• Entrepreneur of the Month

Why Is Capitalism Under Attack?

APRIL 2013

ENTREPRENEUR OF THE MONTH: WHOLE FOODS MARKET CEO JOHN MACKEY

By Hope Katz Gibbs
Publisher, Be Inkandescent

“Despite enabling widespread prosperity, free-enterprise capitalism has earned little respect from intellectuals and almost no affection from the masses,” observed Whole Foods Market CEO John Mackey when he spoke recently at the National Press Club in Washington, DC.

“Rather than being seen for what they really are—the heroes of the story—capitalism and business are all too frequently vilified as the bad guys and blamed for virtually everything our postmodern critics dislike about the world,” he said, quoting from his 2013 book, “Conscious Capitalism: Liberating the Heroic Spirit of Business.”

Before we leap into a discussion about Mackey’s big ideas, here are the four tenets of what he and co-author Raj Sisodia see as the basic elements of Conscious Capitalism.

Defining Conscious Capitalism

Tenet 1: Higher Purpose. Business has a much broader positive impact on the world when it is based on a higher purpose that goes beyond only generating profits and creating shareholder value. Purpose is the reason a company exists. A compelling sense of higher purpose creates an extraordinary degree of engagement among all stakeholders and catalyzes creativity, innovation, and organizational commitment.

Tenet 2: Stakeholder Integration. Stakeholders are all the entities that impact or are impacted by business. Conscious businesses recognize that each of their stakeholders is important and all are connected and interdependent, and that the business must seek to optimize value creation for all of them. All the stakeholders are motivated by a shared sense of purpose and core values. When conflicts and potential trade-offs arise between major stakeholders, conscious businesses engage the limitless power of human creativity to create win-win-win-win-win-win situations that transcend those conflicts and create a harmony of interests among the interdependent stakeholders.

Tenet 3: Conscious Leadership. Conscious business requires conscious leadership. Conscious leaders are motivated primarily by service to the firm’s higher purpose and creating value for all stakeholders. They reject a zero-sum, trade-off-oriented view of business and look for creative, synergistic, win-win-win approaches that deliver multiple kinds of value simultaneously.

Tenet 4: Conscious Culture and Management. The culture of a conscious business is a source of great strength and stability for the firm, ensuring that its purpose and core values endure over time and through leadership transitions. Conscious cultures naturally evolve from the enterprise’s commitments to higher purpose, stakeholder interdependence, and conscious leadership. They usually share many traits, such as trust, accountability, transparency, integrity, loyalty, egalitarianism, fairness, personal growth, and love and care.

So why is capitalism under attack?

If these tenets are true, why does free enterprise earn so little respect from intellectuals and the masses?

“Capitalism,” Mackey says, “is portrayed as exploiting workers, cheating customers, causing inequality by benefiting the rich but not the poor, homogenizing society, fragmenting communities, and destroying the environment.”

Plus, he says, most entrepreneurs are accused of being motivated primarily by selfishness and greed. Mackey insists that entrepreneurs are the true heroes in a free-enterprise economy because historically they are the ones driving progress.

“[Entrepreneurs] solve problems by creatively envisioning different ways the world could be and should be,” explains the Whole Foods Market co-founder. “With their imagination, creativity, passion, and energy, they are the greatest creators of widespread change in the world.”

The entrepreneur as hero, huh?

Consider this idea from former educator Candace Smith, now vice president of the International Foundation for Research in Experimental Economics: “Ultimately, the hero is the representative of the new—the founder of a new age, a new religion, a new city, the founder of a new way of life or a new way of protecting the village against harm; the founder of processes or products that make people in their communities and the world better off.

“In our modern world, the wealth creators are the entrepreneurs,” Smith insists. “They travel the heroic path and are every bit as bold and daring as the heroes who fought dragons or overcame evil.”

If USA Today’s March 26 cover story is any indication, this idea may be catching on, especially with Millennials.

Written by marketing reporter Bruce Horovitz, the article is entitled, Millennials Spur Capitalism With a Conscience, and describes how Millennials are demanding capitalism with a conscience—and some of America’s biggest brands are delivering.

He quotes Mackey saying, “In an ultra-transparent world, where information zips from Facebook to Twitter to Instagram, just about everything a company does is out in the open. “If everything you’re doing is seen, it’s human nature to do things that people would approve of.”

Horovitz adds: “But it’s no longer just outliers such as Ben & Jerry’s and Whole Foods doing the right thing. Big consumer brands such as Panera, Starbucks, and Nordstrom are members in good standing of the Do-Gooder Society. More likely sooner than later, corporate kindness that doesn’t have its origins in the public relations or human resources department may become as common as coupons. Event in a dicey economy, kindness sells.”

Moving to Higher Ground

Of course Mackey and Sisodia are clear that not all business people are conscious. The book dedicates some of the book to topics including “The Intellectual Hijacking of Capitalism,” “The Unintended Consequences of Low-Conscious Business,” “The “Myth of Maximum Profit,” and “The Cancer of Crony Capitalism.”

On this last point, the authors say: “As the size of government has grown, a mutant variation of capitalism has also grown, spurred on by those unable to compete in the marketplace by creating genuine value and earning the affection and loyalty of stakeholders.” And, they argue that “while free-enterprise capitalism is inherently virtuous and vitally necessary for democracy and prosperity, crony capitalism is intrinsically unethical and poses a grave threat to our freedom and well-being.”

If Mackey and Sisodia have have anything to say about it, the future will favor Conscious Capitalists.

“Business is good because it creates value, it is ethical because it is based on a voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity,” Mackey insists. “Free-enterprise capitalism is one of the most powerful ideas we humans have ever had. But we can aspire to even more. Let us not be afraid to climb higher.”

Are you ready to join the Conscious Capitalism movement?

• Learn more about the April 5-6, 2013 Conscious Capitalism Conference here.
• Learn more about it in our podcast interview with Sisodia on the Inkandescent Radio Network.
• And be sure to check out his Six Tips for Entrepreneurs.

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