Raj Sisodia - Conscious Capitalism at Barrett CTT 2012 Conference South Africa

CONSCIOUS CAPITALISM ACTUALIZING BUSINESS AND HUMAN POTENTIAL

Raj Sisodia Professor of Marketing, Bentley University Chairman, Conscious Capitalism Institute

WHAT CAPITALISM HAS ENABLED IN A VERY SHORT TIME

A Tale of Two Short Centuries

$467

$453 $566

$596

$615 $667

$873

$1,262

$2,113

$6,055

2010: $7,278

GDP per Capita, 2000 $

Industrial Revolution Begins

Source: www.VisualizingEconomics.com; Angus Maddison, University of Groningen; www.prb.org; www.worldbank.org

0 2000 500 1000 1500 Year

The Economic Success of Capitalism is Unprecedented in World History

Real per capita income has increased: •16x in developed countries •35x in Japan •3x in Africa •100x in the U.S. (adjusting for quality

and affordability)

Capitalism is Ending Poverty on Earth

World Population Living on Less Than $1/Day (in ‘03$ )

0%

50%

100%

1800 1950 1980 2003

Source: World Bank (constant 2003 dollars)

The percentage of people living on less than $1 per day has dropped from 85% in 1820 to about 17% today.

If current trends continue, poverty will be virtually eliminated in the next 50 years.

good because it creates value ethical because it based on voluntary exchange noble because it can elevate our existence heroic because it lifts people out of poverty Business is

Yet, Mistrust of Business is Pervasive

Only 2 percent of investors believe that CEOs are “very trustworthy”; 72 percent

believe that wrongdoing is commonplace at companies.

2011: 88% of Americans believe that big companies have too much influence on

government, up from 83 percent in 2004.

2011: 79% believe business is too concerned about making a profit and not enough about responsibilities to workers, consumers, and the environment.

Americans’ confidence in big business has declined steadily, from about 34% in 1975 to a historic low of 16% in 2009, rebounding to 19% in 2011.

“The whole growth model we created over

the last 50 years is simply unsustainable

economically and ecologically… Both Mother Nature and

Father Greed have hit the wall at once.”

March 7, 2009

After just one century of modern living…

75% of forests are gone

30% of arable land is gone

Large mammals are down 90%

Large fish are down 95%

Half of all species alive today are likely to disappear in 50 years

Toxic burden on humans is rising

Oil supply is decreasing just as demand is rapidly rising

After 1980, we started using more than Nature can renew; now 1.3 times

If everyone lived as Americans, would need FIVE earths…

…as Europeans, THREE earths

0%

5%

10%

15%

20%

25%

30%

35%

40%

Such cynicism and distrust have huge societal costs

Confidence in Big Business % of Americans with a "Great Deal" or "Quite a Lot" of Confidence in Big Business

WHY has this happened?

THE WORLD has changed

PEOPLE have evolved

BUSINESSES have not kept up

We are changing…

1989 THE WORLD CHANGES

In 1989, for the first time in U.S. history, the majority of adults were over 40

Who is this man?

What did he do to change the world? Tim Berners-Lee

He invented the World Wide Web in 1989

Peter Senge

Live in harmony with nature

Fully mindful and awake

Understand all the consequences of our actions

Reject violence

Commitment to the truth

A finer sense of right and wrong

“The dogmas of the quiet

past are inadequate to

the stormy present.”

To flourish in the future, companies will have be aligned with the new realities of our lives and embody a

more conscious way of being

What will it take for companies to flourish in the future?

“A conscious business fosters peace and happiness in the individual, respect and solidarity in the community, and mission

accomplishment in the organization.” Fred Kofman, Conscious Business

MEETINGS END WITH APPRECIATIONS

ANIMAL COMPASSION STANDARDS

MINISCULE MARKETING SPENDING

1800%

MEMORIAL DAY FLOOD

A HIGHER PURPOSE

93%

19:1

DECLARATION OF INTERDEPENDENCE

FUTURE SEARCH

The Tenets of Conscious Capitalism

STAKEHOLDER INTEGRATION

CONSCIOUS LEADERSHIP

CONSCIOUS CULTURE

CONSCIOUS MANAGEMENT

HIGHER PURPOSE &

CORE VALUES

Can you build a business on love?

Can you build a business on love?

“Heart attacks are highest on

Monday morning.”

An Epidemic of Apathy

The Shame of “Management”

TODAY!

LOVE

JOY AUTHENTICITY

CARING

COMPASSION

SOULFUL

10.5-to-1 performance

“FoE”

(1646%)

Stock Returns over a 15 Year Period (’96-’11)

S&P 500

(157%)

15 Year 10 Year 5 Year 3 Year

Cumulative Annualized Cumulative Annualized Cumulative Annualized Cumulative Annualized

FoE Return 1646.1% 21% 254.4% 13.5% 56.4% 9.4% 77.4% 21.1%

GTG Return 177.5% 7% 14.0% 1.3% -35.6% -8.4% -23.2% -8.4%

S&P 500 Return 157% 6.5% 30.7% 2.7% 15.6% 2.9% 10.3% 3.3%

FoE Compared to Good to Great

What is a “Great” Business?

Maximizes “total value created” Enhances the overall health and well being of society

Brings joy, fulfillment, and a sense of meaning to all its stakeholders

Enriches the world

Businesses Create, and Destroy, Many Kinds of Wealth

intellectual financial social emotional

spiritual cultural physical natural

The Tenets of Conscious Capitalism

STAKEHOLDER INTEGRATION

CONSCIOUS LEADERSHIP

CONSCIOUS CULTURE

CONSCIOUS MANAGEMENT

HIGHER PURPOSE &

CORE VALUES

Meaning comes from:

Doing work that matters

Selfless love Finding meaning

in suffering

Happiness ensues from living a life of meaning and

purpose

Profit ensues from

working toward a higher purpose,

building businesses on love, and

growing from adversity

Compensated engagement is going down

Uncompensated effort is going up – volunteer work is nourishing people in a

way that paid isn’t

The

Purp

ose

Inst

itute

Great Purposes are HEALING

H

E

A

L

I

N

G

Heroic

Evolutionary

Aligning

Loving

Inspiring

Natural

Generous

Healing: To restore to health or soundness; to cure; to restore to spiritual wholeness; to become whole and sound. In a world with too much suffering and ill-health, healing is divine work.

The difference you're trying to make in the world

Drives everything you do Matters to all stakeholders Is your reason for being that goes beyond

making money YET… typically results in making more

money than you thought possible

Roy Spence

The Power of Purpose

Southwest Airlines Give people the freedom to fly

Google Organize the world’s information and

make it easily accessible and useful

REI Reconnect people with nature

The Tenets of Conscious Capitalism

STAKEHOLDER INTEGRATION

CONSCIOUS LEADERSHIP

CONSCIOUS CULTURE

CONSCIOUS MANAGEMENT

HIGHER PURPOSE &

CORE VALUES

56

Whole Foods Market Stakeholder Interdependence Model

I INVESTORS

C CUSTOMERS

E EMPLOYEES

S SOCIETY

E ENVIRONMENT PARTNERS

P

Business, Society and the Planet

Traditional View

The PLANET

BUSINESS SOCIETY

Conscious View

The PLANET

SOCIETY

BUSINESS

Conscious Capitalism ≠ CSR

• Shareholder-centric • Independent of purpose • Often grafted on to

traditional business model • Easy to meet as a charitable

gesture • Performance implications

unclear • Independent of type of

leadership

• Stakeholder-oriented • Incorporates higher purpose • Societal orientation is at the

core of business model • Requires genuine

transformation • Significantly outperforms

traditional business model • Requires conscious

leadership

The Tenets of Conscious Capitalism

STAKEHOLDER INTEGRATION

CONSCIOUS LEADERSHIP

CONSCIOUS CULTURE

CONSCIOUS MANAGEMENT

HIGHER PURPOSE &

CORE VALUES

“We must be the change we want to see in the world.”

Conscious Businesses Need Conscious Leaders

Purpose-driven Authentic

Caring Systems thinkers and “systems feelers”

Emotionally intelligent Spiritually evolved

Strong character and integrity Trustee oriented

The Tenets of Conscious Capitalism

STAKEHOLDER INTEGRATION

CONSCIOUS LEADERSHIP

CONSCIOUS CULTURE

CONSCIOUS MANAGEMENT

HIGHER PURPOSE &

CORE VALUES

Culture eats

strategy for lunch! breakfast!

T

A

C

T

I

L

E

Cultures of Conscious Businesses

Trust

Accountability

Caring

Transparency

Integrity

Loyalty

Egalitarian

Humans are born to care.

Our institutions magnify or

depress the human capacity

to care. Jane Dutton

University of Michigan

Conscious Management

Beyond Theory Y

• Self-Organizing Self-Motivating Self-Managing

• Decentralization

• Empowerment

• Teamwork

• Collaboration

Higher sales intensity & growth

Lower gross margins, higher net margins

Lower marketing, product return costs

Lower legal and administrative costs

Greater employee retention & engagement

Cons

ciou

s Cap

italis

m w

orks

The biggest difference between ordinary and conscious businesses?

Creative, Caring Human Energy!

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We are all in the same boat.

“I would not give a fig for the simplicity on this side of complexity but I would give my life for the simplicity on the other side of complexity.”

Oliver Wendell Holmes, Jr. US Supreme Court Justice

Humanity is one spirit

Natural resources are

finite

Our inner resources

are infinite

Ron Pompei

The Opportunity

Those of us alive today have the opportunity to lead the most meaningful lives ever lived

Our challenges are great, but so is our consciousness and our ability to change things

We have all the tools we need; we just need to unleash human ingenuity on our challenges in a holistic, conscious, caring way

Lynne Twist

Essential Reading for Conscious Capitalists

www.ConsciousCapitalism.org

Raj.Sisodia@ConsciousCapitalism.org Please email me if you are interested in being involved with

setting up a South Africa Conscious Capitalism Chapter

Can successful profitable organizations really be built on “love”?

Is a “Conscious” agenda realistic in tough, recessionary times?

How can we embed conscious living and conscious business principles in young people early on?

Some Questions