Founder and CEO of Symphony Advantage and Certified Conscious Capitalism Consultant.
Companies now understand that generating a profit cannot be their sole purpose. After all, 7 in 10 Americans believe that businesses have an obligation to improve societal and environmental issues. Additionally, capitalism is one of the most powerful engines for scalable, sustainable change.
Either driven by a strong belief in the conscious capitalism movement or by necessity to adapt to the changing marketplace, companies are increasingly making the shift from traditional corporate social responsibility toward purpose. In this scenario, profit fuels the larger mission but is not an end in and of itself.
However, many companies that are eager to align profit with people and the planet struggle with implementation beyond the definition of their purpose. They understand the why but struggle with the how.
My advice: Focus on stakeholder management.
Conscious companies operate with their entire business ecosystems in mind. They reject trade-offs and concentrate on optimizing value for all of their stakeholders: customers, employees, suppliers, shareholders, leaders, and the environment and society at large.
So, the question remains, how can a company make the shift toward a win-win approach? A good start is to focus on the six essentials of conscious capitalism for each stakeholder:
1. Customers: Don’t focus on profits at all cost. Instead, focus on company purpose, and give customers an opportunity to better connect with your brand by solving a problem that affects them in a profound way.
Example: Olio is an app that tackles food waste by connecting people to their neighbors to give away, rather than throw away, spare food. It generates revenue by charging larger businesses for the service it provides. Because of its strong purpose, customers have related to the brand in a meaningful way. At time of writing, Olio has more than 2.6 million users and is growing rapidly.
2. Employees: Don’t focus on creating jobs for the sole purpose of your economic gain. Instead, help people thrive by impacting all aspects of their lives for the better.
Example: About four years ago, CEO Hamdi Ulukaya shocked his employees — and the world — when he gave them 10% of his shares in Chobani. He knew employees were at the very heart of his company’s success and wanted to help them thrive in return. Today, the company is valued at $10 billion. This is good news for Chobani employees as rumors of an IPO have been confirmed by the Wall Street Journal in early February.
3. Leaders: Don’t just promote people who think or look like you. Instead, promote inclusion and equity by elevating people from different background, identities and abilities.
Example: In 2015, George Taylor was shocked by the murder of a 16-year-old boy in a gang-related shooting that occurred in his town. He decided to harness his entrepreneurial background and launched a new company called TRU Colors with the purpose of ending gang violence in his community. TRU Colors is taking an innovative approach to inclusion and equity: The brewery employs active gang members in order to channel the dynamics of gang influence as a powerful driver for change.
4. Shareholders: Don’t focus on making as much money as possible in the short term. Instead, focus on financial prosperity. Help everyone who works for you benefit from your overall growth and successes.
Example: Patagonia became a $1 billion powerhouse by focusing on long-term sustainability. This might be surprising given that the brand promotes anti-consumerism and environmental causes, which one might think would have negatively impacted the company’s sales. But its success proves that companies can profit by doing good and being good.
5. The Planet: Don’t consume resources for near-term gain without regard for the long-term impacts on the ecosystem. Instead, become an environmental steward.
Example: Akash and Nikita Mehta launched Fable and Mane to bring potent, plant-based hair products inspired by Indian beauty secrets to the market. They also set an intention to lessen their environmental footprint by conserving and restoring resources in the creation and delivery of their products and services for the benefit of future generations. Because of their sustainable approach, the company quickly became a success in countries like the U.S., Canada, the U.K. and Germany.
6. Vendors: Don’t focus on getting the lower price. Instead, focus on building collaborative relationships based on communication, transparency and a genuine interest in supporting their goals.
Example: When Nicole Snow, founder and CEO of Darn Good Yarn (and a client of mine), noticed that her yarn would come back at random weights from her supplier in India, she was concerned and frustrated. She decided to investigate and soon realized that her supplier had recently introduced digital scales to the production factory. However, their workers — mostly women — couldn’t read numbers. Together with the supplier, she decided to bring a tutor to teach the workers basic math. It helped both their businesses while providing workers with an important skill they will carry forever.
These are just a few examples illustrating the shift a company can make toward conscious capitalism. By focusing on a win-win approach, companies gain a competitive advantage, accelerate employee engagement and therefore performance, and boost financial performance, among a long list of other benefits. Indeed, strong and engaged stakeholders lead to a healthy, sustainable, resilient business.
But don’t take my word for it: Purpose-driven S&P500 companies historically see 400% more returns than their traditional peers.
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Founder and CEO of Symphony Advantage and Certified Conscious Capitalism Consultant. Read Kent Gregoire’s full executive profile here.