I'm working with AuthorsGlobe on some really interesting online Master classes which give people easy access to some of the most progressive business thought leaders of our time. The current series kicks off on November 10 with Raj Sisodia. He's a Professor of Marketing at Bentley University. A few years ago, as part of a long process of questioning traditional marketing and even fundamental business practices, and while writing his book "Firms of Endearment," Raj began the process that lead to his founding the Conscious Capitalism Institute.
I asked him a few questions to explain this exciting movement.
We define conscious capitalism as having four key characteristics:
- First, business can and should be done with a higher purpose in mind, and not just with a view to maximizing profits. A sense of purpose creates a high degree of engagement for all stakeholders, especially employees.
- Second, the business is explicitly managed for the simultaneous benefit of all of its stakeholders. We use the acronym SPICE to denote the stakeholders: Society, Partners, Investors, Customers and Employees. A conscious business aligns the interests of all stakeholders, so that what is good for one is good for all. Society is listed first for an important reason: businesses must ensure that they are on the “right” side of society, that they have a positive net impact on the world.
- Third, such businesses have conscious leaders, who are driven primarily by their loyalty to the firm's purpose, rather than being driven by power or money. They lead by mentoring, motivating, developing and inspiring people rather than through command-and-control or the use of so-called carrots and sticks.
- Finally, such businesses have some unique cultural characteristics. We represent them using the acronym TACTILE, which stands for Trust, Authenticity, Caring, Transparency, Integrity, Learning and Empowerment. The word tactile also suggests that the cultures of these companies are very tangible to their stakeholders as well as to outside observers; you can feel the difference when you walk into a conscious business versus one that is purely driven by a profit motive and just for the benefit of shareholders.
What's changed to make this important today?
Business as usual will not work because people have changed, and also because our collective sense of urgency about the need for radical change has never been stronger. As Tom Friedman wrote in the New York Times recently, "Mother Nature and Father Greed have hit the wall at the same time."
The world has changed significantly, especially in the past 20 years. What used to be acceptable in the past is no longer acceptable today. Think about it. 150 years ago, slavery was widely acceptable to a large number of people. 100 years ago, many thought it acceptable to deny women the right to vote. 75 years ago, colonialism was still widespread and generally accepted. 50 years ago, most people accepted segregation as a way of life.
As human beings, we did not stop evolving when we got up on our hind legs. Our evolution continued, but became more internally driven. As these examples illustrate, our consciousness about what is right and what is wrong is constantly evolving. The data also suggests that human intelligence has been rising at an average rate of 4% every decade for the past 70 to 80 years. This is known as the Flynn Effect.
Some of the greatest changes in society occurred about 20 years ago. The fall of the Berlin wall in 1989 triggered the collapse of communist regimes all over Europe, something that had been unthinkable just a few years before. This essentially ended the defining ideological debate of the 20th century between competing systems for organizing human societies. Capitalism and democracy decidedly won that battle, and the only question now was the type of free markets and democracy that worked best.
1989 was also the year in which, for the first time, there were more adults over the age of 40 than below the United States. The psychological center of gravity shifted into midlife and beyond, triggering a gradual but deep transformation of the zeitgeist towards a greater concern with meaning, purpose and other centeredness. We refer to this as the beginning of the “Age of Transcendence.”
In 1990, Tim Berners-Lee created the World Wide Web, an invention that would transform the world like no other, perhaps in our history. Within a few short years, the web ushered in an era of true information democracy, in which the average person had free access to more information more rapidly than the richest persons in the world had enjoyed previously. People became infinitely better informed, and were soon far better connected as well, through the web as well as through mobile technology. We now live in an era of almost total transparency, in which all corporate actions and policies become public knowledge, especially if they are controversial.
Taken together, all of these changes have resulted in a dramatically transformed landscape for business. The so-called feminine values of caring, nurturing, relationships and compassion are on the ascendance in most spheres of society. People today care about different things, are better informed, better educated and better connected than ever before. They are looking for different things from companies, in their roles as customers, employees, suppliers, investors and community members. However, most companies have not evolved to keep pace, and are still conducting business according to norms that were developed in a much different time.
Companies that operate according to the principles of conscious capitalism are far better attuned to the sensibilities and needs of people today. These companies create multiple kinds of wealth: social, economic, intellectual, ecological, cultural, spiritual and of course financial. Our research (reported in the book Firms of Endearment) found that such companies outperformed the market by a 9 to 1 ratio over a ten-year period, while paying their employees better, having profitable suppliers, paying taxes at a higher rate, providing great customer service, investing in their communities, and having a positive impact on the environment.
What companies or individuals are the best examples of being conscious capitalists?
Our book features 28 companies, 18 of them publicly traded. Outstanding examples include Whole Foods Market, The Container Store, Southwest Airlines, Costco, New Balance, Timberland, Wegmans, Trader Joe's, UPS, Starbucks and Google. A great example outside the US is Tata, one of the leading companies based in India. Tata has truly been a conscious capitalist for well over 120 years, always acting from a sense of higher purpose that puts society's needs as paramount and seeing profits as the natural outcome of meeting those needs in an effective and efficient manner.
What's an example of a company that's represents the opposite of a conscious capitalist company?
An easy example is British Petroleum, which has just gone through a very public and humiliating ordeal that has revealed how hollow its claims of being a responsible, environmentally sustainable company truly were. A company that is rapidly evolving towards greater consciousness is Wal-Mart. For a number of years after the death of Sam Walton, Wal-Mart became a relentless cost-cutting machine, squeezing its employees, suppliers and communities in order to eke out low prices for its customers and high returns for its investors. After a decade in which its stock price was virtually unchanged, the company has gradually started to better align itself with the value system that is increasingly prevalent today. Other companies that are transforming in a positive way include McDonald's and PepsiCo.
What will it take to make this a mainstream idea?
The business world, like many other spheres of society, is highly imitative. As they say, nothing succeeds like success. As conscious businesses continue to outperform their competitors, other companies will be forced to start emulating their business philosophy in order to survive. Our purpose in the Conscious Capitalism movement is to help thing about this change more rapidly and in a more conscious manner, so that companies understand what it truly takes to be an authentically conscious business and not just one that pays lip service to the idea.
Our mission at the Conscious Capitalism Institute (www.cc-institute.com) includes three elements: research, education and development. We will conduct research that will help improve our understanding of the principles of conscious capitalism and how they can be best implemented. We will develop educational materials (including cases, courses and simulations) that can be used to better educate the next generation of managers coming to our business schools. Finally, we are developing executive education programs to help current managers understand and implement this approach.
Our hope and dream is that one day soon, Conscious Capitalism will come to be seen as the "normal" way to do business. When that happens, we will be well on our way to creating a society that creates a rising level of well-being for all our citizens in a manner that is sustainable for the indefinite future.
What will people learn from listening to your master class?
Through the master class, people will understand how the world is changing, why businesses need to respond, the key elements of conscious capitalism, the impact of these on performance, and how companies can start the change process of becoming truly conscious businesses. They will understand that business transformation starts with individual transformation, and that they must embark on a journey of raising their own consciousness. They will leave with a new lens with which to view the world, and a new perspective on the kinds of companies they should look to associate with, as customers, employees, investors and community members.
What advice do you give your 3 children in terms of how they can support or contribute to this idea that's so important to you?
I have tried to get them to understand the consequences of conscious versus unconscious decision making in all spheres. By now, they are all pretty well indoctrinated into the philosophy of conscious capitalism. I am sure that when they look for a job, or perhaps one day when they start a business themselves, they will keep these principles in mind so that their own prosperity does not come at the expense of other people or the planet itself.
You can register here to participate in Raj's November 10 Master Class at Authors Globe. What a great way to have direct access to Raj, without ever getting on a plane.