They exist in the real world, by the dozens today but soon to be by the hundreds and thousands. Examples of such companies today include Whole Foods Market, The Container Store, Patagonia, Eaton, the Tata Group, Google, Panera Bread, Southwest Airlines, Bright Horizons, Starbucks, UPS, Costco, Wegmans, REI, Twitter, POSCO, and many others. In the decades ahead, companies such as these will transform the world and lift humanity to new heights of emotional and spiritual well-being, physical vitality, and material abundance.
Welcome to the heroic new world of Conscious Capitalism.
The Tenets of Conscious Capitalism
Conscious Capitalism is an evolving paradigm for business that simultaneously creates multiple kinds of value and well-being for all stakeholders: financial, intellectual, physical, ecological, social, cultural, emotional, ethical, and even spiritual. This new operating system for business is in far greater harmony with the ethos of our times and the essence of our evolving beings.
Conscious Capitalism is not about being virtuous or doing well by doing good. 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.
FIGURE 2-1
The four tenets of Conscious Capitalism
Conscious Capitalism has four tenets: higher purpose, stakeholder integration, conscious leadership, and conscious culture and management (figure 2-1). The four are interconnected and mutually reinforcing. We refer to these as tenets because they are foundational; they are not tactics or strategies. They represent the essential elements of an integrated business philosophy that must be understood holistically to be effectively manifested.
Higher Purpose
Business has a much broader positive impact on the world when it is based on a higher purpose that goes beyond only generating profits and creating shareholder value. Purpose is the reason a company exists. A compelling sense of higher purpose creates an extraordinary degree of engagement among all stakeholders and catalyzes creativity, innovation, and organizational commitment.11
Purposeful companies ask questions such as these: Why does our business exist? Why does it need to exist? What core values animate the enterprise and unite all of our stakeholders? Higher purpose and shared core values unify the enterprise and elevate it to higher degrees of motivation, performance, and ethical commitment at the same time. As the figure shows, higher purpose and core values are central to a conscious business; all the other tenets connect back to these foundational ideas.
Stakeholder Integration
Stakeholders are all the entities that impact or are impacted by a business. Conscious businesses recognize that each of their stakeholders is important and all are connected and interdependent, and that the business must seek to optimize value creation for all of them. All the stakeholders of a conscious business are motivated by a shared sense of purpose and core values. When conflicts and potential trade-offs arise between major stakeholders, conscious businesses engage the limitless power of human creativity to create win-win-win-win-win-win (what we will refer to henceforth as Win6) solutions that transcend those conflicts and create a harmony of interests among the interdependent stakeholders.
Conscious Leadership
You cannot have a conscious business without conscious leadership. Conscious leaders are motivated primarily by service to the firm’s higher purpose and creating value for all stakeholders. They reject a zero-sum, trade-off-oriented view of business and look for creative, synergistic Win6 approaches that deliver multiple kinds of value simultaneously.
In addition to high levels of analytical, emotional, and spiritual intelligence, leaders of conscious businesses have a finely developed systems intelligence that understands the relationships between all of the interdependent stakeholders. Their fundamentally more sophisticated and complex way of thinking about business transcends the limitations of the analytical mind that focuses on differences, conflicts, and trade-offs.
Conscious Culture and Management
The culture of a conscious business is a source of great strength and stability for the firm, ensuring that its purpose and core values endure over time and through leadership transitions. Conscious cultures naturally evolve from the enterprise’s commitments to higher purpose, stakeholder interdependence, and conscious leadership. While such cultures can vary quite a bit, they usually share many traits, such as trust, accountability, transparency, integrity, loyalty, egalitarianism, fairness, personal growth, and love and care.
Conscious businesses use an approach to management that is consistent with their culture and is based on decentralization, empowerment, and collaboration. This amplifies the organization’s ability to innovate continually and create multiple kinds of value for all stakeholders.
By embracing the principles of Conscious Capitalism, businesses can bring themselves into close harmony with the interests of society as a whole and align themselves with the evolutionary changes that we humans have been experiencing. Conscious Capitalism provides an ethical foundation that is essential but has been largely lacking in business. We believe that businesses should lead the way in raising consciousness in the world. The larger the company, the greater its footprint and therefore its responsibility to the world. Our friend Kip Tindell, cofounder and CEO of The Container Store, refers to this as the “power of the wake.”12 Just as a ship leaves behind it a large body of turbulent water, so too do individuals and companies leave a wake behind them. However, most of us are so focused on our destination that we never look around to appreciate the full impact we have on the world.
The Financial Performance of Conscious Businesses
Like all businesses, conscious businesses are subject to the discipline of the market, and they need to deliver strong financial results. Appendix A addresses the important issue of the financial performance of conscious businesses in detail, but here is a preview. In addition to creating social, cultural, intellectual, physical, ecological, emotional, and spiritual value for all stakeholders, conscious businesses also excel at delivering exceptional financial performance over the long term. For example, a representative sample of conscious firms outperformed the overall stock market by a ratio of 10.5:1 over a fifteen-year period, delivering more than 1,600 percent total returns when the market was up just over 150 percent for the same period.
As Bill George, former CEO of Medtronic and one of the foremost conscious leaders of our times, puts it, “Some people may interpret the phrase Conscious Capitalism to be soft. But it is not soft at all. It is tough; it is challenging. You’ve got to do both. You have to perform, and you perform for a purpose. It’s like a sports team. You really care about working together as a team, but at the end of the game, you still want to win.”13 Conscious businesses win, but they do so in a way that is far richer and more multifaceted than the traditional definition of winning, in which others must lose for someone to win.
Doing What Is Right Because It Is Right
Conscious businesses have a simple but powerful belief: the right actions undertaken for the right reasons generally lead to good outcomes over time. If we allow ourselves to become too attached to what the Buddha called a “cherished outcome,” we become more likely to engage in actions that seem to work in the short term, but may have harmful long-term consequences. Conscious businesses do what is right because they believe it is right.14 They treat all their stakeholders well because that is the right, humane, and sensible
