Conversation with John Mackey and Rajendra Sisodia
Co-authors of CONSCIOUS CAPITALISM
What is “Conscious Capitalism”?
Conscious Capitalism is a philosophy of doing business that suggests that business has a higher purpose beyond profits and that creating value for all stakeholders is the best way to create value for investors. Such businesses are led by highly conscious individuals who are passionate about the company’s purpose and are driven to serve. These businesses foster cultures that are based on trust, transparency and caring.
What’s wrong with capitalism and business today that we can change?
The two things that need changing are the narrative about capitalism and business in our culture, and the fact that most business people operate with a low level of consciousness about the true purpose and potential of business to create multifaceted value in the world. The existing narrative is that business and capitalism are based on selfishness and greed, but that works in the overall public interest because of the so-called “invisible hand” of the market. This narrative fails to capture the true value of free enterprise capitalism: that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence and it is heroic because it lifts people out of poverty and creates prosperity.
Does business deserve its bad rap?
We don’t think so. A few egregious examples of bad corporate conduct have created a broad negative perception about business that is simply not accurate. The vast majority of businesses are ethical and well-meaning. However, business people hurt themselves and their businesses when they adhere to a narrative that proclaims that the sole purpose of the business is to make profits for shareholders. This breeds resentment and envy. The real purpose of business is to create value for all stakeholders and thereby improve the lot of humanity.
In what ways can we do business differently to create a win-win for all instead of winning for a few at the expense of others?
If you look for trade-offs, you will always find them – that is guaranteed. But if you look for win-win synergies, more often than not you will find those too. Human creativity is essentially unlimited, especially when it is motivated by a deeper purpose than just self-interest. Conscious businesses are able to look at every decision through this lens and craft win-win solutions for their stakeholders.
How does Whole Foods create win-win value for all stakeholders?
Virtually everything that Whole Foods does creates value for all of our stakeholders. Let us take a simple example--selling organic produce. This creates value for our customers by providing them high quality foods that help nourish them, enhance their health and well being, and which taste great. This also creates value for our team members by helping provide them with jobs, benefits, good working conditions, and purposeful work. Our suppliers and farmers who sell us the organic produce benefit from their trade with Whole Foods which helps them to flourish. Selling organic produce helps our company to succeed financially and this creates value for our investors. As our company is financially prosperous we are enabled to be good citizens in our communities through philanthropy and voluntary involvement. Part of our profits is also taxed away by various governments, some of this money being used in constructive ways to help our larger communities. Finally, selling organic produce uses far less fossil fuels and chemical fertilizers and pesticides which lessens negative impacts on the environment. Customers, team members, investors, suppliers, communities and environment all benefit from their exchanges with Whole Foods.
In what ways can customers, not just business leaders, participate in conscious capitalism?
People everywhere are becoming more conscious, including in their role as customers. This means they understand and take responsibility for all the consequences of their actions and have a finer sense of right and wrong. Before selecting companies to buy from, customers should consider the totality of what the firm stands for. They are voting with their dollars every time they make a purchase, so they should choose wisely. Customers today are more intelligent, discerning, informed and connected than ever before and their standards are higher than ever. This affords them enormous power to impact corporate actions and reward the companies that are aligned with their value systems.
What are a few companies that practice conscious capitalism and in what ways do they do so?
Whole Foods does so by focusing on the health and well-being of people, the food system and the planet. The Container Store strives to make people feel happier by becoming better organized. Google has brilliantly organized the world’s vast amount of information and made it easily accessible and useful. Southwest Airlines has brought the freedom to fly to ordinary people.
What does a conscious approach to leadership involve? What are some examples of conscious leaders and why?
Conscious leaders combine analytical intelligence with high levels of emotional, spiritual and systems intelligence. They care deeply about the purpose of the company and lead by example. They are not command-and-control leaders and do not use “carrots and sticks” to motivate people. Instead, they mentor, motivate, develop and inspire others. Examples of such conscious leaders include Herb Kelleher of Southwest Airlines, Ratan Tata of Tata Sons, Kip Tindell of The Container Store and Howard Schultz of Starbucks.
How can companies embrace a conscious culture and yet be profitable at the same time?
There is no contradiction between a conscious culture and profitability. Conscious cultures are about trust, authenticity and transparency but they are also about accountability and learning. People in such cultures are largely self-organizing, self-motivating and self-managing.
What would you say have been the greatest challenges of running a conscious, purpose-driven business?
The biggest challenge is struggling against the negative narratives about business and capitalism that currently exist--that business is based on greed, selfishness, and exploitation and that it is all about money and profits. This mostly inaccurate narrative makes people cynical and distrustful about business and makes it more difficult to successfully communicate higher purpose and an integrative stakeholder philosophy because a large number of people just flatly refuse to believe it. It contradicts their mental model and so it is rejected it out of hand.
Isn’t business really just about profits and social good is for nonprofits and government to worry about?
Absolutely not! It is business, far more than governments and nonprofits, that elevates humanity and enables us to realize our potential. And businesses create far more than profits; they can also create intellectual, social, emotional, spiritual, cultural, physical and ecological value. Poorly run, uninspired businesses can also destroy all these kinds of value, including financial. Even governments and most nonprofits rely, ultimately, on the profit generated by businesses in order to fund their activities.
What will this book help people achieve?
It will help people recognize that business is the ultimate positive sum game. It will challenge prevailing mental models that see the interests of stakeholders as inherently opposed to one another. It offers people a clear roadmap to transform their own businesses and put them on a path of sustained value creation for all stakeholders, thereby ensuring their long-term success and continued relevance. If offers guidance on how entrepreneurs can embed these principles in the DNA of their businesses from the outset. Finally, it is a guide to personal growth and development for leaders at all levels in all sectors of society.
Why do you think the word “capitalism” was the #1 most searched word on Merriam-Webster’s website in 2012?
We think it is indicative of a real struggle in many people’s minds, to understand what capitalism really is and reconcile its positive impacts with what they see as some of its contradictions or “negative side effects.” It is said that fish are the last to discover water. Those of us who have been fortunate enough to be born in countries that cherish economic and political freedom sometimes don’t recognize or appreciate what we have. Capitalism is the greatest system for human cooperation and achievement ever conceived, yet so few of us truly appreciate its power and majesty.
How is “conscious capitalism” different from CSR (corporate social responsibility)?
The key difference is that CSR is often grafted on to an existing approach to business that is fundamentally out of harmony with the real needs of stakeholders. Many profit-driven businesses invest in CSR initiatives to compensate for some of the harm they may be causing some stakeholders as a result of their core business, or as a way of earning goodwill that is disconnected from that core business. Conscious companies are societally aligned to begin with; even if they don’t spend any money on philanthropy, they are still socially responsible.
What are some of the first steps anyone in business can start taking today to becoming more conscious?
It has to start with purpose. Leaders must begin by asking existential questions such as “Why does our company exist? Why does it need to exist? Why would it be missed if it disappeared?” The answers to such questions must come through the collective efforts of all of the company’s stakeholders, not just its leaders. Once the company has articulated a compelling and authentic purpose, it must work to cultivate a stakeholder mindset among its team members. This requires the cultivation of what we call a “systems mind” which is able to see the many interdependencies that exist between stakeholder interests. The company must appoint leaders who are passionate about its purpose, who are accountable and results-oriented while being caring and trusting.
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