Conscious Capitalism is a philosophy stating that businesses should serve all principal stakeholders, including the environment. It does not minimize profit-seeking but encourages the assimilation of all common interests into the company's business plan.
Breaking Down Conscious Capitalism
The Conscious Capitalism credo acknowledges that while free market capitalism is the most powerful system for social cooperation and human progress, people can aspire to achieve more. It builds on the core foundations of capitalism of voluntary exchange, entrepreneurship, competition, freedom to trade, and the rule of law. The credo adds elements like trust, compassion, collaboration, and value creation. Conscious Capitalism does not abjure the pursuit of profit but emphasizes doing so in a manner that integrates the interests of all major stakeholders in a company.
The concept of Conscious Capitalism, popularized by John Mackey, Whole Foods co-founder, and co-CEO, and Raj Sisodia, professor of marketing at Bentley University, through their book Conscious Capitalism: Liberating the Heroic Spirit of Business. Mackey and Sisodia are also the co-founders of the nonprofit organization Conscious Capitalism, Inc., which has chapters in 26 U.S. cities and ten other countries, as of April 2018.
Guiding Principles of Conscious Capitalism
The basis of Conscious Capitalism is on four guiding principles.
- Higher Purpose: A business that adheres to the principles of Conscious Capitalism focuses on a purpose beyond pure profits, and in doing so, inspires and engages its stakeholders.
- Stakeholder Orientation: Businesses have multiple stakeholders, including customers, employees, suppliers, investors, and others. Some companies focus on return to their shareholders to the exclusion of everything else. A conscious business will concentrate on the whole business ecosystem to create and optimize value for all its stakeholders.
- Conscious Leadership: Conscious leaders emphasize a "we" rather than a "me" mentality to drive the business and work to cultivate a culture of Conscious Capitalism in the enterprise.
- Conscious Culture: corporate culture is the sum of the values and principles that constitute the social and moral fabric of a business. A conscious culture is one where the policies of Conscious Capitalism permeate the enterprise, fostering a spirit of trust and cooperation among all stakeholders.
Although Conscious Capitalism focuses on doing the greater good for its stakeholders and not just for shareholder profit, firms that adopt this philosophy reap significant rewards. Many consumers and investors consider the impact businesses have on the environment and its inhabitants. These stakeholders seek businesses that align moral principles with corporate values. According to Nielsen's "Global Survey on Corporate Social Responsibility," 43% of consumers would spend more on products and services that support worthwhile causes.
A growing number of businesses have adopted the principles of Conscious Capitalism, including Whole Foods Market, Starbucks, The Container Store, and Trader Joe's. For organizations that reject this philosophy, their positions may adversely impact revenues and profits.