By Muriel Arts, Executive Director Flow Foundation
Maybe the kingdom of Bhutan and its Gross National Happiness (GNH) can teach us a new leadership paradigm for happiness, sustainable value creation and impact.
‘Now more than ever, the world is faced with the worrying consequences of ecosystem degradation, potential catastrophic climate change, diminishing cultural diversity and a fundamentally flawed economic system. Unconscionable inequities, indebtedness, disempowerment of local communities, political instability, and conflict are some of the many other problems that make clear the need for change in direction’. Happiness and sustainable development report Bhutan 2016
Economic growth, GDP and its limitations
For a long time economic growth and a promise of modernization was seen as a way out of poverty and as a key to development. The expected effects of economic growth and modernization would be sophistication of technology, urbanization, high level of consumption and social and cultural changes. This meant that an increase of Gross Domestic Product (GDP) per capita or per income equals successful development for all. Unfortunately this dream did not come true and the supposed benefits of modernization and economic growth were largely an illusion. Economic growth does not necessarily mean that the standard of wellbeing and happiness increases, nor does it eradicate poverty fully. Although poverty has declined significantly the last years, now-a-days 836 million people still live in extreme poverty and approximately one in five persons in developing regions (circa 1.4 billion people) live on less than $1.25 per day.
On the other hand, excess consumption by richer people is rapidly depleting resources. To paint a picture: 20% of the world’s population presently consume 86% of its goods while the poorest 20% consume just 1.3%. The richest 20% use 58% of all energy and the poorest 20% less than 4%. 20% of the population produces 63% of the world’s greenhouse gas emissions while the poorest produce only 2%. 12% of the world uses 85% of the world’s water. The richest 20% consume 84% of all paper and have 87% of all vehicles, while the poorest 20% use less than 1% of each. [2]
We desperately need change, but where can we find it? Modernization assumes all countries follow the same linear development paths disregarding historical and political differences. Over time it becomes clear that this Western course of ‘modernity’ is not always followed by ‘other’ countries [3]. The problem with theories of modernization and economic growth, is that it ignores the importance of understanding local cultures, their political system and governance and the behaviour patterns on the micro level. There are initiatives that choose another direction. For example in Bhutan and their approach of Gross National Happiness (GNH) with societal and ecological happiness as a guiding view.
Bhutan, happiness and sustainable development
Bhutan is a country in southern Asia, which is landlocked between other countries; the giants India and China amongst others. The country has a population of 766.000 people[4] and is characterized by tall mountains, thick forests and tumultuous rivers. Geographically, Bhutan is located on the Indian and Eurasian tectonic plates, whose movements and collisions cause frequent earthquakes in the area. It also experiences other disasters such as landslides, forest fires, and floods from glacial lake outburst[5]. Politically seen, Bhutan is a kingdom and it transitioned from an absolute monarchy to a constitutional monarchy with a multi-party democracy in 2008. In 2013 the second democratic election process took place.
Economic growth and happiness
Bhutan is an interesting case, not only in the field of development studies, but also for organisations and businesses. It shows an highly relevant field of exercise for organisation and businesses that want to have a positive impact on their social and ecological environment. Officially Bhutan is still a low-income country, with one in four Bhutanese remaining in income poverty. Nonetheless the last 15 years its GDP has grown rapidly. “Bhutan’s poverty reduction record is unique (….) Starting from about the same level as that of the South Asia region in 1990, and with more than half of its population in poverty, Bhutan had managed to reduce the percentage of poor to a mere four percent by 2010, while the whole of South Asia’s poverty level had fallen to 30 percent.” (World Bank Report 2016). Although these figures are significant, it is important to note is that Bhutan does not only take economic growth into account when defining their development. The country has made it a mission to meet the Sustainable Development Goals, is the only carbon negative country in the world and makes the pursuit of national happiness the overarching goal of its sustainable development strategy. The Bhutan Government commits to improving the quality of life for its citizens through inclusive and sustainable economic growth, the conservation of the natural environment, the preservation of the country’s cultural heritage, and good governance. These four pillars are further elaborated upon in nine equally important domains of the GNH approach: psychological well-being, living standard, health, culture, education, community vitality, good governance, balanced time use, and ecological integration.[6]
Gross National Happiness, why?
The concept of Gross National Happiness (GNH) arose from shortcomings in the Gross Domestic Product (GDP) model. According to the GNH model the GDP is not unusable, but it has some important shortcomings. GDP is not an indicator of wellbeing; it shows how much the material economy grows, but it does not show what is exactly growing. This means, GDP does not distinguish between market economic activities that create benefit and those that signify decline in wellbeing. In other words; you might grow economically, but what are the consequences or the impacts of this growth on your social and ecological environment? It is shown that our planet’s resources are running out, poverty continues to exist, species are going extinct, and the climate is changing drastically. How can you run a successful business in a society that fails?
‘Leadership and learning are indispensable to each other’. John. F. Kennedy
The concept of GNH realizes that the problems the planet faces ask for a more holistic approach that focuses on the causes instead of symptoms [7]. GNH understands that the underlying cause is an issue of governance: the inadequacies of governance in addressing the ecological and social issues[8]. The issue that arises in this is that interconnectedness of the world makes it possible for companies to escape the forms of good governance. For example: richer countries have safety rules, minimum wages, social security, and restrictions on e.g. pollution. Globalization makes it easy for companies to shift to countries that lack these kinds of control over production. This increases exploitation, weakening human rights and environmental damage [9].
In this you can clearly see the inadequacies of governance in addressing the ecological and social issues. “The global architecture of global governance has been inadequate in addressing pervasive issues of rising inequality, social disruption, environmental degradation and continuing poverty”[10]. A company might grow, but what is the impact on the environment and all people related to and who are interdependent with the organisation? What is the bigger impact of your success? And what impact do you want to have? This does not only challenges organisations and business, it also challenges it leadership. Like the pressing societal challenges that affects the governance of Bhutan, societal challenges affect business continuity, in turn this affects the core processes of the business and directly challenges managers: What is expected from a manager or leader? How is our company perceived in the societal debate and the challenges facing society and what can I do about this as leader?
New leadership paradigms
Gary Hamel identifies the beliefs that business leaders hold in their minds as follows: “The biggest barrier to the transformation of capitalism cannot be found within the observable realm of org charts, strategic plans and quarterly reports, but rather within the human mind itself […..]. The true enemy of our times is a matrix of deeply held beliefs about what business is actually for, who it serves and how it creates value.” Along with Hamel, others suggest that the global problems have been created (and persist), because our leadership employs a flawed and increasingly outdated economic worldview, based on limited assumptions about the nature of economic, social and ecological reality and the drivers of human behaviour. These assumptions were derived from Newtonian physics and Darwinian biology, in which economy, society, environment and wildlife were seen as separate worlds that humans – the ‘fittest’ among competing species – hold dominion over in order to extract value from and utilize it for their human agenda’s. In this worldview, individuals and companies regard themselves as individual agents – homo economicus – who make their own rational choices in a relatively static and predictable context. We now know this is an outdated view and the challenges of our time ask for different mindsets and more up to date world views.
Out of our research a new leadership paradigm evolves and this involves a shift in multiple mindsets: from a more narrow short-term profit orientation toward a much broader view of longer-term sustainable value creation with multiple interdependent stakeholders. Probably the future leader’s most important capacity is the capacity to recognize the changing context with trends toward increasing complexity and interdependency among stakeholders. In addition, this type of leadership employs a long-term view, a sense of continuity, while exhibiting open-mindedness, moral consistency and courage , a high degree of self-knowledge and willingness to continually learn. In addition, leaders need to be equipped with advanced social and emotional skills to relate to and connect with multiple stakeholders, maintaining excellent relationship while navigating social tensions and paradoxes. Another crucial quality is to stimulate co-creation towards new innovative sustainable solutions in these relationships and to transform these creations into reality. In other words, future leaders need to possess a strong creative impulse and stamina. Finally, they need to be able to speed and scale up these innovative efforts so that they have a collective societal impact. This includes a commitment to embed sustainability initiatives into organizational structures and internal and external performance and value creation measurements.
‘This world is changing enormously. In any position in a company you need to work very hard on learning new skills every day, but you also need to unlearn some of the old skills from the past.’ Paul Polman, CEO Unilever
The 6 C’s of societal business leadership
We summarize these into six fundamental leadership capacities as six C’s: Context, Consciousness, Continuity, Connectedness, Creativity and Collectiveness. When all these six capacities are developed and dynamically balanced they generate a strong sense of empowerment and flow, capable of dealing with ever-increasing levels of uncertainty, responsibility and complexity. This process drives leaders’ sustainable vale creation performance. The good news is that most leaders possess these capacities, they need to be discovered, explored, stimulated and developed. To bring these capacities into focus for leadership development ask for a combination of gaining new knowledge, becoming consciousness of these six C’s and grow through experience, learning, collaboration and reflection. To make learning more easy and more fun we have given the six C’s easy to remember and recognizable names: the visionary, connector, grounder, do-er, wise and the learner.
Inner and outer happiness
The six C practice starts by training the mind (C of Conciousness), which allows the mind to become more calm and stable. These two qualities enable the mind to stay open and hence to observe and understand both the inner and outer reality more deeply and accurately. With regard to pursuing sustainable development, an open perceptive undistorted mind is indispensable. One can only perceive the shifts in the outer context when one has opened one’s mind. So sustainable business leaders can gain most by mastering the perfection of understanding outer and inner reality. The objective is to deal with reality in such a way that it serves as basis for creating long term sustainable value. Human minds that are capable of understanding and operating in accordance with inner and outer reality are bound to be more effective than those who are not. They work for the benefit of the company, customers and social and ecological change to create triple value, as we call it. We need to develop less self-centered and more compassionate ways of living in the world, but how do we do that? By devoting ourselves to the well-being of others, including the health of the earth’s ecosystems. Such leadership development are not distractions from personal practice but deeper and even more effective manifestations of it. Human leadership minds endowed with the perfection of seeing inner and outer reality clearly, are better placed in positions of sustainable leadership and their capability in creating prosperity, wellbeing and happiness for all.
Develop your societal business leadership skills and join our leadership development program in Bhutan. You can still join us on our March 18th 2017, click for more information.
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[1] Happiness: Towards a new development Paradigm, report of the kingdom of Bhutan
[2] Bhutan report
[3] Brenner 1998:10
[4] http://data.un.org/CountryProfile.aspx?crName=Bhutan#Social visit at 16-6-2016
[5] World Bank report Bhutan P1
[6] World Bank report 2016 and Report of the kingdom of Bhutan, Happiness: Towards a New Development Paradigm.
[7] Gross National Happiness Report P. VII
[8] Gross National Happiness Report P.17
[9] Gross National Happiness report P. 18.
[10] Gross National Happiness Report P.17