3 Reasons To Read Conscious Capitalism:
- Helps entrepreneurs and leaders in startups determine their company’s higher purpose.
- Provides a vision of capitalism in which profit is a by-product of treating all stakeholders and the environment as ends and not means.
- Lays out a model of stakeholder integration that makes your conscious business more sustainable than a traditional business.
Background
Entrepreneurs are true heroes. This sentiment from authors John Mackey and Raj Sisodia is one of the reasons I decided to review this book. In fact here’s a direct quote:
Entrepreneurs are the true heroes in a free-enterprise economy, driving progress in business, society, and the world. They solve problems by creatively envisioning different ways the world could and should be. With their imagination, creativity, passion, and energy, they are the greatest creators of widespread change in the world. They are able to see new possibilities and enrich the lives of others by creating things that never existed before. ~ Pg 14, Conscious Capitalism
The book opens with the interesting story of how John Mackey’s mindset developed along the way from being a college student through to the day he later became an entrepreneur. He originally attended two universities earlier in life and mainly studied humanities such as philosophy, world literature, and history. He eventually dropped out of school without getting a degree and having taken no business classes. He spent many of his earlier years searching for the meaning and purpose of his life, which led him into the counter-culture movement of the 1960s and 1970s. In that time he studied Eastern philosophy and religion while practicing yoga and meditation. During this time he also became a vegetarian and lived in a commune in Texas. Unfortunately, he also embraced the belief that business is inherently evil because it seeks profit, while non-profits and government were good because they do not.
John Mackey’s story becomes very interesting at this point because with this belief system he launches a business in 1978 called Safer Way. In his own words:
Becoming an entrepreneur and starting a business completely changed my life. Almost everything I had believed about business was proven to be wrong.
In the remainder of the introduction John Mackey explains several awakenings he had during this time period that led him to his discovery that business can be a force for good. What I found most interesting about this book is that John explains how he came to understand that capitalism doesn’t have to be a system based upon the belief that businesses should seek profit as their only goal. Johh Mackey rejects the idea proposed by economist Milton Friedman that the search for profit is the only social responsibility of a company. John credibly points out that capitalism and businesses function better when profit is seen as a by-product of having done other things well by benefiting not just shareholders but also its employees, customers, suppliers, the surrounding community, and the environment.
I think this book is a good one for entrepreneurs to read because they can set up their company with a conscious mindset from the beginning, whereas existing companies typically have an ingrained culture that may be resistant to becoming more conscious. It may be very difficult for a conscious business leader that reads this book to lead the changes necessary in her existing company. Therefore, if anyone should read this book it is entrepreneurs and leaders working in startups.
Outline Of Conscious Capitalism And What You’ll Gain From Each Section
There are four pillars to the business paradigm of Conscious Capitalism. These will be described in more detail in the following paragraphs:
- Higher Purpose
- Stakeholder Integration
- Conscious Culture and Management
- Conscious Leadership
The First Tenet: Higher Purpose
The first tenet is probably the most important to adopt first. The reason is that as John Mackey points out, having a higher purpose matters because it allows a company to transcend the narrow-minded focus on profit at the expense and or exclusion of everything else.
Having a higher purpose is the starting point of what it means to be a conscious business: being self-aware, recognizing what makes the company truly unique, and discovering how the company can best serve.
Some fundamental questions are addressed by every conscious business:
- Why do we exist?
- Why do we need to exist?
- What is the contribution we want to make?
- Why is the world better because we are here?
- Would we be missed is we disappeared?
The book explains that a firm’s purpose is equivalent to glue that holds the organization together and a life-force that feeds its members. Of equal importance, a higher purpose infuses a company with energy and relevance.
The authors explain what they see as the four types of higher purpose:
- The Good: Service to others. Improving health, education, communication, and quality of life.
- The True: Discovery and furthering human knowledge.
- The Beautiful: Excellence and the creation of beauty.
- The Heroic: Courage to do what is right to change and improve the world.
Plenty of examples of each of these from existing companies are given in the book.
The Second Tenet: Stakeholder Integration
What separates conscious businesses from traditional business is that conscious businesses satisfy the needs of all their stakeholders as a goal unto itself, while traditional businesses often treat the maximization of profit for shareholders as the ultimate goal and use stakeholders as a means to this goal.
The conscious business realizes that all stakeholders, including investors who seek profit, can all be made better off if a company tries to do so. Trade-offs are not necessary. Again, what I like about this book is that the authors specifically state that thinking based upon “entrepreneurship and innovation” can provide the way towards making a business more conscious. In this case, the authors state that stakeholders’ interests do NOT have to be in conflict as long as the business leaders use innovative and entrepreneurial thinking to align the interests of all.
Not only is stakeholder integration possible, but also advantageous. Referring to a collective mindset among stakeholders the authors say:
Together we create our future reality, so we should do so consciously, collaboratively, and responsibly. The Good, the True, the Beautiful, and the Heroic can be made manifest in our world through the power of our collective creative dreams.
The Third Tenet: Conscious Leadership
I’ll quickly summarize these last two tenets. In this section, John Mackey and Raj Sisodia give practical advice on how an individual can evolve into a more conscious leader. The authors describe how we can increase our consciousness in stages.
The Fourth Tenet: Conscious Culture and Management
Lastly, the authors expound upon culture and management in a conscious business. Most importantly, they describe how to manage others through decentralization, empowerment, innovation, and collaboration.
Final Comments
This book was very enlightening in that a traditional view of capitalism is one in which business leaders are driven solely by the need to produce profits. Under this outmoded belief, it becomes very worrisome to those of us who wonder how the environment and communities around a business will be taken care of. But, by adopting the mindset of conscious capitalism as developed in this book, it is easy to see how businesses can take care of the majority of the concerns of society. Government has a role but is freed up to focus on what it does best. It’s not inevitable that businesses will become more conscious through time, but I can see that this has been the case as of lately. More and more companies are finding their higher purpose and making a huge impact on the sustainability of our planet. These companies include Starbucks, Patagonia, Whole Foods Market, The Container Store, Bright Horizons, Costco, the Tata Group, REI, Southwest Airlines, and Panera Bread among others. And mind you, these companies are all very profitable.
Another factor that makes this book excellent is that it shows the flaws in movements such as Corporate Social Responsibility (CSR) and other half-hearted attempts by companies to appear “good”. A conscious business is holistically integrated with a higher purpose that inherently improves society and doesn’t need to be augmented with frivolous CSR activities to appear “good”. This would be an excellent book for any entrepreneurial leader or startup cofounder to read. It can help you get your reason-for-being set from the beginning.
If the concept of Conscious Capitalism intrigues you, John Mackey and Raj Sisodia have organized a non-profit devoted to developing a movement around it. See here: http://www.consciouscapitalism.org/aboutus
Click here to check out Conscious Capitalism on Amazon.com
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