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“Conscious Capitalism” GREAT Book, Just Mistitled

Tuesday, June 18th, 2013

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.