10. Explain the concept of conscious capitalism. Do you think managers and companies that espouse this kind of shared value approach are more likely to behave in socially responsible ways?

7.2c Conscious Capitalism

Conscious capitalism, which has also been referred to as a shared value approach, refers to organizational policies and practices that both enhance the economic success of a company and advance the economic and social conditions of the communities in which the company operates.33 Hindustan Unilever, for example, uses a direct-to-home distribution system for its hygiene products in parts of India, whereby women from low-income households in villages of less than 2,000 people are given micro loans and training to start their own small businesses. The system benefits communities by giving women skills and opportunities that sometimes double their household income, as well as by reducing the spread of disease by bringing hygiene products into isolated areas. It also benefits the com-pany by extending its market and building its brand in hard-to-reach areas. The project now accounts for five percent of Hindustan Unilevers revenue in India.34 Conscious capitalism means having a higher purpose besides just making money by focusing on employees, customers, suppliers, and the community as well as on shareholders; seeking to bring out the best in people; and fostering trust and respect. Companies that embrace a conscious capitalism philosophy include Whole Foods Market, Costco, Pedigree, Medtronic, and Trader Joes. The BookMark further describes the philosophy of conscious capitalism

Conscious Capitalism: Liberating the Heroic Spirit of Business By John Mackey and Raj Sisodia In Conscious Capitalism, John Mackey, founder and co-CEO of Whole Foods, and marketing professor Raj Sisodia start with the premise that business is "fundamentally good and ethical" because it enables people to live more vibrant and fulfilling lives. In just 200 years, they say, we have gone from 85 percent of the world's population living in extreme poverty to just 16 percent. But they challenge business leaders to open their eyes, minds, and hearts and understand the perspectives of their stakeholders so that "the truth, beauty, goodness, and heroism of freeenterprise capitalism" can be realized. FOUR TENETS OF CONSCIOUS CAPITALISM To practice conscious capitalism, business managers have to embrace the right beliefs. Here are the four tenets of conscious capitalism: - Have a higher purpose. No business can practice conscious capitalism without a higher purpose. It is purpose that enables managers to transcend a narrow-minded focus on profit, infuse the organization with energy and relevance, and create engagement among employees and other stakeholders. - Recognize each stakeholder group as important and interdependent. The authors refer to this as stakeholder integration. Conscious businesses strive to satisfy the needs of all stakeholders, including investors who seek profits. Trade-offs are not necessary, the authors say: "Together we can create our future reality, so we should do so consciously, collaboratively, and responsibly." - Conscious businesses need conscious leaders. Leaders of conscious capitalism businesses embrace "decentralization, empowerment, innovation, and collaboration." Leaders are motivated by service to the higher purpose and the goal of aligning the interests of all stakeholders. The authors offer practical advice on how to evolve into a more conscious leader. - Embrace conscious business values. The conscious capitalism culture embodies trust, accountability, fairness, love, transparency, integrity, caring, loyalty, personal growth, and egalitarianism. IT DOES PAY TO DO GOOD Money is one measure of value, but it is by no means the only measure. Mackey and Sisodia believe the primary business model will eventually be one of conscious capitalism rather than profit. They say hard data show that, in the long run, conscious businesses outperform traditionally run organizations by a wide margin. Conscious Capitallsm: Liberating the Heroic Spirit of Business, by John Mackey and Raj Sisodia, is published by Harvard Business Review Press