Conscious Capitalism: Building a Purpose-Built BusinessOct 12, 2022
Conscious Capitalism explores the ROI of putting your business model in the context of purpose. Its goal is to elevate humanity through business. As businesses continue adjusting to phenomena like The Great Resignation or “Quiet Quitting,” it’s become clear that employees and customers are increasingly uncompromising in their efforts to work and do business with companies that share their values – or at least articulate what their values are. Keep reading as we explore Conscious Capitalism – conceptually and practically – how it started and where it’s headed, and how leaders are responsible for making purpose a part of your strategic focus and value proposition.
Why Conscious Capitalism? Why now?
Consumers and employees are demanding more from companies they do business with. People want to see more purpose-driven businesses focusing on people, not profits. Research by Ipsos found that 78% of Americans agree that “the success of a company should be measured not only by its profitability or growth but also how well it serves customers and broader society.” The implications can be seen across industries with the rise of new companies like B-Corps, social enterprises, hybrid L3Cs, and more. This demonstrates conscious capitalism—a way for businesses to build an even stronger connection with their customers and community while creating value for their shareholders (not at the expense of those stakeholders).
What is Conscious Capitalism?
Let’s explore this from two perspectives: Conscious capitalism as a concept and Conscious Capitalism, a nonprofit organization dedicated to these concepts.
Conscious capitalism is a way of thinking about business that aims to build a robust and sustainable business that serves a purpose above the goal of maximizing profits in the short term. It’s based on the premise that companies can do more than make money—they can be a vehicle for positive change. As the name suggests, it’s a form of capitalism, but it’s not the type that has historically been practiced. It’s a new way of doing business that puts the needs of people first—employees, customers, suppliers, and stakeholders—and sees long-term profitability as a result of those actions. For example, a company that is built on conscious capitalism might offer benefits like tuition reimbursement or health care for employees that go beyond the legal requirements or train employees not just for their current roles but also for future roles where they might be needed most. Or, a company that believes in the power of entrepreneurship might support its suppliers by helping them to grow their businesses so that there is less risk for the company.
Conscious Capitalism is also a 501(c)(3) nonprofit organization that provides a framework, community and resources for organizations to practice what it calls the 4 Tenets of Conscious Capitalism:
- Higher Purpose, in which organizations examine why they exist
- Stakeholder Orientation, which recognizes the interdependent nature of life and business to create value for everyone involved in an organization
- Conscious Leadership, where leaders recognize the role of culture in creating value for and harmonizing the interests of stakeholders
- Conscious Culture, where companies intentionally promote values and purpose
There are Conscious Capitalism chapters worldwide, and programs, resources and events where leaders can learn, engage and immerse in better understanding and practice.
How Can We Build a More Conscious Business?
Building a more conscious business is as much an inside job as an outside job. The best businesses have leaders who are fully committed to this way of thinking and who lead by example. But they also have employees who are empowered to think and act in ways that build a stronger connection between the company, its customers, and the community. This is something that the best companies do across departments. Companies like REI, Patagonia, Hyatt, and Build-a-Bear are just a few that exemplify this movement, demonstrating how conscious capitalism can be built from the inside out and outside in. Yvon Chouinard, the founder of Patagonia, recently gave his company away rather than take it public. Valued at $3 billion, ownership was transferred to a trust and a nonprofit organization that, in part, ensures all of its profits go to combatting climate change and protecting undeveloped land around the world.
How to Start Practicing Conscious Capitalism
While the organization Conscious Capitalism has tremendous resources, insight and advice on making your organization more intentionally conscious, there are also a few broad concepts we can explore.
Think strategically about “consciousness” in your company
This is not the stuff of fluffy posters on the wall and all-day retreats to come up with pithy slogans. As indicated earlier, the idea is that becoming more conscious and intentional will, when done correctly, lead to more significant revenue or profitability (the capitalism part of it all.) So make your company and annual goals better connected to purpose. We’ve explored before how your goals and strategies shouldn’t be “Some Number Improved Over Last Year,” but rather Some Impact We Want To Make, such as improved market share, reaching new markets, becoming a leading workplace, broadening your product or service footprint or portfolio and more.
Like with other aspects of your company, put measurable targets in place that are connected to culture. Conduct quarterly reviews, analyses and forecasting with leaders and your CFO.
Dedicate resources to becoming an organization that practices conscious capitalism
Thinking isn’t the same as doing, so take action. Explore the resources and events available through Conscious Capitalism, the organization, and get involved. Consider auditing your company’s culture to understand better how employees, customers, vendors and others perceive the experience of working with you. Set teams to align and prepare strategies and tactics for addressing or improving company culture.
Take Ownership as Leaders
Culture isn’t developed from the bottom up in organizations. Realize that your executive or leadership teams and your board have to lead the imperative and initiative to create and improve culture and practice conscious capitalism. As ever, surrounding yourself with advisors who can help create and navigate the path is a smart way to avoid pitfalls and wrong turns.
Today’s best companies, and the companies that will thrive in the future, build programs that encourage people to think about how they are serving customers and communities, creating the kinds of experiences that help people to see the bigger picture and how their actions can have a real purpose and make a difference. Consider how conscious capitalism can help you build a stronger culture, broader connections and a thriving company.