E512 | Oliver Brunschwiler & Enrique Molina, Chi Impact Capital: Riding First Tracks: Circularity, Purpose & Leading Beyond Hierarchy

0:00What happens when a pro snowboarder discovers that chasing waves that don't exist yet is the key to sustainable business. So there was these magazines with BMX and then later surfing, skateboarding, and somehow this signaled for me some kind of freedom that wasn't around my neighborhood at that time. So for me, it was actually the full start of becoming like an entrepreneur at a very early age. Oliver Brunchweiler thought he had cracked the code of modern organizations. But when idealism met reality... I try with the holacracy and I love it as a concept, but we fail miserably. That failure led to a breakthrough that's reshaping how companies lead with impact.

0:41Purpose is boss, which is actually a good thing because if you can measure the impact of the purpose on a strategy with the right KPIs behind, it's actually boss. So you don't need a boss. You need leadership because in a world where resources are running out, there's no time left for half measures. Yeah, I absolutely agree. I mean, resources are finite, so not infinite. it's just this gap where before it kind of has to take off because there's no other way around. So how do you spot the opportunities others can't see coming? I'm still looking for those people that are like really not catching the wave, but catching the wave that isn't there yet.

1:19Discover how freestyle thinking becomes circular innovation. This is the EUVC podcast.

1:35It's more than just an ally. This is a union of values. Let's start acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome back everyone to another episode of the UBC Podcast. Today we are exploring the real world struggles and breakthroughs of circular innovation, long term systems thinking and value aligned leadership. Not through brand names, but through principles, frameworks, and lived experiences. In this episode, I have brought my dear friend Enrique from Qi Impact to co-host this episode. And we are talking together with Oliver Brunschweiler.

2:13And I might be pronouncing that name terribly, but I'm doing my best to uphold the European heritage here. He's a purpose-driven entrepreneur, system thinker, and former pro snowboarder who's helped redesign how organizations work from the inside out, always with impact at the center. Enrique, tell me, why did you, or tell the audience maybe, why did you think that it's such an important person to bring on the podcast? Thank you for that beautiful introduction, Andrea. It's always a pleasure to be here with you. So who else to speak about systemic change than someone who has been a professional snowboarder, a real leader in so many companies, a voice for everything that is moving the needle towards a more circular economy and impact in terms of businesses.

3:03I mean, I can really just define a few things, but I think Oli is all of that. And it's a very inspirational person for me because of that, like sports mixing the leadership and his personal approach on this. I think I would just let Oli to explain a little bit more about his life and career. Thank you for the beautiful introduction, both of you. Also, I already feel a little bit like in India on a cloud and surfing. I'm actually constantly in doubt of myself, so it really feels good to have an intro like this. So thank you very much, Iga. Of course, this is not the truth and not the reality. When I teach or when I educate elderly students, I always talk about the failures mainly to get some honest feedback from them too, because usually we tend to talk about our successes.

3:54And I really like to talk about the opposite with also usually people that are successful. And that's for me more interesting. So we can maybe focus on that a little more. It depends on what the goal of your podcast will be today. Snowboarding. What has that given you to like snowboarding at a pro level, of course? What has that given you as an individual walking into a very successful career in business life afterwards? Well, first of all, it still gives me a lot of goosebumps. All kinds of sports give me goosebumps. So I'm still into it. I'm like an older guy, but I consider myself pretty fit still.

4:41I still surf. I still snowboard a lot. Sometimes I skate, even though that's getting harder because when you fall, it's really hard for a 55 year old. So, I mean, it started everything, actually. So when my father died, when I was eight years old, I wasn't like a lost guy. We were like in a safe place. My mother was looking after us and everything. I kind of also felt in some kind of a trap. So there was these magazines with BMX and then later surfing, skateboarding. And somehow this signaled for me some kind of freedom that wasn't around my neighborhood at that time. For me, it was actually the full start of becoming like an entrepreneur at the very early age after my career, which actually never stopped.

5:30So as a surfer, I mean, I don't know if you know, you actually never stop. So it just gets stays and sticks with you. You always stay like a child and you go out and play. So I'm still in this mood. But working with people that have that experience in life is really interesting and also very influential, right? Because last weekend, I was doing this tour of the Lake Le Mans, which is 176 kilometers. I want to make the number because it was five hours and a half on the bicycle. and it's extremely intense for people in general. There is a lot of professionals, which is nothing, but for me, it was a thing.

6:18But when you get your body to those levels and that you have this flow, the understanding about leadership, following people, understanding ways of working as a group and resilience is so important. And I think it recalls a lot when I really tried to develop some guidance for the investments that we made. I always try to recall to people like him, right? Like, look at this kind of person, how he developed these and that. And now, like being a professor at the IMD, well, at St. Gallen, University of St. Gallen, it really, you know, it's really someone that looks after people that are learning new things.

7:02And maybe that's one of the key elements of getting to those levels. Yeah, I mean, in general, as a freestyler, you're always looking for the next thing that didn't exist before. So I have huge respect for all athletes, especially also from your generation, which are a little bit younger. But we were like these kind of athletes. I mean, I was, you know, when the weather was bad, there was a World Cup in Canada. I was, I was laying in a hotel and smoking pot and watching TV. So, and then you wait for the next morning to perform. So, and today I have huge respect. I mean, it's a completely different level.

7:41Also, endurance cycling or whatever you say. It's just before this is, I mean, this is a completely different area of sports. In our time, it was like discovering the next thing. So when I look, I mean, if you want to cross the bridge into investments now, when I look into people, of course, you invest more than 50 % into people, right? I've probably heard that many times in, even in this podcast. I don't know. I haven't heard all of them, but some of them. So really good. I was always looking also for entrepreneurial people. I'm still looking for those people that are like really not catching the wave, but catching the wave that isn't there yet.

8:19So, and this is, I mean, this is not high art. This is just somehow, you know, the undiscovered is more fun than the discovered. So for some people, they consider that as a danger, as an adventure, you know. And for me, it's just like, it's like the obvious. If you want to do something, you know, first track in snow, there's nothing else, you know. You want to have the first track. Everybody wants to have the first track. So that's why Japan and all these places are so full now of people because everybody wants to be first now. You know, in my time, there wasn't this need. Everybody wants to do that.

8:57So, yeah, there's a mass of people that actually want to be first liners these days. And how to discover the people that really are really talented, not just to have the first line, but to make it beautiful, to really make it nice, look nice, you know, because surfing, snowboarding is all about style. It's not about pure performance, athleticism or so. So I have huge respect for people that go first line and look great while they do it. I'd love to ask you something because I know you're big into holocratic systems, which of course is an alternative to traditional top-down management, meaning that you try and distribute authority and decision-making across self-organizing teams.

9:39It's a bit funny because I've been thinking about growing EUVC as what I call a platform to enable micro entrepreneurs in the venture space, because I honestly don't. It's probably driven both by what I think is most powerful in our industry, but then it's also very much driven by the fact that I hate management. I really do not thrive in it. And I don't think that the people that deliver the most value should be in a system where you operate, what you would call it, modus operandi is management because management is almost by definition terrible. I'd love to ask you, how do you think about this in the starter world and bridging the gap into enterprise as well?

10:24Because the beautiful thing about a small startup is, of course, that it is quite distributed and non-centralized. But at the same time, it gets very difficult as you scale. So Holacracy was like one base of new work or new kinds of organizations, agile organizations at that time. And it was for me very inspirational. And also when we shifted the Freitag from a traditional management system to an agile role-based system, it was actually a very hard time for some people. because the misunderstanding or the interpretation of what this means from a cultural behavior perspective was really different for some people.

11:06But it was a good match for Freitag at that time because also the founders, they were never into managing their own company. They were creatives. And so they wanted to have actually the best ideas, will win and will drive our company forward. And so we tried different things before we actually shifted to Holocracy. and Holacracy actually was the starting point for me also to consult other companies in shifting into role-based organizations, which I also do today in my board role. So usually I have this focus in transforming the organization into a hierarchy or hierarchy of the competences-based organization form.

11:46And that's actually usually for most startups, not just startups, for younger organizations, it's a very good fit because people feel comfortable when they actually can change their heads from role to role because you're not like, you know, you have a given job description. After two months, it's actually gone. In most organizations, if you get that in an organization today, the organization is doomed, in my view. So you have to adapt to the constantly growing or changing competencies of people. And that's why I have role-based organizations. Even as a CEO today, a lot of people call people CEOs.

12:24And usually both CEOs are not like the CEOs we used to have because they have different competence in different roles. And I also had this, so I had different interests and I was a constant learner. In my highest time at Freitag, I had like 17 different roles. But one was also like a apostle. Apostle was like the guy that could talk to you in a podcast. So the media spokesman is an apostle. but there were like 10 people assigned to this role because they could talk in the name of their company to media, giving speeches, whatever. So it wasn't like only the CEO that could do that. It was the people that had the competence to do that.

13:07And that's what I'm driving in most organizations from day one when we not just invest, but also when we like consult or so. It's what I see in most younger companies as a very future-proof model. I just need to give my two cents on this because I try with Holocracy and I love it as a concept, but we fail miserably at doing it. I mean, it was actually on a roll years back and I love the team and it's amazing. It's the Impact Hub Network and we work in this Holocracy way of thinking and system. But the challenge on the implementation was the discipline to keep the role model, to own that at the time where the meeting or the moment to show the results was happening.

14:06The ideologists, they wanted to get rid of leadership and that didn't work at the beginning. So you can't get rid of leadership, right? So today we teach purpose-led organizations. So purpose is boss, which is actually a good thing because if you can measure the impact of the purpose on a strategy with the right KPIs behind, it's actually boss. So you don't need a boss or the bosses. You need leadership. Leadership, people that lead and have this competence or this drive or this talent to actually inspire and communicate and create trust in a company. They lead. And you give them the role of leadership.

14:46But whatever you name it, it's something that you cannot delete. And at the beginning, people, when they heard, oh, holacracy, sociocratie, we don't have it, you don't need our boss anymore. They wanted to get rid of their boss. They gave all the power to the organization and they completely failed because there was normal leadership. I mean, I know some organizations, also taller organizations, bigger organizations, I'm also part of that failed with such models. Absolutely. So it's a constant development. But what sticks is purpose-led and role-based organizations. Yeah. I'm going to take that as a new norm.

15:29leadership and purpose is definitely, I think, a great way to continue on these roles and to implement them. Thanks for that. I'm sitting here reflecting a ton because thinking about what am I seeing across the spectrum? Also, if we then think about how AI is changing everything, it's allowing everyone to do more people's work, so to say, in output at least, and making everyone a bit of a manager of of of a Gendic systems for you. What I am seeing both when I look at the distributed organization or whatever we might want to call it, and also with the adoption of AI is that there are people that to me seem either caught out for it or at a place in life and ambition where it is well aligned with them.

16:20And then there are people that kind of want to go to work and, you know, do the thing that they're asked to do and don't want to take ownership in the same way. How do you deal with this? So this is what I meant with you cannot delete leadership. You know, what does leadership do? I think, first of all, it gives orientation. Some organizations call it strategy. Where does the ship go and communicate this in a constant matter to why do we do that and how could we do that? And so this is leadership orientation, giving orientation. And at the bottom of leadership is giving safety and secureness to an organization, to people in an organization.

17:06But everything between like solving decision-making or creating, I don't know, a room for decision-making is not specifically leadership. You can distribute that or a lot of those tasks from historical leadership into different people that can do that much better. But what you cannot delete is giving safety and security. So some people in some organizations need a lot of that. They want to exactly know what they have to do and when they have to do and for how much they have to do it. They need this like clear orientation. and orientation for some people is at the opposite not necessary because they see the purpose they see the strategy and they don't need anyone to inspire them on a daily base or give them the security to do their job because they're self-organized and a self-organized organization usually have to have this have a specific high level of trust in there and because people So, you know, it's not about the failure.

18:11It's about there is clear orientation. We know everything. Everybody knows where to go. So everybody has this specific role. If the tensions arise, we have a system to solve them. But not the boss and not the CEO and not the leadership has to solve it specifically. Modern teams, as you all know, younger organizations, they have methods to solve their tensions. It's not, you know, not leadership has to do it. But I absolutely give you a right, but you're right. With some people, also I had that with Freitag, there was like a production, it's a factory, you know, in Zurich. So there's like a couple hundred people working in the factory.

18:51And some people, they don't work there for purpose. They work there for money to feed their kids. It's not just factory worker people, it's also different people. And you have to accept. they don't see like the overarching reason the cultural benefit they get from working at fried dog or at another company which is purpose-driven you know so give them their orientation what they need adapt to them and not the opposite they have to adapt to your culturally purpose-led company you have to adapt to that i'd love to shift the conversation a bit because i want to talk about circularity as well. And I want to try and go a bit beyond the hype because it is very much which ecosystem you're in.

19:38Some would say it's overhyped and you hear about it all the time. That's one echo chamber. Another echo chamber would say that, well, the hype, it's already gone. Trump killed that on day one. So I'd love to ask you, first and foremost, both of you, just to restate, where do you see circularity being today? How do you think about circularity? And then after that, we can bear a bit into the tensions of it. Circularity, yes, indeed, is right now a controversy, right? So there is multiple ways to see it. Like what is happening in the West and what is happening in Europe, it's completely different.

20:15One of the key elements of how to see it is the way to proceed in terms of businesses that are more connected to giving back to the customer and also to respect the planning somehow. Wow. It is challenging to be completely circular, that's for sure. However, the system of circularity allows companies to actually be part of the giving back, back and forth, and reconnect with the end life cycle of a product or create a new service on it. Especially in Europe, where we have different cultures and different languages. It really helps people to reconnect with the meaning of production, reconnect with new ways of thinking, also as part of systemic changing.

21:11So, you know, I think we have an opportunity more than a challenge. And we can see it also at the European Union level. Legislation is changing and adapting to that and being more strict in terms of production with circularity, with intention to take back the products that we are creating. You know, it's not just about like putting there in the market and then at the end, these clothes, whatever you are wearing, it's going to end up in a beach somewhere, unfortunately in Africa. It's going to be something that you can reuse or at least utilize it for a different type of concept. We are still in the beginning of circularity and there is multiple ways that we're going to see circularity thriving.

21:57Yeah, I absolutely agree. I mean, resources are finite, so not infinite. It's just currently, it's like, I always compare it like if your stock is down and it's the same with all sustainability topics. Currently, it's just a low stock and you stick with it. So yeah, because you can kind of reverse it. maybe our generation you know could say well it's not so urgent the you know it's not getting hotter really and it's uh let's you know let's stick with the old plan again and it's more comfortable you know than trying out than failing with hundreds of circular business models and startups but for me it's just you know this gap you know where you had the trends and then you have this small gap before it kind of has to take off because there's no other way around.

22:53Something logic somehow. How do you marry this? Because the dip is very real. Yes, the stock is down, but that also means that you just lost some real value. The people that thought that had their pension money in the company, that's down now. They're wiped out or at least it's less than they thought. or the investors that were meant to come in to help on if you're private might help in the next round they might be now saying well that's not so how how do you kind of solve this practical tension between the fact that you can be very mission driven and just say well it's going to happen it's needed and for that reason we just need to persevere and on the other hand you also have to reconcile with the market incentives and operational realities I don't consider it that worse to be honest so for me it's more like a look into the ratio right if you invest into deep tech maybe currently that has a two to ten ratio two to eight ratio so so two are successful eight not and in circular maybe it's one to nine so but it's still one to nine so from a i'm not a classic vc or so but from a vc perspective that's a good ratio as long as what i see um there are some are thriving, you know, so and I don't know any pension fund that they'd invest into a pure circular or like extremely sustainable fund to have all your pension funds in there.

24:21I don't know anybody of that. So they all reduced their risks many years ago. They played safe. You know what I mean? The employees that have considerable stock options in their own company. Oh, yeah, of course. Yeah, but that's It's an entrepreneurial risk, you know, so if you buy into your own company, your own startup as an employee, I mean, this is entrepreneurial risk. So, yeah, it's normal. How do you both of you see founders lead through this and how do you lead through it as investors yourselves as well? The reality is in Europe, we are facing a lack of exits in general, right? It's not just the circularity.

25:01There is multiple kind of sectors, including the investment sector, that are missing that moment. And I like this comparison or this analogy that Olivier is making about having a stock and really speaking about circularity as a type of investment, just as an asset class and as another. Sometimes you need to hold it and just think through it and give also as a supporter and having other investments in circularity, young, very young companies, these guys, these CEOs that are starting those new businesses, they really see the value in the long term, especially in, let's say, marketplaces, right? Or ways to consume products in a different way because of the potential that you can have in the future, right?

25:55So if you analyze it on a big picture and you see circularity as a trend that will continue growing, and you see this use of circularity for the take back of production or products in the market, you can see also multiple levels of connection with your customers. Nowadays, customers look for something that is more specific for them, more special. I was on a conference at the IMD actually on luxury. The new luxury is actually to have a specific, not just retreat, but specific moments, like emotions that will actually thrive the customer to invest on that. And that is experiences. Most of the time, what experience means is that someone is going to buy whatever, but to have an experience with that product.

26:54From my perspective and also the experience that I have with these early stage circular economy businesses, they want to create that. They want to see that the customer is actually compromised with what they are offering on the long run. It's a customer that will buy that product multiple times or that will be able to actually even pay a ticket that is going to be a monthly base or whatever because they compromise with this same value. It's not for everyone, of course. It's like any other asset class. Not everyone is going to invest in that specific thing. But it has a space. Yes, of course, definitely.

27:31And then these guys, the early stage ventures, they see this and they look at the trends and the big data of this and they analyze it from different places. So I think it is something exciting also for them. How do you, Oliver, see the best founders mobilize both investors and customers and employees around circularity? Well, you know, when they pitch, depending on their model. But, you know, circular models are, of course, usually very cost-efficient models. So they use less. They are a driver for innovation. And they are clearly based on regulatory topics that arise. You just said some of them, in Europe at least, it's driving very fast currently again.

28:26Even in Switzerland, it's driving very fast in the build sector. It just released a new rule in terms of because 40 % of the global CO2 impact is building materials. And then, of course, they show a lot of resilience in these times. So if people, young people now pitch models to us currently, you see that they're exactly what I said before. You know, they're looking for their first track. You know, they see a current first track, something that, especially in the fashion industry, the big ones, Inditex and H &M didn't like adapt yet because they're waiting for the regulator because it really hurts still.

29:02It really hurts their business model. So when we see or evaluate now, we see younger entrepreneurs that see a lot of cost efficiency in circular business model. And that really, I mean, drives innovation in the whole system. And that's why I'm so positive and not too afraid. Currently, it's just a matter of how long or how deep or how wide will be the gap. And can you stand it? Can you hold tight? That's the question currently. But in general, for me, it's the method of circular business model is one way to a thriving planet. So I'm less motivated than two or three, four, five, ten, even when I started, it was about 15 years ago, to adapt the opportunities of circularity.

29:59Oliver, where are you seeing the biggest opportunities right now? What business models are you seeing? Food. I see a lot in food because also from a behavioral perspective, you said that before, Enrique, a lot of people don't drink a lot of alcohol anymore. is have friends, they close their nightclubs. How about your friends? Because people don't go out a lot anymore and they have a healthier lifestyle. I don't know why that is. It's a huge thing somehow. So people are really looking into what they digest. And in the whole food industry, there's a lot of change going on. And the scale, you know, is so fast and can be so big.