Why Conscious Capitalism Will Be The Framework For Your Next Decade Of Innovation

The profit motive, not government or charity, will create the kind of socially responsible world we want our kids and grand-kids to grow up in
Adapted from "Conscious Capitalism: Not Just Capitalist Pigs", originally published in BusinessWeek by G. Michael Maddock and Raphael Louis Viton.

Maybe if members of the social responsibility, green, or sustainable movements were to spend less time hectoring companies about climate change, worker exploitation, and the like, and more time pointing out the greater profits these businesses could produce by implementing socially responsible ideas, they would be more effective. If they recast the issue in terms of "and," as in "You can do X, which will increase earnings and by the way, contribute to the greater good," instead of "or," as in "You can do well or make money, but you can't do both," they would have to beat followers away with a stick. At its heart, social responsibility is an innovation challenge. These are the thoughts we came back with after attending the recent Catalyzing Conscious Capitalism conference in Austin, Tex. (see highlights here). Conscious capitalism is a new way of thinking about "social responsibility, being green, and/or sustainability," the idea that an organization (government, nonprofit, business) has an obligation to act not only in its own best interests but also in those of all its stakeholders (customers, employees, suppliers, investors, society, and the environment).

Needed: Clarity of Destination

Let us be clear. Our company is a huge believer in the idea of doing well by doing good. As an Executive Member of the Conscious Capitalism Alliance and Leadership Community we are proud of the clients we represent and the contributions - both financial and in-kind that we make. To us, this is not only good business but is also totally consistent with the kind of company we want to run. It aligns with our purpose and core values. On the way back from the conference, we sketched the conscious capitalism framework in a way that borrows from the late psychologist Abraham Maslow and his well-known hierarchy of needs. We think it's an apt parallel. To us, the conscious capitalism movement requires clarity of destination. We want to be known as a company that makes moneythe middle layerbut more important, we want our people to know what we believe so that everyone here can work effectively in unison, which in turn will allow us to make more money for our stakeholders and make more contributions to society. Because of that, we don't cast the issue of social responsibility in terms of "earthmuffins" vs. "plunderers and/or greenwashers" (people who pretend to do good, but in actuality don't). That dichotomy is neither helpful nor accurate. We prefer to talk about "going green" the way Ray Anderson of Interface or Jeff Immelt of GE do: "It is a way of making more money."

Not an End in Itself, but a Tool

It's much easier to sell a plan to reduce accidents by saying, "if we create a safer work environment, we will save money on insurance and manpower costs," than it is to run around screaming about the exploitation of the workforce. We don't know who said it at the conference, but he or she got the idea absolutely right: "Conscious capitalism is a devastatingly good weapon." It is not an end in itself but rather, a tool. Creating a win-win-win business model - with the wins being what benefits the company, its stakeholders, and the environment/society in general - is the only way to optimize value. That means that in addition to measuring your success monetarily, you need to adapt new metrics, in terms of relative intent and relative impact, that will tangibly illustrate the ongoing progress toward the interrelated desired outcomes of the model. At the onset, it could be as simple as charting your recycling efforts or as complex as measuring the return on investment on your employee-safety efforts. It will be capitalism, not government or charity, that creates the kind of world we want our kids and grandkids to grow up in. Getting that world will require innovative thinking, but it is well worth the trip for many reasons, including money. Nonetheless, if you just see this as a way to make more money - which it is - you are missing part of the point. Companies and brands that embrace conscious capitalism will create comepetitive advantage and increased customer interest for themselves ahead of others that will be left facing a costly and risky game of catch-up with potentially punitive consequences. As a friend once put it: We may not save the world, but it's important that our kids know we were on the right team and that we were trying.