Conscious Capitalism: the Next Chapter in Business

19th International Symposium on Ethics, Business and Society

05/07/2016 Barcelona

Raj Sisodia

The New Capitalism: Looking Beyond Profits to Human Prosperity

High-profile corporate scandals, short-term thinking and global crises have bred cynicism and mistrust in business. However, change is on the horizon. IESE's 19th International Symposium on Ethics, Business and Society explores conscious capitalism, B Corps, and other new models that bring capitalism back to its roots as a system of social cooperation and prosperity. Get inspired! Subscribe to IESE's YouTube Channel:

Raj Sisodia: “Business is not a machine, nor is it a game of war or a maths problem. Business is about the lives of real people.” / Photo: Edu Ferrer

“It’s not about minimizing costs and making profits. You have to build on growing, caring and making an impact.”

So says Babson College Professor, Raj Sisodia, co-founder of Conscious Capitalism Inc.

“The founders of capitalism believed in serving society and improving the condition of all human beings through business.”

Speaking at the 19th International Symposium on Ethics, Business and Society, at Barcelona campus recently, Sisodia said that management theories and business models focused on the bottom line – instead of the people – have damaged not only the image of business, but society as a whole.

“Cynicism and mistrust come with a high price for business and society. In the U.S. alone trust in companies dropped from 35 percent in 1970, to 17 percent in 2009.”

Calling for a step change in management approaches, Sisodia argued it is time to “shed the tired and toxic old stories of business. After all, business is not a machine, nor is it a game of war or a maths problem. Business is about the lives of real people.”

Doing so, he said, means looking at three dimensions of human beings: self-interest, the need to care and a drive to purpose.

Conscious Leadership

“What we need today is a paradigm shift and we are trying to craft a new one for people to hold on to.” At the center of this new paradigm is finding a “higher purpose, stakeholder integration, conscious leadership and a caring culture.”

Defining conscious leadership as the quality of selflessness, caring and purpose, Sisodia said: “It’s the philosophy of the leader eating last, rather than the old-fashioned and out of date carrot and stick philosophy – that doesn’t really cut it in today’s society.”

And a caring culture also means sharing a sense of purpose and of “something worth doing that makes money” rather than just doing something to make money.

“It’s about putting purpose first and then strategy. When you stop and think about it, great companies have great purposes, like Wholefoods, or Google. Both are purpose driven, be it by health, or organizing the world’s information.”

This was a view shared and underscored by Marcello Palazzi, founder and President of the Progressio Foundation.

“All businesses need to aim to produce the highest benefits for society,” he said.

Palazzi currently heads up B Corporation, the social responsibility movement which provides a framework and certification for companies committed to social and environmental impact.

“Business is the driving force behind society and B Corps is a movement of progressive entrepreneurs that aims to inspire, govern and lead businesses towards a new creative economy of shared prosperity.”

“And now even multinationals like Danone are getting on board. They’re realizing it’s about striving not only to be best in the world, but to be the best for the world.”

Towards a New Economy and a New Ecosystem

“Entrepreneurs who come to IESE who want to do good things for the world, they aren’t here just for a piece of paper with IESE on it,” said Palazzi.

And joining B Corporation isn’t just about getting a certificate either, he said. Over 40,000 companies are in their database, but only five percent have made it through the process.

“We ask you everything you could possibly imagine to ensure you are really committed to society and the environment,” he said. “You might be sustainable, but do you pay your taxes?”

Palazzi echoed Sisodia’s view that it is now imperative to re-write the “toxic story of business.”

“We need a new story that helps to create a new economy and a new ecosystem.”

Both agreed that ethics and strategic management need to be implemented to help build a framework and mindset that companies use to form the language that shapes their strategy.

Conscious Capitalism: Walking the Walk

“It’s an evolutionary process,” said Palazzi. “Language is connected to action – it doesn’t happen in a laboratory – it happens while we work.”

“Now we have companies that operate like open source movements with open source ideas, and that’s a new standard. So in a way, we’re raising the standard of business.”

“When it comes down to it,” he said, “there is no real reason why every company cannot become a conscious business.”