John Mackey, and the paradox of profits

conscious capitalism_book coverI’m reading an advance copy of new book  called Conscious Capitalism: Liberating the Heroic Spirit of Business by John Mackey, the founder and co-Ceo of Whole Foods Market, and business school prof Raj Sisodia. It’s very good, with useful insights on almost every page so far. (I’m only 70 pages in.)

Mackey was a liberal hippie. He’s now a libertarian entrepreneur and cheerleader for capitalism. He’s also a vegan who meditates and practices yoga. Not your typical CEO of a FORTUNE 500 company.

One reason I like the book is that I agree with much of what Mackey says. This passage, about what Mackey and Sisodia call the “paradox of profits,” comes  from a chapter about how purpose, and not profits, is what drives all great companies:

Just as happiness is best experienced by not aiming for it directly, profits are best achieved by not making them the primary goal of the business. They are the outcome when companies do business with a sense of higher purpose, build their businesses on love and caring instead of fear and stress…

If a business seeks only to maximize profits to ensure shareholder value and does not attend to the health of the entire system, short-term profits may indeed result; perhaps lasting many years, depending upon how well its competitor companies are managed. However…without consistent customer satisfaction, team member happiness and commitment, and community support, the short-term profits will proved to be unsustainable over the long term.

The No. 1 competitive advantage of purpose driven companies (or values-driven companies, if you prefer) is that their workers are engaged, as I wrote in my own book, Faith and Fortune: The Quiet Revolution to Reform American Business, back in 2004. Mackey and Sisodia put it this way:

The difference in business impact and personal happiness between a team member who is inspired, passionate, and committed and one who merely shows up for a paycheck is enormous. The blame for this does not lie with ‘lazy and unmotivated’ workers but with companies that fail to create workplaces in which people are given the opportunity to find meaning, purpose and happiness…

They note that people devote enormous amounts of time, money, and effort to causes that often have nothing to do with their narrowly defined self-interest, and say:

To tap this deep wellspring of human motivation, companies need to shift their emphasis from profit maximization to purpose maximization. By recognizing and responding to the hunger for meaning that is a quintessential human companies, companies can unlock vast sources of passion, commitment, creativity and energy that lie largely dormant in their team members.

Makes sense, no? People who care a lot about food, health and the environment can pursue their passions at Whole Foods or Stonyfield Farm. People who love the outdoors can be fulfilled at Patagonia or REI.

Of course, a strong sense of purpose isn’t, by itself,  enough to assure profits. (Look at the newspaper industry.) But it  helps.

This book reminds me that there’s a big opening out there for a bank that is really, truly committed to serving its customers and workers.

Comments

  1. Great food for thought! But does conscious capitalism exist?
    Ethical capitalism?

  2. This goes along with the saying that good teachers teach and great teachers inspire. Inspired employees go the extra mile. All people have different things they get inspired about.

  3. caroline frampton says:

    “….companies can unlock vast sources of passion, commitment, creativity and energy that lie largely dormant in their team members.” I believe this is the heart of ALL positive ways for a company to make a profit (in a good and positive way), when greed for money does not exist, but the care of the people, team(s), every single worker in a company, small or large. Our company aims to be exactly as mentioned. We are native American owned and run in the closest degree as possible to the traditional and spiritual ways, yet integrated with modern business practices. We are family oriented as well as in great respect to Motherearth. Our workers, from the C-level to the crews, to each support member in all fields of their duties, we are committed to the fairness of treatment, pay, work environment, and all that makes an employee motivated and inspired to become involved in the company’s growth. As a company, we cannot function nor advance in a positive way without each member being committed to it’s advancement. Yes, a profit must be had, however, there are positive, ethical and respectful ways (for mother earth) without compromising. I look forward to reading this book, and to pass on what I learn to the rest of my family.

  4. It is interesting that one friend of mine who worked for Whole Foods was forced to take her break siting in her car, because there were no breaks allowed, nor any place to take one. That got cold or fuel-inefficient in the winter time. I sometimes think CEOs believe that their high-flown ideas happen automatically down the chain or that what they experience is experienced by others. Not everyone can be fulfilled at work: someone still has to carry out the garbage and clean the bathrooms.
    As much as I respect our employees, our customers and vendors, not everything is rosy all the time and I do get to model the CEO servant role by doing some of the grunt work that just has to get done.
    Passion and commitment are there for those who respond to a challenge and whose values are such that they feel fulfilled at work. Alas, that is not available for everyone.

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