So much has changed, and so quickly. What will it take for businesses to truly flourish in the future? The second keynote of the 2013 NACD Board Leadership Conference was a smooth transition from NACD Chair King’s address on innovation in the boardroom with a presentation from Raj Sisodia. Conscious Capitalism Institute Co-Founder and Chairman Sisodia recently co-authored with Whole Foods Co-Founder John Mackey, Conscious Capitalism: Liberating the Heroic Spirit of Business.
Although capitalism is suffering an image crisis following the global financial crisis, Sisodia focused on its ability to advance society as a whole. He currently consults companies on shifting from a traditional method of operations to a “conscious” one. Based on research on the impact of the industrial revolution on social well-being, Sisodia believes that business is good because it creates value. His method of conscious capitalism is based on four tenets:
1. Business can and should be done with a higher purpose, not just maximizing profits.
2. Conscious businesses are explicitly managed for the benefit of all their stakeholders.
3. Conscious leaders are driven primarily by service to the firm’s purpose and people, rather than by power or money.
4. These leaders create a conscious culture, which enables and empowers employees.
Other takeaways from the session:
- Capitalism is the most effective method to alleviate poverty. If current trends continue, extreme poverty (world population living on less than $1 a day) will be virtually eliminated in the next 50 years (if free markets are allowed to spread and be the norm).
- “Have you ever watched a movie in which the business person is a good person?” The lack of trust in capitalism is the result of the world and humanity changing significantly in the last 20 years, yet business has not adapted.
- In the future, companies will not be able to survive by only focusing on driving shareholder wealth. Ultimately, viewing financial profit as the end result will drive you to do things that destroy value in its path. To this end, Sisodia believes directors should focus on the corporation—not just the shareholders. In doing so, value will be created for all stakeholders.
- Conscious capitalism is not about trade offs, but they can always be found. Although businesses create wealth, they can also destroy many kinds of wealth, including financial, social, and emotional. “It matters how companies make their money.”