Raj’s first point is that we shouldn’t be too negative about capitalism, lest we forget its role in bringing a huge percentage of civilization out of poverty. During most of recorded history, the vast majority of population was extremely poor, and in fact prior to the industrial revolution, the GDP per capita had stagnated for more than a thousand years. The massive upswing in GDP visible in the modern world is due in no small part to the adoption of capitalism as the dominant paradigm.
“Business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity.”
- Raj Sisodia
Why is it then that the popularity of capitalism and businesses is sinking even though they have done so much for society? Raj argues that the needs and demands of people have evolved and changed a lot in the past few decades. An important change of values has been observed, and we are now seeing a population less self-centred and more concerned with its surroundings. The population is also much more informed than in the past, as we have quick access to so much information. To synthesize, people are becoming more conscious: we understand our actions and their consequences; we have a deeper commitment to what is right and wrong; we seek more harmony with nature.[i]
“The average person today has access to more information instantaneously, at their fingertips, anytime at anyplace for free, than the richest billionaire did 20 years ago” - Raj Sisodia
Unfortunately, the way we do business has not evolved at the same pace, and companies often still behave the same way they did 100 years ago. This discrepancy between how society has evolved and how businesses have not helps to explain the increasing amount of scepticism oriented towards capitalism. Raj believes that in order for companies to catch up with the evolution of mankind and its values, a few important steps must be taken. This is where the notion of Conscious Capitalism comes into play.
The idea of conscious capitalism is developed around four key pillars that work together: having a higher purpose, stakeholder integration, conscious culture and conscious leadership[ii].
Having a higher purpose is just as crucial for companies as it is for individuals. We all need a purpose in life, a reason to wake up every morning, a goal we thrive to attain. It is not possible for businesses to have profits as their only objective, they must have a reason to exist that drives them forward. A good purpose creates more motivation, engagement and innovation for the stakeholders of a company. In the framework of Conscious Capitalism, the higher purpose is the central figure that other tenets are built around.
Another important characteristic of conscious businesses is stakeholder integration. This term represents the idea of taking care of each person that impacts or are impacted by a company. As opposed to focusing on creating profits for shareholders, a corporation following stakeholder integration seeks to create value for everyone. A great example of such company is Whole Foods, which really aims at promoting healthy and organic foods.
Conscious businesses cannot develop without the help of conscious leaders. This notion is another one of the key pillars of conscious capitalism. These leaders are characterized by the fact that they do not restrict themselves by thinking in terms of trade-offs and numbers. Instead, they are attracted towards a creative way of doing business; one that values emotional and spiritual intelligence, and focuses on the relationships between all stakeholders.
The last tenet that Raj discusses in his book is conscious culture and management. This defines a work environment centred around trust, loyalty, care and fairness. Enlightened companies seek to create an environment where people feel valued and fulfilled, and aim to help their employees to better themselves. A great example of such company is Barry-Wehmiller (discussed in a previous blog post).
“Conscious businesses can help evolve our world in such a way that billions of people can flourish, leading lives infused with passion, purpose, love and creativity; a world of freedom, harmony, prosperity and compassion.”
- Raj Sisodia
All in all, the ideas of conscious capitalism work together to propose an inspiring solution to the current issues we have with big businesses. A company who adopts a conscious capitalism solution will foster net benefits for its employees, the environment, and society, and see an improvement in its financial situation. In his research, Raj exposes the fact that companies operating under the conscious capitalism model have outperformed the stock market with a 10:1 ratio over a 15 year period. The data is clear, conscious capitalism makes dollars and more importantly makes sense![iii]
You now know a little bit about conscious capitalism and Raj’s work. If you want to get some more information on the topic, Raj will hold the opening keynote of our conference on the 16th of November, check it out here: http://www.ignite-movement.com/conference