The conference was opened Sisodia talking about ‘firms of endearment’ and the need for a ‘declaration of interdependence’ – a recognition that we are all interconnected and co-dependent.
Sisodia presented a number of statistics about trust with business, which provided a context for the later proceedings:
- New York Times: “The majority of the public… believes that executives are bent on destroying the environment, cooking the books and lining their own pockets.”
- Roper: “Only 2% of investors believe that CEOs are ‘very trustworthy’: 72% believe that wrongdoing is commonplace at companies.”
- Harris Poll: “90% of Americans believe that big companies have too much influence on government.”
- “80% believe business is too concerned about profits and not enough about responsibilities to workers, consumers and the environment.”
I thought the most interesting presentation during the conference came from John Mackey, CEO at Whole Foods.
Mackey continued Sisodia’s train of thought, noting that business is widely seen as greedy, untrustworthy and widely unethical, and putting the blame for this on poor business ideology. This has led to the current push back against capitalism and means that now “corporations and CEOs are in the toilet”.
In Mackey’s view, the narrative we use to describe businesses needs to change – and ‘conscious capitalism’ provides an appropriate alternative. This is about:
- Enterprises having a deeper purpose behind maximising profit and shareholder value
- Enterprises being managed to optimise value for all major interdependent stakeholders
- Servant leadership to the enterprise and its stakeholders.
This approach means that profits should not be pursued – they ensue from working towards a higher purpose. In Mackey’s view, maximising profits is a curious purpose for a business – and one that typically hasn’t come from the entrepreneurs who created new businesses – but from economists. Entrepreneurs usually define an initial meaning for their businesses, and organisations need to hold on to this (accepting that meaning will evolve over time).
Great companies have great purposes which tap into the highest ideals that humans aspire to:
- Service to others: expressing love and care (the good)
- Discovery and the pursuit of truth (the true)
- Excellence and the quest for perfection (the beautiful)
- Changing and improving the world (the heroic).
Mackey notes he is not anti-profit. Profits are essential for doing business. But we need to recognise that profits are created through voluntary exchange, not from the exploitation of people. The paradox of profits (similar to happiness) is that they are best achieved as a by-product of something else.
The problem is that not many bosses act in this way – there are few servant leaders. Take executive reward.
- In 1980, the average US CEO received $40 for every $ earned by the average worker
- In 1990, it was $100
- By 2006, this had increased to $364 for every $ earned by the average worker.
At Whole Foods Markets, the highest pay is limited to $19 for every $1 the average full-time team member earns.
Also stock options – typically the top five executives will received 75% of stock options. In Whole Foods Markets, the top executive only received 7%.
In Whole Foods, executive reward reflects the expectations of different stakeholders – in other firms, it “reflects a certain amount of greed”.
An inspiring presentation – and a great conference. See more of these presentations at http://www.bentley.edu/conscious-capitalism/index.cfm.
And for more insights on new ways of managing, join the Moon Shots community site at http://moon-shots.ning.com.
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