Conscious Capitalism. John Mackey

potential of business and capitalism being conducted much more consciously!

      My coauthor, Raj Sisodia, has gone through his own journey of seeking deeper truths about business over his twenty-eight years as a professor, an author, and a consultant to numerous companies. He has come to discoveries similar to mine by studying a number of companies (including Whole Foods Market) that are loved by all their stakeholders and have consequently become extraordinarily successful at creating both wealth and well-being. He investigated and described what made these companies special in his influential and inspiring 2007 book Firms of Endearment: How World-Class Companies Profit from Passion and Purpose.

      Over the last five years, together with a number of influential business and thought leaders, Raj and I have pursued our shared calling of changing the way business is thought about, taught, and practiced through our work in the Conscious Capitalism movement. In 2009, Raj cofounded the Conscious Capitalism Institute, which has now merged into Conscious Capitalism, Inc. (www.ConsciousCapitalism.org), a nonprofit of which we are both trustees. Our shared passion for the extraordinary potential of a more conscious form of capitalism makes it only fitting that we write this book together.

      Our primary purpose in writing this book is to inspire the creation of more conscious businesses: businesses galvanized by higher purposes that serve and align the interests of all their major stakeholders; businesses with conscious leaders who exist in service to the company’s purpose, the people it touches, and the planet; and businesses with resilient, caring cultures that make working there a source of great joy and fulfillment. We truly believe that this will lead to a better world for all of us. Together, business leaders can liberate the extraordinary power of business and capitalism to create a world in which all people live lives full of purpose, love, and creativity—a world of compassion, freedom, and prosperity. This is our vision for Conscious Capitalism.

      How the Book Is Structured

      In chapter 1, we provide some much-need historical perspective on free-enterprise capitalism: what it really is, how much it has helped transform our world for the better, and the challenges it faces today. Chapter 1 is also a call to adventure to you (the reader) to actively participate in changing the narrative of capitalism. In chapter 2, we expand on the idea of Conscious Capitalism, a more evolved form of capitalism and business enterprise that addresses the challenges we face today and offers the promise of a dramatically better future.

      The next four parts of the book each deal with one of the four tenets of Conscious Capitalism. Part 1 (chapters 3 and 4) is about purpose: we explain why purpose is so critical, offer some generic kinds of purpose, and describe how every company can go about discovering its own authentic purpose. After that, we turn our attention to stakeholders. In part 2 (chapters 5 through 12), we discuss how conscious businesses think about each major and secondary stakeholder. We also discuss how they can leverage the interdependent relationships that exist among stakeholders, which lies at the heart of the Conscious Capitalism philosophy. In part 3 (chapters 13 and 14), we turn to the crucial issue of conscious leadership: what it means and how one can cultivate it. In part 4 (chapters 15 and 16), we discuss the fourth tenet: conscious culture and management. Chapters 15 and 16 describe the key elements of a conscious culture, especially love and care, as well as an approach to management that is consistent with a conscious culture and leverages its strengths. In chapter 17, we provide some suggestions on how to start a conscious business and offer guidance on how an existing business can move toward becoming more conscious. We conclude the book in chapter 18 by discussing how we can spread the Conscious Capitalism philosophy more broadly and more rapidly, and offer a credo for Conscious Capitalism.

      The book also has three appendices. Appendix A describes how and why conscious businesses perform better than traditional businesses over the long run. Appendix B compares Conscious Capitalism with other recently proposed alternatives such as Natural Capitalism, Creative Capitalism, Shared-Value Capitalism, B Corporations, and Triple Bottom Line. Appendix C addresses some common questions and misconceptions about Conscious Capitalism.

      A stylistic note: while this introduction is in my voice, the rest of the book is very much a joint effort and is in “our” voice, including instances in which we recount aspects of the Whole Foods story. In a few places, we revert to using my voice when describing episodes in my personal journey.

      CHAPTER 1

      Capitalism: Marvelous, Misunderstood, Maligned

      In the long arc of history, no human creation has had a greater positive impact on more people more rapidly than free-enterprise capitalism. It is unquestionably the greatest system for innovation and social cooperation that has ever existed. This system has afforded billions of us the opportunity to join in the great enterprise of earning our sustenance and finding meaning by creating value for each other. In a mere two hundred years, business and capitalism have transformed the face of the planet and the complexion of daily life for the vast majority of people. The extraordinary innovations that have sprung from this system have freed so many of us from much of the mindless drudgery that has long accompanied ordinary existence and enabled us to lead more vibrant and fulfilling lives. Wondrous technologies have shrunk time and distance, weaving us together into a seamless fabric of humankind extending to the remotest corners of the planet.

      So much has been accomplished, yet much remains to be done. The promise of this marvelous system for human cooperation is far from being completely fulfilled. Too much of the world still has not embraced the core principles of free-enterprise capitalism, and as a result, we are collectively far less prosperous and less fulfilled than we could be.

      Much of the twentieth century can be seen as an extended intellectual war between two diametrically opposed social and economic philosophies—free-enterprise capitalism (free markets and free people) and communism (dictatorship and governmental economic control). By every objective measure, free-enterprise capitalism has won this battle. The United States was far more economically dynamic and socially evolved than the Soviet Union, its chief communist rival. The same held true for West Germany versus East Germany; South Korea versus North Korea; and Taiwan, Hong Kong, and Singapore versus China. With the fall of the Berlin Wall in 1989, country after country began to turn toward greater political and economic freedom in the 1990s and 2000s, as the dismal economic and societal results of the various socialistic experiments conducted in the twentieth century became better known. As this transition to greater freedom took root, many countries experienced rapid economic growth, and hundreds of millions of poor people were able to escape grinding poverty.

      Of course, much of the Western world has benefited from the fruits of free-enterprise capitalism for about two centuries now. The success of free-enterprise capitalism in improving the quality of our lives in countless ways is the most extraordinary but poorly understood story of the past two hundred years. It has enabled humankind to progress at a rate unprecedented in all of history. Consider these facts:

       Just 200 years ago, 85 percent of the world’s population lived in extreme poverty (defined as less than $1 a day); that number is now only about 16 percent.1 Free-enterprise capitalism has created prosperity not just for a few, but for billions of people everywhere.

       As figure 1-1 shows, average income per capita globally has increased 1,000 percent since 1800.2 It has increased 1,600 percent in developed countries. Japan’s income per capita has increased by 3,500 percent since 1700. Adjusting for affordability and quality improvements, the standard of living of ordinary Americans has increased 10,000 percent since 1800!3 Perhaps most startling, the gross domestic product (GDP) of South Korea has grown 260-fold since 1960, transforming it from one of the poorest countries in the world to one of the richest and most advanced.4

       Over tens of thousands of years, the human population grew very slowly and declined frequently as huge epidemics such as the plague and influenza claimed millions of lives. It finally crossed one billion around 1804 and has grown rapidly since to over seven billion, primarily because of progress in sanitation, medicine, and agricultural productivity.5

       In the past two hundred