The 21st century’s rapidly compounding crises – from climate and ecological breakdown to extreme social inequities of power and opportunity – make it irrefutably clear that the global economic system must be transformed if humanity and the rest of life on Earth are to thrive. The Doughnut of social and planetary boundaries provides one possible compass for guiding this transformation. It calls for creating an economy that meets the essential needs of all people, and does so while respecting the life-supporting systems of this delicately balanced living planet.
Getting into the Doughnut calls for a transformation in the dynamics of the global economy. Today’s degenerative industrial systems use up and run down the living world. They must rapidly be turned into regenerative industries that work with Earth’s cycles and within Earth’s means. Meanwhile, today’s economy has created a divisive dynamic, fueled by ownership and power concentrated in the hands of far too few people. This must transition into a distributive dynamic that shares value and opportunity far more equitably with all who co-create it. Doughnut Economics points towards creating an economy that is regenerative and distributive by design.
Today’s degenerative industrial systems use up the living world. They must rapidly be turned into regenerative industries
For several years, at Doughnut Economics Action Lab (co-founded by economist Kate Raworth, pictured below) we have been exploring what all this means for business. And the answer is a journey into the deep design of business itself. Over the past 12 months, we have worked with communities of businesses to conduct 21 pilot workshops. Through these, we have created and tested a business tool for guiding any business through a journey of business design. Over 300 businesses from around the world participated in these workshops, helping us refine the concepts and materials, questions and activities in the tool. Essentially, the tool supports attempts to transform the deep design of business so as to enable and unlock the regenerative and distributive ideas we need businesses to embrace.
Regenerative and distributive by design
Doughnut Economics calls on businesses to demonstrate how they are going to transform so that they will belong in this future – aligned to, and in service of, a world where people and the living planet thrive. For many companies, the journey towards such a transformation typically begins with innovations in product design, eliminating single-use plastics and in-built obsolescence, while committing to paying living wages for the supply-chain workers making the products.
Such actions are an important start, but they are very unlikely to take place on the scale required for business to become not just more ‘sustainable’ but regenerative by design, and not just more ‘inclusive’ but distributive by design. Reaching this scale of ambition calls for transforming not only the design of products, but the deep design of business itself.
This scale of ambition calls for transforming not only the design of products, but the deep design of business itself
Innovations in the five layers of business design – through purpose, networks, governance, ownership, and finance – are essential if business is to become regenerative and distributive in its strategies, operations, and impacts, thereby helping to bring humanity into the Doughnut. This framework, which draws from the work of author and thought leader Marjorie Kelly, can help guide a journey into the deep design of any business. In essence, it’s to redesign business – away from the outdated 20th century idea of existing to extract maximum value, to the 21st century idea of generating maximum benefits.
Doughnut Economics is, of course, far from the only initiative calling for business transformation. Many other initiatives and approaches are already under way, with many different points of focus: shifting the mindset of business leaders; promoting consumer and investor action; supporting collective action by workers, farmers, and communities; promoting democratisation of business; and developing impact measurement to set better targets for businesses. Governments have likewise introduced rules and regulations, taxes, subsidies, new alliances, and innovation programmes intended to promote sustainable and social business practices, such as through ESG (environmental, social, and governance) reporting, extended producer responsibility, and carbon pricing schemes.
These are all important contributions to achieving the change needed in the business world. The transformative change required will only be achieved by also transforming the deep design of business itself. Deep design focuses on the ownership and financial structure of an enterprise; how it manages relationships with suppliers, clients, and stakeholders; how it makes and monitors key decisions; and how it sets and protects its purpose. In this sense, enterprise (re)design is foundational for many other transformations in both business and the wider economy that can help to bring humanity within the safe and just space of the Doughnut.
Focusing on deep design is a relatively new and fast-evolving approach to transforming business. Design innovations necessary for business to become regenerative and distributive are now being created and explored; already the scope of what may be possible is emerging. From a regenerative perspective, for example, consider business designs that make Earth the sole shareholder, a board director, or the CEO of a company. Examples like this already exist: US outdoor clothing company Patagonia has made Earth its ‘only shareholder’, UK-based shampoo company Faith In Nature has ‘appointed Nature to its board’ and Willicroft, a Dutch plant-based cheese company, has shaped the CEO role to ensure that Nature is the priority. Design innovations like these can fundamentally affect the likelihood of a business taking transformative regenerative action, for instance by giving the green light to a regenerative agriculture proposal, making significant investments in carbon-positive construction, or achieving beyond a living wage for supply chain workers. While the counterfactual outcome – ‘what would have happened without the particular business design?’ – is hard to determine, the design of a business is certainly a pivotal factor shaping important decisions across that business.
From a distributive perspective, consider the transformative actions that can be pursued when the interests of the people most connected to, or impacted by, a business are core to its deep design. Examples exist, such as wool and fashion producers Manos del Uruguay, whose profits are always used to generate benefits for its artisans across rural Uruguay. Consider Amul, a dairy company in India whose small-scale farmers own the business, thus benefitting both from its profits and giving it a role in governance that helps ensure that the purchasing practices of the business are designed to support their needs. Likewise consider the rise of affordable, community-owned renewable energy suppliers, such as the 1,900 citizen-led energy cooperatives in the REScoop Federation, representing over 1.25m people across Europe.
While none of these businesses would yet claim to be fully regenerative and distributive by design, they collectively demonstrate that innovations in the deep design of business – its purpose, networks, governance, ownership and finance – can unlock transformative action to open up far greater scope for business to become part of a regenerative and distributive future.
Seven lessons for deep design
In the work we have done at Doughnut Economics Action Lab, we have also learned some lessons around ways the deep design of businesses can evolve, so as to enable transformative ideas. Here are seven such lessons:
1. Put the most transformative ideas on the table
Truly regenerative and distributive ideas seldom reach the drawing board, let alone the implementation stage, as they are considered infeasible, impractical or out of reach, in the short term at least. Resist self-censorship and embrace the ambition that the future demands.
2. Explore the limits of your current business design
Questioning the deep design of a business includes asking questions about power and money, recognising trade-offs and limitations that feel uncomfortable or even overwhelming. But don’t succumb to the urge to shut down the exploration of your current design. Persist in exploring how your business’s design both enables and holds back the most transformative ideas.
3. Remember that redesign can ensure business resilience
Businesses can become more resilient if they become designed to enable long-term investment and to forge deep, committed relationships with employees, consumers, communities, and suppliers. Think of ways your company’s ownership or governance, trading partnerships and purpose can evolve for instance to deepen those relationships to weather crises and future challenges.
Ask the big question: what will this business need to become in the next ten years?
4. Build momentum and commitment for your business redesign
For leaders and managers in all businesses, redesign requires building momentum and commitment across the organisation. It requires continued honesty about what holds back transformative ideas, and how changes in the design of the business can unlock them. This means ongoing and repeated conversations about the relationship between design layers and transformative ideas.
5. Decide on the right size and scope for the business
Ask the big question: what will this business need to become in the next ten years, to belong in a regenerative and distributive economy? What products and services would it provide? How and where would it operate? And, critically, how large should it be?
6. Tailor the redesign journey and start slowly if needed
Each business faces a unique set of circumstances, with specific impacts, challenges, aspirations. As such, its design should be tailored to its own context. Some won’t be able to change their design quickly, and can start small and take an incremental approach. Meanwhile others can pursue an ambitious journey of business redesign.
7. Steer towards systemic change and industry transformation
The broader system surrounding a business can limit its ability to pursue regenerative and distributive ideas, as well as limiting its ability to change its business design. Businesses can demonstrate new possibilities, inspire peers and actively advocate for a paradigm shift towards designs that create maximum social and ecological benefits. The voice and leadership of ambitious businesses embodying regenerative and distributive enterprise design can shift mindsets in their industry, among policy-makers and with the public in order to support broader systemic change.
Drawing on these lessons, we invite change-makers in and around the business world to use the Doughnut Design for Business tool. It sets out a practical and action-oriented journey to generate the business design changes appropriate for the context of each business. Using it can catalyse innovations in the deep design of any business that can enable them to pursue an ambitious agenda of transformation and to become regenerative and distributive in their strategies, operations, and impacts, and so helping to bring humanity into the Doughnut. We’re excited to see the innovations that can arise across businesses the world over.
This article is based on the Doughnut Design for Business tool launched by Doughnut Economics Action Lab, and the accompanying paper written with the Centre for Economic Transformation (CET) in Amsterdam. Some text is taken directly from this paper, which is co-authored by Erinch Sahan, Carlota Sanz Ruiz and Kate Raworth of DEAL; and Willem van Winden and Daniel van den Buuse of CET.
Top image by tete_escape on freepik
Thanks for reading Pioneers Post. As an entrepreneur or investor yourself, you’ll know that producing quality work doesn’t come free. We rely on our subscribers to sustain our journalism – so if you think it’s worth having an independent, specialist media platform that covers social enterprise stories, please consider subscribing. You’ll also be buying social: Pioneers Post is a social enterprise itself, reinvesting all our profits into helping you do good business, better.