Business leaders are driven to make the best choices for their companies. As you explore new ways of growing profits, you will likely learn about the growing popularity of purpose-driven businesses—also referred to as conscious capitalism. What is conscious capitalism? It’s a more holistic approach that provides not only financial wealth to stakeholders, but also intellectual, ecological, cultural, emotional and social wealth. Conscious Capitalists consider their impact on the planet and their local neighborhood.
Indeed, many business leaders, executives and entrepreneurs are practicing conscious capitalism in an effort to change how business is conducted. Conscious Capitalism, Inc. is a nonprofit organization founded by the co-founder and co-CEO of Whole Foods, John Mackey, and marketing professor Raj Sisodia.1 Mackey and Sisodia wrote a book about what it means to find an intersection of capitalism and business that reflects humanity, the environment, current events and positive social impact. The Conscious Capitalism organization now promotes the work of Mackey, Sisodia and many other thoughtful business leaders. But the organization is not the end of the movement.
- How Is Conscious Capitalism Unique?
- What Are the Guiding Principles of Conscious Capitalism?
- What Are the Benefits of Conscious Capitalism?
- What Are Some Examples of Conscious Capitalism?
- Why Conscious Capitalism?
How Is Conscious Capitalism Unique?
Conscious capitalism focuses on people and the environment. Business leaders who practice the philosophy recognize that principal stakeholders need to be more involved and respected in business decisions. In many cases, though, principal stakeholders might be customers who do not have representation at business meetings. Conscious Capitalism leaders find ways to honor the voices of their stakeholder—from investors to customers—when making business decisions. They also consider community and environmental impact.
The business leaders who practice conscious capitalism put purpose of the center of their work. They herald programs and processes that bring more personal connection to the work. The system of capitalism has long been portrayed, and sometimes practiced, as heartless and unforgiving. The traditional idea of capitalism is that, in order to be successful and profitable, a business leader must be cutthroat. The conscious capitalism philosophy changes that, and it does so with a profit. Conscious Capitalism, Inc.'s co-founder, Raj Sisodia, states in his book "Firms of Endearment" that conscious businesses outperformed the S&P 500 index by a factor of 10.5 from 1996-2011.2
What Are the Guiding Principles of Conscious Capitalism?
To see how conscious capitalism business leaders have been so successful, it can be helpful to review the core components of the philosophy. There are four guiding principles that make up the framework for conscious capitalism. Business leaders and organizations who commit to conscious capitalism follow these four guidelines.
1. Higher Purpose
Leaders who follow the conscious capitalism philosophy think about why their business exists. Identifying a higher purpose allows them to stay focused on their mission. A higher purpose acts as a compass and keeps the company headed in the right direction. For conscious capitalism businesses, the higher purpose exists for reasons beyond making a profit.
2. Stakeholder Orientation
Conscious capitalism leaders think about all of the humans involved in their organization. This can be anyone from customers, employees and investors to the communities where their businesses are located. Conscious capitalism practitioners ensure that the ecosystem that supports and maintains their business is healthy and involved.
3. Conscious Leadership
The leaders of conscious capitalism businesses guide others along a purposeful path. They inspire others with their passion and dedication to their purpose. They focus on creating harmony among stakeholders and valuing the role of each human in their organization. A conscious capitalist leader promotes a culture of social responsibility.
4. Conscious Culture
Conscious capitalism organizations thrive when there is intention around building a work culture. The values, principles and practices of these organizations uplift the business and values the stakeholders. Every person involved with a conscious company is tied together through the purpose and goals of the organization.
What Are the Benefits of Conscious Capitalism?
There are some major benefits to practicing conscious capitalism. Leaders who commit their passion to their purpose find that employees are more satisfied in their jobs. Employees who believe that the company is motivated by more than just money are more likely to commit to the mission. They then become strong voices for the brand. In addition, employees who are more engaged are more creative. They are able to innovate more often and help business grow.3
In addition, the advantages of practicing conscious capitalism may include:
- Better relationships between customers and employees
- Brand-loyal customers who are attracted to a strong mission
- More intentional community engagement by a business
What Are Some Examples of Conscious Capitalism?
Many popular brands have evolved from leaders who follow conscious capitalism business philosophies. In fact, there is a designation for these types of organizations—Certified B Corporations or B Corps. There are over 3,500 of these Certified B-Corps around the world. All of them have committed to balance purpose and profit.4
Some well-known conscious capitalism businesses include:
- Whole Foods Market
- Southwest Airlines
- Ben and Jerry’s
Why Conscious Capitalism?
Conscious capitalism is an option for business leaders who feel uncomfortable with the way capitalism is currently practiced. Leaders who want to invest in greater social responsibility and bring those practices into mainstream business believe that conscious capitalism is the right way to do that work.
The best way to sum this up is to quote the introduction to the Conscious Capitalism, Inc. credo: “We believe 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. Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had. But we can aspire to even more.”5
Understanding your personal business philosophies and growing your organization around your beliefs is a major part of leadership. Asking yourself questions like, “What is conscious capitalism and how can I be the best leader for my employees and customers?” is a starting place for future business leaders.
Those leaders who are set on making a difference in the world should enroll in the Master of Science in Leadership program at Grand Canyon University. You will learn about how business philosophies, like conscious capitalism, can impact not only your profit, but how you can give back to the world as a business leader.
1 https://www.consciouscapitalism.org/people/john-mackey, December 2020.
2 https://hbr.org/2013/04/companies-that-practice-conscious-capitalism-perform, December 2020.
3 https://www.entrepreneur.com/article/326473, December 2020.
4 https://bcorporation.net/about-b-corps, December 2020.
5 https://www.consciouscapitalism.org/credo, December 2020.
The views and opinions expressed in this article are those of the author’s and do not necessarily reflect the official policy or position of Grand Canyon University. Any sources cited were accurate as of the publish date.