Are You a Conscious Capitalist?
It’s time for capitalism to find a higher purpose.
If you haven’t studied conscious capitalism, you should. Doing so helped me answer a question—actually, the question—that ran through my mind for years while working as a leader in a large corporation: Does it pay off in the long term to focus almost exclusively on improving financial performance, all too often to the detriment of employees, vendors, and customers? My intuition told me that this was no way to run a business. And it turns out that my gut was right.
Companies with a single-minded (and simple-minded, I must add) focus on maximizing profits find that, over time, revenue and profit growth become increasingly more difficult to achieve. Eventually, disregarded employees become disengaged and will mistreat customers who, in turn, will take their business elsewhere. In today’s world, customers have the information and power to make or break a business, and employees expect more from their jobs than just a paycheck.
Conscious capitalists focus on a higher purpose—to have a positive impact on the world, through the products and services they deliver and the value they create for their stakeholders. The four principles of conscious capitalism—purpose, stakeholder orientation, conscious leaders, and conscious cultures—are practiced in well-known and revered companies such as Whole Foods Markets, Patagonia, Tata Group, Toms Shoes, Medtronics, and TDIndustries. These companies have figured out how to be fierce competitors and generate superior financial performance while treasuring their employees and delighting their customers without destroying the planet.
A good place to start learning about the concept is the book Conscious Capitalism, penned by John Mackey, cofounder and co-CEO of Whole Foods Market, and professor and author Rajendra Sisodia. The authors make a convincing argument that capitalism is not inherently evil, but that over time, it has lost its way. They write that capitalism is the most “powerful system for eliciting, harnessing, and multiplying human ingenuity and industry to create value for others” as long as it is “grounded in an ethical system based on value creation for all stakeholders.” Capitalism approached consciously is “good because it creates value… is ethical because it is based on voluntary exchange… is noble because it can elevate our existence and… is heroic because it lifts people out of poverty and creates prosperity.”
Mackey and Sisodia believe that financial performance doesn’t need to suffer for conscious capitalism to thrive, and that superior financial results are an outcome of businesses being run in a conscious manner. To support this thesis, they present research that demonstrates that conscious businesses outperformed unconscious ones, by a “nine-to-one ratio” over the ten-year period studied.
While reading the book, I relived the three years I worked with Whole Foods Market as a leadership coach. Anybody who has worked with the company knows that its “declaration of interdependence” is more than just wall art. The firm’s culture has been extensively studied by numerous academics, but the published words just don’t seem to adequately convey what it feels like to work in an organization that is completely aligned around purpose, common values, and an operating system that paradoxically encourages competition within cooperation, delivers standardization and innovation through empowerment, and maintains high standards of performance and accountability while providing job security.
For me, the book served as a catalyst to coalesce ideas that I have been pondering for more than a decade. By the time I finished reading it, I became a card-carrying conscious capitalist. This was rather a seismic shift, given that I was educated and have worked in decidedly unconscious-capitalist environs. In the early 1980s, one of the prevalent mantras was to maximize shareholder value. And for the next 15 years, I based my leadership decisions largely on what was rewarded, not what was right.
But in 1998, I decided that robbing the Peters (employees, vendors, the environment, and customers) to pay the Pauls (investors and senior executives) is a form of leadership malpractice. As leaders, we can and should do better. So, I opted out of the unreal “real” world of business to provide the type of care and concern for employees that they deserve and desperately desire but do not typically receive within their workplaces.
“I decided that robbing the Peters to pay the Pauls is a form of leadership malpractice.”
In addition to the book, Mackey and Sisodia founded a non-profit group called Conscious Capitalism Inc., which aims to transform leaders, businesses, and industries by cultivating theory and practice through events, presentations, publications, and social media. The group, currently led by former Trader Joe’s president Doug Rauch, hosts two conferences a year with local chapters founded to help further the cause.
This year I attended my first Conscious Capitalism conference. The agenda drilled down on the four principles with discussions about various subtopics, including the power of purpose, systems thinking, community building, servant leadership, fueling human capacity, language and accountability, inspirational leadership, stakeholder engagement, building a values-based culture, metrics for the new enterprise, and the journey to conscious capitalism. As you would expect, the conference had a unique vibe: There were more women than men, attendees were friendly and inquisitive, and people were of one mind to help further the movement within their organizations. It was great to be, for three days a least, within the company of leaders committed to elevating business, and spending time exploring how to create and operate conscious businesses rather than debating why it is essential to do so.
Of course, learning about conscious capitalism is one thing—implementing it is quite another. Mackey and Sisodia admit that this type of fundamental philosophical change has to start from senior leaders who are passionate about purpose and unwilling to participate in zero-sum, scarcity-based thinking. As a leader in an organization, it’s your job to do what you can from where you are. Start by educating yourself about these concepts, but don’t stop there. After all, as the saying goes, awareness without action leads to apathy. If you can’t make change from within, vote with your feet and find a job with a conscious company. Or, if you are so inclined, take my lead and start one of your own.