Why the Future Must Belong to “Conscious Business”

Presently, negative headlines are troubling two icons of Germany’s economy: Volkswagen deceived millions of its customers, thousands of employees and additional millions of people in the “Diesel affair”. The U.S. see public health endangered by the higher exhaust fumes: MIT calculated in a study that in the U.S. alone, 60 to 130 people will die a premature death as a consequence of the fumes.

The Deutsche Bank is another candidate in distress. In 2015/ 16, the company will suffer a loss of several billions. In both cases, the crises have been self-made: Greed, ignorance, arrogance and a complete absence of consciousness on the top management level have led to the largest crises in the recent history of both enterprises.

The facts that the top managers responsible for the crises are no longer in their positions and that some of them regularly are summoned before a court illustrate that a completely different approach of entrepreneurial acting and thinking is long overdue, if sustainable success of a company is to be achieved. It is quite amazing how little some companies have learned from the financial crisis in 2008.

Alert, conscious and mindful

The mistakes that have led up to these crises would not have happened in a “Conscious Business”. In the U.S. at least, the principles behind this concept have recently gained quite some popularity – also due to the publications by John Mackey und Raj Sisodias on the topic.

In companies where the management and the employees have understood the principles of “Conscious Business” as centerpiece of all entrepreneurial activities, all action is guided by the principles of alertness, consciousness and mindfulness. This approach does not assume that profit-making is an organization’s primary purpose, but aims for sustainable economic success by the uncompromising implementation of the four principles of a “Conscious Business”: Orientation at a higher purpose and the core values, conscious leadership, conscious culture and management, plus the integration of all stakeholders.

imageSource: Mackey, John and Raj Sisodia (2014): Conscious Capitalism – Liberating the Heroic Spirit of Business

Here is a quote from the book “The Conscious Capitalist Credo” by John Mackey:

“Conscious businesses are galvanized by higher purposes that serve, align, and integrate the interests of all their major stakeholders. Their higher state of consciousness makes visible to them the interdependencies that exist across all stakeholders, allowing them to discover and harvest synergies from situations that otherwise seem replete with trade-offs. They have conscious leaders who are driven by service to the company’s purpose, all the people the business touches and the planet we all share together. Conscious businesses have trusting, authentic, innovative and caring cultures that make working there a source of both personal growth and professional fulfillment. They endeavor to create financial, intellectual, social, cultural, emotional, spiritual, physical and ecological wealth for all their stakeholders.”

“Conscious Companies” are also financially successful

Quite a number of enterprises are already implementing these principles with much success. One example is Southwest Airlines (abbreviation at the stock exchange: “LUV”!). This airline was the one that transported the most passengers within the U.S. in 2014 and has never suffered a loss in any year since its establishment 44 years ago. The company’s founder and former CEO, Herbert D. Kelleher, was even occasionally encountered loading luggage.

Another example is Whole Foods Market. The company was founded in 1980 and, with an annual turnover of approx. 13 billion USD, is the world’s largest ecological super market chain. Its founder and CEO, John Mackey, is presently shaping the “Conscious Business” trend in a game-changing manner. And Fred Kofman, LinkedIn’s “philosopher and vice president” is one of the most important pioneers of the “Conscious Business” concept.

But what about the financial success of these companies that declared it their goal to maximize their value for society as a whole – and not only for the shareholders alone? In his survey “Firms of Endearment”, published as a book, Raj Sisodia and his co-authors prove that “humanistic companies” – as he calls them – are also much more successful financially than the companies listed in the Standard & Poor’s 500 Index (see table). And they only refer to the investors’ profits. Overall societal profit, as they result from environmental awareness, for example, happy employees and long-lasting and particularly stable supplier relationships were not even considered.

 

imageNotes:
– Company returns are total returns with dividends reinvested and compounded.
– a: Companies from Firms of Endearment, updated by authors.
– b: Standard & Poor’s index of five hundred U.S. companies

Source: Sisodia, Raj, David Wolfe and Jag Sheth (2014): Firms of Endearment – How World-Class Companies Profit from Passion and Purpose

Added value by more values

“Conscious Companies” place man into the focus of all business activity – man within the company and man in general. In too many cases, this very obvious and self-understood fact (man is and will remain the main player) seems to have been lost over the past decades. Too much emphasis was placed on technical and mechanical qualifications that enable processing tasks within a profitable time frame and in consideration of a limited budget – to achieve a monetary/ material gain in the end.

But in the long run, not one single person will emerge happy from such conditions. The members of “Conscious Business” will think about the higher purpose of their activities, use this as an orientation in their daily work and thus influence their relationships with customers, stakeholders and the world around them. It is about a deeper understanding why companies exist and how they can generate added value by more values. For some companies (refer to above), this implies an extraordinary and urgent change of culture.

Recommended literature:

– Kofman, Fred (2006): Conscious Business – How to Build Value Through Values, Boulder
– Mackey, John and Raj Sisodia (2014): Conscious Capitalism – Liberating the Heroic Spirit of Business, Boston
– Sisodia, Raj, David Wolfe and Jag Sheth (2014): Firms of Endearment – How World-Class Companies Profit from Passion and Purpose, Upper Saddle River
– Other media: Video „Lessons in Conscious Business at LinkedIn: Jeff Weiner, Fred Kofman, Soren Gordhamer“, Dialogue on Wisdom 2.0 Conference 2015

Prof. Dr. Christian Schmidkonz
About Prof. Dr. Christian Schmidkonz 34 Articles
Christian Schmidkonz, Professor for Asian-Pacific Business Studies at Munich Business School, is Academic Program Director of the Master International Business study program. His academic focus is on Business in China and Entrepreneurship. After studying economics at the Ludwig-Maximilians-University in Munich and graduation at the Mercator School of Management of the University Duisburg-Essen, Schmidkonz worked as senior consultant for the region of “Greater China”. Schmidkonz is a partner of the THINK!DESK China Research & Consulting and works as an analyst on topics around Taiwan.