I love a good food analogy to explain a complex concept. Phrases like “I bit off more than I could chew”, and “we’re cherry picking the data”, or “you’re comparing apples to oranges.” are a daily part of my vocabulary. So when I heard of a book called “Doughnut Economics” by Kate Raworth, I was immediately curious how a sweet fried food could relate to the dynamics of resources in society. My instinct led me to a parallel proposition: how might “Doughnut Leadership” enable teams and companies to grow, without sacrificing sustainability?
For those of us who grew up on Adam Smith and the supply-demand equilibrium, “Doughnut Economics” offers a more contemporary theory of a thriving economy. Different from the revered principles of neoclassical economists like Smith and Pareto, Kate Raworth posits that GDP (gross domestic product) is a metric that is no longer serving us as a primary measure of growth. She presents a “doughnut” view, where our goal is to live in the sweet interior of the doughnut (sounds delicious so far!). Her theory is that the hole is not where we want to be; where homelessness, lack of education, gender and racial inequality, violence, and food scarcity are rampant.
Unfortunately, many people in the world are in that hole today. However, for wealthier nations like the USA and China, more people are at risk of obesity than malnutrition. And while poverty is still a reality for many, even in these wealthy countries, the GDP per capita is not low. In fact, the severe inequality and environmental damage caused by market growth in wealthy countries is a significant risk to the population.
Society has moved beyond the sweet interior of the doughnut, and onto the cold plate of negative externalities (where many countries are now, Raworth argues). Metrics like GDP and other measures of wellbeing, might help us measure whether a nation is “in the hole” or not. But they fall short at assessing whether a society has gone beyond the doughnut and is threatening sustainable living for all of us.
I found the visual of the doughnut really compelling in a leadership context as well. As I’ve coached leaders looking to maximize their team and personal performance, we spend most time on the foundational questions: How do you build a bench of stellar leaders? What are some techniques to effectively hold yourself and others accountable? How might you create a culture of effective feedback? What does it look like to cultivate psychological safety? How might you lead with purpose and set clear & measurable goals? These are all incredibly important questions: they help leaders, teams, and companies get out of the hole, and into the sweet, soft, doughnut interior!
However, leaders, teams, and companies spend far less time exploring how to stay in the sweet interior of the doughnut, without overshooting away onto the plate. Questions like: how might I grow my business metrics, without hurting the planet? How might I hold my team and myself accountable, while ensuring clear boundaries? How might I deliver value to shareholders, while holding a firm bar on spreading misinformation? Similar to GDP, maximizing shareholder value and business / product growth doesn’t afford the nuance of holding leaders and teams accountable to these goals. So all too often, preventing “overshooting” outside of the donut becomes a “nice-to-have” for leaders and teams. The kind of investment that might feel good and virtue signal. But will only matter if growth, the metric that matters, is impacted. Hence leaders and teams who overshoot the sweet doughnut are less likely to feel short-term consequences, as long as growth is up and to the right.
How might we craft success measures to help us thrive within the donut? Here are some ideas:
- Growth in sales, with a cap on carbon emissions by team members (or even incentives to reduce)
- Impactful product deliverable metrics, with a maximum number of employee hours a day online (or other ways to require “rest time” while also holding teams accountable for impact)
- Employee and customer satisfaction and retention, across all demographic vectors (with weighted averages reflecting the general population of the community).
What ideas do you have to better assess if leaders, teams, and companies are staying in the doughnut? Comments welcome.