Balance scales cc Hans Splinter

This blog is written as a companion to an “Innovative Leaders Driving Thriving Organizations” interview between Maureen Metcalf and Thea Polancic that aired on VoiceAmerica. Polancic is a managing partner of ClearSpace, LLC, a Chicago-based consulting firm that helps leaders, teams, and organizations grow and thrive. She is also the founder and executive director of the Chicago Chapter of Conscious Capitalism, Inc.

As we talk about the trends we face between now and 2050, there are many challenges. According to a McKinsey study released in May 2016 summarizing its recent survey of global leaders, “Over the next five years, nearly all respondents expect a disruption in the global economy due to volatility. And they are much likelier now—43 percent, up from 29 percent in 2013—to expect that potential disruptions to the economy will be very severe. This is a greater share even than those who expected very severe disruptions in 2010, in the wake of the global financial crisis.” In this time of volatility where our once effective models for doing business are breaking down, we are seeing new models emerge that promise to alter how we look at business. On “Innovative Leaders Driving Thriving Organizations,” we have focused on the leader of the future and the organization of the future. One model we believe is very promising is Conscious Capitalism.

As a person running a for-profit business with a greater mission, I am surprised by how many people have very negative comments about business. While I assume this is not a personal assault, it is hard to hear the level of anger directed at corporations and not see a larger systemic issue. So, in this blog and in the interview, I explored the pillars of Conscious Capitalism and how it can be implemented in for-profit businesses.

In the event this is unfamiliar to you, the four pillars of Conscious Capitalism are:

1. Conscious Leadership: leaders who are motivated by purpose as well as profits and demonstrate a level of leadership maturity that allows them to manage their impact on a broad range of stakeholders

2. Stakeholder orientation: leaders attend to the health of the “ecosystem” of stakeholders. This requires an ongoing balancing act of balancing competing needs and expectations. Customers usually want to pay less while employees want to make more. Add to this the needs of the environment to manage pollution and pay dividends to stockholders or owners. The leader is balancing competing needs on a daily basis.

3. Conscious culture: organizational culture is created by the agreements leaders and employees make with one another. These agreements are often unconscious. In a conscious capitalism organization, people often form cultural agreements based on accomplishing the organizational purpose.

4. Higher Purpose: business has a higher purpose in addition to making money – this is one of the critical distinctions and often misunderstood – money is required and as the fuel that feeds the organization’s ability to deliver on its purpose it is not the sole purpose.

Like many, I learned of Conscious Capitalism from John Mackey, CEO of Whole Foods Market. In listening to Mackey during a board meeting at his ranch in Austin, Texas, it was clear that he is both committed to conscious leadership AND committed to running a profitable business. He makes no apology for being profitable, as profits are the fuel to keep the business successful which, in turn, allows it to meet its purpose. He talks about optimizing interdependent systems—which means part of the job of the business is to ensure that all stakeholders, customers, employees, suppliers, investors, owners, and the community we impact, etc., are better off because of their involvement with the business.

Basically, business is a complex adaptive system of interconnected stakeholders and unless we are focused on our profit and the health of others, we are likely to experience shocks to our success because of the impact it makes to the overall system. A great example of this is a conversation I had recently with someone in the auto industry who pointed out that unless their competitors stayed healthy, some of their own key suppliers risk going out of business. As leaders, we must attend to the health of the larger ecosystem if we are to stay healthy. And yes, this sounds like a lot of work. It is hard enough to stay focused on my own organization without paying attention to the entire ecosystem.

Conscious Capitalism requires leaders to be both purpose-driven and effective at running a profitable business. In the intro, I mentioned an evolution of business. Leaders need to be effective in the traditional measures, and in this more complex adaptive environment they need to respond to the many competing commitments from various stakeholders while accomplishing a purpose. In many ways, this is a return to the roots of capitalism where individuals started small family enterprises to support their families and meet the needs of the community. It is only as businesses grew that some got away from the foundation upon which capitalism was built.

One of the things I have enjoyed about the interview series is meeting many leaders who are living Conscious Capitalism and don’t even know the term. These leaders are wired to be purposeful and they run effective organizations that consider the health of the ecosystem, not because they are following a fad but because it is who they are. They really are the leaders we talk about when we refer to Leader 2050, the term we use in the interview series often and also a topic featured chapter twelve “The Strategist Competency Model, The Future of Leadership Development” in the book Leadership 2050, Critical Challenges, Key Contexts and Emerging Trends. This chapter was written by Susan Cannon, Mike Morrow-Fox, and me.

I hope you find this topic interesting and consider how you as leaders are using these four pillars in your organization and where you might have opportunities to grow. I also applaud all of the leaders who are the role models for Conscious Capitalism. Thank you for creating the evolving future that acknowledges the interdependence of all stakeholders and the importance of purpose to the enterprise as well as the individual leader.

About the author
Maureen Metcalf, founder and CEO of Metcalf & Associates, Inc., is a renowned executive advisor, author, speaker, and coach who brings thirty years of business experience to provide high-impact, practical solutions that support her clients’ leadership development and organizational transformations. She is recognized as an innovative, principled thought leader who combines intellectual rigor and discipline with an ability to translate theory into practice. Her operational skills are coupled with the strategic ability to analyze, develop, and implement successful strategies for profitability, growth, and sustainability.

In addition to working as an executive advisor, Maureen designs and teaches MBA classes in Leadership and Organizational Transformation. She is also the host of an international radio show focusing on innovative leadership, and the author of an award-winning book series on Innovative Leadership, including the Innovative Leaders Guide to Transforming Organizations, winner of a 2014 International Book Award.

Photo credit: Hans Splinter