Stakeholder engagement, value creation, sustainability and responsibility have become common in the parlance of contemporary business language and even sometimes practice; however the concepts of meaning, purpose, empowerment, and dare it be said selflessness, love and spirituality are not readily associated with capitalist business, until now.
John Mackey and Raj Sisodia, co-founders of the Conscious Capitalism movement, along with companies such as Whole Foods Market, Patagonia, Airbnb and a host of others, are putting human beings, creativity, innovation and social cooperation at the centre of business endeavour.
Conscious businesses exhibit four central characteristics – higher purpose, stakeholder orientation, conscious leadership and conscious culture. But is this just the latest buzzword – following a host of predecessors e.g. triple bottom line (TBL), corporate social responsibility (CSR), and corporate sustainability – merely another attempt to obscure the sometimes ugly truth that goes with the self-interested pursuit of profit or is it actually possible to reimagine a more conscious and human centred capitalism?
Having spent almost 15 years working as a professional in the field of corporate sustainability and most recently as an academic receiving my doctorate that examined how institutional investors can be more responsible with their investment decision-making, I must admit I am still disillusioned and have occasionally become cynical about the possibilities of capitalism ever being anything other than a machine that makes the rich richer and the poor poorer. This cynicism emerges despite my earnest and often idealistic attempts to believe there can be more to business than the short term pursuit of profits.
What my professional and research experiences have taught me is that despite the actions of well-intentioned individuals to encourage better corporate conduct in the pursuit of better social and environmental outcomes, the vested interests that guard the adage of profit maximisation are systemically and structurally far too deep. Well-meaning effort over the past few decades to make companies and investors more responsible and accountable, through the guises of social responsibility, sustainability or even long term investment decision making, have been either belittled as greenwashing or more pervasively have fallen victim to capitalism’s power to take on its critics and to constantly reform and regenerate itself. In other words capitalism seems to subsume the critical voices in a way that makes itself and the profit motive even stronger. This in turn maintains the status quo that serves the capitalist accumulation process. In the end, these ideas about corporate sustainability and investor responsibility that begun as a way to critique capitalism with the aim to change corporate behaviour become another means to defend the bottom line.
But, it seems that there is now hope. The co-founders of the Conscious Capitalism movement, as they coin it, Raj Sisodia and John Mackey (Co-CEO of American food powerhouse Whole Foods Market) and the companies aligning themselves to the movement start from a different premise. They see business and capitalism as inherently good and as the means to raise living standards and provide opportunities for meaning, where people are the primary purpose and profits are a happy outcome of doing business. This is central to the first principle of Conscious Capitalism that business can be done with a higher purpose in mind which is much more altruistic than a view that only maximises profits. The second principle of stakeholder orientation argues that conscious businesses align to the interests of society, partners, investors, customers, employees and the environment and that they have a positive net impact on the world. Conscious leadership, the third principle, is where leaders are driven primarily to the service of the firm and are selfless. Such leaders lead by mentoring and inspiring. The creation of a conscious culture, the fourth principle, is one that is trustworthy, authentic, caring, transparent, and a place of integrity, learning and empowerment.
So there seems to be some striking similarities with TBL and CSR ideals but Conscious Capitalism claims to be different. Engaging with all stakeholders is central to one of the principles, but proponents of Conscious Capitalism argue it is a much more holistic and comprehensive approach to business. Rather than being ‘bolted-on’ to the existing profit maximisation logic (i.e. TBL and CSR), or the more recent push to integrate CSR into the dominant capitalist framework (i.e. integrated reporting), or indeed to shroud CSR with an economic logic (i.e. creating shared value); Conscious Capitalism is explicit in its vision of meaning, leadership, management and culture and the evolution of business to a higher level of purpose. For those interested in finding out more about the central tenets there are wonderful and noble ideas around treating every employee as a member of your family, and even having business embrace more feminine notions of love and care, and more, captured in the recently published tome by the two co-founders, Conscious Capitalism: Liberating the Heroic Spirit of Business and the soon to be released Everybody Matters: The Extraordinary Power of Caring for Your People Like Family by Sisodia (and co-author Bob Chapman).
And this is not about sacrificing financial returns as Sisodia’s own studies revealed that investors who used the Conscious Capitalism principles as their criteria for investment decision making outperformed the market over all time periods by a 14-to-1 ratio. Noting that these companies created much more than financial wealth but more contented staff, happy and faithful customers, innovative suppliers, thriving environments for healthy communities. In fact the need for profit is said to be universal for all businesses in a healthy market economy and capitalism, via voluntary exchange, has been more successful than any other system in lifting people out of poverty, improving quality of life and increasing life expectancy.
Despite my criticism of a capitalist system fraught with the Friedman paradigm of self-interest and profit maximisation, I have always admired its ability to distribute goods and services, and arguably raise living standards and provide opportunities. Conscious Capitalism does not try to hinder the ability to make profit but with a higher purpose in mind, a human centred approach and raising consciousness, it is about creating value and how the profit is made that counts. Is there finally a real possibility to transform free enterprise capitalism into a more conscious vehicle for human beings to prosper? I remain a critical optimist.
This article was originally published on The University of Sydney Business School’s website.
Image: BP Miller