, we don’t want to be like this, but it’s so much more comfortable to just speak English and to just be this monoculture. People fall into the strap. And to continue this, this international part of the conversation a little bit more and brought it. You asked me about as an American, you know, from an American point of view, where should the young American live? Global, global point of view. Anyone? South Australia, forget New Zealand, all those other shitty countries in which English is a dominant language because you will not learn shit. You will fool yourself. Let’s say our inclination to fool ourselves that the other country is similar, is too big. That’s why we should always look, try again, following Oscar Wildes advice, not mine. You can only know a country if you know two countries. That includes knowing a language. The country in which you live and do not learn the language is a country not acquired. Sometimes when I go to the Netherlands, I see signs there at the airport that say, if you live here, if you are a foreigner living here for six months, fucking learn our language. This growing movement of digital nomads and what it is, it’s kind of in between, I say longer, I love this place. I’m a tourist. The question is, is six months enough to pick up all these languages? So you have, say, six months in every single country in the world, or like in 90 different countries, say 50 languages. This is a virus and we cannot spread it to eat every country. When I go to Berlin, I see so many Americans who have no clue of nothing. I mean, nothing, not of America, not of Germany, and they’re speaking trash English. I think there’s something else there. I mean, I agree with you. Americans are not great tourists. The problem is we are born ignorant, all of us. So we must acquire ignorance. It’s a process of learning. We must subject ourselves to processes of learning. And that’s what I’m advocating. I’m not trying to make fun of Americans and their ignorance or white trash Americans who travel too much, because there are also white trash Germans enough polluting every other country in the world. And this is not a competition of, you know, of blaming. But here’s my advice for anyone, try to live in a country in which they speak another language and acquire the language early on. It’s not, it’s not so difficult. And that is what integrates you. Otherwise, you don’t have to have a chance of really acquiring the taste of the country to live in Brazil or to be in Brazil and not speak Portuguese. As you well said before, it robs you of the opportunity to understand the culture and the beauty and subtleties of what this country has to offer. Absolutely. The question is, once you go into a digital nomad lifestyle where you’re literally in a different country with a different language, some speak some English, some don’t, are you able to pick up, say, 50 languages in a matter of 25 years? Is that something that there’s very few people I’ve ever seen that speak more than, say, 10 languages relatively fluently? And I’ve yet to, I’m trying to get them on the podcast. I don’t know anyone. They’re probably out there. So if they are, please, please, please get back to us. But can you scale this? I mean, there’s a lot of fear, I think we all have with a bunch of countries, either by randomness or by birth. But it’s a relatively finite experience, say, five, six countries, max. But beyond that and their language, how do we go from there? Or is that impossible? No sane person in the world will ever define him or herself as a digital nomad, otherwise totally depressed or fugitive or an escapist. So I would argue, and this is a theory that I’m just coming up with right now. People who call themselves digital nomads are not to be taken seriously. They don’t live in the other country. They live in enclaves, just like many diplomats in the past or so. It’s easy. I once met the Canadian ambassador in an Eastern European country. Great woman. Did she speak all the languages of the countries that she was a diplomat, a consul in? I think so. I think she learned all of them. But that doesn’t matter so much. It doesn’t matter if you are capable of learning the language, if you’re really integrating and if you’re not a diplomat. Those digital nomads only try to evoke their Silicon Valley dream lifestyle in other parts of the world and then don’t give a shit about anything, most of them. Yeah, there’s these people, I agree. But I’m not sure this is all of them. I kind of see it like the digital camera and the analog camera. The analog camera was way better than digital cameras for years and people still adopted the digital camera because it had other benefits that were scalable. I’m going to use this word again. But you can just say it was cheaper or it was simpler or I could take more pictures. I think something is going on with this nomadism and I agree with you that the people we see right now, there’s a lot of problems there and I think depression is definitely one of them. But if you go to San Francisco right now, easily 50% of the residents can be described as clinically depressed and every psychologist in the world will test this. So this is a global phenomenon. I don’t know if the digital nomads and I agree with you. They are certainly more American than not. But there’s a lot of Eastern Europeans who do this when I go to Asia or when I was still able to go to Asia. And there is a mindset. It hasn’t found a good word right now. I agree with you. But I think there’s something there that people really truly cherish is this curiosity, is this getting out there and discover yourself. You can pepper yourself but you don’t have to. That is a choice that you can make. As you say for a diplomat, you can stay very peppered but you don’t have to be. Yes, but I think what you just said is very important. Digital nomadism is by definition an uncurious stance. Oh, not at all. Oh, I think so. Because again, if you are interested in something other than yourself, you would be interested in, okay, I go to Vietnam. It’s something that I plan to do over the next couple of decades to live in some more countries or some cities where I haven’t lived. For example, I could imagine living in Rio de Janeiro. I lived in Sao Paulo for 12 years, but I never lived in Rio and I can well imagine living there. But not because of the beaches, because of several other factors that I find amazing about that city. And I can imagine living for half a year or a year in Vietnam, but I would never call myself a digital nomad because of that. I would call myself a student of Vietnam and ideally learning a bit of Vietnamese would be part of that challenge. And most people derive the income through the digital means and that’s kind of part of how this is fueled. Otherwise, most people can’t do it. They literally have to be, we talked about organizations, part of the office, right? Or they have to be in the same time zone at least. So that makes it easier for people that idea to digitize earning a living. Yes, but if we look at LinkedIn, if you would look up people’s profiles on LinkedIn and look for digital nomads, you would probably. Oh yeah, I agree. On Instagram, that’s the same problem. Costa Rica or whatever the countries, the fashion countries are at this moment, you would find very little of that. And so I think curiosity. And here’s a thing, again, maybe I’m a bit over focused on our American audience here. But if I look at America, it worries me that even the fashions, the trends, the hip cycles that are supposedly about betterment are all driven by selfishness and self. And say over accentuation of, of me, like the mindfulness fashion, mindfulness supposedly is about being, it’s not about being mindful, it’s about yourself. The whole mindfulness movement and techniques also, interestingly, made famous, made turn into a worldwide movement by Google people, people from Google and Google the company itself. Mindfulness is just about me, me, me, me, me. It’s about selfishness. Selfishness in the last 10 years, it was rebranded into mindfulness, so that it sounds better. But mindfulness, even yoga, I mean, it may be an interesting technique to stay fit. But ultimately, it’s just about you, you, you, you, you, and you’re thinking of yourself within yourself and the calmness you can achieve through yourself, yourself, yourself. That is the opposite of being a citizen. That is the opposite of being curious. The opposite of learning from, you know, exposing yourself to a world that’s out there. That’s why I always would recommend live abroad, but live in a country with another language, a cultural, significant cultural differences. I mean, for Americans, Mexico is perfect, of course. Yeah. No, I hear what you’re saying. I think there’s a lot of truth to this. A lot of things went wrong. And that’s the latest trends, so to speak. But, you know, this could flip really quickly. And I think there is a consensus that things have not worked out. But I think we touched that. And when we spoke earlier, there is a tendency, and especially in America where I think everybody has said, but America seems to be a little quicker with this. We do everything and try it out and eventually we figure out if it works or not. And sometimes it takes a while to figure out if it works or not. It might take 10 years. It might take 20 years. But we run into these rabbit holes. That definitely is one of the rabbit holes that makes people depressed and has created. But it is also a result of technology that has helped this rise of depression and moved people away from each other. But it also created maybe some productivity or maybe not. We don’t know the result of this yet. But what I’m trying to say is we try out all these things and eventually we figure out what works and that’s what’s going to have a long term impact. So that’s my learning from the only 20 years I have in America. So hopefully there’s some more that’s relevant learnings to be had. On this positive note, Niels, thanks for joining. That was fantastic. Thanks for your insights. I can say I enjoyed enormously, enjoyed our conversation. We agreed on nothing, I think, which is great, which is the best, right? Which is what we wanted, right? The problems of this podcast, I suppose, right? Yeah, most people agree all the time with me. So maybe I just, I seek them out, only people who agree with me. You tried to also try this with me. You fascinated me into believing everything you say. But I tried to resist and I hope it was enjoyable to also listen to. It’s extremely valuable. Absolutely. Thanks for doing this. Thank you very much. See you soon. Thanks.

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