There is a trend happening in office buildings around the world, a revolution jumpstarted by John Mackey and Raj Sisodia and their book Conscious Capitalism. Hoping to build a more cooperative, humane, and positive future, they believe that businesses should focus on a higher purpose, as well as making money; that they should focus on doing good, as well as avoiding red ink. When Conscious Capitalism.org was set up to help spread the movement, they needed a strong and like-minded leader, so they brought in this week’s guest, Alexander McCobin, as its CEO. (I’m so excited! He’s here from California!)
Although Conscious Capitalism may sound totally granola, it’s serious business. With Millennials looking for meaning both in the places where they work and the products they buy, companies that focus solely on profits are likely to lose both the war for talent and the war for customers. This is one of those “emerging trends” you’re going to keep hearing about on CEO Exclusive.
In Alexander’s mind, companies need to start looking at their impact both internally (among employees and stakeholders) and externally (clients/customers and the community) while creating a culture of service and giving. For him, it’s not good enough to just serve the customer. You should serve the planet, using your business as a “platform to do great things,” and “to elevate humanity.” Lofty goals for sure, but in his mind, totally achievable…and here’s how.
Making Money vs. Making a Difference
As I already pointed out, it’s all about the Millennials (isn’t everything these days?) Put another way, the trend in Conscious Capitalism clearly coincides with the emergence of a whole new work force, college age employees who have loftier ambitions than the mere doorway into the American Dream. A few episodes ago, ADDO Worldwide Co-Founder Kevin Scott made it very clear that the new generation of employees is looking for something more than a paycheck.
Citing a study by the UNC Kenan-Flager School of Business, he stated that 65% of Millennials are looking for “professional development.”They also want their career to reflect their own sense of social justice and core values. Scott said it best when he commented, “Millennials, they choose companies to do business with the way that previous generations chose charities. Meaning, when they work for a company or they spend their dollars, they want it to say something about who they are and what they believe.”
So, the new generation of workers want to feel like they are doing more in their job than pushing paper and keeping the corporate machine afloat. They want purpose. They want activism. They want to be involved in something that, not only pays the rent, but betters the planet. Naturally, such a change in corporate culture doesn’t come easy.
Conscious Capitalism is Not Corporate Social Responsibility (CSR)
Perhaps we should start with what Conscious Capitalism is not. It’s not philanthropy. It’s not sponsoring a local school event or offering an annual meet and greet. Both of those things are absolutely wonderful and may be part of your overall engagement strategy. But, Conscious Capitalism is more foundational. It’s the way you build your business, in addition to how it operates. It’s part of the corporate DNA.
Perhaps, this is why many seem to think that CSR (or Corporate Social Responsibility) and Conscious Capitalism are the same thing, or at the very least, branches from the same tree. But, as Xavier Smeardom points out in an article for the website ProBono Australia, there are major differences between the two.
“Conscious Capitalism is the engine that drives the car,” he writes, “while CSR is an optional extra (especially if you’re running a business with a “conventional economic” engine). Decisions that drive the engine of a conscious business are based on the philosophy’s four pillars (see below), whereas the practice of CSR is often subordinated to the primary goal of a corporation – that is, to maximize the financial return to shareholders.”
The bottom line vs. a better planet. Where have we heard (or read) that before? Most experts view CSR as an “afterthought,” a way for companies to act responsibly without making such a desire part of the actual corporate vision. “There’s nothing wrong with philanthropy or community service,” says McCobin, “those are great things. Think of conscious capitalism as a step further. It’s not about adding something onto what a corporation normally does. It’s how the business and the people in it make money and what the business is about.” The key for him is the discovery of a higher purpose, and the implementation of same. It’s just one of the Four Pillars of the Conscious Capitalism movement.
The Four Pillars of Conscious Capitalism
That’s right – thinking beyond just maximizing profit to the underlying value that the business is creating for society is the first of four tenants which encompass the main principles of Conscious Capitalism. As part of their corporate mission or credo, McCobin’s company reiterates the main points in Mackey and Sisodia’s book:
- A Higher Purpose – businesses do need profits to survive, and to fulfill this mandate, but they should not treat it as an ends in itself. It doesn’t mean you are perfect or great, just true to what you said you’re going to do.
- Conscious Leadership – it’s not just a question of analytical and emotional intelligence. A CEO needs systemic intelligence. And, even spiritual intelligence. (Yeah, that’s right.) They need to embody the values of the company and model how people should act within the organization.
- Conscious Culture – no matter how in-depth your strategic plan, or what your revenue model is like, how your people interact with each other is critical. It’s not just about what it is doing, but how the company is getting it done internally. The culture is what makes that higher purpose live and breathe in the everyday operations of the business.
- Stakeholder Engagement – any group or person your company touches (shareholders, investors, employees, customers, clients, the community, etc.) is important. And, they should not be at odds with each other. You can create win/win/win/win/win/win solutions if you practice Conscious Capitalism.
By applying these principles to the very reason your company exists, you will see a significant change, one that makes a difference all the way up the company’s chain of command and all the way down to the figures in the annual report.
You Can Build Your Business with Conscious Capitalism
Perhaps the biggest misconception is that being a Conscious Capitalist is contrary or incidental to financial success. When they hear about the idea of pursuing a “higher purpose” as part of the business, many fear the impact to the bottom line. But, there is more to Conscious Capitalism than being a “do-gooder.” Indeed, Forbes, as part of an overview of the topic, points out that too many CEOS are defining themselves “in terms of what they make rather than what they make possible.” A related article in Forbes makes it very clear that when you “put people over profits, the profits eventually catch up.”
“In Jim Collins’ book, Good to Great, we discovered that conscious capitalist companies outperform the market by several fold actually,” McCobin states. “It’s creating more profitable companies by taking into consideration a more nuanced perspective on how people bring themselves into the business.” Citing Nielsen’s “Global Survey on Corporate Social Responsibility,” Forbes again points to statistics which find “43% of global consumers (saying) they are willing to spend more for a product or service that supports a cause. And businesses are responding in kind. According to the 2012 IEG Sponsorship report, cause marketing programs in North America alone totaled $1.7 billion.”
For McCobin, this is the reason to be in business. “Few people start out just to make a lot of money,” he points out. “Many do it because they see some challenge in the world that they want to overcome or there’s something they are passionate about and they want to bring that into people’s lives and they develop a revenue model around it.”
Many of my guests and listeners have been practicing conscious capitalism—you may not have known there was a language for it, or that there are other like-minded leaders. Guess what? There are. Better yet, we are the future of business. And, the future is now.