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In their 2013 book Conscious Capitalism, co-founder and former CEO of Whole Foods Market John Mackey teams up with businessman Raj Sisodia to introduce an improved version of capitalism. Mackey and Sisodia argue that capitalism is inherently good for people, but conscious capitalism is even better because it benefits all interested parties—including the environment and society at large. According to the authors, conscious capitalism has the potential to unleash unprecedented human ingenuity and solve most, if not all, of the problems we face.

Our guide will cover the philosophy of conscious capitalism and how to practice it—by prioritizing a good cause over profits, practicing enlightened leadership and management, and ensuring that all interested parties benefit from doing business with your company. In our commentary, we’ll compare conscious capitalism with other economic systems, discuss business management advice from other authors, and explore examples of conscious capitalism in greater detail.

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Finally, we all depend on a healthy environment for continued life—so Mackey and Sisodia argue that it’s counterproductive for your company to harm the environment and that you have a responsibility to make your business environmentally friendly.

(Shortform note: Experts note that businesses started concerning themselves with environmental issues during the third wave of environmentalism in the 1990s—when businesses followed the advice of green organizations to reduce their negative environmental impacts. The third wave was preceded by the second and first waves of environmentalism, whose aims were to conserve land and minimize pollution. In the late 2010s, society entered a fourth wave of environmentalism, which is focused on creating new technologies and strategies to solve existing environmental problems.)

We’ll go into more detail about best practices to ensure all interested parties win in the next section.

Part 3: Becoming a Consciously Capitalist Company

Now that you understand why and how everyone can win under conscious capitalism, we’ll explain how you can build a consciously capitalist company (CCC) by incorporating two key elements: prioritizing a good cause over profits and practicing enlightened leadership and management.

Prioritize a Good Cause Over Profits

Mackey and Sisodia argue that all CCCs exist for a good cause—instead of prioritizing profits, they prioritize making the world a better place in a particular way. For example, the authors explain that Whole Foods Market’s good cause is to promote nutritious eating and environmentally friendly agricultural practices. A good cause is especially important for employees: The authors argue that employees who don’t believe in the company’s cause—or who see that there is no cause beyond making money—won’t perform as well at work (which ultimately harms the company) and won’t be happy in their own lives.

The authors say there are four kinds of good causes—helping others (for example, by providing medical care), maximizing knowledge (for example, by performing research), promoting art (for example, by creating stylish clothing), and transforming the world (for example, by building the first AI). Founders usually already know the company’s cause when they establish a company. But if a company’s cause is unclear, Mackey and Sisodia recommend assembling a group of representatives from each interested party, from investors to environmentalists, to discuss and explicitly define the company’s cause.

Good Causes: Don’t Just Talk the Talk—Walk the Walk, Too

In Servant Leadership, businessman Robert Greenleaf argues similarly that businesses have a moral duty to contribute to the greater social good. According to Greenleaf, the purpose of any institution is to meet the needs of the people it serves. He says that American businesses have largely failed on this front, but they’re uniquely poised to do better because they must respond to market demands (including demands for ethical business practices) to remain profitable. Many businesses have responded to these demands by taking stances on social issues and promising to be accountable for their social impact.

However, some research suggests that there’s often a gap between a company’s desire to work toward a good cause and its actual performance with regard to that good cause. This may be the case for Whole Foods Market—its stated good cause is to promote good nutrition and environmentalism, but some evidence suggests it falls short of that goal at times. For example, one nutritional claim Whole Foods makes is that its beef doesn’t contain antibiotics, but a 2022 lawsuit alleges otherwise.

To ensure your business actually follows through with its moral duty to contribute to the greater social good (rather than just aspiring to), Greenleaf recommends that you collect opinions from all interested parties about your company’s social impact and implement a plan for improvement. Other experts note that this assessment should come from key strategists within the company, instead of being assigned to outside consultants or underqualified, low-ranking employees.

In addition to targeting a greater good, research suggests that reducing the gap between your company’s values and its enactment of those values may be key to employee satisfaction—employees generally find work more meaningful and, in turn, become more productive when the companies they work for practice what they preach.

Practice Enlightened Leadership and Management

According to Mackey and Sisodia, enlightened leaders and managers are the most important element of a CCC because they have the decision-making power to ensure that all interested parties win. They explain that leaders and managers occupy different roles: Leaders supply the ideas that propel a CCC forward, while managers put those ideas into practice. Next, we’ll explore each position in detail; then, we’ll discuss best practices that help enlightened leaders and managers ensure that everyone involved with the company wins.

(Shortform note: According to other experts, there are a few other differences that set leaders and managers apart. For example, leaders are concerned with the long-term goals of a company, while managers focus on reaching short-term goals. And while leaders embrace innovation, change, and even risks, managers are supposed to achieve stated goals using methods that have already been proven to work.)

What Enlightened Leaders Do

According to the authors, enlightened leaders differ from traditional leaders because they’re motivated by the company’s ability to make a difference in the world, while traditional leaders are motivated by the prospect of power or profits.

(Shortform note: Enlightened leaders are similar to servant leaders—a kind of leader outlined by Robert Greenleaf in Servant Leadership. Servant leaders aim to make a positive difference in the world by meeting others’ needs, prioritizing them over their own desires for money, power, or glory. Greenleaf adds that servant leaders have five other characteristics: They take responsibility for themselves, listen to their intuition, persevere, communicate effectively, and nurture their followers.)

Leaders can become enlightened leaders by practicing the following techniques:

Develop your emotional and spiritual intelligence. The authors argue that while traditional intelligence—your ability to use logic and solve problems—is valuable, it’s not enough. You also need emotional intelligence (a combination of introspection and the ability to connect with others) and spiritual intelligence (an ethical code) to lead effectively. To develop your emotional intelligence, they recommend making a conscious effort to love all of life and engaging in self-reflection practices like journaling. To develop your spiritual intelligence, they recommend contemplation and studying philosophical and religious traditions.

(Shortform note: Other experts clarify that emotional intelligence is important for leaders because it enables them to create a nurturing environment for employees to thrive in—a necessity for productive organizations. Experts are divided as to whether spiritual intelligence is a valid concept, but it may help leaders by enabling them to live more meaningful lives. However, others warn that leaders who exercise spiritual intelligence at work should demonstrate sensitivity and respect for differences in spiritual or religious beliefs, or else they risk stepping on employees’ toes.)

Act with integrity. The authors argue that it’s the leadership’s job to ensure the company never stops prioritizing its good cause. This means that enlightened leaders have to align their actions—and the company’s actions—with the company’s values at all times, even when it’s hard. They must admit and learn from their mistakes and immediately correct their course. Acting with integrity also entails supporting the growth of everyone involved with the company by treating them with dignity and setting them up for success.

(Shortform note: In The 15 Invaluable Laws of Growth, leadership consultant John C. Maxwell argues that if you want to act with integrity, you should prioritize strengthening your character. He explains that people with good character embody three universally valued virtues—honesty, integrity, and generosity—and he suggests that you build character by seeking out opportunities to serve others. He also says that having a strong character is key to inspiring others—if you want to be an effective leader, you’ll have to become living proof that your ideals are worth pursuing.)

What Enlightened Managers Do

According to the authors, enlightened managers differ from traditional managers because they promote employee autonomy, while traditional managers need employees to rely on them for direction in order to keep their jobs. Managers can become enlightened managers by practicing the following techniques:

Give employees the opportunity to make decisions. For example, this could mean something as simple as relaxing your dress code so your employees can dress in a way that’s still work-appropriate but feels authentic to them.

(Shortform note: Businesses are increasingly moving in the direction of self-management (another term for empowering employees to make decisions). Psychologists say self-management requires five key skills: taking care of your personal needs, dealing with your emotions in a healthy way, being neat and methodical, spending your time wisely, and keeping yourself motivated. It may be necessary to ascertain that your employees have developed these abilities—and, if not, to encourage them to work on these skills—before you give them decision-making power.)

Encourage experimentation at all levels. Mackey and Sisodia say that businesses often make the mistake of assuming that only higher-ranking employees have the knowledge or ability to innovate, and they restrict lower-ranking employees to simply following the rules. They argue that this stymies much-needed creativity at the lower levels of your company—which ultimately slows the evolution of your company and puts you behind your competitors. Instead, they recommend giving all employees room to try new things and balancing experimentation with accountability: When experimenters succeed, they should be rewarded and their ideas should be promoted. When they fail, they must be held responsible—for example, via demotion.

(Shortform note: In No Rules Rules, Reed Hastings and Erin Meyer explain that Netflix has put this advice into practice by dispersing decision-making power, to the point that employees can move forward with projects even if their managers disagree. The authors say this ensures that employees are more focused on benefiting the company than pleasing their bosses, and they recommend Netflix’s four-step strategy for ensuring that employee experiments succeed: First, employees gather feedback on the project; next, they put their ideas to the test; then, they take the lead on further project development; finally, they celebrate their success or share what they’ve learned from failing.)

Best Practices for Ensuring Everyone Wins

Mackey and Sisodia argue that leaders and managers can ensure that everyone involved with their company wins if they demonstrate care for each interested party and use systems thinking to understand how their business and all interested parties are interrelated. Caring for an interested party means being grateful for their participation (as opposed to taking them for granted), conscientiously tending to their needs, and ensuring that doing business with you benefits them.

(Shortform note: Since according to Mackey and Sisodia, effective leaders and managers must care for interested parties, you may need to intentionally improve these skills. One way to increase your capacity for caring is by becoming more compassionate, which experts say you can do with the help of compassion training programs that incorporate meditation or writing practices.)

Systems thinking is a kind of logic that focuses on the big picture: Instead of analyzing the contributions and needs of each independent part, it sees all parts of the system as interconnected and incapable of functioning well without one another. (Shortform note: According to Donella Meadows, author of Thinking in Systems, one way to improve your capacity for systems thinking is by drawing a diagram of the system you’re interested in and asking others for feedback about how to improve your understanding of the system.)

Mackey and Sisodia also make specific recommendations for meeting your responsibility to each interested party without sacrificing anyone else’s needs. Let’s explore those now.

Investors

Let investors determine your company’s leadership—Mackey and Sisodia argue that since it’s investors’ money you’re working with, they should have the final say about who is entrusted with the power to decide how that money will be used.

(Shortform note: Experts note that public companies are typically led by a board of directors (who have formal governance over the company) that is democratically chosen by investors each year. In contrast, private companies’ directors can be chosen by investors or according to other rules the company sets for itself. Given Mackey and Sisodia’s advice, it may be beneficial for private companies to formally document investors’ right to determine company leadership.)

Don’t give in to unrealistic performance pressures. The authors explain that it’s common for companies to experience pressure to appear profitable by the end of each quarter so that stock values will increase, maximizing investors’ profits. Companies often sacrifice the well-being of other interested parties in order to achieve these profits—for example, by charging customers more. Instead, the authors say you should aim for honesty and fairness, keeping the big picture—everyone’s satisfaction—in mind. Investors’ profits aren’t more important than any other interested party’s needs.

(Shortform note: Experts clarify that when it comes to stock values, market expectations matter more than actual profits. This means that if your company earns more than it was predicted to, company stock values may actually depreciate instead of going up. It’s less important to appear profitable than it is to appear predictable—which is another reason not to give into unrealistic pressures to increase profits each quarter.)

Fairly distribute employee stock options. Mackey and Sisodia explain that executives are often given the opportunity to own a high concentration of company stock, which can be problematic if executives are more interested in short-term profits than the company’s long-term success. They might force decisions that are profitable now but ultimately unwise because they’re hoping to sell stock, make money, and get out of the business before suffering any negative consequences. On the other hand, if all employees are given the opportunity to own a small amount of stock, they might be more motivated to help the company succeed since they have a financial stake in it.

(Shortform note: Beyond motivating employees to perform well, offering stock options as a form of compensation to all employees may also help your business save money: Compensatory stock options can be offered in exchange for a lower salary, which means your company can fairly compensate employees at a lower cost and reinvest the money saved on payroll in other areas. Also, most stock options contracts require an employee to work for the company for a certain amount of time before they kick in, which incentivizes them to continue working at the company. Maintaining employee loyalty at all levels helps your company succeed in the long run—it’s expensive to replace even lower-ranking employees.)

Suppliers

Build up the suppliers you count on. The authors explain that practically, this could mean investing in them or coming up with strategic solutions to supply chain problems. For example, say you own a restaurant that purchases ingredients from local farmers. To help those farmers continue to provide the produce you need, you might contribute money to conservation programs that make farming more sustainable.

(Shortform note: If you try to build up the suppliers you count on but find that they’re still unreliable, it may be time to switch suppliers. In that case, experts recommend finding a new supplier whose company values match up with yours. Value alignment creates a foundation of mutual trust—you each believe in what the other is doing, so you’ll be more inclined to treat each other well.)

Foster a partnership. Mackey and Sisodia say that instead of trying to get the most out of each other while giving as little as possible in return, you should aim for a mutually beneficial relationship with suppliers. For example, this could mean not haggling over prices—unless it’s clear that they’re charging you unfairly, pay them what they ask for as soon as payment is due. Like any other business, they have to profit to get by; and since you need them to succeed, you want them to profit, even if that means you pay a little more than you’d like to.

(Shortform note: One way to strengthen your partnerships with suppliers is to practice the Japanese model known as keiretsu, where businesses (including suppliers and buyers) closely network with each other—and sometimes purchase stakes in each others’ companies—to become a more productive, smoothly running machine. Experts say keiretsu has six steps: learning more about how your suppliers operate, encouraging competing suppliers to work together, giving suppliers regular feedback, helping suppliers become more technologically efficient, keeping suppliers informed, and working together to enhance each company.)

Renegotiate contracts often. Mackey and Sisodia explain that this gives you a chance to address any major changes in the supply chain and fulfill any new or previously unmet needs. It also creates faith in the fairness of your working relationship.

(Shortform note: Experts say there’s another benefit to regularly renegotiating contracts with your suppliers: It buttresses the overall supply chain, allowing suppliers and buyers to adapt to novel situations like the Covid-19 pandemic more quickly and with fewer major disruptions.)

Employees

Hire people whose values are aligned with your company’s values. Mackey and Sisodia explain that when employees believe that their work serves an important purpose, they’ll be intrinsically motivated to do their jobs well and they’ll have greater job satisfaction. (Shortform note: To ensure that new hires share your company’s values, experts recommend that you make those values explicit during interviews and ask prospective employees about how they’ve put those values into practice. For example, if your company values honesty, you might ask interviewees to tell you about a time when they had to tell someone a difficult truth.)

Encourage employee collaboration. Mackey and Sisodia say that collaboration fulfills a fundamental human need for connection and makes work more fun. Also, teams can accomplish more than individuals can—so your company will benefit from employee collaboration, too. (Shortform note: Experts share five practices that foster employee collaboration: Give everyone equal access to (and ability to contribute to) shared knowledge. Promote individuals’ unique talents. Welcome feedback. Unite employees around their ability to make a positive difference in the world. Finally, provide opportunities for employees to have fun together.)

Promote a healthy work culture by emphasizing equality, trust, and humanity. You can promote equality by fairly compensating your employees, which involves instituting salary caps to ensure that higher-ups aren’t overpaid and providing health insurance and wellness programs. You can promote trust by ensuring that the company (and everyone involved with it) is honest, fair, loyal, and accountable. Finally, you can promote humanity by encouraging employees to openly express their feelings, helping people find new jobs when you need them to leave the company, and hiring more women leaders—the authors say that women are naturally more likely to practice and spread humane values like empathy and collaboration.

(Shortform note: Human resources experts say that a healthy work culture is integral to employee retention—studies suggest that a negative work culture is a top factor (more important than pay) that leads employees to quit their jobs. Other aspects of a healthy work culture may include a sense of belonging, clarity of performance expectations and behavioral standards, and respect for cultural and personal diversity. Research also affirms that employing women leaders can make your work culture healthier because women tend to behave more ethically than men—however, women who address immorality in the workplace also tend to encounter disproportionate retaliation, which can counteract that effect.)

Customers

Build trust. Mackey and Sisodia say that if you treat customers with dignity, they’ll trust you—which is necessary in the long term because businesses often have to educate customers about their own needs, and customers won’t buy into that education if they don’t trust the business. For example, a hospital isn’t likely to buy novel medical equipment from you if you have a history of selling faulty equipment—to convince them that they need this new medical equipment, you need their trust.

(Shortform note: In addition to Mackey and Sisodia’s advice to treat customers with dignity, Stephen M.R. Covey highlights other methods for building trust in The Speed of Trust: being authentic, competent, and explicit. You can apply this to your business by communicating to your customers honestly, clearly outlining what they can expect from you, delivering the results you promise, and showing your customers that you trust them, too.)

Innovate. Mackey and Sisodia say that to improve your customers’ lives, you have to offer them the best of the best. This often requires innovation—the creation of new goods and services that meet not only the needs your customers know about, but also the needs your customers don’t know they have yet.

(Shortform note: In Ten Types of Innovation, Larry Keeley, Ryan Pikkel, Brian Quinn, and Helen Waters offer several pieces of advice for ensuring your innovations are successful. These include understanding what you want to achieve and how it will change your industry, using prototypes to test and improve your innovations, and developing a disciplined approach to innovation (rather than relying on spontaneous inspiration).)

Make your marketing educational. According to the authors, good marketing teaches your customers about what they need and how you can fulfill that need—and when you make good on that promise, you reinforce their trust in you.

(Shortform note: In All Marketers Are Liars, Seth Godin argues that while good marketing educates customers about the ideas you’re attempting to spread, it doesn’t necessarily have to be truthful. He explains that customers tell themselves stories (which may not be accurate) about how your product or service is going to make them feel—and that your job as a marketer is to convince your customer that purchasing your product or service is going to fulfill an emotional need.)

Society

Be philanthropic. The authors explain that you can donate money to community nonprofits or create your own. You can also partner with local nonprofits by encouraging your employees to donate their time to them. They suggest that you set up community service opportunities during workdays—that way employees aren’t giving up their own free time by participating—and allowing employees to volunteer for projects that are personally meaningful to them, rather than assigning them to an arbitrary cause.

(Shortform note: Some experts recommend that to maximize your philanthropic effectiveness, your company should develop a corporate philanthropy strategy: a plan for contributing to the greater social good that also makes your company more competitive. Part of this strategy might be to sponsor nonprofit programs—for example, by paying your employees to volunteer for an initiative. Experts also note that incentivizing your employees to volunteer directly benefits your company—when employees volunteer, they learn new skills, improve their mental health, and forge a stronger bond with their employer and coworkers.)

Learn from your enemies. Mackey and Sisodia explain that entities that are commonly considered the enemies of businesses—like competitors, social and environmental activists, and labor unions—actually count as interested parties because they genuinely care about how your business functions and whether you succeed or fail. They also have a lot to teach you—they bring issues to your attention that you wouldn’t have seen otherwise, like employee unhappiness, which you can then address.

(Shortform note: Another reason to care about competitors, activists, and unions is that doing so may give you a competitive advantage. According to Microsoft CEO Satya Nadella in Hit Refresh, forming strategic partnerships with competitors benefits your customers (which, in turn, contributes to your company’s success). Working with activists can help you stay competitive by helping you meet society’s standards for ethical corporate behavior, which is one factor consumers weigh when deciding whether to buy your product. Similarly, labor unions may help you stay competitive by ensuring you pay competitive wages, which is linked to greater employee productivity—that way, your company gets more bang for its buck.)

Foster a healthy relationship with the media and government. The authors explain that a healthy relationship with the media is one where you balance traditional media (which shares updates about your business with other interested parties) and social media (where you’re in control of how your business is represented). A healthy relationship with the government is one where there’s only enough government regulation to stop businesses from harming people or the environment (and not enough to slow innovation), and businesses are taxed fairly—which, in the authors’ eyes, means a low rate, allowing them to invest more in projects that directly support society’s health.

(Shortform note: Experts note that when it comes to traditional media relations, it’s important to nurture a direct relationship between your company and journalists you hope will represent your company positively. Similarly, for social media, it can be helpful to build strategic relationships with influencers who are willing to promote your product or service. As for your company’s relationship with the government, experts suggest educating policymakers about your industry so they can institute regulations that support innovation rather than hinder it. Experts also note that there’s a disadvantage to low corporate tax rates—governments consequently lack the funds to meet society’s basic needs.)

Environment

Become environmentally conscious. The authors contend that most environmental damage is done accidentally—business owners don’t set out to purposefully harm the environment, but it happens because they don’t fully understand the consequences of their actions. For example, some argue that the AI boom has been accompanied by a hidden environmental cost. To become more environmentally conscious, educate yourself about environmental challenges that relate to your line of business.

(Shortform note: One way to become more environmentally conscious is to learn more about humanity’s collective ecological footprint—the ways humans have changed the natural world to suit their needs. According to science journalist Alan Weisman in The World Without Us, these changes include building cities and electrical infrastructure, transforming forests into farmland, and generating massive amounts of waste. With humanity’s footprint in mind, you can brainstorm ways to reduce your personal footprint, as well as that of your CCC.)

Proactively improve the environment. Mackey and Sisodia say that while minimizing the harm your business does to the environment is a good first step, you shouldn’t settle for the bare minimum—instead, you should take the initiative to fund research or innovative programs that address environmental problems.

(Shortform note: One common way for businesses to proactively improve the environment is by making ESG investments. ESG investing is a strategy that evaluates potential investment opportunities based on how they fare environmentally, socially, and/or governmentally. Environmentally sound investments may include, for example, buying stock in companies that responsibly self-manage their pollution output. Note, however, that the ability to make ESG investments has been restricted in some US states as of 2023, due to an ongoing cultural dispute about whether it’s OK for businesses to take political stances.)

Don’t focus solely on climate change. Mackey and Sisodia argue that although climate change is a real threat to the environment, it’s not the only or most important concern—and that treating it as though it is can lead you to neglect other environmental issues, like deforestation or pollution. Instead, they recommend that you strategize about how to tackle various kinds of problems.

(Shortform note: In Apocalypse Never, science writer Michael Shellenberger expands on the view that climate change is an overstated concern—he argues that climate activists misrepresent the truth when they claim that climate change poses a threat to the planet’s survival and that deforestation and non-degradable wastes (like plastic) pose a bigger threat to the environment. He also argues that since humans only degrade the environment because it’s a survival necessity in developing countries, further industrialization is the solution to environmental problems—an effort businesses would undoubtedly play a role in.)

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