What Is Conscious Capitalism?

Raj Sisodia

Co-Founder, Chairman Emeritus – Conscious Capitalism, Inc.

Conscious Capitalism seeks to amplify the myriad benefits of free market capitalism while reducing, eliminating, and often reversing many of its negative consequences. Companies that adopt this approach make a net positive impact on the world and significantly outperform the market financially.

Conscious Capitalism is a comprehensive alternative philosophy of doing business that seeks to address all of the drawbacks of the “selfish, instrumental and narrow” approach that has long been the norm. It seeks to amplify all of the myriad benefits of free market capitalism while greatly reducing or even eliminating and often reversing many of its negative consequences.

Conscious Capitalism has four tenets or pillars of belief:

  1. Higher Purpose: Every business should have a higher purpose that transcends making money. It is the difference the company is trying to make in the world. By focusing on its higher purpose, a business inspires, engages and energizes all its stakeholders.
  2. Stakeholder Orientation: Recognizing the interdependent nature of life and the human foundations of business, a business needs to create value with and for all of its various stakeholders (customers, employees, vendors, investors, communities, etc.).
  3. Conscious Leadership: Conscious leaders understand and embrace the higher purpose of the business and focus on creating value for and harmonizing the interests of all the stakeholders of the business. They are missionary rather than mercenary or military-style leaders.
  4. Caring Culture: Conscious business create cultures rooted in qualities such as trust, authenticity, caring, transparency, integrity, learning and empowerment. Most conventional business cultures are rife with fear and stress.

Conscious businesses spend money where it makes a positive difference, paying their employees and suppliers well and investing in customer care. They don't waste money on unnecessary advertising, gimmicky promotions, and the revolving door of high employee and supplier turnover. They empower people and engage their best contribution in service of a higher sense of purpose. They make a net positive impact on the world.

Our research has found that conscious companies significantly outperform the market financially; in the first edition of Firms of Endearment: How World Class Companies Profit from Passion and Purpose, we found a nearly 9-to-1 ratio of outperformance over a ten-year period. In the second edition (2014), the ratio was 14-to-1 over a 15-year period.

Our challenges have never been greater, but so is our consciousness of those challenges. Our collective determination to address those challenges and our ability to do so have also never been greater. We have at our disposal all the tools and technologies we need to solve virtually every one of our challenges, and we have the capacity and creativity to invent anything that we need but do not yet have.

If we can marshal the latent energy that is in each of us and channel it through creative organizational forms, we can and will eradicate poverty in this century, live on a more peaceful planet, restore and replenish our environment and threatened species, eliminate most major diseases, and enable the vast majority of humans to lead long, healthy, vibrant, productive, and meaningful lives. Our children and grandchildren and generations far beyond will collectively flourish in ways we cannot even imagine today.

This is the power, promise, and beauty of Conscious Capitalism. Why would you choose to operate any other way? How can you ethically justify doing so?

Posted in Blog.

About Raj Sisodia

Raj Sisodia is the FW Olin Distinguished Professor of Global Business and Whole Foods Market Research Scholar in Conscious Capitalism at Babson College. He is also Co-Founder and Chairman Emeritus of Conscious Capitalism Inc. In addition to a Ph.D. in Marketing from Columbia University, Raj has published ten books and more than 100 academic articles. His books include Conscious Capitalism: Liberating the Heroic Spirit of Business, Firms of Endearment: How World Class Companies Profit from Passion and Purpose, Everybody Matters and Shakti Leadership. He is on the Board of Directors at The Container Store, and a trustee of Conscious Capitalism Inc.