By: Jeff Klein Issue: Conscious Capitalism Section: Opinion
The Missing Chapter
True to form, in his new documentary Capitalism: A Love Story, director Michael Moore amplifies the lies, abuses, and manipulations underlying the recent and ongoing financial crisis. In some ways appropriately, Moore points accusatory fingers at Wall Street titans and their well-placed allies in government. In the context of ICOSA, we can recognize and perhaps celebrate the role of connection and collaboration in facilitating the bail out of the finance, auto, and other related industries.
But there is a chapter missing from Michael Moore’s story, which reveals a very different conclusion and inspires optimism and engagement, rather than pessimism and despair. This new chapter in the story of capitalism reflects a distinctly different kind of connection and collaboration.
While some capitalists work on Wall Street, and some of those Wall Street capitalists focus on money and their personal wealth at the exclusion of nearly every other thing, many other capitalists build and run companies that focus on creating value for more than just themselves. Furthermore, many of the capitalists on Wall Street invest in companies for reasons beyond their own self-interest.
The missing chapter of the Love Story reveals a growing cadre of entrepreneurs, executives and investors dedicated to practicing Conscious Capitalism, dedicated to creating conscious companies, which are purpose-driven and deliver great value to all of their stakeholders, including their customers, employees, investors, vendors and the communities where they do business.
At its core, capitalism is about voluntary association and collaboration, which is one of the reasons capitalism works, why it won the battle with socialism in the 20th Century, and why it continues to persist and flourish, in spite of its flaws and manipulations by some of its practitioners. At its core, in a market-based economy, no one forces us to decide what to buy or where to buy it, where to work and under what conditions, or where to invest and on what terms. For the marketplace to work, participants need to be connected through language, culture, proximity or technology and to collaborate to facilitate transactions and value exchange. Without connection and collaboration, there is no marketplace or capitalism. While to some extent the financial markets function in their own realm, their foundation rests on the companies, commodities and other things that we value or that create value. No customers, no business. No business, no stock market.
While capitalism is about much more than Wall Street, the ecosystem of capitalism requires capital. Just as we require food and drink to survive, grow and flourish, businesses need capital to fuel their growth and development, and often the rate of capital required outstrips a business’s ability to generate through its revenues. A start up, like an infant, requires nourishment from the outside to feed its launch into life.
Thus investors are one important stakeholder in the ecosystem of a business, but not the only one. Conscious investors recognize that for their capital to have the greatest effect and to yield the best return, best including their considerations other than financial, such as healthy companies, communities and environments, among other things, the business needs to deliver value to the other stakeholders and they need to collaborate with management to ensure a healthy stakeholder system.
The marketplace is increasingly saying “yes!” to environmental sustainability, poverty alleviation, peace and opportunity for all, and business is responding. Consumers, employees, investors and others expect businesses to participate in addressing social issues, and they look to business as a source of inspiration, meaning and purpose as well as a platform for personal growth and societal evolution.
So, how does the marketplace reward conscious companies? In their ground-breaking book, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose (Wharton School Publishing: 2007) authors Jag Seth, Raj Sisodia and David Wolfe assess long-term and short-term stock performance of 30 companies who practice versions of conscious capitalism. The companies substantially outperform the S & P 500. The 100 Best Places to Work similarly outperform the market.
By having a clear, meaningful purpose, creating value for all stakeholders, explicitly and purposefully fostering collaboration within and between its stakeholder groups, companies and their leaders cultivate vigorous ecosystems with great energy and information flow. In the process, conscious capitalists will create healthy, sustainable, purpose-driven companies based on strong, resilient relationships with engaged stakeholders. As a result of an increasing number of conscious companies, we will advance the evolution of the marketplace as a tool to facilitate human interaction and development and a more Conscious Capitalism will emerge.
While Michael Moore wants the Love Story to end, there are new suitors entering the story and their offerings are not only appealing, they are delicious, nutritious, and sustainable. If capitalism is dead or dying, it is only to be reborn. From the compost of Greed-based Capitalism (which has never been the only face of capitalism), Conscious Capitalism is sprouting. Let’s all play a role – as consumers, employees, entrepreneurs, leaders, investors, communities, citizens – in celebrating and tending its growth and development.
Jeff Klein is CEO of Cause Alliance Marketing, President of the Conscious Capitalism Alliance, and author of Working for Good; Making a Difference While Making a Living.