Opinions

The Benefits Of Conscious Capitalism

Is it time businesses moved beyond corporate social responsibility?

Share this article

Share this article

Is it time businesses moved beyond corporate social responsibility?

Opinions

The Benefits Of Conscious Capitalism

Is it time businesses moved beyond corporate social responsibility?

Share this article

Some of you may be familiar with the term Corporate Social Responsibility, popularised in the 1960’s, which is a set of initiatives a company can implement alongside their existing business practices.

Corporate social responsibility (CSR) strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others.

Conscious Capitalism is simply an advancement of the concept of Corporate Social Responsibility but it evolved to a more holistic way of thinking about the term. Its evolution came as a result of tying metrics and expectations to decipher whether the philosophy was tied to all areas of your business.

As Corporate Social Responsibility would be an aspect of your organisation, possibly siloed in its efforts and thought of as a cost centre, Conscious Capitalism is reflected in who you are and how you behave across your entire organisation.

If it sounds radical, it is, but it also makes for radical increases in profit and brand strength. This ideology shifts all aspects of an organisation to refocus its efforts on people first and economics after. That doesn’t mean that output isn’t measured, it just mandates a holistic way of defining success and those metrics aren’t all financial.

cash-flow

Profit is important, but how you achieve it is important too

Muhammad Yunus, who, in 2006, won a Nobel Peace Prize for his social and economic development work in Bangladesh, first used the term “Conscious Capitalism”.

Yunus, a professor of economics, founded the Grameen Bank in 1976, which focused on giving poor Bangladeshi people, especially women, access to microcredit to start micro businesses. Yunus hypothesized that social businesses, rather than charities, may be a better way to solve some of the world’s problems. In his Nobel Prize interview (Nobel Media 2014) Yunus explained the essence of conscious capitalism:

“Social businesses are businesses where you want to invest money to achieve a social objective... It's not a charity, it's not given and never seen back again...but I'm not doing it to make money for myself. I'm doing it to reach out to people, solve the social problems, solve an economic problem... I don't have to go around passing round a hat to collect money, because as a business it generates its own money and it continues.”

But Is it Good for My Business?

The 2013 Cone Communications-Echo Global report is an online survey that represents 10,287 adults, comprising 5,127 men and 5,160 women 18 years of age and older, with data pulled from 10 countries, including the United States, Canada, Brazil, the United Kingdom, Germany, France, Russia, China, India and Japan.

The report found compelling statistics that support the conscious capitalism ideology – from a consumer’s standpoint. The report concluded:

  • 96% have a more positive image of a conscious company than one without socially responsible practices
  • 94% will be more likely to trust that company
  • 93% will be more loyal to the company (i.e., continue buying products or services)
  • 91% of global consumers are likely to switch brands to one that supports a good cause, given similar price and quality
  • 92% would buy a product with a social and/or environmental benefit if given the opportunity, and 67% have done so in the past 12 months

How Much More Profitable Can it Be?

I interviewed Raj Sisodia, bestselling author of “Firms of Endearment: How World Class Companies Profit from Passion and Purpose” to understand the economic benefits to engaging in a compassionate capitalist strategy. Raj, who has consulted with and taught programs for enterprises like AT&T, LG, Sprint, Volvo, IBM, Walmart and McDonalds, truly believes in harnessing the power of capitalism for good.

To Raj, the conscious aspect of conscious capitalism enhances everything about the capitalism model. And he can back up this belief.

super businessman

Can conscious capitalism help you create a super business?

Through rigorous research of companies like Southwest Airline, Starbucks and Whole Foods, Raj found that over a 15-year period, conscious capitalist companies had investment returns of 1646%, whereas the S&P 500 companies did 157% over the same time frame (Sisodia, 2003). This finding alone should make the ears of any business leader perk up.

Raj warns that leaders have to be “very careful and thoughtful about the transition process” he said, “You cannot pull the plug suddenly on the old way.”

Like many business decisions, choosing a conscious capitalist path is both an investment and a risk, but with the right strategies and supports, Raj says it’s well worth it. In his many years of experience, Raj has witnessed the business benefits of a conscious capitalist time and time again.

But, I agree wholeheartedly with Raj’s final words of our interview, “You have to have a degree of faith” he said, “and belief that this is the right thing to do. You have to be able to say I want to do this even if it doesn’t result in higher profits.”

Take it from me, the reward is worth the risk.

Jennifer Moss is author of Unlocking Happiness at Work, advising employees and leaders on how to increase happiness at work and in life, published by Kogan Page.

Related Articles
Get news to your inbox

The Benefits Of Conscious Capitalism

Share this article