Conscious Capitalism is a way to look at business through the prism of creating value for multiple stakeholders that a business impacts: its customers, employees, suppliers, communities, partners, and the environment, as well as investors and owners.
This new paradigm is in contrast to the conventional view of business that is primarily driven by the need to maximise only shareholder value, mainly through profit maximisation. The conventional operating model has dominated economic thinking over the twentieth century, and largely motivated many of the high profile corporate collapses we have witnessed, including Enron, WorldCom, Bear Sterns and others. At the core of these collapses has been an unrelenting focus on maximising short-term profits at the expense of long-term value creation, underpinned by organisational cultures that encourage (and actively promote) such focus, questionable ethics and processes, and business leadership corrupted by selfish greed and a lack of care for the wider impacts of its decisions.
But we are in a stage of rising consciousness across the world. Humans are finally recognising the impact there are having on the fragility of our environment and other species that inhabit our precious planet, and that some of these impacts may have irreversible consequences for our well-being, even our survival. Whether we, as a species, are fully conscious enough to respond in a co-operative, trustful, co-ordinated and impactful way to the urgent environmental and social issues we face is another question. Can our individual actions, our business models, our government policies, and our communities collectively adapt and evolve to a future that can no longer accommodate the way we have done things before?
As part of this rising awareness is a growing understanding of the role of business, and the critical way the corporate sector impacts our pressing environmental and social issues. One key indicator of this increasing consciousness is the growth of social enterprises, shared value business models, B Corporations (which my business Whole Kids is one of the first in Australia to be certified), and the Conscious Capitalism paradigm.
So what is Conscious Capitalism?
In John Mackey and Raj Sisodia’s book “Conscious Capitalism”, this new paradigm is “not about being virtuous or doing well by doing good [which is the basis of most corporate social responsibility programmes]. It is a way of thinking about business that is more conscious of its higher purpose, its impacts on the world, and the relationships it has with its various constituencies and stakeholders. It reflects a deeper consciousness about why businesses exist and how they can create more value”.
Conscious Capitalism has four components or tenets:
Higher purpose and core values
Conscious culture and management
Over my next posts I’ll dive deeper into these four tenets and share some insight into how we live each of them in my business Whole Kids, as well as share stories from other conscious businesses leading the way.