What is Conscious Capitalism?
“To be conscious means to be awake, mindful. To live consciously means to be open to perceiving the world around and within us, to understand our circumstances, and to decide how to respond to them in ways that honor our needs, values, and goals. A conscious business fosters peace and happiness in the individual, respect and solidarity in the community, and mission accomplishment in the organization.”
— Fred Kofman, Conscious Business
Business today needs a new paradigm because “business as usual” is just not working any more. Public distrust of business is at historic highs; many employees, customers and other stakeholders of businesses are disconnected from the companies they interact with.
At the same time that its reputation is deteriorating, the reach and impact of business in the world is growing. Business today has greater power than ever before to enhance or to diminish overall well being in society. As its power and influence grow, so too must its sense of responsibility and “stewardship”/ trusteeship.
The term “conscious capitalism” reflects the fact that more people today are at higher levels of consciousness about themselves and the world around them than ever before. This is due in part to natural evolution, but also to the rapid aging of society, which has resulted in a higher proportion of people in mid-life and beyond, when consciousness is elevated and higher-level needs predominate. The advent of the World Wide Web has accelerated this trend, simultaneously connecting hundreds of millions of people and placing great demands for transparency on companies.
Our definition of “conscious capitalism” has three key elements:
- companies have a purpose that transcends profit maximization;
- companies are managed for the benefit of all stakeholders in their ecosystem, not just shareholders; and
- companies are led by spiritually evolved, self-effacing servant leaders.
CORE ELEMENTS OF A CONSCIOUS CAPITALIST PHILOSOPHY
Companies that practice “conscious capitalism” embody the idea that profit and prosperity go hand in hand with social justice and environmental stewardship. They operate with a systems view, recognizing and benefiting from the connectedness and interdependence of all stakeholders. They tap into deeper sources of positive energy and create greater value for all stakeholders. They utilize creative business models that are both transformational and inspirational, and can help solve the world’s many social and environmental problems.
Some of the characteristics of companies that practice conscious capitalism are:
1. They have a higher purpose than simply the maximization of profits or shareholder returns. The purpose addresses real and important needs of society and individuals; it is not about creating and exploiting short-term desires. A well thought out purpose energizes the enterprise and infuses it with passion and creativity.
2. They are managed for the benefit of all stakeholders. Company leaders seek to optimize the health of the overall “ecosystem,” recognizing the connectedness and interdependence of all stakeholders.
3. Beyond just achieving a better balance of emphasis across stakeholders, leaders strive to join and align the interests of each. Accomplishing this reconfigures business into a positive sum game, rather than the zero sum game that it is too often seen to be.
4. They do not engage in exploitation of any kind, e.g. taking advantage of some stakeholders to advance the interests of others or playing on people’s fears and addictions. They view each stakeholder’s well being as an end in itself, not just a means to better satisfy investors.
5. Society is seen as the ultimate stakeholder; companies view themselves as existing ultimately to advance the well being of society as a whole. They are motivated by a genuine desire to help solve large societal problems in partnership with governments, other companies and NGOs. They do not externalize costs on to society, even when it may be legally permissible to do so.
6. These companies treat the environment as a crucial though voiceless stakeholder. They take responsibility for their full environmental impact. At a minimum, their objective is to “do no harm” to the earth; ideally, they seek to have a net positive impact on the environment.
7. They approach the marketplace with a “whole pyramid” model that seeks to uplift rather than ignore (or worse, exploit) the poorer sections of society.
8. They hold a firm belief that doing the right things ultimately brings good results. Profit is seen as the natural outcome of doing the right things, not the single-minded focus of all company activities. Indeed, an overly strong profit orientation ultimately destroys the ability of a company to make profits. When the company states its objectives in profit-maximizing terms, it causes all stakeholders in turn to seek to maximize their own profits by giving as little as possible and taking as much as possible. The performance of the system rapidly deteriorates and profits soon evaporate.
