CAPITALISM TODAY AND ITS NEW CONSCIOUS DIRECTION:
Nobel laureate Milton Friedman argued that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” This led to an entire generation Of short-term profit maximization that brought the world to its knees.
Today’s millennials are different; they are purpose driven. More than half of millennials have ruled out working for an organization because of its values or standard of Conduct or have chosen not to undertake a task at work because it went against their personal values or ethics. This generation has surpassed the baby boomers in size and are expected to own $41 trillion in transferred wealth (Deloitte 2016).
Hence the shift from CSR to CSV (creating shared values) by Michael E. Porter, 3 leading authority on competitive strategy and head of the Institute for Strategy and Competitiveness at Harvard Business School, and Mark R. Kramer, Kennedy School at Harvard University. CSV is where one of the core purposes of business is to create economic value in a way that also creates shared value for society and all relevant stakeholders, not at the expense of society.
The Conscious Capitalism movement founded by Professor Raj Sisodia (Babson College) and John Mackey (co-founder and co-CEO of Whole Foods Market) focuses on four principles —shared values aligned with stakeholders:
Higher purpose: making money is not the only or even the most important reason abusiveness exists. Conscious businesses focus on their purpose beyond profit.
Stakeholder orientation: going beyond the thinking that businesses only exist to maximize return on investment for their shareholders. Conscious & businesses focus on their whole business ecosystem, creating and optimizing value for all of their stakeholders.
Conscious leadership: focusing on ”we”, rather than ”me.”
Conscious culture: Culture is the embodied values, principles and practices underlying the social fabric of a business, which permeate its actions and connects the stakeholders to each other and to the company’s purpose, people and processes.
Contrary to conventional wisdom that purpose is a tax on the bottom line, companies such as Patagonia, Virgin, Starbucks and DSA are demonstrating that purpose-driven enterprises have an inherent market and profit advantage giving them staying power.