Welcome to the Softer, Kinder (More Profitable) Side of Capitalism

Though we are all interconnected in this system we call Capitalism, at the heart of every company, every brand, every advertising agency, marketing company, and media firm lies the question “Why?” Why do we exist? Why do we do what we do? Why should I concern myself with leaving the world better than I found it?

Every day, as business becomes more competitive and branding more global, it’s clear the companies that succeed are the ones that understand and are fully leaning into their why. Brands that know who they are and the non-negotiable role their values play in guiding everything they do. Brands that recognize the value of culture and are willing to fight for it – even when that’s hard.

Now, more than ever, how companies show up matters. And whether those companies are blue chip or challenger brands, it turns out companies that seek first to do good and be good, are not just doing well — they’re exponentially outperforming their competition. 

IF YOU’RE BRAVE ENOUGH, ONE QUESTION CAN CHANGE EVERYTHING

Almost a decade ago, leadership stalwart Simon Sinek wrote a classic business book called “Start With Why” that explained “How Great Leaders Inspire Everyone To Take Action.” The book and Sinek’s subsequent TEDx Talk made him an instant leadership icon and the lessons landed hard with leaders in every type of business. The question he asked was simple, but, based on the response, one we had not been asking ourselves nearly enough. The question was “why?

As the book explains, every person and every company can tell you what they do. Most can even explain how they do it, or how they are different from other companies. But very few, it turns out, could articulate why. Why they did what they did. Why they were who they were. Why their culture was what it was. And Sinek notes in his TedTalk, “people don’t buy WHAT you do. They buy why you do it.”

And so, in large part due to Simon Sinek, hundreds of companies and thousands of leaders set out on a journey to find their why. They dug into the narratives that shaped who they were as leaders and the places their brands held in the world. And as they looked toward the future, considering the difference they might be able to make, those leaders realized – just as I did here at LOOMIS – that their ability to be effective leaders started with an honest, naked assessment of their intent and a true understanding of the WHY that lies at the heart of every choice we made. 

For many leaders, that was far easier said than done. It still is. Asking “why” requires a potent mix of curiosity, honesty, and bravery. But for those with the courage to unpeel the onion and keep asking “why” until they get to the truth – even when they don’t understand, or like the answers — “why” is the one question that can help us move from the leader, the company, and the brand we are to who we want to be. It’s hard, and sometimes painful to discover those aren’t the same thing. But without that honest soul searching, you, and more importantly, those you lead, will never experience the extraordinary growth that’s sitting in front of you.

CONSCIOUS CAPITALISM: LIBERATING THE HEROIC SPIRIT OF BUSINESS.

In 2013, four years after “Start With Why” was published and just five years after 2008’s historic financial collapse, Whole Foods co-founder John Mackey and marketing professor Raj Sisodia wrote a compelling book about an emerging business movement called “Conscious Capitalism” that challenged companies to balance profitability with social conscience. Where traditionally, most companies focus primarily on profit and shareholders, Conscious Capitalist companies believe they have a responsibility to serve everyone who touches their business. It’s the difference between a traditional “shareholder model” and a new “stakeholder model.”

In the “shareholder model,” everything a company does is in service of driving as much money as possible to the bottom line and to the shareholders. It’s the traditional business mindset perpetuated for a century by business titans in every industry and the likes of Nobel Prize winning economist Milton Friedman. In 1970, Friedman wrote a piece for the New York Times called “The Social Responsibility of Business to Increase Its Profits” that perfectly encapsulated the Wall Street mindset of the day. According to Harvard business professor Bill George who wrote the Foreword to “Conscious Capitalism,” Friedman “excoriated business leaders who were concerned about their employees, communities, and the environment” and said, “Businessmen who take seriously their responsibilities for providing employment, eliminating discrimination, avoiding pollution… are preaching pure and unadulterated socialism.”

In 1987, Michael Douglas’s Oscar-winning performance as Gordon Gekko in “Wall Street”  brought that mindset to the forefront of cultural consciousness with a single line of dialogue. “Greed, for lack of a better word… is good,” he said. “Greed is right. Greed… works.” And corporate leaders ate it up. Over the next 30 years, the dark side of that mindset reared its ugly head time and time again with Enron and Bernie Madoff and the sub-prime mortgage crisis. Admittedly, those are extreme examples of criminal dishonesty. But even now, for companies doing everything right, there still seems to be a short-sighted focus on what their stock is doing today and how they can cut and maneuver to make the bottom line look better tomorrow.

In contrast, Mackey, Sisodia, and other business leaders of the Conscious Capitalism movement have argued that a “stakeholder model” that looks out for employees, vendors and suppliers, customers, and the community, in addition to shareholders, is not only better for all – it’s more profitable. The misnomer about Conscious Capitalism is that in some way it is anti-profit, or some hippy dippy brand of socialism that sacrifices shareholder returns on the altar of fairness and equality. Nothing could be farther from the truth. Conscious Capitalists are all about profit. (Have you shopped at Whole Foods lately?) It’s just that their “why” comes from a different place and with a very different result in mind than companies who are solely focused on themselves.

Conscious Capitalist companies generally care about providing for each of their stakeholders and making sure each individual piece can grow and thrive as a part of the whole. As an example, Whole Foods could squeeze tomato farmers for a few more cents on every tomato, but they believe it’s better for both the farmer and Whole Foods for that farmer to make a fair wage to support his organization and his family. Nothing says Whole Foods has to support their communities in any way, yet they give back by contributing food, donations, and thousands of volunteer hours. Why? Because they believe the healthier the community is, the healthier they are. The same goes for employees, vendors, suppliers, and customers. 

Conscious Capitalist companies value strong relationships and part of that comes from their commitment to purpose, culture, and leadership. Leaders like Mackey and those of companies like Tom’s Shoes, Starbucks, The Container Store, Chick Fil-A, Studio Movie Grill, Panera Bread, and Ben & Jerry’s understand those are the things that define their “why” and the building blocks for a company that people want to be a part of. Think for a second about the companies and brands you lead and all the people you interact with. What is the “why” you are projecting to them? Whether you’re a full-blown Conscious Capitalist or not, are you giving off cues of belonging and value? Of purpose and inclusion? Or are you giving off cues that remind that person they are just a cog in the wheel and a means to your end?

With your employees, your vendors, your customers, and your community, imagine how things might look differently if you managed through the lens of the Conscious Capitalism Credo:

“We believe that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity. Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had. But we can aspire to even more.

Conscious Capitalism is a way of thinking about capitalism and business that better reflects where we are in the human journey, the state of our world today, and the innate potential of business to make a positive impact on the world. Conscious businesses are galvanized by higher purposes that serve, align, and integrate the interests of all their major stakeholders. Their higher state of consciousness makes visible to them the interdependencies that exist across all stakeholders, allowing them to discover and harvest synergies from situations that otherwise seem replete with trade-offs. They have conscious leaders who are driven by service to the company’s purpose, all the people the business touches, and the planet we all share together. Conscious businesses have trusting, authentic, innovative, and caring cultures that make working there a source of both personal growth and professional fulfillment. They endeavor to create financial, intellectual, social, cultural, emotional, spiritual, physical, and ecological wealth for all their stakeholders.

Conscious businesses will help evolve our world so that billions of people can flourish, leading lives infused with passion, purpose, love, and creativity; a world of freedom, harmony, prosperity, and compassion.”

Still not sure Conscious Capitalism is a game changer? In preparation for writing “Conscious Capitalism,” author Raj Sisodia looked at 28 “firms of endearment” that he considered to be the most “conscious” based on characteristics such as their stated purpose, generosity of compensation, quality of customer service, investment in their communities, and impact on the environment.

Of the 28 companies he looked at, 18 were publically traded. From 1996 to 2011, those 18 companies outperformed the S&P 500 index by nearly 11x.

Every day, companies are realizing that the path to doing well is paved with doing good, both inside their organizations and out. Some are disruptors who are redefining what business looks like. And yet others are companies who have been around for nearly 100 years, suddenly finding new and meaningful ways to do good. Like you perhaps, they may not be wholly committed to the Conscious Capitalism way of doing business. But that doesn’t mean they can’t benefit from finding a place to do good and starting there. Just look at the impact Izod Lacoste made with a simple, smart, meaningful idea.

SHIRTS AND SKINS: LACOSTE’S ENDANGERED ANIMAL PROJECT

Earlier this year, for the first time in its history, French fashion designer Lacoste decided to change the iconic smiling crocodile logo on its shirts. And for good reason.

Concerned for the plight of endangered animals around the world, Lacoste partnered with the International Union for the Conservation of Nature (IUCN) to create a special “Save Our Species” campaign to help fight extinction. To raise money for the campaign, Lacoste chose 10 animals facing extinction and created logos for each animal in the style of their iconic crocodile. They then created a series of white shirts featuring each endangered animal’s logo, but for each, only as many as the actual number of those animals left in the wild.

The Vaquita, an endangered porpoise in the Gulf of California got 30 shirts. The Burmese roofed turtle got 40. The Javan rhino, 67. The California condor, 231. The Sumatran tiger, 350. In all, only 1,775 shirts were made representing these rarest of birds, reptiles, and mammals. Normally priced around $25, each Izod shirt sold for around $185. And they sold out quickly. But don’t worry if you missed out. This is the beginning of a three-year partnership between Lacoste and the IUCN so a new round of shirts should be coming in 2019.

PURPOSE IS ONLY AS GOOD AS THE ACTION BEHIND IT.

Lacoste’s “Save Our Species” campaign (a not so subtle acronym of S.O.S.) is the perfect example of finding a place to do good and then executing well against it. In the grand scheme of Lacoste’s operation, knocking out 1,775 shirts – even having to retool the logos – probably took an afternoon. But look at the impact. Monetarily, they probably donated a quarter of a million dollars. But when you look at the news outlets that covered the story, endangered species were brought to the attention of tens of millions of people who hadn’t given them a thought in who knows how long.

Where are there opportunities for you and your company to do well by doing good? If you’re an agency, look for service opportunities that would be a great fit for your clients and pitch them on doing good together. If you’re a brand, challenge your employees, your agency, and your suppliers to join you in making the world a little bit better. As a challenger brand advertising agency, we have the creativity and manpower to solve any marketing problem you put in front of us. So why can’t we use that same creativity and manpower to leave the world better than we found it? Why can’t you? The answer is, we can. And when our intent and our purpose are pure, everything good we do is destined to come back to us many times over.

According to Conscious Capitalism, 10.5 times to be exact.

MIKE SULLIVAN is the president at LOOMIS, the country’s leading challenger brand advertising agency. For more about challenger branding, subscribe to our blog BARK! The Voice of the Underdog