It seems that a day does not pass without another scandal shaking America’s confidence in the business community. Whether it be abuse of finances, abuse of power or abuse of people, the bad actors in our community have tarnished the reputation of us all. As business leaders we need to take stock of our impacts not just on the companies we work for, but the world at large. We need to stand together in embracing a new way forward toward social and financial well-being. I believe that Conscious Capitalism is that path forward. The simple tenets that define this growing movement have helped numerous companies, including my own, become more successful by finding our higher purpose of building a better world.
Reorienting business to be a force for good is not a fringe idea. There is a growing understanding that this new direction is something that needs to be embraced for the social and financial well-being of the future. Larry Fink of BlackRock Capital made headlines earlier this year with a letter sent to CEOs of public companies in which he called on them to not only commit to delivering financial performance but also demonstrate how they are making a positive contribution to society. Warren Buffet is just as famous for his commitment to philanthropy and advancing social causes as he is for his financial expertise.
This prioritization of business’s ability to do good for society is central to the Conscious Capitalism movement, which is led by John Mackey, cofounder of Whole Foods, Starbucks CEO Howard Schultz, and other prominent business leaders. Businesses embracing Conscious Capitalism look beyond the bottom line, seeking to elevate society along with shareholder interests.
The financial value that Conscious Capitalism brings to its followers is quantifiable. According to the book Firms of Endearment: How World Class Companies Profit from Passion and Purpose, recent research covering a 15-year period showed that by following the principles of Conscious Capitalism, companies not only improved their cultures but are outperforming their peers 14-1. Consumers increasingly expect that the companies they do business with will have a social mission. Employees who feel good about the positive work of their company are happier and more productive. Doing good in business benefits everyone.
I became CEO of the South Central Connecticut Regional Water Authority (RWA) in 2009. The 2008 financial crash had left our company in dire straits. In the process of righting the ship, I discovered Conscious Capitalism. The RWA had already adopted parts of Conscious Capitalism into our culture, but I committed to integrating the philosophy into our company’s culture, operations and strategic plan for the future.
Like other Conscious Capitalist businesses, the RWA has found that pursuing a purpose beyond just chasing the bottom line has led to quantifiable benefits, including improved financial strength. The RWA’s state-of-the-art laboratory now tests tens of thousands of water samples from around the country, ensuring more people have access to high-quality water while bolstering our company’s revenues. New infrastructure investments have resulted in us having one of the lowest rates of main breaks in the industry. These strategies grew out of our determination to better serve our customers and our communities, and they have resulted in $20 million in savings that we used to mitigate rate increases by 18 percent. Looking beyond the bottom line has worked very well for the RWA, and I have made it my mission to share this roadmap to success with other companies.
To follow the Conscious Capitalism philosophy, a business first must examine its motivations and identify its unique “why” in the form of a higher purpose. This higher purpose is the value a company provides; a reason for being that motivates stakeholders beyond dollars and cents as well as inherently reinforces financial sustainability across the organization and amid market shifts. A higher purpose isn’t something accomplished by a corporate outreach department, it is central to the fabric of the entire business. For Conscious Capitalism’s benefits to become apparent, it must be adopted as a core philosophy that resonates throughout an organization to create a culture of aligned purpose.
The qualitative and quantitative benefits are clear, and aligning your company to follow Conscious Capitalism is not terribly burdensome. You may find, like I did, that you are already following some of the guideposts.