January 17th, 2013 by Harvard Business Review Press
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:
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.