When WH Auden wrote these words in his poem “September 1, 1939”, he could see the world was on a precipice. Having lived for almost a decade in Berlin just before writing this, Auden feared that what he had seen in a limited context was about to sweep the world.
As we find ourselves at a different precipice, where we can only choose either to act or not act, Auden’s sentiments find a new poignancy. Although not explicitly stated, this was where the session, Conscious Capitalism in Business: Rethinking the Way We Do Business, picked up. Professor Thomas Gladwin from the Ross School of Business at the University of Michigan painted a rather bleak picture of where capitalism has gotten us, and where he thought it would inevitably take us, which, in short, was nowhere. In his opinion, unless we disassemble this machine called capitalism, the machine will continue to consume until it consumes itself and everything else around it.
Fortunately, despite the heavy truths in Dr Gladwin’s argument, the other three panelists did not share his grim inevitabilities of the future. Dr Mark Albion, co-founder of Net Impact, and Dr Shubhro Sen and Dr Rajendra Sisodia co-founders of the Conscious Capitalism Institute, presented instead an alternative of hope for the future. For them, capitalism could be redeemed, but only with a measure of fundamental change.
Change, they argued, needed to come about first by rethinking and redefining what the world constitutes as success. They argued that the accepted paradigm that promotes the concepts of Good to Great is fundamentally flawed, and that it is in many ways the perpetuator of our problem. Under this paradigm, companies like Phillip Morris, Fannie Mae, and Circuit City are great. With the lucidity of hindsight, we can see that this was true of none of these. When the metrics only consider income statements for a set amount of years, an incredible amount is overlooked. The “Good to Great” concepts talk about being “long-lasting” and having “longevity”, yet, they only look at a narrow segment of time. Likewise, by only looking at a balance sheet or income statement, only a narrow slice of the costs and benefits are considered. Dr Rajendra Sisodia and the CCI demand that all relevant costs and benefits be considered. He used Phillip Morris as an example and asked just how the incredible costs that tobacco has had on society can be so conveniently externalized, as though they were intangible or inconsequential. Thus, CCI’s new definition of “great” makes the argument that “there are no side effects, just effects”. We can no longer just look at one metric, and ignore the rest – it is no different than looking at company that is hemorrhaging cash in operations, and judging it healthy because of an acceptable metric of net income.
Conscious capitalism argues for a much broader definition of success – one that looks to more than short-term gains. Dr Sisodia used Whole Foods as an example of a company that has prospered tremendously without sacrificing or ignoring sustainability, or social responsibility. In fact, these two factors that the present paradigm often sees as a burden are the very foundation of the company’s success. With policies like a 19:1 ratio for compensation, the company takes on a very balanced view that there has to be a limit to how much more an executive is worth than an entry-level employee. At a peak of three-quarter of a million dollars a year, it would be hard to say that these executives are self-denying philanthropists, but rather they are operating under a compensation scheme that is comprehensible to reason. When executives of other firms are operating at 200:1 ratios, it is hard to find rationale other than unbridled self-interest to justify such compensation.
Conscious capitalism is not anti-wealth; on the contrary, the CCI wants the world to be filled with profitable companies who are intent on increasing wealth. The differentiating factor is that conscious capitalism demands that companies take a longer, more encompassing view of profitability. If “long-lasting” is truly an attribute of a “great” company, then the outlook on success should by definition also be long-lasting.
