it is also smart business practice to do so. They operate with a sense of higher purpose because that is what gets their people excited about coming to work. The leaders of conscious businesses care about service to others because that is ultimately what leads to fulfillment and value creation.
We never actually fully control outcomes in our lives, but in business, we have created a deep-seated illusion that we do. What we can do is learn to control our actions and reactions. Traditional businesses give their managers hard targets for metrics like market share, profit margins, and earnings per share. Such metrics confuse cause and effect. To achieve those numbers—which are just abstractions—managers often knowingly undertake actions that are harmful to stakeholders, including, ultimately, shareholders. For example, managers might squeeze their team members or their suppliers. These actions may deliver the desired numbers in the next quarter, but they also plant the seeds for much bigger problems in the future. This is what happened to Toyota a few years ago, when the company started to set numerical goals for sales growth and market share. Managers throughout the organization soon shifted their focus to meeting the numbers and away from creating safe and reliable cars. The result: a spate of quality and safety problems that greatly tarnished the hard-won reputation of the company.
The lesson is to focus on the things we can control, which are our actions and our reactions, and trust that the right actions will lead to positive outcomes, not always immediately but in the long term. The positive outcomes may not be exactly what we had in mind. Depending on the quality of our actions and external factors, they could be different but far better.
Conscious Capitalism Is Not Corporate Social Responsibility
A good business doesn’t need to do anything special to be socially responsible. When it creates value for its major stakeholders, it is acting in a socially responsible way. Collectively, ordinary business exchanges are the greatest creator of value in the entire world. This value creation is the most important aspect of business social responsibility.
The whole idea of corporate social responsibility (CSR) is based on the fallacy that the underlying structure of business is either tainted or at best ethically neutral. This is simply not the case. As we showed in chapter 1, free-enterprise capitalism has helped improve our world in numerous ways.
While businesses do not need to redeem themselves by doing good works in the world, there is nothing wrong with businesses focusing some of their attention on social and environmental challenges. Conscious businesses believe that creating value for all their stakeholders is intrinsic to the success of their business, and they consider both communities and the environment to be important stakeholders. Creating value for these stakeholders is thus an organic part of the business philosophy and operating model of a conscious business.
By contrast, firms that are primarily profit-driven tend to graft social and environmental programs onto a traditional business profit-maximization model, usually to enhance the firm’s reputation or as defensive measures to ward off criticism. Many such efforts are really about public relations and have rightly been dismissed as “green-washing.” What is needed is a holistic view that includes responsible behavior toward all stakeholders as a core element of the business philosophy and strategy. Rather than being bolted on with a CSR mind-set, an orientation toward citizenship and society needs to be built in to the core of the business.15 Table 2-1 summarizes the key differences between Conscious Capitalism and CSR.
TABLE 2-1
How Conscious Capitalism differs from Corporate Social Responsibility
| Corporate Social Responsibility | Conscious Capitalism |
| Shareholders must sacrifice for society | Integrates the interests of all stakeholders |
| Independent of corporate purpose or culture | Incorporates higher purpose and a caring culture |
| Adds an ethical burden to business goals | Reconciles caring and profitability through higher synergies |
| Reflects a mechanistic view of business | Views business as a complex, adaptive system |
| Often grafted onto traditional business model, usually as a separate department or part of public relations | Social responsibility is at the core of the business through the higher purpose and viewing the community and environment as key stakeholders |
| Sees limited overlap between business and society, and between business and the planet | Recognizes that business is a subset of society and that society is a subset of the planet |
| Easy to meet as a charitable gesture; often seen as “green-washing” | Requires genuine transformation through commitment to the four tenets |
| Assumes all good deeds are desirable | Requires that good deeds also advance the company’s core purpose and create value for the whole system |
| Implications for business performance unclear | Significantly outperforms traditional business model on financial and other criteria |
| Compatible with traditional leadership | Requires conscious leadership |
A Way Forward
Every human being is born relatively undeveloped, but holds the potential for virtually unlimited personal growth. Likewise, business and free-enterprise capitalism can also evolve to richer purposes and extraordinary positive impact. Conscious Capitalism brings our rapidly evolving consciousness together with a keen appreciation for the core principles that animate capitalism. It enables us to better use this great system of social cooperation in ways that will transform our lives for the better and bring opportunity and hope to the billions on the planet still living with poverty and deprivation.
In the early years of the twenty-first century, we are becoming acutely aware that our natural resources are finite. But we are also coming to realize that there is no limit to our entrepreneurial creativity. When we learn how to manifest our creativity on a mass scale, when many more of the seven billion of us are enabled to blossom and empowered to create, we will discover there is no problem on earth that we cannot solve, no obstacle we cannot overcome.
Just as splitting the atom unleashed the awesome power hidden inside that seemingly inconsequential particle, Conscious Capitalism offers the promise of tapping into human potential in ways that few companies have been able to do. Businesses must view people not as resources but as sources.16 A resource is like a lump of coal; you use it and it’s gone. A source is like the sun—virtually inexhaustible and continually generating energy, light, and warmth. There is no more powerful source of creative energy in the world than a turned-on, empowered human being. A conscious business energizes and empowers people and engages their best contribution in service of its noble higher purposes. By doing so, a business has a profoundly positive net impact on the world.
We believe that the way forward for humankind is to liberate the heroic spirit of business and our collective entrepreneurial creativity so they can be free to solve the many daunting challenges we face. Our world does not lack for business opportunities: there are billions of people whose basic needs are not being adequately met, and we need to rethink how we can continue to meet the needs of the already-prosperous in a more sustainable manner. Companies that recognize this and unlock the natural human creative spirit to address these challenges and capitalize on these opportunities will flourish for a long time.
This journey starts with the discovery of a company’s unique higher purpose, an idea that we will explore in the next two chapters.
