Doughnut Economics (Product Application)

1. Overview

Doughnut Economics, a concept developed by economist Kate Raworth, provides a framework for sustainable development. It visualizes a world where both people and the planet can thrive. The model is represented by a doughnut shape, with a social foundation and an ecological ceiling. The goal is to operate within this doughnut, meeting the needs of all people without overshooting the planet’s ecological limits. This pattern, “Doughnut Economics (Product Application),” specifically explores how this framework can be applied to the design, development, and lifecycle of products. It offers a paradigm shift from the traditional linear model of ‘take, make, dispose’ to a circular and regenerative approach. By integrating the principles of Doughnut Economics into product strategy, businesses can create value that is not only financial but also social and environmental. This approach challenges businesses to rethink their purpose, moving beyond profit maximization to a more holistic view of success that includes human and ecological well-being. The application of Doughnut Economics to products is not just about creating ‘green’ or ‘ethical’ products, but about fundamentally redesigning business models to be distributive and regenerative by design. This means creating products that are not only sustainable in their production and consumption but also contribute to a more equitable and just society.

2. Core Principles

The application of Doughnut Economics to products is guided by a set of core principles that are derived from Kate Raworth’s original framework. These principles provide a new economic mindset for the 21st century, one that is fit for the challenges of our times. They are not a set of rigid rules, but rather a way of thinking that can be adapted to different contexts and industries. The seven core principles are:

1. Change the Goal: From endless GDP growth to thriving in the Doughnut. For products, this means shifting the focus from maximizing sales and profit to creating products that contribute to human and planetary well-being.
2. See the Big Picture: Recognize that the economy is embedded within society and the living world. This means considering the entire lifecycle of a product, from the extraction of raw materials to its end-of-life, and understanding its social and environmental impacts at each stage.
3. Nurture Human Nature: We are not the rational economic man of mainstream economics. We are social and cooperative beings. Product design should reflect this by fostering collaboration, community, and a sense of shared purpose.
4. Get Savvy with Systems: The economy is a complex adaptive system. This requires a systems-thinking approach to product design, considering the interconnectedness of different elements and the potential for unintended consequences.
5. Be Distributive: Today’s economies are divisive, with wealth and power concentrated in the hands of a few. A distributive economy shares value more equitably among all who co-create it. For products, this can mean adopting open-source designs, using fair trade supply chains, and creating products that are accessible and affordable to all.
6. Be Regenerative: Our industrial processes are degenerative, running down the living world. A regenerative economy is one that works with and within the cycles of the living world. This means designing products that are made from renewable materials, are easy to repair and remanufacture, and that contribute to the regeneration of ecosystems.
7. Aim to Thrive Rather Than to Grow: In nature, things grow until they mature, and then they thrive. The same should be true for our economies. This means designing products and business models that are not dependent on endless growth, but that can thrive in a steady-state economy.

These principles provide a compass for businesses to navigate the complexities of the 21st century and to create products that are fit for the future. They challenge us to be more creative, more collaborative, and more courageous in our approach to business.

3. Key Practices

Translating the core principles of Doughnut Economics into tangible business practices requires a shift in mindset and a commitment to innovation. Below are some key practices that companies can adopt to apply the Doughnut Economics framework to their products. These practices are not exhaustive, but they provide a starting point for businesses that are serious about creating products that are both profitable and sustainable.

• Circular Design: This practice focuses on designing products and services that eliminate waste and pollution, keep products and materials in use, and regenerate natural systems. This can involve designing for durability, repairability, and recyclability. For example, the Library of Things is a circular platform that enables communities to borrow items instead of buying them, reducing consumption and waste. [1]
• Value Chain Innovation: This involves redesigning supply chains to be more equitable and sustainable. This can include sourcing from local and fair-trade suppliers, investing in renewable energy, and reducing transportation emissions. Guayaki Yerba Mate, for instance, has a regenerative business model that includes sourcing their yerba mate from shade-grown agroforestry systems that protect and restore the Atlantic Forest in South America. [2]
• Steward-Ownership: This is a form of business ownership in which the company is legally bound to its purpose, and profits are reinvested to serve that purpose. This prevents the company from being sold or taken public, which could compromise its mission. CrowdBuilding, a company that makes community-led housing the norm, is an example of a steward-owned business. [3]
• Open Source and Collaboration: This involves sharing knowledge and technology to accelerate innovation and create a more collaborative economy. Sharetribe, a software company that helps entrepreneurs create their own online marketplaces, is an example of a company that uses an open-source model to democratize platform ownership. [4]
• Community-Centric Models: This practice involves designing products and services that are co-created with and for the communities they serve. This can lead to more inclusive and equitable outcomes. SELCO India is a social enterprise that provides access to energy for underserved populations through tailored solutions that are co-designed with the community. [5]

These practices demonstrate that it is possible to do business differently. They show that companies can be both successful and sustainable, and that they can play a positive role in creating a more just and regenerative world.

[1] Doughnut Economics Action Lab. (n.d.). Library of Things. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies [2] Doughnut Economics Action Lab. (n.d.). Guayaki Yerba Mate. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies [3] Doughnut Economics Action Lab. (n.d.). CrowdBuilding. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies [4] Doughnut Economics Action Lab. (n.d.). Sharetribe. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies [5] Doughnut Economics Action Lab. (n.d.). SELCO India. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

4. Application Context

The Doughnut Economics (Product Application) pattern is applicable across a wide range of industries and sectors. Its principles can be adapted to both new and existing products, and to businesses of all sizes, from small startups to large multinational corporations. The key is a willingness to challenge the status quo and to embrace a new way of thinking about the purpose of business.

The pattern is particularly relevant in industries with high environmental and social impacts, such as fashion, food, and electronics. In these sectors, the pressure to move towards a more circular and sustainable model is growing, and the Doughnut provides a clear and compelling framework for doing so. However, the principles of Doughnut Economics can be applied to any industry, as all businesses have a role to play in creating a more just and regenerative world.

The pattern is also well-suited to businesses that are purpose-driven and that are looking for a way to align their values with their business practices. It provides a practical tool for translating a company’s mission into concrete actions that can be measured and tracked over time. This can help to build a strong sense of purpose and engagement among employees, and to attract and retain customers who are looking for more than just a good product at a low price.

5. Implementation

Implementing the Doughnut Economics (Product Application) pattern requires a deep commitment from the leadership of the company, as well as the active involvement of employees at all levels. It is not a quick fix or a one-size-fits-all solution, but rather a journey of transformation that will be unique to each organization. Below are some steps that companies can take to get started.

1. Educate and Engage: The first step is to educate employees about the principles of Doughnut Economics and to engage them in a conversation about what it would mean to apply them to the company’s products. This can be done through workshops, training sessions, and internal communications campaigns.
2. Assess Your Impact: The next step is to assess the company’s current social and environmental impact. This can be done using a variety of tools, such as a life cycle assessment, a social impact assessment, or the Doughnut Design for Business tool developed by the Doughnut Economics Action Lab. [6]
3. Set Ambitious Goals: Based on the results of the impact assessment, the company should set ambitious goals for improvement. These goals should be aligned with the social foundation and the ecological ceiling of the Doughnut, and they should be specific, measurable, achievable, relevant, and time-bound (SMART).
4. Innovate and Experiment: The next step is to innovate and experiment with new products, services, and business models that can help to achieve the company’s goals. This can involve anything from redesigning a product to be more circular, to developing a new business model that is based on sharing or leasing rather than owning.
5. Measure and Report: Finally, it is important to measure and report on the company’s progress towards its goals. This will help to keep the company accountable, and to identify areas where further improvement is needed. It will also help to build trust with customers, investors, and other stakeholders.

Implementing the Doughnut Economics (Product Application) pattern is a challenging but rewarding journey. It requires a long-term commitment, but it has the potential to create significant value for the company, for society, and for the planet.

[6] Doughnut Economics Action Lab. (n.d.). Doughnut Design for Business. Retrieved from https://doughnuteconomics.org/tools/29

6. Evidence & Impact

The application of Doughnut Economics principles in product design and business strategy is still an emerging field, but there is a growing body of evidence demonstrating its positive impact. Companies that have embraced this approach have reported a range of benefits, from increased brand loyalty and employee engagement to improved financial performance and enhanced resilience.

One of the most compelling pieces of evidence comes from the case studies compiled by the Doughnut Economics Action Lab (DEAL). These case studies showcase a diverse range of businesses that are putting the principles of Doughnut Economics into practice. For example:

• Patagonia, the outdoor clothing company, has long been a pioneer in sustainable business. In 2022, the company took its commitment to the next level by making Earth its only shareholder. This means that all of the company’s profits are now used to fight the climate crisis and to protect nature. [7]
• Vancity, a Canadian credit union, has a long history of investing in its local community. The credit union has a strong focus on social and environmental justice, and it has been a leader in financing affordable housing, renewable energy, and other community-based projects. [8]
• Manos del Uruguay, a network of rural, female-led worker cooperatives, has been providing a source of income and empowerment for women in Uruguay for over 50 years. The cooperative is owned and governed by its members, and it is committed to fair trade and sustainable production. [9]

These case studies, and many others like them, demonstrate that it is possible to build successful businesses that are also good for people and the planet. They show that the Doughnut Economics framework is not just a theoretical concept, but a practical tool that can be used to create real-world change.

Beyond the individual case studies, there is also a growing body of research that supports the business case for sustainability. For example, a 2020 report by the World Economic Forum found that companies that prioritize sustainability are more likely to outperform their peers financially. [10] Another study, by the consulting firm McKinsey, found that companies with strong environmental, social, and governance (ESG) performance are more likely to have higher profits and a lower cost of capital. [11]

[7] Doughnut Economics Action Lab. (n.d.). Patagonia. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies [8] Doughnut Economics Action Lab. (n.d.). Vancity. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies [9] Doughnut Economics Action Lab. (n.d.). Manos del Uruguay. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies [10] World Economic Forum. (2020). New Nature Economy Report II: The Future of Nature and Business. Retrieved from https://www.weforum.org/reports/new-nature-economy-report-ii-the-future-of-nature-and-business/ [11] McKinsey. (2020). Five ways that ESG creates value. Retrieved from https://www.mckinsey.com/business-functions/sustainability/our-insights/five-ways-that-esg-creates-value

7. Cognitive Era Considerations

The transition to the Cognitive Era, characterized by the rise of artificial intelligence, big data, and the Internet of Things, presents both opportunities and challenges for the application of Doughnut Economics to products. On the one hand, these technologies can provide us with the tools and insights we need to create a more just and regenerative economy. On the other hand, they also have the potential to exacerbate existing inequalities and to create new forms of social and environmental harm.

One of the biggest opportunities is the potential to use data and AI to create more circular and efficient product lifecycles. For example, AI-powered predictive maintenance can help to extend the life of products, while IoT sensors can be used to track and manage the flow of materials in a circular economy. Digital platforms can also be used to facilitate sharing and collaboration, making it easier for people to access the goods and services they need without having to own them.

However, there are also significant risks. The digital economy is currently dominated by a few large platforms, which have a tendency to create winner-take-all markets. This can lead to the concentration of wealth and power, and to the exploitation of workers and users. There are also concerns about the environmental impact of the digital economy, from the energy consumption of data centers to the electronic waste generated by our ever-growing collection of devices.

To navigate these challenges, it is essential to apply the principles of Doughnut Economics to the design of digital technologies themselves. This means creating digital platforms that are distributive and regenerative by design. It means ensuring that the benefits of AI and other advanced technologies are shared widely, and that these technologies are used to empower people and to protect the planet. It also means being mindful of the potential for unintended consequences, and taking a precautionary approach to the development and deployment of new technologies.

8. Commons Alignment Assessment (v2.0)

This assessment evaluates the pattern based on the Commons OS v2.0 framework, which focuses on the pattern’s ability to enable resilient collective value creation.

1. Stakeholder Architecture: The pattern fundamentally redefines stakeholders to include the planet and society, not just consumers and shareholders. It establishes responsibilities to operate within an “ecological ceiling” and a “social foundation,” effectively granting rights to a safe environment and social equity. This architecture guides product design to be distributive and regenerative, considering the well-being of all stakeholders, including future generations.

2. Value Creation Capability: The framework is explicitly designed to shift value creation from purely economic output to a multidimensional view that includes social and ecological value. By aiming to “thrive rather than grow,” it prioritizes the creation of resilience, well-being, and knowledge. Practices like circular design and value chain innovation are direct strategies for generating positive externalities and collective value beyond the product itself.

3. Resilience & Adaptability: The pattern promotes resilience by encouraging a shift from degenerative, linear systems to regenerative, circular ones that can better withstand resource shocks. The core principle to “Get Savvy with Systems” fosters an adaptive approach to complexity, helping organizations understand feedback loops and interconnectedness. This systemic awareness is critical for maintaining coherence and adapting to a constantly changing environment.

4. Ownership Architecture: The pattern challenges traditional ownership by promoting models like “Steward-Ownership,” where the company’s purpose is legally enshrined and profits are reinvested to serve that mission. This defines ownership through the lens of responsibility and stewardship rather than just monetary equity. Furthermore, its advocacy for open-source models helps distribute ownership of knowledge and capability, moving beyond proprietary control.

5. Design for Autonomy: The framework’s principles of being distributive and systems-savvy are highly compatible with autonomous systems like DAOs and AI. Its emphasis on community-centric models and collaboration aligns with the distributed nature of these technologies. The pattern encourages designing systems with low coordination overhead by embedding ethical and ecological principles directly into the operational logic, making it suitable for a future of increasingly autonomous economic activity.

6. Composability & Interoperability: As a high-level framework, this pattern is exceptionally composable. It provides a guiding philosophy and set of principles that can be combined with numerous other operational, technical, and organizational patterns. It acts as a meta-pattern that helps to select and integrate other patterns in a way that aligns them toward a common goal of regenerative and distributive value creation.

7. Fractal Value Creation: The core logic of the Doughnut—meeting needs within planetary boundaries—is inherently fractal and can be applied at any scale. The pattern demonstrates its application at the product level, but the same principles can be scaled down to individuals or up to entire industries, cities, and national economies. This scalability allows the value-creation logic to be consistently applied across nested systems, from a single product to the global commons.

Overall Score: 4 (Value Creation Enabler)

Rationale: The pattern provides a powerful and comprehensive framework for shifting from extractive, linear models to regenerative, circular ones. It strongly enables collective value creation by redefining the goals of business and providing clear principles for generating social and ecological well-being. While it is a high-level guide and not a complete, off-the-shelf implementation, it is a critical enabler for building new value creation architectures.

Opportunities for Improvement:

• Develop more explicit guidance on defining and managing the Rights and Responsibilities of non-human stakeholders, such as ecosystems or AI agents.
• Create more detailed implementation pathways for integrating the framework with specific legal and governance structures for DAOs and other autonomous systems.
• Provide clearer metrics and tools for measuring the creation of non-financial value (social, ecological, knowledge) in a standardized way.

9. Resources & References

Key Resources

• Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth: The foundational book that introduces the concept of Doughnut Economics.
• Doughnut Economics Action Lab (DEAL): The official website for Doughnut Economics, featuring tools, resources, and case studies.
• Doughnut Design for Business Tool: A workshop tool developed by DEAL to help companies engage with and apply the principles of Doughnut Economics.

References

[1] Doughnut Economics Action Lab. (n.d.). Library of Things. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[2] Doughnut Economics Action Lab. (n.d.). Guayaki Yerba Mate. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[3] Doughnut Economics Action Lab. (n.d.). CrowdBuilding. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[4] Doughnut Economics Action Lab. (n.d.). Sharetribe. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[5] Doughnut Economics Action Lab. (n.d.). SELCO India. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[6] Doughnut Economics Action Lab. (n.d.). Doughnut Design for Business. Retrieved from https://doughnuteconomics.org/tools/29

[7] Doughnut Economics Action Lab. (n.d.). Patagonia. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[8] Doughnut Economics Action Lab. (n.d.). Vancity. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[9] Doughnut Economics Action Lab. (n.d.). Manos del Uruguay. Retrieved from https://doughnuteconomics.org/tools/doughnut-design-for-business-case-studies

[10] World Economic Forum. (2020). New Nature Economy Report II: The Future of Nature and Business. Retrieved from https://www.weforum.org/reports/new-nature-economy-report-ii-the-future-of-nature-and-business/

[11] McKinsey. (2020). Five ways that ESG creates value. Retrieved from https://www.mckinsey.com/business-functions/sustainability/our-insights/five-ways-that-esg-creates-value