From Managers to Diplomats
Last week's letter ended with a claim: that leadership towards circular transformation resembles statecraft more than management.
This week, I want to explain what I mean by that; and why business leaders, specifically, are the ones who need to learn the difference.
The best teacher I ever had
Ted Geiger taught at Georgetown's Walsh School of Foreign Service during my time there. I got to know him and study under him towards the end of his life. Early in his career he had played a significant role in the shaping of the Marshall Plan.
Present at the creation of the post–World War II order, he became an academic observer of how such systems hold together.
What Geiger spent his career studying was a deceptively simple question: How do societies and intersocietal systems maintain cohesion over time? Not in the abstract, but in practice.
His answer was a framework I've carried with me ever since. Durable systems, he argued, depend on the ongoing alignment of three interacting domains: identity, institutions, and culture.
When those domains fall out of alignment — when the tensions among them are ignored or mismanaged — systems decay even while appearing functional. The metrics still move. The incentives still clear. But legitimacy erodes, trust thins, and collapse arrives long after the conditions for it were set.
This is a framework built for moments like the one we're in now.
Context prescribes conceptual framework
When you're operating within an established system, optimization is the appropriate mode. You tune. You improve. You compete on margins. The rules are known, the players are mapped, and the work is to perform better within that architecture.
But when the system itself is what needs to change, optimization stops working. Not because it fails on its own terms, but because it succeeds at the wrong task. You can optimize beautifully inside a structure whose premises no longer hold. You can hit every target while the ground shifts beneath you.
This is what I see happening across circular economy efforts today. The work is treated as a series of disputes to be resolved — over costs, over incentives, over compliance — rather than as a system to be rebuilt. Leaders approach the challenge like advocates in a courtroom: marshaling evidence, arguing positions, seeking favorable rulings within a given order.
Call that mode advocacy. It has its place. But advocacy assumes continuity. It works within the architecture. It seeks wins inside rules that remain stable.
What circularity requires is the redesign of the order itself. The reconciliation of competing interests — producers, consumers, capital — into arrangements that can hold. Durability that flows not from the hegemony of any one or subset of actors, but because the settlement itself is legitimate.
That is what I mean by statecraft.
Managers and diplomats
This distinction matters especially now because the leaders who will build the next system are not governments. They are not NGOs. They are not citizen movements, however necessary these all remain.
It is business leaders.
The infrastructure of daily life — how goods are made, sold, used, and recirculated — is shaped by enterprise decisions. If the circular economy is going to exist at scale, it will be because businesses designed it as a system that generates profits.
Which means business leaders face a choice about what kind of actors they want to be.
The default mode is manager: optimize returns, manage risk, compete within known rules. This is honorable work. It is also insufficient to the moment.
The alternative is diplomat: design lasting settlements, reconcile interests, build legitimacy across constituencies whose reasons for cooperation are nonobvious. This is harder. It requires a conceptual framework that treats alignment as the work, not the precondition.
Circular transformation is an invitation for business leaders to punch up their game. From managers to diplomats. From advocacy to statecraft.
Geiger's framework, mapped to enterprise
Geiger's three domains translate directly to the stakeholders that circular strategy must reconcile:
Identity systems correspond to producers and brands: leadership, intent, values, and the trust that accumulates or erodes over time. This is where courage lives — or doesn't.
Institutional systems correspond to business models and capital: ownership structures, incentive designs, contractual arrangements, and the time horizons that govern investment. This is where durability gets encoded — or undermined.
Cultural systems correspond to consumers and meaning: norms, mythology, jobs to be done, and the stories people tell themselves about what a good life looks like. This is where legitimacy is conferred — or withheld.
These three domains are interdependent. Pressure in one shows up in the others. A brand that signals circular intent (identity) but operates an extractive business model (institutions) will eventually face consumer skepticism (culture). A subscription model that captures value for capital while stripping sovereignty from consumers will erode trust regardless of how efficient it becomes.
Durable outcomes require alignment across all three. Not optimization of any single constituency. Alignment.
A case in point: Impulse Labs
I've been watching Impulse Labs for this reason.
The company builds a battery-equipped, software-defined induction cooktop: a durable good. Their approach to incorporating batteries into white goods is their start of an energy distribution disruption on behalf of consumers. For the price of an appliance that does miraculous things, Impulse enables their customers to permissionlessly roll their own virtual power plants.
To capture the benefits and allay the costs of their software development over time, Impulse has chosen a subscription strategy. That raises a question I suspect many consumers feel: does this disruption mean energy sovereignty, or monthly payment serfdom?
Subscriptions applied to durable goods signal customer lock-in. The pattern is familiar enough to trigger suspicion on contact.
From an advocacy standpoint, this looks like territory to be won or lost. A moat to be dug. Zero-sum.
From a statecraft standpoint, it looks like a positive-sum negotiation in progress. It calls for the delicate balancing of optionality between parties.
The ongoing subscription obligation introduces what you might call an optionality debit: a claim on the consumer's flexibility. The permissionless VPP model introduces an optionality credit: an expansion of what the consumer can do. Consumer sovereignty is preserved when the optionality balance is positive.
It needs to be designed into the DNA of the strategy. For that, Impulse needs a diplomat.
The Circudynamics connection
Consider the five domains of Circudynamics in the context of statecraft.
Horizons asks: What would have to be true for this arrangement to hold across time? What conditions must obtain for producers, consumers, and capital to remain aligned as the system scales?
Living Futures asks: Can people experience what this arrangement feels like before it fully exists? Can the case be made for the future it proposes?
Catalysts asks: Are the enabling conditions present — technological, economical, regulatory — for this settlement to become viable?
Connection asks: Does this resonate culturally? Does it tap into existing desires and emerging norms, or does it ask people to become something they don't recognize?
Craft asks: Is the execution beautiful? Does every touchpoint reinforce the legitimacy of the whole? Is the organization designed to fulfill its obligations over time?
Statecraft, in Geiger’s sense, is what happens when you hold all five of these questions simultaneously and design for their intersection rather than optimizing any single dimension.
The work ahead
Circular initiatives keep stalling because they aim too low. They argue within the system when the system itself is what's under negotiation.
If the task is to build arrangements that endure between producers, consumers, and capital, then diplomacy is not a metaphor. It is the appropriate mode of leadership.
In moments of systems change, the work is not to advocate harder for better outcomes. It is to design settlements that support their own weight, and withstand the unexpected.
That is what statecraft looks like in enterprise form. And it is what the circular economy is waiting for its leaders to learn.
For Dynamo members: provocations that illuminate statecraft as a strategic capacity for circular transformation. Thank you for your support. You make this work possible.
Subscribe to continue reading
