Something’s stinking up corporate America. On Friday, a 3% decline in shares of Wal-Mart drove the Dow Jones Industrial Average into negative territory. This was driven by leaked internal e-mails about dismal February sales at Wal-Mart, one saying, “Where are all the customers? And where’s their money?”
And then there is the issue of Wal-Mart’s European arm Asda discovering horse meat in a “beef” pasta sauce it sells. If that wasn’t enough, the Carnival Cruises CEO apologized to 4,000-plus passengers stuck in a cruise ship in the middle of the Gulf of Mexico after fires shut off all power. The passengers suffered terrible conditions, as the lower floors of the ship flooded with human excrement. Apparently the ship had suffered from issues before sailing but no one made the decision to ask whether it was sail-worthy.
These two incidences this week reinforce a question asked in discussions at Davos in January, and in a recent book called “Conscious Capitalism.” What’s the purpose of corporations? Of business in general? Apparently, making money is high on the list, given these two recent examples. But could there be a higher calling?
What’s the purpose of business?
The short-term pursuit of profits led to the financial meltdown and a global recession. It leads to unethical behaviors and shortcuts, pollution of the planet, a work culture that demands a 24/7 work ethic from people while cutting back resources, and a general decline in trust in corporations.
“Conscious Capitalism” challenges the conventional wisdom that corporations are here just to make money for shareholders. Written by John Mackey (co-CEO of Whole Foods) and Raj Sisodia (co-founder of the nonprofit Conscious Capitalism), it highlights the need for a higher calling for corporations.
I recently spoke with Raj Sisodia to understand the basic tenets of the book and also the challenges that each of us as business people face in implementing these tenets. The book lays out a step-by-step plan calling for all businesses to become more “conscious” and align the needs of shareholders with all the other stakeholders.
The four key tenets of “Conscious Capitalism” are:
- A higher purpose. Corporations need to discover and articulate the unique stakeholder needs that they are here to fulfill. The authors share evidence that sustainable businesses that create shared value are driven by purpose as their primary goal; superior financial returns are outcomes. They believe the real purpose of organizations is to improve peoples’ lives through innovation and creating well-being for all stakeholders.
- Stakeholder integration. As a corporation articulates and expresses its core purpose in all its actions, this is like a magnet attracting loyal customers, inspired team members, patient and purposeful investors, collaborative and innovative suppliers, and welcoming communities. The conscious corporation seeks win-win outcomes across its stakeholders rather than settling for trade-offs.
- Conscious leadership. Organizations need conscious leaders who are self-aware, motivated primarily by purpose and service, and have high integrity in order to fulfill the organizational purpose and reflect it in day-to-day decisions and actions.
- Conscious culture. For these actions to happen sustainably, they must be reinforced by a culture that glues purpose, stakeholders, and people. The book describes seven characteristics of conscious cultures: trust, accountability, caring, transparency, integrity, learning and egalitarianism.
The challenges to conscious capitalism
Within the context of a business world where everyone feels pressure to make results happen and faces work stresses, how do we get from here to there? Clearly, it starts with leaders at the top of the organizations. Culture is most often set by the actions of top leaders and the boards that govern these organizations.
But CEOs can’t be everywhere. Just this weekend, I was at my local Whole Foods store. I saw a store manager rather loudly “telling off” an employee in the store. I could tell the manager was stressed about something that had gone wrong and was blaming the employee. I also saw the stress and confusion in the employee’s face. I didn’t see “the capacity for love and care” described in the book as a tenet of conscious leadership. Ironically, the book was being sold right next to where I observed this happen.
Implementing conscious capitalism is tough because at the end of the day, we’re all human. Under stress and pressure, we make “unconscious” decisions and take “unconscious” action. If organizations want to embed these tenets of conscious capitalism, we must find ways to help all our employees become conscious in their leadership. We have to help them find personal purpose in their work and to grow and self-actualize through the leadership experiences they have.
Whose job is it?
What about the rest of us? Do we stand at the sidelines and watch the CEOs do this work? We each have a decision to make. Do we want to become a more conscious leader? To be a more conscious consumer? To be a more conscious investor? Do we care to make this a better planet for future generations? Do we care enough about our customers to want to create better experiences for them? Do we care to inspire those we work with?
As Gandhi reminded us, we can choose to “be the change” we wish to see in the world. In the final analysis it is really up to a decision each of us makes. Are we powerful enough to make a change, starting with ourselves?
Henna Inam is CEO of Transformational Leadership, a company focused on helping women achieve their potential to be transformational leaders. As a former C-suite executive with Fortune 500 companies, her passion is to help leaders be successful, deeply engaged and create organizations that drive breakthroughs in innovation, growth and engagement. Connect @hennainam on Twitter and at her blog.