Contributed to EO by Kent Gregoire.
Kent recently became the seventh certified Conscious Capitalism consultant globally. He helps organizations execute on their desire to do business for good by working with leaders to uncover hidden potential that benefits all stakeholders. EO asked Kent how entrepreneurs can embrace the tenets of Conscious Capitalism. Here’s what he shared:
Today, the richest one percent owns 44 percent of the world’s wealth, while 36 percent of the population lives in extreme poverty. Inequality is growing for more than 70 percent of the global population, exacerbating the risks of divisions and hampering economic and social development.
In this context, I believe that we have reached a clear outcome of the original version of capitalism, and it’s time for an evolution. I also believe that Conscious Capitalism offers an alternative that can align business with people, profit and the planet.
We are, indeed, in a moment in time when technology, opportunity and understanding converge toward a more caring way of conducting business at scale. The new wave of consumers is making different choices. Similarly, the new wave of entrepreneurs and executives is leading their companies with passion, purpose and conviction.
Conscious companies like Interface, Southwest Airlines, Patagonia and others are not an anomaly. Over time, I have witnessed what happens when leaders and teams discover their own greater purpose, and infuse that into their work.
However, one cannot mistake the PR veneer some companies are using in lieu of the profound and holistic change needed to build conscious businesses. To this end, the conscious capitalism movement provides a framework that includes four interconnected disciplines. Companies must be committed to each of these principles in order to be successful on this journey:
1. Higher purpose
While profits are essential to build a sustainable business, conscious capitalism focuses on purpose beyond the profit. When you operate with a higher purpose, your business purpose goes beyond making money. The purpose establishes a deeper meaning which, in turn, inspires and engages employees, customers and other stakeholders.
Example: In 1994, Interface, a carpet company that relied heavily on petroleum-based products, pivoted and launched their mission entitled “Beyond Zero.” Since then, they reduced their carbon footprint by 95 percent and have built an operating model designed to go beyond minimizing environmental harm to actually maximizing environmental benefits, pulling carbon out of the atmosphere and locking it away in its materials and products.
2. Stakeholder orientation
Conscious companies operate with their entire business ecosystems in mind. They concentrate on optimizing equal value for all of their stakeholders without tradeoffs. This includes customers, employees, suppliers, shareholders, society at large and the environment. In turn, strong and engaged stakeholders lead to a healthy, sustainable, resilient business, creating a win-win-win proposition for all.
Example: In 2009, Southwest Airlines decided to go against industry standards that were shifting toward fees for checked luggage. What was pilloried by analysts at the time as a missed opportunity to provide much-needed cash for the company, proved to be a smart and profitable decision that resulted in both customer retention and attraction.
3. Conscious leadership
This is the idea that conscious leaders understand and embrace the higher purpose of business and focus on creating value for, and harmonizing the interests of, the business stakeholders. Driven primarily by service to the firm’s purpose, rather than by power or money, conscious leaders inspire, foster innovation and transformation, and bring out the best in those around them.
Example: Tony Hsieh, the late founder and CEO of Zappos led with a customer-centric business approach that set Zappos apart from most other online retailers. Zappos offers free shipping and returns, as well as an accessible and effective customer service department. The caring culture he developed also points to his genuine concern for stakeholders. Hsieh believed that happy employees make happy customers, and he saw his primary purpose as CEO to be doing what it takes to make both happen every day.
4. Caring culture
Conscious capitalism contributes to a culture of trust, care and cooperation among the company’s employees and all other stakeholders. This is the social fabric of a business, which connects the stakeholders to each other and to the purpose.
The culture of conscious companies is very tangible to their stakeholders as well as to outside observers. A company that embraces a caring culture isn’t focused on increasing employee engagement (that’s a result): It’s about an environment in which employees express their creative mindset to solve worthy challenges for customers and stakeholders.
Example: Barry Wehmiller, during the long tenure of CEO Bob Chapman, has grown into a US$3 billion global enterprise. For the last couple of decades, Chapman and his team have been focused on creating a culture of trust and care that aims at helping people discover their gifts, develop their gifts, and be appreciated for doing so.
Conscious culture can be a tremendous positive force to foster human development and wellbeing. When companies make that the goal of their workplace, major performance and advantages accrue. Barry Wehmiller has employed this strategy to complete more than 110 acquisitions worldwide, nearly all of them profitable.
As demonstrated above, businesses that practice conscious capitalism benefit from a wide array of advantages including increased harmony between employers and employees, greater employee and customer satisfaction, enhanced stakeholder loyalty, and improvements in surrounding communities and environments. These advantages have long-term impact on the profitability and sustainability of these businesses showcasing why conscious capitalism is now becoming both a force for good and a key comparative advantage for companies.