Running a successful business is about more than raking in the most profit. Whole Foods CEO John Mackey and other entrepreneurs explain.
Ruthless capitalism isn't the road to building a brand customers love to buy and a company employees love to work for. According the executives behind Trader Joe's and Whole Foods, a softer, more conscious capitalism is required.
Former Trader Joe’s president Doug Rauch created the organization Conscious Capitalism, Inc. to promote the very ideas that helped him build the grocery chain into a beloved--and successful--brand. The business ideology emphasizes four tenets--purpose, stakeholders, leadership, and culture. Last week, the organization and such high-profile supporters as John Mackey, co-founder and CEO of Whole Foods Market, and Eric Ryan, co-founder of the eco-friendly soap company Method, gathered to explain what it means to run a business with conscious capitalism in mind.
Work with purpose.
It's not all about the money.
“Business is the greatest value creator in the world,” Mackey told attendees. Mackey, along with Bentley University marketing professor Raj Sisodia, co-authored the book Conscious Capitalism: Liberating the Heroic Spirit of Business. But with that power to create global value comes a greater responsibility on the part of today’s business leaders.
“Is the purpose of business to make money?” Mackey asked the audience. “Doctors make money. But their purpose is to heal people.” Figure out what defines your higher purpose.
Create value for your stakeholders.
The soap industry has plenty of competition, but Method co-founder Ryan explained how his company stood out by offering a different value proposition.
“Cleaning is a really dirty business,” he said. Not only do traditional detergents inflict ecological damage with toxic chemicals--they’re wasteful, too. And oversized laundry detergent caps, which encourage customers to use more detergent than they actually need, ultimately waste soap and water.
Ryan explained that Method strives to eliminate this waste while simultaneously saving customers money.
“We love to slay monsters,” he said, “The difference between villains and monsters--Tide is my villain--[is that] monsters attack entire communities.” Those detergent caps are an industry monster.
Method does its part to slay this monster by offering appropriately sized caps and concentrated detergent--a win for the environment and the customer, he said.
Be a conscientious leader.
One consumer trust survey places business executives below members of Congress in terms of public trust. Regaining that trust, Sisodia said, will happen only when entrepreneurs follow their hearts--not their wallets.
Sisodia believes that business is more powerful--and fundamentally more ethical--than politics because it is based on a voluntary exchange of goods, and lacks a certain coercive element sometimes seen in government. But he believes that business leaders need to harness this power for good, not evil.
Mackey echoed the sentiment. "[We are] moving away from corporate freedom because [business leaders] are seen as economic sociopaths," he said. As he told Inc. at SXSW in March, “Business will never be trusted if all it talks about is maximizing a profit.” Mackey and Sisodia both recommended that business owners get more transparent about their motivations.
To gain back consumer trust, Mackey said leaders must demonstrate that they have just as much invested in their companies as the consumers and financial backers. “Money is not what drives most entrepreneurs. What drives most entrepreneurs is some kind of dream,” Mackey said at SXSW. So don't be afraid to advertise your dreams for your company--they might be just the emotional common ground you need to level with consumers.
Develop a sustainable culture.
Conscientious entrepreneurs support and nurture the talent that doubles as one of their most important resources, Sisodia said.
“It’s kind of a hippy-like question: Can you build a business on love? I think so,” he said. Originally from India, Sisodia explained that when he first came to the U.S. he was baffled by the name of restaurant chain T.G.I. Friday’s.
“Thank God it’s Friday? I thought people went to church on Sundays,” he says. Sisodia explained that once he discovered the name was an allusion to the collective relief felt by employees at the end of “another hellish week at work” he was galvanized into action. “There’s a reason that heart attacks are highest on Monday morning,” he says, “Our work is literally killing us.”
Employees are stakeholders, too. Treat them well, and they'll treat your business well.
FRANCESCA FENZI reports on entrepreneurship, technology and small business news from San Francisco. Her work has previously appeared in TIME, USA Today, Pop City and The Northside Chronicle. @FrancescaFenzi