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“Conscious Capitalism” GREAT Book, Just Mistitled

June 18th, 2013 by Bob Burg

Conscious Capitalism book coverFirst things first: The book, CONSCIOUS CAPITALISM: Liberating The Heroic Spirit Of Business is outstanding. As a case study on why companies that honor all of their stakeholders and not just their shareholders actually do much better financially than those who don’t, it’s terrific! As a look at how companies can create an enthusiastic and happy team, ultra-loyal customers, and feel great about the value they provide, it’s amazing!

John Mackey, co-founder and co-CEO of Whole Foods Market, along with Dr. Raj Sisodia, Bently University marketing professor and author of Firms of Endearment, show why the companies they call “Conscious Companies” simply do better.

But, that’s just it. It’s really about conscious companies. Putting the modifier before the word “Capitalism” simply furthers the incorrect premise held by so many that Free-Market Capitalism, in and of itself, isn’t good enough. In other words, the title implies that for Capitalism to be “legitimate” it needs to have a word like “conscious” in front of it. ARRGHHH!

Now, if the author (here, I’m referring to Mr. Mackey, as it’s written in his voice) really believed that, there could be a respectful debate on the topic. However, that isn’t the case. He is a believer and noted defender of true, Free-Market Capitalism. (Chapter One is even entitled, “Capitalism: Marvelous, Misunderstood, Maligned”.) He even makes the distinction a number of times between what’s often called “Crony-Capitalism” and Free-Market Capitalism.

{Note: I often say that I wish the great defenders of Free-Market Capitalism, such as Mackey, as well as one of my heroes, John Allison, would stop using the term, “Crony-Capitalism” as it only serves to confuse people into thinking that it is a legitimate form of Capitalism. It is not. Crony-Capitalism is to Capitalism what Chinese Checkers is to Checkers; Nothing! Instead, it would be much more accurate to simply call it, “Cronyism.”}

Even Bill George, the iconic former Chair and Chief Executive of Medtronic, Inc., who provided a glowing Foreword, wrote: “In these pages, they call their version conscious capitalism. I consider it just capitalism, as it is the only authentic form of capitalism.”

The authors begin by discussing the benefits of pure Capitalism as “the greatest system for innovation and social cooperation that has ever existed.” And, they are correct. Capitalism creates an environment where the citizenry lives longer, healthier, happier and more financially prosperous lives. Even the poor in a mainly free-market based economy are much better off than those in countries not based on such.

But…the term, “Conscious Capitalism.” This is the name of Mr. Mackey’s and Dr. Sisodia’s organization, and this book is one excellent manner in which they are spreading the word.

Their intent is more than noble, but I believe the name is counter-productive. Free-Market Capitalism works for everyone living wherever it exists. Entrepreneurs create value for the marketplace. They and the buyer voluntarily exchange financial value for the product or service. Both parties come away better off after the exchange than they were before.

The profit enjoyed by the company can be invested in expansion which results in more employees. This allows for more value creation. The employees have money to spend with other companies that, as a result can expand, hire more employees and create more value for the marketplace. And on and on and on.

When entrepreneurs are left free to operate with minimal interference from government, abundance and a booming economy results. There are enough jobs for everyone who wants one, and sufficient charity for everyone who truly needs it. No, it’s not Utopia. However, it is so, so much better than any other economic system. (Of course, protecting the citizenry from force and fraud are indeed legitimate functions of government. Creating unnecessary roadblocks, red tape and unfair advantages through cronyism are not.)

Capitalism does not need to become more conscious. Literally, it cannot; it is simply an economic system.  However, those who want to operate successful companies within that economic system do indeed need to be more conscious in the way they do business, if they want the resulting benefits. As the authors magnificently demonstrate, those companies with a higher purpose than simply financial, and who honor all of their stakeholders; employees, customers, suppliers, community, the environment, etc., actually make substantially more money than those who don’t.

Please understand, there is nothing theoretical about this; the evidence is abundant. Throughout the book, the authors cite a number of companies and provide many very specific examples. And, of course, Mackey has run his company exactly as he describes in the book and the proof is in the pudding (though, in his case, it would be a very healthy pudding). 🙂

It’s really a tremendous book. I’m so glad I read it and had the opportunity to benefit from it.

And, in my opinion, it would have been so much more accurate to have titled this book, Conscious Companies or something similar.

That aside, whether you are a solo-preneur, have just a few employees, or the leader of a huge organization, or believe that one day you might be at the helm of any of the above, the wisdom in this book will put you nine steps ahead of the game…in a ten-step game.

11 Responses to ““Conscious Capitalism” GREAT Book, Just Mistitled”
  1. Jim Swink said at 9:26 am on

    Thanks Bob,
    I have not read the book, only your above review but I do like your suggestion of “Conscious Companies”. Companies like Southwest Airlines, FedEx, and Publix have created a “Conscious” business model how they want to engage in the Capitalism Economic System.

    As always, after either reading or hearing one of your reviews I am just one click away form ordering the book! Thanks!

  2. Bob Burg said at 9:34 am on

    Jim: Thank you. I appreciate your kind feedback. And, yes, those companies were mentioned as examples. The authors really did a terrific job of making their case. They truly showed that when you focus on providing value to ALL of your stakeholders, your company will thrive. Enjoy the book!

  3. Rupert Whiting said at 11:14 am on

    Hi Bob,

    I love the first paragraph. As a coach I have frequently told my clients of the importance of increasing the number of stakeholders not the number of shareholders that they have in their business. By that I mean weaving their business into the fabric of their communities and creating symbiotic relationships with other people and business for whom their survival (and thrival if that is a word) becomes important. This moves them from win-lose or win-neutral to win-win thinking and, although is may shake up their business model it puts emphasis where it is needed.

    Overall I totally agree with your frustration at the the qualifiers like conscious and cronyism. If we must put one there, let’s call it sustainable or unsustainable capitalism.

  4. Bob Burg said at 11:33 am on

    Rupert: Thank you for joining the conversation, and for your insightful views. I agree (and, I love the word, “thrival” and, like you, use it myself after saying “survival”) ;-). Regarding the qualifier, I often use the term “free-market” capitalism; not so much as a modifier but more of an explanation, since that’s what the term, “Capitalism” actually implies. Of course, then you have to explain that “free-market” doesn’t mean “without rules” (just the opposite – a free-market is based on “rule of law”) but that the rules are meant to protect rights. Many of them, instead, take away the rights of free exchange between parties and cause far more harm, both to the individual and to society as a whole.

  5. Perhaps they should have called the book “Conscious CapitalISTS.”

  6. Bob Burg said at 3:24 pm on

    Beth:Thank you. I believe that would have actually been a lot more accurate!! I think what they are looking to do via their Conscious Capitalism Foundation is sell the beauty and benefits of Capitalism. In this, I strongly agree with them. Unfortunately, Capitalism must be *sold* because the masses simply don’t understand it and – because of how it is presented to them by news media, schooling, entertainment media – often confuse it. If people really *studied* Capitalism they’d never accept anything less as an economic system. But, such is not the case.

    So, it needs to be sold. My challenge with the title – as explained in the post – is that it sort of “plays into the misunderstanding” and seems to want to add legitimacy to Capitalism by using the modifier, “Conscious.” What that ends up communicating (again, this is just my opinion) is that, “regular Capitalism ‘no longer works’ but we can make it really good again by changing.

    Well, true Capitalism, which we’ve never had in this country 100 percent but for a time came closer to it than did any other country, works just fine. To the degree it’s allowed to exist, we prosper as a country. When not, then we don’t.

    We don’t need the word “Conscious” before it, nor do we need the word “Compassionate” in front of it, or any other modifier. When a person, entrepreneur, company is successful in the free-market (i.e. Capitalism) it’s because they PLEASED LOTS OF CUSTOMERS (and their other stakeholders). Because, in a free-market, where no one has to buy from you (or work for you, etc.), it’s the only way to prosper.

    I’d rather they approached it like that.

    On the other hand, the type of person or company who will be successful needs to be “conscious” just like they explained in their excellent book.

    Which, again, is why I loved the book but did not feel the title was as productive.

    Thanks again, Beth. I always enjoy hearing from you. And, I know you have a new book coming out soon. I wish you the very best with it!

  7. Bill Lynch said at 4:16 pm on

    The book Firms of Endearment validated my lifelong management philosophy: making fans of your employees, your customers and your suppliers will lead to excellent long term profits for your shareholders. I was rarely able to explain it well enough to win over a board member of a boss along the way. Every young manager who believes in adding value to the lives of employees, customers and suppliers as well as shareholders needs to read and understand the operating philosophy of the books featured as “Firms of Endearment”. This validation got me started in speaking and led me to write my first book. You are, as you usually are, spot on in your selection of books to comment about. Thanks.

  8. Bob Burg said at 4:36 pm on

    Bill: Thank you. Yes, Firms of Endearment was written by Dr. Raj Sisodia, the coauthor of the book. I have not yet read it but it sounds fascinating. Thanks for the heads up! And, thank you for sharing your thoughts with us!

  9. Doug Wagner said at 12:57 pm on

    Interesting choice of modifier. How many people really see a difference between conscious and conscientious when used like this and with the Whole Foods Market reference.

    The opposite of conscious is unconscious. Not sure you could run a business in that state.

    I would guess that the choice of name was a marketing one; both for the book and their organization. As you said in the review, the book itself is great.

    I honestly don’t think a business book is going to have much impact on public perception of capitalism. Most of the readers will be business people.

    The best thing we can do as business owners and practitioners of free market capitalism is to engage and train employees in business (multiplier), build the best companies we can, run them with our authentic conscience, and show everyone through example and education that business is there to create value for people and that is where profits come from.

  10. Bob Burg said at 1:10 pm on

    Doug: Thank you. Fantastic, wisdom-filled points as always! Terrific!!

  11. Bill Lynch said at 1:27 pm on

    Doug’s comment about what we “can do” is a great observation. In my experience companies that actually have that as a real culture of operations are extremely rare. I have read the Enron mission and vision documents. Even they said they would practice adding value staying focused on doing good in the world. Easy to espouse, rarely really embraced.

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