There is a new paradigm emerging in business that allows forward-thinking businesses to create genuine value and in turn, reap great rewards. The value created is not only financial and can take a myriad of forms that contribute to making the world a better place.
This topic was recently explored with business managers and leaders in a workshop in Cape Town on 24 June 2011, titled, ‘Introduction to Conscious Leadership: Business leadership for a sustainable world’.
The key differentiator between ordinary profit-driven businesses and forward-thinking businesses of the future is in the way its leaders think. We are speaking here of the difference between ordinary leadership and conscious leadership.
Conscious leadership is about abundance creation and the outcome is not only sustainable, but creates better outcomes for the wider stakeholder network including shareholders, employees, customers, suppliers, the community, animals and the environment.
The ‘zero sum’ pie
Ordinary leaders run businesses from a profit motive based on a belief in scarcity. This belief reflects a paradigm – conscious or unconscious – that life is a ‘zero sum game’ and for somebody to gain, somebody else must lose. This kind of thinking is fairly hardwired in many of us and often seems borne out by experience. However, experience actually shows that the opposite is true if we give it a chance.
We create our life’s experiences based on our conscious and unconscious beliefs about reality. To make the shift toward abundance and sustainability thinking takes deep personal insight and courage, but it is possible and many conscious-minded individuals have made the shift.
Conscious leaders run businesses from a value-creation motive based on an underlying belief in abundance. The term ‘abundance’ means ‘alue created without loss.’ These businesses generate shareholder value as well as value for the wider network of stakeholders.
The term ‘value’ extends beyond financial value (profits, growth, costs, and donations) and includes product value, service value, empowering value, practical value, aesthetic value, health and wellness value, peace-making value, community-building value, spiritual value, preservation and sustainability value. These forms of value apply to humans, animals and the environment.
The ‘abundance’ pie with various stakeholders benefiting
A mutually beneficial feedback loop
In a consciously run business shareholder value is designed to increase but not at the expense of others or the environment. Profits naturally arise out of a mutually beneficial feedback loop involving the wider stakeholder network. The result? Everybody gets more pie and the pie keeps growing.
There are now a growing number of highly successful companies that have succeeded in their quest to make a positive difference in the world while creating shareholder value e.g. Whole Foods, The Body Shop and Discovery Health to name a few.
If we consider the definition of a conscious leader as a person who leads a company to greater wealth while creating value within a wider network of stakeholders, let’s consider how Whole Foods has fared.
In a 2011 interview with Harvard Business Review, Whole Foods founder John Mackey stated ‘I actually don’t think trying to maximise profits is a very good long-term strategy for a business. It doesn’t inspire the people who work for you. It doesn’t lead to that higher creativity.’
And he means it, as the facts show for themselves.
Whole Foods’ revenue in 2010 was $ 9 billion representing a 12% sales growth. Clearly, the shareholders are doing just fine. Whole Foods’ higher purpose according to Mackey is ‘helping support the health, well-being, and healing of people and the planet.’ He knows that profits will come as a result of pursuing this higher purpose built into a solid business model.
To its customers Whole Foods provides high quality natural and organic foods with friendly, efficient service. Why is the service so friendly and efficient? Well, it seems to ‘come from within.’ The employees are happy, as demonstrated by their vote 14 years in a row of Whole Foods as one of Fortune’s 100 Best Companies to Work For.
Whole Foods provides its health- and planet-conscious employees (‘team members’) with a sense of meaning and purpose in their work as well as opportunities for growth. Not only are team members empowered to work in a decentralised, self-directed team culture, but they can volunteer overseas in some of the communities where Whole Foods is microlending via its Whole Planet Foundation.
Ordinary shareholders might have baulked at the idea of microlending to poor people in developing countries, but the effect this programme has had on Whole Food’s team members has been amazing.
As John Mackey states, ‘nothing we’ve ever done in our history has created more goodwill with our team members than that.’
The microlending program
The microlending program was structured after the Grameen Bank’s model which earned a Nobel Peace prize in 2006. Customers also support the microlending initiative via donations and in this way, Whole Foods has involved its team members, its customers and its suppliers, who benefit from starting and developing sustainable businesses as suppliers. Furthermore, these suppliers receive preferential marketing in Whole Foods stores.
The microlending programme extends to over 130 000 suppliers in 32 countries, of which 92% are women. As a result, this has provided poverty relief for 650 000 people. And what would the shareholders say if they could know that the loan repayment rate is around 97.5%? We think they would be happy, considering that many private banks have in the past few years experienced 3% – 4% in bad loans.
For the community and environment, Whole Foods provides at least 5% of its total net profits to non-profit organisations. It also supports and strongly advocates organic farming and animal welfare. Moreover Whole Foods composts and recycles its own waste. Considering this integrated stakeholder model shows that the stakeholders benefit from each other and value is created throughout. Whole Foods has initiated this widespread, interrelated model of abundance. Like any business, it will naturally reap the benefit of its own creation.
The integrated stakeholder model shows that abundance is more than a pipe dream, and that it truly works. Business leaders need to create a deeper and genuine purpose for being in business beyond that of making profits, and then creatively engage the stakeholder model through genuine value creation. The business model itself must reflect the deeper intention and the inclusivity of the stakeholder model.
This kind of abundance creation and sustainability is the outcome of conscious leadership. Loraine Magda helps leaders and leadership team to develop their own conscious leadership.
By Loraine Magda (top photo)