Conscious Capitalism

I have been watching a movement develop over recent years called ‘conscious capitalism’ or ‘conscious business’.  It provides a different take on what it means to be a ‘social enterprise’.  The idea is being pioneered by amongst others, John Mackey, CEO of Wholefoods Supermarket.  In a recent speech he says:

A Conscious Business is one which has two major attributes that define it:

  1. It has a deeper purpose beyond only making profits. Just like individual people by following their hearts can discover their own sense of deeper purpose, so can the business enterprise. I believe that great businesses have great purposes that inspire them to higher levels of success. Think for a moment about some of the greatest businesses in the world and ask yourself whether they exist to fulfill a greater purpose beyond only maximizing profits. Certainly Apple does, driven by its intense desire to create “insanely great” technology which transforms our lives in positive ways. Clearly Google does too with its passion for discovery and desire to operate an ethical company. One of the best examples in the world is Grameen Bank in Bangladesh founded by 2006 Nobel Peace Prize winner Muhammed Yunus, which exists to end poverty in Bangladesh and throughout the world. Every business has the potential to discover and actualize its higher purpose—it has the potential to become more conscious.
  2. The Conscious Business also understands the interdependency of all of the major stakeholder groups—customers, employees, investors, suppliers, communities, and the environment—and the business is managed to consciously create value for all of these major stakeholders. Instead of viewing the stakeholders in terms of win-lose relationships with conflicts of interest dominating their interactions, the Conscious Business understands that there is a harmony of interests between the stakeholder groups and that by working together greater value can be created for all of them. At Whole Foods we understand that management’s most important job is to make sure the team members are well trained and happy at their work. The team members in turn understand that their job is to satisfy and delight the customers and happy customers result in happy investors through the prosperity of the business. A virtuous circle is created with all of the stakeholders flourishing together.

Who will create the Conscious Businesses of the 21st century—businesses that have deeper purpose and are managed consciously to create value on behalf of all of the stakeholders?

John Mackey, May 2008

This feels to me like a much more coherent, honest and powerful approach to making business work for the planet than cleaving it along  ‘social enterprise = good; for profit = bad’ divide.

Of course words are relatively easy (although John Mackey has found that words have got him into lots of how water in the past.  We have to judge the movement by its achievements.  But I am hopeful.

You can read a much fuller paper by John Mackey called ‘Conscious Capitalism’ here.

Comments

  1. While I agree “Conscious Capitalism” is a positive concept, there will be a tremendous amount of pressure on a business with traditional shareholders to maximize shareholder value, regardless of the company’s philanthropic ideals.

    The leadership team may believe in balancing the wants and needs of all stakeholders, but it will be much easier to maintain that balance if safeguards are written into the business and potential conflicts of interest are eliminated from the beginning, even those heretofore consider inherent to modern day capitalism.

    This is Yunus’ point when he defines a “social business” as offering no dividends (profits are re-invested in the expansion of the business itself). In a social business, shareholders can expect no financial return. There are no stock market strings attached that could undermine the business’ principles, nor compromise its focus on its social goals.

    The broad concept of conscious capitalism is good for provoking thought and discourse, but it’s only when we put precise business definitions where our hearts are pointing that social-minded enterprises can be effective in the long term.

    • Indeed there is a legal obligation on managers in a listed company to maximise return for shareholders. Whether managers seek to maximise in the short term or the long term is the issue.

Speak Your Mind

*

Follow

Get every new post delivered to your Inbox

Join other followers: