Conscious Capitalism: liberating the heroic spirit of business published on 15 January 2013

January 17th, 2013 by Harvard Business Review Press

(click book cover to go to publisher's website)

Capitalism has been villainised in some quarters because of a multitude of highly publicized corporate scandals and greedy misconduct by many major companies.

But, there is inherent good in capitalism—and if we all participate in it with higher consciousness, argue John Mackey and Rajendra Sisodia— we can renew its inherent power to improve both the lives of people and the long-term success of companies.

Conscious Capitalism: Liberating the Heroic Spirit of Business published by Harvard Business Review Press on 15 January 2013 by John Mackey, co-CEO and co-founder of Whole Foods Market, and Rajendra Sisodia, business professor and co-founder of the Conscious Capitalism Institute, tells the story of how to do this.

The book is in part a personal memoir of John Mackey’s own awakening as a capitalist determined to do good, a bold defense and reimagining of capitalism and a blueprint for a new system for doing business that is grounded in ethical consciousness.

In 1981, Austin’s worst flood in history almost bankrupted the humble natural foods store that would grow into Whole Foods Market, an $11.7 billion Fortune 500 company that’s now the world’s leading retailer of natural and organic grocery products.

After the flood, team members, customers and neighbors pitched in to clean up the mess and more than a hundred suppliers resupplied them on credit.

This inspirational, watershed moment taught John Mackey a lesson that would shape his lifelong leadership philosophy: do right by your stakeholders and they’ll do right by you.

Contrary to the views of its critics, capitalism, in the long run, is not a zero sum game of greed at the expense of others.

“Without consistent customer satisfaction, team member happiness and commitment, and community support, the short-term profits will prove to be unsustainable over the long term,” John Mackey and Rajendra Sisodia state.

Instead, capitalism can be a powerful system of exchange for mutual benefit.

To steer capitalism away from today’s growing trend of cronyism, the authors say we need to ground ourselves in “conscious capitalism”—a way of thinking about business that is more aware of its higher purpose, its impact on the world, and the relationship and interdependencies among its various stakeholders.

This new business paradigm is rooted in four key pillars:

• Higher purpose – “Business has a much broader positive impact on the world when it is based on a higher purpose that goes beyond only generating profits and creating shareholder value. A compelling sense of higher purpose creates an extraordinary degree of engagement among all stakeholders and catalyzes creativity, innovation, and organizational commitment. Purposeful companies ask questions such as these: Why does our business exist? Why does it need to exist? What core values animate the enterprise and unite all of our stakeholders?”
• Stakeholder integration – “Conscious businesses recognize that each of their stakeholders is important and all are connected and interdependent, and that the business must seek to optimize value creation for all of them. When conflicts and potential trade-offs arise between major stakeholders, conscious businesses engage the limitless power of human creativity to create win-win-win-win-win-win (or “Win6”) solutions that transcend those conflicts and create a harmony of interests among the interdependent stakeholders.”
• Conscious culture and management -“Conscious cultures naturally evolve from the enterprise’s commitments to higher purpose, stakeholder interdependence, and conscious leadership. While such cultures can vary quite a bit, they usually share many traits, such as trust, accountability, transparency, integrity, loyalty, egalitarianism, fairness, personal growth, and love and care.”By embracing the principles of Conscious Capitalism, businesses can bring themselves into close harmony with the interests of society as a whole and align themselves with the evolutionary changes that we humans have been experiencing.
• Conscious leadership – “Conscious leaders are motivated primarily by service to the firm’s higher purpose and creating value for all stakeholders. They reject a zero-sum, trade-off oriented view of business and look for creative, synergistic win-win-win approaches that deliver multiple kinds of value simultaneously. In addition to high levels of analytical, emotional, and spiritual intelligence, leaders of conscious businesses have a finely developed systems intelligence that understands the relationships between all of the interdependent stakeholders.”

The authors show how a different breed of conscious companies create positive impacts for all stakeholders—from customers and employees, to suppliers and the environment.

These companies invest money where it makes a real difference, such as high quality products or a great customer experience because they see their employees as valuable stakeholders, they create engaging work spaces and cultures, and offer generous benefits.

The examples the authors describe include such diverse businesses as The Container Store, Google, and Patagonia.

It’s no surprise, the authors point out, that companies that operate under this model have lower turnover, lower marketing and administrative costs, and higher profits.

When tradeoffs between stakeholders are eliminated, the entire system flourishes. And when reinvented to rest on the four key pillars of conscious capitalism, we will see capitalism evolve into its truest form, which will liberate businesses from the confines of a zero-sum game.

‘Conscious Capitalism’ shows aspiring leaders in any industry that it’s possible to create a profitable and successful business where all stakeholders win without compromising ethical consciousness.