Can companies make money and improve the communities around them at the same time? According to the theory of conscious capitalism, it’s not only possible, it’s the right thing to do. In today’s business environment, conscious capitalism underscores the idea that companies can be profitable while making a deliberate effort to give back more than they have taken.
It’s not just about the management team and the shareholders. Rather, it is an inclusive philosophy that shares benefits with customers, partners, the community, the supply chain and the environment. When businesses practice conscious capitalism successfully, all of their stakeholders win.
The Backstory of Conscious Capitalism
The term was coined and popularized in its namesake book, Conscious Capitalism: Liberating the Heroic Spirit of Business. The 2013 bestseller was written by Whole Foods co-founder and co-CEO, John Mackey, and Rajendra Sisodia, Babson College University professor (formerly of Bentley University).
Of course, the bottom line will always be important in a capitalist society. After all, profits drive the economy. But conscious capitalism recognizes that there are aspects of social welfare that may be forgotten in a world that places too much emphasis on maximizing profit and earnings.
Capitalism is based on a foundation of entrepreneurship, competitive markets, private property, voluntary exchange, and wage labor, among other concepts. Conscious capitalism is an additional layer, like the cherry on top, recognizing that businesses and the people who run them can do a lot more than line the company coffers.
But that doesn’t mean that conscious capitalism can’t lead to extraordinary success. Consider Whole Foods. Mackey opened his first store, Safer Way, in 1978 in Austin, Texas, from a humble location that mostly sold organic food to the hippie enclave found in the city. By 1980, he and his business partners had opened the first Whole Foods Market. Mackey has been able to create a strong culture by drawing people in who are attracted to the purpose of the business.
Mackey and Sisodia also co-founded the Conscious Capitalism Foundation. In 2020, Mackey went on to co-author another book, Conscious Leadership, with Steve McIntosh and Carter Phipps. In the new book, the authors take a deeper dive into how leaders can be more value-driven.
Those who espouse the theory of conscious capitalism are champions of a better world. They believe that capitalism can be a force for good, to uplift communities and solve systemic problems.
Conscious capitalists put their clout behind some pretty ambitious causes, such as the following.
- Diversity and inclusion: Actively fighting racism and creating access for underrepresented communities.
- The environment: Deploying sustainable practices and combating climate change.
- Health and wellness: Prioritizing the physical and mental health of employees and their families.
- Local communities: Supporting and engaging in the areas in which they live and work.
- Education: Cultivating next-generation leaders by providing opportunities both on and off the job.
- Global poverty: Providing equitable access to the wealth made possible through capitalism.
- Human rights: Protecting the basic rights and freedoms of all, regardless of race, nationality, gender, sexual orientation, language, religion or other status.
- Standard of living: Committing to a sustainable living wage and safe place to live for individuals and families.
It’s just what the world needs right now, particularly as gen Zers enter the workforce and expand their buying power. More than any other generation, they have expectations that the companies they care about will also care about the things that are important to them.
The Four Tenets
The four tenets of conscious capitalism are the building principles through which critical decisions are made. They include the following:
1. A Higher Purpose
Business leaders and employees must understand why the company exists. This goes beyond making money. It explains why people invest their energy and creativity into what they do and why it matters to them. When employees are connected to the company’s purpose, it gives meaning to their work.
2. Stakeholder Orientation
In addition to shareholders, businesses have various stakeholders, including customers, employees, suppliers, investors, communities and more. To practice conscious capitalism, the business must focus on all of its stakeholders, and not just with equity holdings in the company. By doing so, companies can optimize value for everyone.
3. Conscious Leadership
Leaders inspire others to follow their vision, embrace the business goals and objectives, and maximize profits for the shareholders. Conscious leaders go even further; they recognize that by creating value for all stakeholders, they create a vibrant and sustainable company for the long term.
4. Conscious Culture
Culture is the glue that holds a company together. It encompasses the principles, beliefs and behaviors that guide the way in which the business and its employees interact with one another, its customers, and the greater community. Conscious culture is one that is intentional and intrinsically tied to the company’s higher purpose.
None of these tenets is more important than the other. They all work together to create a company that embodies conscious capitalism. However, before a business can do anything at all, it needs the right leadership. Leaders are the ones who establish direction and purpose, develop policies and procedures, and set the tone for the culture.
Y Scouts Places Conscious Capitalists as Executives
Companies without great leaders fail to thrive. If your firm is looking to embody the values of conscious capitalism and needs people who can lead you on that journey, Y Scouts can help. As a premier retained executive search firm and a B corporation itself, we have built into our methodologies a radical alignment process. This means that we match candidates for purpose and value, as well as to ensure that they have the experience needed to deliver in the role.
Y Scouts is the premier firm for companies looking to embody the tenets of conscious capitalism. Beyond simply filling seats, our leadership model ensures that the candidates we present to you have three qualities that are essential to realizing your company’s highest aspirations. They include the following:
- Relentless learners
- Developers of people
- Results drivers
Envision this: a company that can successfully combine the tenets of conscious capitalism, the Y Scouts leadership model, and your unique company purpose and mission. You’ll need the right executive leaders to take you there. Contact Y Scouts. We can help.