Conscious Capitalism – A Radical Transformation of Business Culture

The Conscious Key to Business Success

The premise of Raj’s model, which is largely based on case studies of existing and successful companies such as Whole Foods and Southwest Airlines, is that it is difficult or impossible for companies to buy customer loyalty through traditional marketing approaches such as ad campaigns and branding.  Companies do better by earning this loyalty and adopting a broader sense of community and purpose and letting that sense of community and purpose drive business decisions. He proposes that this approach is far from being an idealistic visionary idea to be promoted principally to improve corporate posture and image.  In Raj’s view, adopting this approach as strategy and in actual business practices is the winning move for businesses competing in today’s market.

The Conscious Capitalism strategy begins with the understanding that “maximizing shareholder value” is a broken model for organizing a business.  Businesses should, instead, be managed to improve outcomes for the broader community of stakeholders.  This includes (at a minimum) employees, customers, suppliers, and, yes, investors.  Raj claims that companies that successfully satisfy their involved communities of interest will incur lower costs of doing business, see more innovation from within their operations, and gain a more engaged customer base with reduced marketing investment.  These businesses will ultimately experience better and more stable profitability over time than companies that are managed for maximal share price at the end of the quarter.

Proving the Case

It is not hard to find examples to help Raj make his case.  An engaged workforce enjoying a relationship of trust with management can be counted on to innovate on their own work processes, and to do so more effectively than outside consultants would be able to do. Suppliers enjoying a fruitful long-term relationship with a company will be more likely to work cooperatively to both partners’ mutual benefit.  Good relationships are self-reinforcing, since both parties recognize that there is a partnership to improve, rather than simple a transactional relationship of convenience and price.  Customers who trust a company to act in an ethical fashion and in accordance with their values will prefer to do business with that company, even at a premium price.  And shareholders who believe that the company is pursuing a worthwhile mission will be willing to forego quick profits in favor of long-term, sustained returns.

Raj’s pitch to the business community is largely based on what might be called “significant intangibles.”  These are factors which we are willing to believe have a pronounced effect on operating a business, but which are hard to measure in a concrete way, or even to define in rigid terms.  Yet these factors are supported by anecdotes and examples that include many well-known successes. Raj also points out that a business owner or manager is motivated to maintain a positive self-image as a caring, decent person who doesn’t want to be awful to others.  He is right.  Most of us are, as best we are able, caring and decent people, and most of us want to be good and kind to others. In fact, we would prefer to treat people well, if we can afford to do so, and Raj tell us that this is also a more profitable way to do business.

Does Raj succeed in making his case?  The answer should be measured not only by whether those already inclined to believe him come away feeling confirmed in their inclination and inspired to do more, as many clearly were, but by the number of skeptics who have been sold on the idea.  There were skeptics in the room, one of the hallmarks of a Long Now Boston discussion.  Based on the questions raised in the Q&A and on the discussion following the talk, not all of the skeptics were sold on the proposition.  The challenge for Raj and the proponents of Conscious Capitalism is to continue building evidence and arguments supporting not just the “why” but the “how,” convincing the business community that “conscious” is a better way to do capitalism, and that capitalism can be “conscious” in a meaningful way.

Broadening Communities of  Interest

We like to say that a “Long Now” implies a “Big Us.” That is, as we consider longer time scales, our communities of interest naturally broaden.  Raj’s model effectively inverts this equation.  By broadening our communities of interest, a company broadens the time scales in which it is likely to operate. A Big Us will result in a Long Now.  This is an inversion worth contemplating. Regardless of whether Conscious Capitalism influences future management models, it’s at least heartening to see someone making the sincere case that broadening our communities of interest is not only the right thing to do, it’s also the best way to do business. Long Now Boston is a community of long-term thinkers striving to be good ancestors.  It’s good to be reminded that we might learn some useful things about the deep reaches of time by broadening the communities we engage with in the here and now.