A Conscious Capitalist’s Vision For Business School

“Many of those (enterprises) will founder and eventually those people will end up back in the traditional for-profit sector,” Sisodia says.

When students discuss possible non-profit enterprises with him, Sisodia suggests they figure out a way to make their initiatives profitable, he says. “We want to restore the value of being for profit,” he says of the conscious capitalism movement. Somewhat ironically, the movement’s company, Conscious Capitalism, Inc., which sells memberships from $120 to $1,000 and presents conferences and seminars, is a non-profit. Corporate memberships cost $10,000 to $100,000. The non-profit includes among its directors Whole Foods co-founder John Mackey, Pantheon Enterprises CEO Laura Roberts, The Container Store CEO Kip Tindell, and former Trader Joe’s president Doug Rauch.

THE NON-PROFIT CRITIC’S NON-PROFIT

“Conscious Capitalism, Inc. is a non-profit because of the current sources of our funding,” Sisodia says. “We have discussed making it a for-profit or creating a for-profit subsidiary, but haven’t figured out the right business model.”

Sisodia cites Whole Foods as an example of an impact-oriented company whose success is built not only on the healthy-eating and earth-friendly agriculture it supports, but also on impressive financial yields – a current market capitalization of nearly $18 billion.

“If they had not been highly profitable and a great investment, they would not have been able to grow . . and change the food culture,” Sisodia says.

Some issues can benefit from public sector or civil society intervention, he believes.

“That should be the exception,” he says. “If at all possible, we should look at for-profit solutions.”

A RECENT-ISH CONVERT

Sisodia has taught for 30 years, and for the great majority of those years, he delivered traditional business education.

“For the first 25 or so years, I never used the word ‘purpose,'” he says.

But while conducting research for a book on companies with strong customer loyalty but low marketing spending, Sisodia began looking at what lay behind those firms’ success. “There was something about these businesses. They had some kind of a passion. The notion of purpose emerged from that for me.”

In his books and talks, Sisodia highlights companies that have adopted a holistic approach to business, focusing on profitability, but also on customer and employee satisfaction, and positive social and environmental impact. He’s studied firms including Whole Foods, Starbucks, Costco, UPS, BMW, Harley-Davidson, and JetBlue, all of which outperformed the market by more than 10 to one from 1996 to 2011, he says.

“They have defined their purpose in terms of people – measuring success by the way you affect people,” Sisodia says.

INDUSTRIES LOSE PURPOSE AND JUST GRAB MONEY

In counterpoint to those companies, Sisodia cites pharmaceutical and financial services firms as examples of businesses that have lost their higher purpose. Drug companies aren’t concerned about curing diseases or improving people’s well-being, but are devoted exclusively to reaping the largest-possible profits, he says. Financial services companies aren’t interested in channeling society’s savings into the most productive investments, to build and sustain a healthy economy, but are instead focused on grabbing as much loot as they can, he says.

“You can make money while also enhancing well being, or you can make money while simultaneously squeezing people. All the brokenness that we see in society, I think business has a lot to do with that.”

In business schools, however, the idea that business should be run according to a higher purpose than profit making runs up against entrenched tradition, Sisodia says. “There’s a tremendous reluctance to take any kind of normative stand and say, ‘This is what’s better for the world,'” he says.

Conscious capitalism rests on the belief that doing what’s better for the world is good for business. Putting employees ahead of profit increases profit, Sisodia says. “Companies that value their people and actually place their people ahead of everything else actually do extraordinarily well,” he says. “It’s not just the top 10% of the best talent. It’s about ordinary people being enabled to do extraordinary things, by creating the right kind of leadership and the right kind of culture.”

Meanwhile, leading business schools keep “teaching people how you can rise up through the ranks and achieve as much as you can,” Sisodia says. “When you’re learning how to essentially use people to get the most for yourself, that’s not leadership, that’s tyranny.”

Business guru and author Steve Denning believes the central message of conscious capitalism should be taught in every business school, and adopted by every company, to reverse a steady decline in the U.S. on returns from vested capital and assets.