Conscious Capitalism: An Effective Model to Motivate and Organize Human Effort

Like many people, I have had mixed experiences with corporations and capitalism. I have worked in places where employees were happy and creative and in those where things could have been better.

However, seeing things from employee’s perspective does not give complete picture. One should try to understand a particular business from evolutionary point of view. How was the business started? What were the entrepreneur’s original motivations? What stage is the organization currently in?

A straightforward stereotypical answer is that the business was started in order to make money. And the goal of the company continues to maximize profits, it exists only for the sake of its shareholders and the sole purpose of the management is to organize the company in order to attain this profit making goal.

This simplistic answer is being challenged these days. A book titled Conscious Capitalism: Liberating the Heroic Spirit of Business, by John Mackey and Rajendra Sisodia, published in 2013, offers a new answer which is the topic of this post.

Conscious capitalism is holistic, humanistic and value driven. An entrepreneur following conscious capitalism is motivated by several things. One of them may be making money and maximizing profits, but there could be several other more powerful motivations such as doing service to others, creating something new, or changing the world. Furthermore, in conscious capitalism a corporation cares about all of its stakeholders and not just shareholders. Stakeholders include investors, customers, employees, suppliers, partners and society.

These ideas are not completely new. In fact, I was reading Henry Ford’s quotes and some of them resonated with tenets of conscious capitalism. Henry Ford not only changed the way people travelled but he took one amazing step in 1914 when he doubled the wages of his workers. In Strategic Management: A Stakeholder Approach published in 1984, R. Edward Freeman advocated stakeholder theory which provides the conceptual foundation for conscious capitalism.

In Firms of Endearment book published in 2007, Rajendra Sisodia, David Wolfe and Jagdish Sheth, have analyzed the performance of companies which follow conscious capitalism. These widely loved companies outperformed S&P 500 by a factor of almost 10 over a 10 year period! This list of Firms of Endearment has 30 companies which have earned reputation for being great companies.

By the way, John Mackey is co-CEO and co-Founder of Whole Foods and in the writing of Conscious Capitalism 2013 book, he teamed up with Rajendra Sisodia. This has given the book a first hand credible account of building a great business which is driven by strong values and by a holistic vision.

One thing which comes out of the conscious capitalism movement is to look at the constituents of a business as human beings. Humans have deep psychological drives of love, caring, cooperation, exploration and self-actualization. We want to live meaningful lives. And, some of us want to go even beyond that! As in Star Trek we are explorers who want to go where no one has gone before.

This is what I call as human effort. A desire to explore the world, to make it a better place and to solve grand challenges which surround us!

Conscious capitalism in democratic societies is an effective model for this human effort. It looks at capitalism as this effort embedded in a larger human setting and which is aware of its higher calling. This model motivates us further towards new exciting territories, organizes us in effective teams, and at the same time makes our humanity even stronger than before. I hope that this movement will succeed and we will see the list of widely loved and successful companies grow in coming years.