The Boss Show

Workplace wisdom with heart and humor

May 29, 2016

Conscious Capitalism, Part 1

By any objective measure, capitalism has enhanced longevity and quality of life for billions of people across the planet.  But by any objective measure, capitalism is also responsible for much of the world’s suffering — from climate change to environmental degradation to global economic inequality.  If capitalism could become truly conscious, is there hope? (Part 1 of 2)


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Speaker 1: It’s a Northwest lifestyle weekend on KOMO News. Now, a show for anyone who is or has a boss. This is the Boss Show with Jim Hessler and Steve Motenko.

 

Steve Motenko: Welcome to The Boss Show. I’m Steve Motenko, I’m the psychology guy. I’m an executive coach here in the Puget Sound area and I do leadership development work with my friend across the table.

 

Jim Hessler: That’s me, I’m Jim Hessler, I’m the business guy. I’m the founder of Path Forward Leadership Development and the author, along with Steve, of the book, “Land On Your Feet Not On Your Face.” This is the show for anyone who is or has a boss.

 

Steve Motenko: Wow, we’ve never done that before.

 

Jim Hessler: No, we haven’t, we haven’t.

 

Steve Motenko: Wasn’t that smooth?

 

Jim Hessler: Very spontaneous too.

 

Steve Motenko: Today on The Boss Show, Conscious Capitalism, Part One of a two part show on Conscious Capitalism, can it be anything more than an oxymoron? Jim, as you know I’m interviewing tonight here in Seattle our recent Boss Show guest, Howard Behar who is …

 

Jim Hessler: Not tonight in terms of when the show’s going to air. We have to record the show.

 

Steve Motenko: Yeah, I was going to mention that. Yeah, we pre-record.

 

Jim Hessler: By the time you hear this it will have already happened.

 

Steve Motenko: Don’t go looking for tickets. I’m interviewing Howard Behar who we did a two parter with recently on The Boss Show. He was founding President of Starbucks International and this event is sponsored by the Seattle chapter of Conscious Capitalism which is an international movement that’s growing. I just think the principles behind it are intriguing enough to spend some time looking at. Also, kind of the notion that as you hear the term Conscious Capitalism it may seem self contradictory or oxymoronic to you so we want to get into that.

 

  At the beginning of the book … There’s a book called Conscious Capitalism and it’s written by John Mackey and Raj Sisodia. John Mackey is a better known name. The two of them are kind of the founders of this movement, they’re the big names in this movement. John Mackey, you may recognize the name, is the CEO of Whole Foods and there are a lot of references to Whole Foods Market in the book. In fact, in a lot of ways the book …

 

Jim Hessler: No longer the CEO, by the way, I believe he’s just on the board now.

 

Steve Motenko: Okay, former CEO of Whole Foods. In some ways the book comes across as a bit of an advertisement for Whole Foods Market because there are many more references to it in the book than to other businesses, but also a lot of references to other conscious businesses as well. Early in the book I noted a really interesting statistic, a Gallup Poll on happiness in 155 countries. Across the world found that the leading determinant of happiness is not wealth because past a certain level of material resource accumulation the effect of that accumulation plateaus in terms of impacts on happiness.

 

Jim Hessler: Somebody pegged that at $70,000 of your annual income.

 

Steve Motenko: Yeah, yeah, right, I’m trying to remember who that was but our friend, Dan Price, at Gravity Payments ended up using that as the baseline salary which is a whole other show. The leading determinant of happiness is not wealth, it’s not health … Most people in good health end up taking it for granted, I know I do. It’s not even family which one might think of as the go to for what makes you happy or not. The number one determinant of happiness, human happiness, a good job according to this International Gallup Poll. Work that is, A, meaningful, and B, performed in the company of people that you care about. Meaningful work in the context of a team that you care about. Surprising?

 

Jim Hessler: No, I don’t think it’s … Well, I think, yeah, different surveys come up with different results. There’s been this famous study of Harvard grads over the last 75 years that has indicated, that tends to point towards the quality of relationships as the number one predictor of happiness but relationships at work and your relationship with your job could probably be brought into that category.

 

Steve Motenko: Yeah, especially since the only activity that we spend more time doing than working is sleeping.

 

Jim Hessler: Yeah, so I can only imagine that getting up in the morning and having to go do a job that you hate has just got to tear the guts out of your spirit, it’s got to be awful. I also know that a lot of that attitude we take to our work is self generated too.

 

Steve Motenko: Indeed, yeah, which is another subject to get into. Jim Clifton, the CEO of Gallup wrote after the survey, “What the whole world wants is a good job. This is one of the most important discoveries Gallup has ever made.” That’s a pretty powerful statement.

 

Jim Hessler: Also, it’s kind of Freudian in its scope because he said what, love and work are the two drivers of human behavior. I’m not a Freudian but that’s what he said.

 

Steve Motenko: Yep. Coming up, what would it take for corporations to transform, in the public’s awareness, from being vehicles for greed into being vehicles for humanity’s most enlightened hopes? You’re listening to The Boss Show.

 

Speaker 1: It’s a Northwest lifestyle weekend on KOMO News. The Boss Show continues.

 

Steve Motenko: Welcome back to The Boss Show, I’m Steve Motenko, the psychology guy.

 

Jim Hessler: I’m Jim Hessler, the business guy. If you like The Boss Show, and who doesn’t, you can go to www.thebossshow.com and listen to all of our past episodes and you can also visit with us on Facebook and Twitter.

 

Steve Motenko: First, listen to the show, the rest of the show.

 

Jim Hessler: We’re modern guys.

 

Steve Motenko: Yeah.

 

Jim Hessler: We’re thoroughly modern guys.

 

Steve Motenko: We are tech savvy, aren’t we? Thoroughly modern Millies. The show today, Part One, Conscious Capitalism. Quote from the book, early on in the book, Conscious Capitalism. It is written primarily by … Well, written by John Mackey and Raj Sisodia. Jim, I want to bounce this quote by you, “No human invention has had a greater positive impact on more people, more rapidly, than free enterprise capitalism. What do you think?

 

Jim Hessler: I want to say that’s from the introduction to the book which is written by Mackey rather than the part that’s written jointly by them. Who knows? I can’t go back and see how society … I can’t predict how different society would have been if we’d chosen a different way. Certainly history has shown that Communism doesn’t work or at least it didn’t work in those circumstances in which it was placed and Capitalism has generated an unbelievable amount of wealth for a lot of people. Yeah, I guess on that point you really can’t argue the basic premise of the quote.

 

Steve Motenko: Yeah, I mean it not only created wealth but also … I mean, it lifted literally billions of people out of poverty. Again, I don’t know how much of that you can attribute to the free market part, the free market.

 

Jim Hessler: Well, there is certainly a correlation between capitalism and democracy. The countries that tend to have the most wide open free market based economies also tend to have more Republican or Democratic types of government so those two seem to go together.

 

Steve Motenko: True, because democracy is … The values underlying democracy are similar to the values underlying free market.

 

Jim Hessler: Right. There’s this element of self-determination, that in a democracy you get to vote and you get to be part of the process. Capitalism certainly teaches us that as well that it’s up to us to make the most out of our lives.

 

Steve Motenko: Right, to make things happen.

 

Jim Hessler: Generate wealth for ourselves and for others, yeah.

 

Steve Motenko: Right. You look at areas like sanitation and medicine which have been funded by Capitalism for the most part and they have doubled life spans. We used to live until 30 and then we’d die of strange diseases.

 

Jim Hessler: Yeah. I was reading an article recently that talked about inventions. Some scientists believe that the most important inventions actually happened in the latter half of the 19th century and having to do a lot with water and sanitation. Indoor plumbing completely changed human existence.

 

Steve Motenko: Right, and communication.

 

Jim Hessler: Much more than the cell phone has.

 

Steve Motenko: Right.

 

Jim Hessler: Right?

 

Steve Motenko: Yeah, sure.

 

Jim Hessler: In a much more fundamental way.

 

Steve Motenko: Sure, in most areas of the world.

 

Jim Hessler: Yeah, right, right.

 

Steve Motenko: Look at systems of communication. Transportation, communication. Look at the internet which I can’t imagine would have … Although it was originally a military invention, am I right?

 

Jim Hessler: Yes.

 

Steve Motenko: Yeah. I can’t imagine that it would have taken hold as it has today, opening all the world’s information to all the world without Capitalism.

 

Jim Hessler: Because there was money to be made. Now, that doesn’t … We can’t rule out the idea that, for example, the interstate highway system was built by the government. I’m not sure we could have done that as a free enterprise project for example so, but that really in many ways was in service of Capitalism, was to make people mobile and allow for commerce to travel freely on the highways.

 

Steve Motenko: Right. Cynics will say, and I’ve done my fair share of bashing Capitalism. I’ve done my fair share of bashing corporations. I’ve done work in sustainability and nothing has had a more negative impact on the sustainability of the planet than Capitalism. Cynics mostly on the left will say that the advances of … The benefits of Capitalism are more accidental by products of its priority on greed and money grubbing.

 

Jim Hessler: Right. It’s the trickle down theory, really, in many ways. If enough people are incented to create wealth then that wealth will transfer and spread to all. I want to just get something right out here. John Mackey, I’ve got some real problems with John Mackey and I don’t know if you want to talk about that on the show today, the guy that wrote the book.

 

Steve Motenko: I have no problem talking about that but let’s do that after the break.

 

Jim Hessler: Okay.

 

Steve Motenko: After the break we’ll talk about Jim’s problems with John Mackey. We’ll also talk about whether it’s possible for a system that has been focused on maximizing profits in most people’s awareness to transcend that motive and become truly conscious. You’re listening to The Boss Show.

 

Speaker 1: Now back to Jim Hessler and Steve Motenko. This is The Boss Show on KOMO News.

 

Jim Hessler: Hi, I’m Jim Hessler, I’m the business guy.

 

Steve Motenko: I’m Steve Motenko, I’m the psychology guy. We’re talking today about the possibility of Conscious Capitalism, whether in fact it is in the cards at any time in the future for the egregious impacts of Capitalism to be overcome by a completely conscious approach that takes the world capitalistic culture by storm. We’ll get into the details of what that means in a few minutes but first, Jim, you said before the break you’ve got some issues with John Mackey as I know many people do.

 

Jim Hessler: Yeah. Anytime you’ve got someone who’s the figurehead of a movement. When you think of Conscious Capitalism he’s the guy with his name on the book and he’s the guy that is the high profile guy. This is a person who comes across … This is my cynical reaction to John Mackey. This is a guy who’s made a lot of money, he’s worth 100 million dollars apparently. He has a 400 acre ranch in Austin, Texas. I hate books, I got to be honest, I just hate books where somebody says, “Well, this is the way I did it and if you do it my way you’ll be successful too.” I just have an issue with books like that. There’s been a ton of them over the years and I generally kind of get tired of them.

 

  For John Mackey who’s kind of significantly anti-union, who’s very much against any sort of public healthcare program, who’s called Barack Obama a Fascist in no uncertain terms, and frankly, Whole Foods isn’t doing very well. Whole Foods store sales year against year are down and they’ve already kind of lost their edge in the marketplace. All of this, I’m a little leery of holding him up as any sort of an icon for the Conscious Capitalism model.

 

Steve Motenko: That’s not my intention to do.

 

Jim Hessler: I know it’s not your intention but …

 

Steve Motenko: For those listeners, yes. You want to do that, yeah, be informed.

 

Jim Hessler: Yeah. It doesn’t mean Conscious Capitalism is a bad thing but I think to me it’s a lens, it’s a little bit of a darkened lens that I read the book through.

 

Steve Motenko: Got it, got it. Let’s talk more about the message than the messenger.

 

Jim Hessler: Okay, we can. Even speaking about the messenger, you talk about his 400 acre ranch. Wouldn’t you agree that the vast majority of entrepreneurs who start businesses are not doing so in order to make multi-billions.

 

Steve Motenko: I would agree. It’s a game. I have always said it’s a game. It’s the most fun game you can ever play is to start a business and see it be successful. It’s like winning the lottery, it’s an incredible experience.

 

Jim Hessler: When you say a game that makes me think of a win/lose game, like a zero sum game. I don’t know if that’s necessarily how you mean it.

 

Steve Motenko: When somebody buys food at Whole Foods Market they are not spending their money at Safeway, so yes.

 

Jim Hessler: Okay.

 

Steve Motenko: Somebody wins, somebody loses. There’s a certain amount of dollars out there, they get spent according to customer preference and so his job running Whole Foods is to get people to prefer buying food from his market than from another market.

 

Jim Hessler: Well, but it could also be … His job could also be framed in a lot of different ways. His job could be framed as contributing to a more healthy nutrition diet across America.

 

Steve Motenko: Sure, and if he’s doing that and Safeway doesn’t do that then Safeway loses that portion of the market to Whole Foods.

 

Jim Hessler: To say that there are winners and losers is different from saying that the reason I start a business is so that I can win and others can lose.

 

Steve Motenko: Yeah, you and I have had this conversation before. The winning is … What would you call it? It’s exciting, it’s exciting to win, to see those dollars coming in and see your business doing well. We’re in that mode with Path Forward right now, this is a fun time for us.

 

Jim Hessler: It’s exciting and it’s not the reason, for me it’s not the primary reason that I do the work that I do, and I would say not the primary reason that most entrepreneurs do the work that they do. I’d love to hear you respond but we don’t have time, we got to go to break. You’re listening to The Boss Show, stay tuned.

 

Speaker 1: KOMO News. The Boss Show is back on a Northwest lifestyle weekend. Here’s Jim Hessler and Steve Motenko.

 

Jim Hessler: Hi, I’m Jim Hessler, I’m the business guy. Hey, wait a minute. Are we starting the show now?

 

Steve Motenko: Yes. No, we started the show a couple segments ago, we’re continuing the show now. Wake up.

 

Jim Hessler: Oh good, good.

 

Steve Motenko: I’m Steve Motenko, I’m the psychology guy. Jim and I are having fun because we’re having a little bit of a disagreement which we don’t do often enough on the show, it makes better radio, and we’ll continue our disagreement in a few minutes, maybe.

 

Jim Hessler: If it makes our listeners happier, I think you’re a jerk.

 

Steve Motenko: Before the break we … I mentioned that the vast majority of entrepreneurs, I’m not going to go to Jim because … Well, because if I start saying, “Jim thinks,” then you’re just going to crawl all over me so I’m not going to go there. The vast majority of entrepreneurs start a business not because they’re expecting to make billions of dollars, maybe they’re a few, I’m sure there are a few who do, but because they have a passion or because they enjoy playing the game. That game may involve win/lose aspects but for the most part I submit that it’s about manifesting their passion, sense of purpose in the world at whatever level of development they are.

 

  It’s not the kind of purity of the entrepreneurial spirit that’s in the way of making Capitalism conscious. There’s also something else that’s not in the way of making Capitalism conscious and that is the profit motive, necessarily. There is a common misconception that corporations are legally bound to prioritize shareholder value, maximize shareholder value, and hold that as a priority over everything else. From a number of sources I’ve read that it’s an urban myth essentially. Yes, economists and business school professors have focused on that for decades, over 100 years.

 

Jim Hessler: People who own stock in companies can sue the board of directors if they feel that their investment has been poorly served.

 

Steve Motenko: Well sure, but anybody can sue anybody in this country. Yeah, as a big corporation you take a big risk if you’re not prioritizing shareholder value but first of all it’s not a legal duty. Secondly, the argument that the Conscious Capitalism writers make and anyone involved in the Conscious Capitalism movement. Jim, I want to know what you’re going to say about this. Is that to truly maximize profits in the long term, not in the short term, not for the next quarterly statement, but in the long term. What you want to do is satisfy the interdependent network of all your stakeholders and that means … This is one of the first principles of Conscious Capitalism is what they call stakeholder integration which is a little bit of a, sounds like a business school term, but to maximize value to your customers, your team members/employees, your investors, your suppliers, the planet, and your community.

 

Jim Hessler: That all makes perfect sense to me. I don’t disagree with that in any way. Again though, the purpose of that unity, the purpose of that stakeholder community is to achieve some end which may not satisfy everybody. Right?

 

Steve Motenko: The purpose of the stakeholder community …

 

Jim Hessler: Well, if you get together, if you form this community that you’re describing of stakeholders, and I love that idea, there’s still a purpose in that in which all of them want to be part of a winning team, all of them want to be part of an enterprise that’s going to grow. One of the things we need to talk about, maybe this is after the break, but there’s two elements here. There’s an element of how much the employees receive in compensation from the operations of the business, and then there’s the question of how much the investors receive as a return for investing their money in the business. We have to be careful to keep those two things kind of separate.

 

Steve Motenko: They’re not necessarily zero sum. There are all sorts of examples of companies that pay their employees more than what the market will bear and they do better because they attract better talent. Thus, their investors do better.

 

Jim Hessler: They have a good product, and they have something that is well placed in the marketplace, and they have a product that’s demonstrably better or out competes their competition.

 

Steve Motenko: Right, yes, and it’s all inter-dependent.

 

Jim Hessler: Yes.

 

Steve Motenko: We’ll get to more of it when we come back. You’re listening to The Boss Show.

 

Speaker 1: It’s a Northwest lifestyle weekend on KOMO News. The Boss Show continues.

 

Jim Hessler: I’m Jim Hessler, I’m the business guy.

 

Steve Motenko: I’m Steve Motenko, I’m the psychology guy. We’re talking about Conscious Capitalism, is it a oxymoron? Jim, before the break you said something that you’d said in an earlier segment about everybody wants to win, everybody wants to be part of something that’s growing. On the one hand, I get the growth thing. We all want to grow, we all need to grow, we’re born to grow, every living thing is born to grow. On the other hand, if we did a survey I don’t know where it would come down, but it’s not the … As I look at the work that I do, and I’m a capitalist, I charge money for my services and I make a profit. There’s nothing in my consciousness that says I want anyone, I want other coaches to lose or other leadership development firms to lose. I just want to offer the services that I have to offer in ways that will benefit people.

 

Jim Hessler: I believe that to be true. I believe that largely to be true about me, about the way I approach my work. I do know that I have to get up an do what I do better than other people do in order to earn my place in the marketplace.

 

Steve Motenko: Yeah, I don’t know if I’d even agree with that because it’s not an even playing field. All you have to do, for example, in your work is have enough people that trust you. It doesn’t matter how many people trust other leaders of development providers, all you have to do is have enough people who trust you and have enough persuasiveness in the context of authenticity and in your sales efforts and in your work effort facilitation.

 

Jim Hessler: That’s not true if you’re selling groceries or automobiles.

 

Steve Motenko: Right. Yeah, so the point that Mackey makes, and the messenger is clearly tainted, from our perspective. From your perspective especially, but I agree. Is that, and maybe this is the core notion of Conscious Capitalism, that if we get away from this short term profit driven notion we actually will generate more profit over the long term.

 

Jim Hessler: That’s the part that I violently agree with in this idea.

 

Steve Motenko: You do?

 

Jim Hessler: Oh yeah. The short term is killer. I’ve worked for a major American corporation and every freakin’ quarter it was some sort of stress event to say, “Oh, we didn’t meet our shareholders expectations and we need to cut expenses,” and I see clientele going through that and it’s awful. It’s awful from a personal and a professional perspective and it’s a bad business strategy. Mackey’s point in Conscious Capitalism or I should say the point of the movement, to take it away from the association with Mackey’s name, is that it doesn’t have to be that way. That a long term perspective will produce both satisfaction for all stakeholders and long term profit.

 

Steve Motenko: The former CEO of Costco, Jim Sinegal, was being interviewed a few years back and they were comparing what he paid his employees with what they were paying at Sam’s Club. Direct competitor. They said, “How can you afford to pay what you pay? You pay more than twice as much as employees at Sam’s Club?” He said, “Come back in 15 years and tell me which one of our companies has been the most successful.

 

Jim Hessler: Mm-hmm, yeah.

 

Steve Motenko: That’s exactly what you’re talking about.

 

Jim Hessler: Yeah. There’s one really critical point that I want to make. I think the most important thing that I have to say about this notion of Conscious Capitalism, and I want to get it out before we close the show, although we are going to do a part two next week. That is that it seems to me that everything, the possibility of Capitalism becoming conscious depends completely on the psychological maturity of the leaders who run these corporations, that’s the problem where we are now.

 

Steve Motenko: I’ll agree with that.

 

Jim Hessler: Thank you. All right, final words on Conscious Capitalism when we come back. You’re listening to the Boss Show.

 

Speaker 1: Now back to Jim Hessler and Steve Motenko. This is The Boss Show on KOMO News.

 

Steve Motenko: Hi, welcome back. I’m Steve Motenko, I’m the psychology guy.

 

Jim Hessler: I’m Jim Hessler, I’m the business guy. We’re having a very interesting conversation today about a concept called Conscious Capitalism. We’re going to do another show on this and I just want to say before we part ways today, Steve, I’m still kind of cynical about the concept. I agree that enlightened people run better businesses that are better for the whole world but Capitalism is still a rough and tumble game.

 

Steve Motenko: Yep, I agree with that and I honor your cynicism and I don’t always agree with it. In our part two next week …

 

Jim Hessler: That was such psychology guy thing to say.

 

Steve Motenko: Yeah, yeah, completely agree. If you’re gagging out there you’re doing the right thing. Next week we want to talk about the four … Get a little more specific about the four core principles of Conscious Capitalism which are stakeholder integration, we mentioned it briefly, higher purpose, conscious leadership, and conscious management and culture. What do those look like on the ground running?

 

Jim Hessler: The Boss Show is produced by Boss Media Productions and our sound engineer is Kevin Dodrill.

 

Steve Motenko: If you missed any of the show you can get all of it online at thebossshow.com.

 

Jim Hessler: You can subscribe to our podcast or contact us, we’d love to hear from you. Thank you for listening.

 

Steve Motenko: Don’t forget, rule number six.

 

Jim Hessler: Rule number six.

 

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One Response to Conscious Capitalism, Part 1

Fred Block says: June 5, 2016 at 12:45 pm

When you talk about conscious capitalism, you miss one big point. Even companies that start out with good intentions often have to change their business plans due to what I call the “Walmart Effect”. Years ago, many retailers treated their employees far better than they do today. Employees were seen as valued partners, not commodities as they often are today. When Walmart gained a competitive advantage by limiting employees hours, their competitors had to also reduce costs by squeezing employees. By limiting hours, they eliminated overtime pay and also made many employees ineligible for health insurance and other benefits. Customers usually vote with their wallets, and today most competitive retailers follow the Walmart template.
How can a business stay true to their ideals while also maintaining a competitive edge?

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