What is Conscious Capitalism?

By Linda Fisher Thornton

What is Conscious Capitalism?

In last week’s post, I explored how Ethics Means Acting Beyond Self Interest. This week, I’ll explore the same question at the organizational level.

What are an organization’s ethical responsibilities? How is conscious capitalism a way to understand them?

Ethical Leadership is to the Moral Leader as Conscious Capitalism is to the Moral Company 

While ethical leadership is the term we use to describe what a moral leader does, conscious capitalism is a term that describes what a moral company does. According to BBC News E-Cyclopedia, “conscious capitalism stands for a more moral approach to what is often seen as ‘the dirty business of business.’” (Cited in Conscious Capitalism: Dirty Business No More by Ramla at NextbyRamla.Blogspot.com)

Conscious capitalism involves thinking beyond self-interests, demonstrating care for stakeholders at the global level, using a long-term time orientation and seeing the company’s role in the world through a systems view.

Taking A Systems View on the Moral Responsibilities of Business

According to Anne Federwisch,  Markkula Center for Applied Ethics, Santa Clara University in Corporate Moral Responsibility and The Ethics of Product Usage “… the idea of moral responsibility has been expanding over the years.”  While businesses that followed laws used to be considered “good,” there is now so much more that they need to do in order to be considered an ethical business.

According to John Mackey, CEO of Whole Foods, quoted in A Case for Conscious Capitalism: Conscious Leadership Through the Lens of Brain Science, by Pillay and Sisodia in the Ivey Business Journal, “Conscious Capitalism is a philosophy of doing business that incorporates the principles of higher purpose (beyond profit maximization), stakeholder interdependence (rather than shareholder centricity), conscious leadership (instead of command-and-control or “carrots and sticks”) and conscious culture (in place of bottom-line obsession).”

When we lead with conscious capitalism, we assume responsibility for our impact on global markets and quality of life in addition to our impact on local communities.

“Conscious Capitalism stresses the importance of viewing stakeholders as interconnected and interdependent. All stakeholders – employees, customers, suppliers, investors, and community members – are regarded as important in their own right (not just as a means to better business results).”

“Conscious Capitalism® is a philosophy based on the belief that a more complex form of capitalism is emerging that holds the potential for enhancing corporate performance while simultaneously continuing to advance the quality of life for billions of people. The conscious capitalism movement challenges business leaders to rethink why their organizations exist and to acknowledge their companies’ roles in the interdependent global marketplace. “

What is Conscious Capitalism? Conscious Capitalism, Inc., consciouscapitalism.org

In conscious capitalism, we don’t have to choose between caring about our business and caring about society. In an interview with Tom Palmer of Atlas Network, John Mackey explained that:

“A false dichotomy is often set up between self-interest, or selfishness, and altruism. To me it is a false dichotomy, because we’re obviously both. We are self-interested, but we’re not just self-interested. We also care about other people. We usually care a great deal about the well being of our families. We usually care about our communities and the larger society that we live in. We can also care about the well being of animals and our larger environment. We have ideals that motivate us to try to make the world a better place… I think that capitalism and business should fully reflect the complexity of human nature.”

What are the Benefits of Conscious Capitalism?

What are the benefits of thinking about and implementing business in a conscious way? How does conscious capitalism help businesses succeed in the global marketplace?

While conscious capitalism benefits people and communities, there are also clear benefits for the businesses that embrace this philosophy, including:

1. Better Financial Performance

“The pragmatic value of conscious capitalism is underscored by the fact that companies that adhere to these principles outperformed the market by a 9 to 1 ratio over a 10 year period.”

A Case for Conscious Capitalism: Conscious Leadership Through the Lens of Brain Science, by Pillay and Sisodia in the Ivey Business Journal

2. Relationships and Synergies for the Long Term

He (co-CEO John Mackey, Whole Foods) also spoke about the virtues of being generous with vendors, noting that cultivating strong relationships with suppliers pays off when times become difficult. “Business is not a zero-sum game,” he said. “It is in fact all about deriving value from synergies.”

Mark Hamstra, Whole Foods Cites Benefits of Conscious Capitalism, supermarketnews.com

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“Another result is long-term trusted relationships with suppliers, consistent with The Integrity Chain, which is more profitable for both parties.”

4 Tenets of Conscious Capitalism, ctsmithiii.wordpress.com

3. Stakeholder and Employee Engagement

“A compelling sense of purpose can create a high level of engagement by the stakeholders and generate tremendous organizational energy.”

Mark Hamstra, Whole Foods Cites Benefits of Conscious Capitalism, supermarketnews.com

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“The result of this is empowered employees who we know work harder, are more creative, care more and are responsible for driving greater customer experiences.”

CTSmithIII, 4 Tenets of Conscious Capitalism, ctsmithiii.wordpress.com

4. Shared Meaning and Purpose

“I’m absolutely confident that practicing the principles of Conscious Capitalism brings both a deeper sense of meaning and purpose to your employees (and customers), as well as higher financial returns in the long run. It provides an authentic context to the “story of us,” the fact that business is about relationships, about creating value and not extracting value from those relationships.”

Doug Rauch, former President of Trader Joes and CEO of Conscious Capitalism, Inc.  quoted in Conscious Capitalists Share Their Smarts, monkeydish.com

5. Increased Innovation and Trust

“The benefits far outweigh this challenge. Employee morale and engagement increase, innovation flourishes and the principles of your brand relationship with consumers, namely trust, is reinforced by living core values that align with your consumers’ own values. We feel a remarkable sense of duty and accomplishment in building a better business model and caring today for seven generations of tomorrow.”

 John Replogle, President and CEO of Seventh Generation, quoted in Conscious Capitalists Share Their Smarts, monkeydish.com

 Doing “Good” Is Its Own Reward

Conscious capitalism is the view that we, as business leaders, can make money and make the world a better place at the same time. This is not an unrealistic dream – this is a new way of leading that an increasing number of companies are choosing. And those leaders choosing conscious capitalism are finding out that the old saying is true – that doing “good” is its own reward.

Questions for Discussion:

1. Are we leading in ways that make us part of the global conscious capitalism movement?

2. In what ways do we enhance lives and communities in the course of our business?

3. How could we better demonstrate systems thinking and a long-term view?

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About The Author:

Linda Fisher Thornton is Adjunct Assistant Professor of Leadership for the University of Richmond School of Professional and Continuing Studies. She is also CEO/Owner of Leading in Context LLC, a consulting firm helping business leaders lead responsibly in a complex world.

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