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Helpful prior knowledge and learning objectives
Helpful prior knowledge and learning objectives
Helpful prior learning:
Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 1.1.3 Degenerative economies, which explain the problems for people and planet with the way our current economies operate.
Section 1.1.4 Regenerative economies, which explains how circular, distributive and caring, needs-based and sufficient economies can meet human needs within planetary boundaries
Section 1.3.3 Human needs, which explains the distinction between needs and need satisfiers
Section 1.3.4 Doughnut Economics model, which explains a model for considering meeting human needs within planetary boundaries
Section 1.4.1 Biomimicry for economic design, which explains how Nature’s Unifying Patterns provide principles for regenerative economic design
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems and the importance of systems thinking
Section S.2 Systems thinking patterns, which outlines the core components of systems thinking: distinctions (thing/other), systems (part/whole), relationships (action/reaction), and perspectives (point/view)
Section S.5 Causal loops, feedback and tipping points, which explains the feedback loops that can stabilise or destabilise systems.
Learning objectives:
explain the broad transitions that businesses must make to become regenerative: linear to circular, extractive/divisive to distributive, and endlessly/aimlessly growing to needs-based and sufficient
Imagine you’re a designer for a footwear producer. You've created a low-cost, durable shoe for children that expands as their feet grow. This product meets a real need, especially for low-income families. The shoe's adaptability reduces waste and resource use. You calculate that it will be profitable and help the business reach new customers around the world who normally could not afford its products.
However, when you present your design, your managers reject it. Though the shoe should earn a profit, it doesn’t meet the company’s expected high profit margins. Instead, the managers decide to develop a different shoe for high-income households, aiming for greater profits.
Business decisions like this are often driven by internal rules focused on profit, investment, and shareholder expectations. These rules can limit well-intentioned efforts to engage in regenerative practices (Figure 1). To support a regenerative economy, many businesses need to rethink their own operations, including their purpose, networks, governance, ownership, and finance.
Figure 1. Even when they want to pursue regenerative strategies, many people find they are limited by their business’s design
(Credit: Doughnut Economics Action Lab, CC BY-SA 4.0)
What big transitions should we make to business design?
What big transitions should we make to business design?
Section 1.4.1 explored how regenerative economies mimic nature, a concept known as biomimicry. Biomimicry involves observing and imitating nature’s forms, structures, and processes to create human systems and products.
bio = life
mimicry = imitation
Humans and our economies are part of nature, not separate from it. If we want to thrive in harmony with other life on Earth, our economies, including businesses, must behave like natural systems. Regenerative businesses draw inspiration from nature to improve their products and design their operations to support life, just as the rest of the living world does.
The Biomimicry Institute has identified Nature's Unifying Patterns that can guide the transition to more regenerative business models. As you explore these patterns, think about how they can be applied to businesses.
Figure 2. Leaves using solar energy to make food
Nature uses only the energy it needs
Nature uses only the energy and matter it needs from freely available renewable resources like sunlight and wind in order to find food, grow, and build shelter (Section 1.2.5).
Figure 3. A decomposing log providing nutrients to a forest.
Decomposing waste from plants and animals becomes food or materials for others through natural cycles like the carbon cycle (Section 1.2.6).
Figure 4. Predator-prey relationships keep animal populations in balance in ecosystems.
Nature optimises rather than maximises
Nature avoids excess growth of biomass or populations because resources are also needed for survival and reproduction. There are natural limiting factors in ecosystems (Section 1.2.5)
Figure 5. Many organisms exhibit mutualism
Nature provides mutual benefits
Organisms in nature often exhibit cooperative behaviour where interactions between organisms benefit all involved. This is called mutualism (Section 1.2.5)
Figure 6. Organisms provide feedback to each other to meet their needs.
and
is locally attuned and adaptive
Organisms and ecosystems send, receive and respond to information from their local surroundings to adapt and thrive. Reinforcing feedback and balancing feedback are important response mechanisms (Section S.x - coming soon).
Figure 7. Nature uses water-based chemicals and biodegradable forms.
Nature uses safe chemistry and materials
Organisms use chemical processes within and near their own cells, so must use water-based chemicals and structures that do no harm and are biodegradable.
Figure 8. Nature uses abundant and local resources for its forms and processes.
Nature uses abundant resources
Nature relies on local and plentiful resources. The most common materials used in nature come from the most abundant elements: carbon, nitrogen, hydrogen and oxygen (Section 1.2.6).
Figure 9. Nature’s efficient forms follow function
Nature uses form/shape to achieve function
Nature uses appropriate forms / shapes to achieve needed functions. This minimises the energy needed to survive and thrive. In almost every case, a form you can identify in an animal or plant has a particular function.
Figure 10. Nature can recover after a disturbance.
Resilience is the ability to recover after disturbances or significant changes in the local environment like fires or floods. Natural systems are diverse, redundant, decentralised, and self-renewing. These qualities enable natural systems to function even when disturbed.
As you read the following text, consider which of Nature's Unifying Patterns are related to the big transformations needed in business.
Big transition 1: from linear to circular
Most businesses today follow a linear business model: they extract energy and matter from ecosystems to create products, which are later discarded as waste (Figure 11). This take-make-use-lose process harms the ecosystems we rely on. We overuse resources to produce goods, many of which don't even enhance human well-being. Then, we dump toxic waste back into nature, causing further damage (Figure 12).
Figure 12. We must move from linear business models to circular business models
(Credit: Doughnut Economics Action Lab, CC BY-SA 4.0)
Figure 11. Plastic waste from linear economies
(Credit: Bo Eide CC BY-NC-ND 2.0)
However, many businesses are shifting from linear to circular models. A circular business model involves:
designing products and services from the start to use fewer resources and planning for waste to be reintegrated into the ecosystem or recycled into new products.
circulating materials and products repeatedly, reducing waste.
actively regenerating Earth's ecosystems in a mutualistic relationship.
Examples of circular design include Fairphone, which produces modular phones that people can fix themselves and replace parts rather than the whole phone, and Sanergy, a Kenyan company turning waste into fertiliser, fuel, and animal feed. Section 3.4.2 will explore more circular business models.
The short video below from the Ellen MacArthur Foundation explains the principles of the circular economy.
Which Unifying Patterns of Nature are related to the move from linear to circular business design? (after you think, click the arrow)
Big transition 2: from extractive and divisive to distributive
Some businesses are shifting from extractive and divisive models to distributive ones. As discussed in Section 3.2.2, many businesses take too much from ecological and social systems, weakening them. Business leaders are often trained to maximise profits for a small group of owners and shareholders. In practice, this often means large businesses use their market power to extract as much value as possible from other stakeholders:
from households through high prices;
from workers through low wages;
from suppliers through pressuring them to lower resource prices;
from the state by avoiding taxes used for infrastructure and social services;
from nature by overusing resources and dumping waste back into ecosystems.
This extractive behaviour, where a few profit at the expense of many, leads to serious problems: growing economic inequality, weakened social cohesion, damaged ecosystems, and reduced ability for states to provide essential services. These effects harm the resilience of our economies, societies, and the environment (Subtopic 3.2.2).
Figure 13. The goal of profit maximisation for a small group of shareholders is undermining ecological and social systems
(Credit: Tom Toro in the New Yorker, licensed from www.CartoonStock.com)
To change this, businesses can adopt distributive models that share value and opportunities with employees, suppliers, and communities. This means recognising and fulfilling responsibilities to all stakeholders involved with the business. Rather than asking, "How much can we take from this enterprise?" businesses should ask, "How many benefits can we create through this enterprise?" (Figure 14). This generous mindset strengthens social and ecological resilience.
For example, a bakery would focus on making healthy products that nourish the community, not only selling them but also donating to those in need. It could set up a pay-it-forward program, enabling customers to buy bread for others in the community (Figure 15). The bakery would pay its workers at least a living wage, offer generous care leave, and ensure a safe, healthy work environment with a supportive culture. It could also provide free baking classes to the local community and offer apprenticeships to those eager to learn. Additionally, the bakery would pay its suppliers fairly and maintain long-term relationships with them. These dense networks of generosity strengthen communities.
Figure 14. Moving from extractive and divisive business models to distributive business models ensures that value is shared with all who create it, not just a few
(Credit: Doughnut Economics Action Lab, CC BY-SA 4.0)
Figure 15. A pay-it-forward programme enables customers to purchase goods for someone else to have when they need it
(Credit: Nathan Dumlao, Unsplash licence)
Which Unifying Patterns of Nature are related to the move from extractive and divisive to distributive business design?
Big transition 3: from endlessly, aimlessly growing to needs-based and sufficient
Our current economic systems aim for endless, aimless economic growth, measured by gross domestic product (GDP), the total value of all final goods and services produced in an economy.
Businesses, industries, and state policies drive this growth, which is ecologically and socially harmful. As businesses endlessly increase their output, they consume excessive energy and resources, pushing us beyond planetary boundaries in areas like land use, water use, biodiversity loss, and pollution. Much of this activity doesn't address core human needs, leading to wasted resources. Moreover, endless growth often prioritises profit over human well-being, raising prices and cutting costs, which weakens social resilience.
However, by refocusing on meeting core human needs as outlined in the social foundation of the Doughnut Economics model (Figure 16, Section 1.3.4), businesses can find a purpose that truly serves humanity. Growth will no longer be aimless, but directed toward fulfilling essential human needs. Additionally, businesses can aim for sufficiency, determining the level of output needed to meet their purpose. Combined with actions to regenerate Earth’s systems, focusing on sufficiency can help keep business activities within the planetary boundaries of the Doughnut Model.
Figure 16. The Doughnut Economics model showing the “safe and just space for humanity” (Credit: Kate Raworth and Christian Guthier CC-BY-SA 4.0)
Which Unifying Patterns of Nature are related to the move from endlessly and aimlessly growing to being needs-based and sufficient?
How can businesses (re)design themselves to be regenerative?
How can businesses (re)design themselves to be regenerative?
To move to regenerative economies, businesses need to reconsider their deep design (Figure 17).
Figure 17. To move to regenerative economies, businesses need to reconsider their deep design
Move green slider to see second image.
(Credit: Doughnut Economics Action Lab, CC BY-SA 4.0)
Based on Marjorie Kelly’s research, the Doughnut Economics Action Lab offers a framework for redesigning businesses to meet human needs within planetary boundaries across five key areas (Figure 18):
Figure 18. The five design elements to reconsider for business transformation
(Credit: DEAL, CC-BY-SA 4.0)
purpose: Why does the business exist? How is its purpose visible in its products, communication, culture, and operations? How can the purpose be strengthened by the other design elements?
networks: Who does the business engage with and rely on, both internally and externally? How does the business share value with its stakeholders?
governance: How are strategic decisions made, and who makes them? How does the business measure success, engage with stakeholders, and manage risk?
ownership: Who owns the business and what role do they have in managing the operations? What are their expectations for impact or profit?
finance: From whom does the business get funding to start and grow? What do those financiers expect in return for their money? How does the business use its profits?
These five areas are explored in Sections 3.3.2-3.3.5. Once you've reviewed them, you'll be ready to critically assess the businesses you interact with and consider how they might be redesigned to become more regenerative.
Activity 3.3.1
Activity 3.3.1
Concept: Regeneration
Skills: Thinking skills (critical thinking)
Time: varies, depending on the option
Type: Individual, pairs, group?
Option 1: Exploring tensions in Patagonia’s business practices
Time: 40+ minutes, depending on how much time students get to research - more research and/or reporting out may need to be done in a second lesson
In 2011, the clothing firm Patagonia ran an advertising campaign (Figure 19) called “Don’t Buy this Jacket.” The ad appeared around Black Friday, a day in November that is traditionally a heavy shopping day in the United States.
Patagonia explained that the purpose of the campaign was to raise awareness of the role of excessive production and consumption in damaging the planet, and to encourage its customers to think twice before purchasing its products. Ironically, the ad may have had the opposite impact, as sales data seemed to indicate an increase in Patagonia sales in response to the campaign.
Since 2011, Patagonia has taken a number of other steps to become a more regenerative business.
Read Patagonia’s explanation of the “Don’t Buy This Jacket” campaign and discuss the tensions of being a clothing business that recognises its negative impact on the planet. This could be done with a partner, small group, as a whole class or through individual written or audio reflection.
Research the steps that Patagonia has taken with regard to its purpose, networks, governance, ownership and finance to try to move in a regenerative direction.
Have there been criticisms of Patagonia’s approaches?
Share the information you find with others. Hold on to the information about Patagonia and revisit it as you explore sections 3.3.2-3.3.5 on the five elements of Doughnut Design for Business.
Figure 19. Patagonia’s campaign to reduce clothing consumption - what tensions does this create for the business?
(Credit: Patagonia)
If you need a jump start on the research, you can click the arrow below to reveal some helpful sources.
Patagonia’s own website (Difficulty level: easy)
A letter from Yvon Chouinard explains Patagonia's decision to change ownership structure (Difficulty level: easy)
Better brands: Is Patagonia sustainable? (Difficulty level: easy)
Patagonia Proves the Success of Sustainable Corporations (Difficulty level: medium)
Patagonia’s Greenwashing Ignores Workers and Won’t Solve the Climate Crisis (Difficulty level: medium)
Option 2: Discussion - Should we frame regenerative business practices as a win-win?
Time: 40+ minutes - less time if students split up the reading, but a teacher would need to divide it up logically (it’s well organised) and assign groups
A 2022 research paper/presentation called The Making of Long-Term Capitalism from the investment firm BlackRock claimed that socially and ecologically positive business practices, what it calls ‘long-term capitalism’, are a win-win strategy for all stakeholders, including shareholders.
Read/skim the report - what are its main points? You could split up the reading work among several groups and then share your insights with other students.
What is BlackRock’s argument about how both shareholders and other stakeholders can benefit from ‘long-term capitalism’? To what extent is this mutual benefit possible if businesses keep goals about profit maximisation?
To what extent might arguments around resilience help businesses understand the need to benefit more stakeholders, as part of its fiduciary duty?
Ideas for longer activities and projects are listed in Subtopic 3.5 Taking action
Checking for understanding
Checking for understanding
Further exploration
Further exploration
How the Doughnut calls for the redesign of business - At TEDxBath, Doughnut Economics Action Lab Business Lead Erinch Sahan explains why business as usual is holding back the transformations we need to meet human needs within planetary boundaries. He makes the case for business (re)design with the five elements outlined in this section. Difficulty level: easy
Doughnut design for business case studies - a set of case studies of real businesses using regenerative business design. These can be used in the classroom to help students apply their understanding of the five design elements in real cases. Difficulty level: easy/medium
Capitalism: Scene on Radio, Season 7 - A fascinating podcast series tracing the origins and history of capitalism, its impacts and alternatives. All the episodes are well worth listening to and making space for in your course, but the ones most relevant to this text section are (Difficulty level: medium):
Patagonia - A global clothing and outdoor equipment manufacturer that is exploring transformative business design, with all its tensions.
Ellen MacArthur Foundation - the organisation’s website has excellent resources to further explore strategies and examples of circular economy around the world. The website is well worth exploring. Difficulty level: medium
They recently produced three short videos to address each of the three circular economy principles. Difficulty level: easy
Ask Nature - a website has an amazing list of biological strategies that can be used to apply nature’s forms, functions and processes to a design challenge. Difficulty level: easy-medium
Biomimicry Toolbox - a resource from the Biomimicry Institute with great support materials to learn more about biomimicry. Difficulty level: easy-medium
Youth Design Challenge - a yearly design competition for secondary school students where you can design a solution to solve a problem using biomimetic principles. Difficulty level: easy-medium
The Story Behind the Nine-Year-Old New Yorker Cartoon That Defines Our Climate Moment - This article is an interview with the cartoonist Tom Toro who drew the famous cartoon in Figure 13 from this section. Toro discusses how the cartoon was made and what its impact has been since its publication more than a decade ago. Difficulty level: easy
Sources
Sources
Biomimicry Institute. (n.d.). Biomimicry Toolbox. https://toolbox.biomimicry.org/
Doughnut Economics Action Lab (March 2024). Doughnut Design for Business DEAL’s guide to redesigning businesses through Doughnut Economics – Core workshop Version 1.2. https://docs.google.com/presentation/d/1x8flVhi7JKRRzQClrJnlGkdjd7TpIGXeQiVMQotIH0Q/edit?usp=sharing.
Ellen MacArthur Foundation. It’s time for a circular economy. https://www.ellenmacarthurfoundation.org/
Kelly, M. (2012). Owning our future: The emerging ownership revolution. Berrett-Koehler Publishers: Oakland.
Kelly, M. (2013). The architecture of enterprise: Redesigning ownership for a great transition. The Good Society, 22(1).
Patagonia (Nov. 25, 2011). “Don’t Buy This Jacket, Black Friday and the New York Times.” https://www.patagonia.com/stories/dont-buy-this-jacket-black-friday-and-the-new-york-times/story-18615.html.
Raworth, K. (2017). Doughnut economics: seven ways to think like a 21st century economist. London: Penguin Random House.
Sahan, E. (2023, January). Doughnut Design for Business: Introduction to Redesigning Businesses through Doughnut Economics [Video]. YouTube. https://youtu.be/ViHwewmuArI.
Sahan, E. et. al. (2022, November). What Doughnut Economics means for business: creating enterprises that are regenerative and distributive by design. Doughnut Economics Action Lab. https://doughnuteconomics.org/rails/active_storage/blobs/redirect/eyJfcmFpbHMiOnsibWVzc2FnZSI6IkJBaHBBcXNpIiwiZXhwIjpudWxsLCJwdXIiOiJibG9iX2lkIn19--259000ee416367cd44b4e63d37637ded7c89f384/Doughnut%20&%20Enterprise%20Design%20-%20CET_DEAL%20paper%20V.1.0.pdf
Terminology
Terminology
Link to Quizlet interactive flashcards and terminology games for Section 3.3.1 The deep design of firms - in order of appearance
profit: total revenue minus total cost
profit margin: the percentage of profit earned by a company in relation to its revenue
income: money received from work or investments
household: a system where people living together care for each other and do domestic work, often termed the 'core economy'
investment: money spent for the enhancement of human or physical capabilities
shareholder: a person or organisation that ownes a share, or portion, of a business
regenerate: the process of restoring and revitalising something
economy: all the human-made systems that transfer and transform energy and matter to meet human needs and wants
governance: the process of overseeing the control and direction of something
finance: to provide funding for a person or organisation
biomimicry: when humans observe nature and imitate its forms, structures and processes to develop human systems and products
Nature's Unifying Patterns: universal patterns of function, processes or structure in nature
renewable resource: natural resources that can be regenerated in a human timescale
decompose: to break something into smaller parts, especially organic materials
carbon cycle: the movement of carbon between Earth's atmosphere, hydrosphere, biosphere, and lithosphere
limiting factor: a factor that limits a population or humans, other organisms or things
mutualism: an interaction between organisms where both organisms benefit
reinforcing feedback: a situation where change in a system causes further changes that amplify the original change which can lead to tipping points in a system
balancing feedback: a situation where feedback produces change in the opposite direction
biodegradable: able of being decomposed by bacteria or other living organisms and returning to Earth's biological systems
redundant: something that is repetitive, not necessary under normal circumstances, but useful in unusual circumstances
decentralised: located away from a center, especially having dispursed powers or functions
linear: in a straight line
energy: the ability to do work or cause change
matter: anything that takes up space and has mass
waste: unwanted or unusable materials
circular business model: business models that focus on keeping materials in use for as long as possible and minimizing waste
mutualism: an interaction between organisms where both organisms benefit
modular: consisting of separate parts that, when combined, form a complete whole
extractive: taking something from other humans or from nature without trying to replace it or avoid harm
distributive: when something is widely or evenly among individuals
market power: the ability of a firm to influence the price of their product in a market, as well as other market conditions
price: an amount that must be paid to access a good or service; can be money or some other medium of exchange
wage: payment for work
state: a system that provides essential public services, and also governs and regulates other economic institutions
tax: payment from individuals or organisations to the government, used to provide public infrastructure and services
infrastructure: large scale physical systems that a society needs to function (roads, railways, electricity networks, etc)
economic inequality: unequal distribution of income and opportunity between different groups in society
social cohesion: the extent to which people in society feel connected to one another and share common values
resilient: able to recover after a disturbance
stakeholder: a person who has an interest in or is impacted by some activity
living wage: a wage that is high enough for a person to cover their living expenses
care leave: time off of paid work used to care for others; can be paid or unpaid by the employer or state
economic growth: an increase in the total value of goods and services produced in a period of time
gross domestic product (GDP): the total value of all goods and services produced in an economy in a time period
planetary boundaries: the limits of Earth systems to absorb the impact of human activity and continue to function
biodiversity: the variety of living organisms on Earth
pollution: the presence of a substance that has harmful effects on the environment
social foundation: human needs that need to be met for human survival and wellbeing
Doughnut Economics model: a model for sustainable development shaped like a doughnut, combining the concept of human needs with planetary boundaries
sufficient: when there is enough of something
fiduciary duty: the duty to act in a way that will benefit someone else financially
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