Success can be unexpected. When I started ICE (Innovative Commercial Environments) as an independent furniture dealership from a spare bedroom in 2006, concepts like conscious capitalism had yet to hit the business zeitgeist. Over the last 13 years, ICE has developed a reputation of being San Diego’s most community engaged and creative office and hospitality furniture dealership. In an industry that averages single digit growth, ICE continues to grow in the 40–80% range every year, landing us on the Inc. 5000 for 6 years in a row; a feat accomplished by only 3% of U.S. companies.
I had to wait patiently for the works of John Mackey, Rajendra Sisodia and Jagdish N. Sheth before I had something like an answer. In Conscious Capitalism and Firms of Endearment, I discovered an explanation for why the ICE formula has proven so effective.
According to Firms of Endearment (FoE), we entered the ‘Age of Transcendence’ in the late 1980s. America has experienced a ‘cultural revolution’ and shifted its cognizance, created by two factors: 1) the World Wide Web, and 2) a rising global median age. Easy access to knowledge has facilitated a ‘democratizing shift in power for the global masses’, which according to Sisodia and Sheth is a natural evolution. For them, we are gradually awakening, becoming more aware of our responsibility to our planet, to our communities and to future generations.
The aging demographic literally desires to modernize the purpose of business, resulting in a more humanistic vision of capitalism, a seismic swing in consciousness that is shifting the basis of American society. In the context of such a change, I have only my own experiences to reflect upon.
At ICE, a company with mostly Millennials, the generational shift includes this cohort along with digital communication and an aging population. The values and perspectives of the Millennial generation are as much a factor in the emergence of conscious social enterprises as those identified in Firms of Endearment or Conscious Capitalism.
They bring with them a set of demands that are at times productive in reimagining enterprise as a constructive social vehicle and free markets as a social good in-themselves. The overlap of millennial values and the tenets of conscious capitalism are remarkable. Compare the (4) principles of Conscious Capitalism, which I elaborate on below:
Core Values which are the heart of an engaging Higher Purpose.
Fully integrated Stakeholders are viewed as critical to the success of the company; consequently, equitable achievement is required for all.
All leaders and managers embrace Conscious Leadership.
The company has an active Conscious Culture.
The authentic truest purpose of business is to elevate humanity and create value for all stakeholders.
According to the Small Business and Entrepreneurship Council, in 2019 businesses with less than 500 employees employed 46.8% of the labor force. 99.7% of U.S companies have less than 500 employees and are considered small businesses. Small business owners not only have the responsibility to positively impact change, it is in our best interest to do so if we want to attract the highest caliber of talent and create organizational resiliency during economic downturns. The purpose of business has evolved and we have the opportunity, perhaps the duty, to understand how we can positively influence future generations and affect significant transformation.
According to the Deloitte Global Millennial Survey 2019, both Gen Z and Millennials feel ‘government has the most responsibility for improving social mobility’. The unfortunate truth is that government has never been able to provide income equality without substantial cost to long-term economic growth, innovation and of paramount concern, human freedom. In all instances, an advanced economy has developed as a result of free markets, which in turn has reduced poverty and expanded opportunity. The alternatives have failed spectacularly, and it is concerning that so many in the current generation are laying their hopes in such failed strategies.
Markets depend on more than just businesses to function. They need the buy-in and support of people. Mentoring our next generation of leaders through an enhanced dialogue of stakeholder capitalism buttresses free markets against the counter winds of bad economic ideologies. Additionally, at the core of stakeholder capitalism is heightened inclusion on issues of gender and racial parity, sexual orientation and social justice.
The conscious capitalism movement offers the brightest hope for the future of America. Free and fair markets are good, very good; this was capitalism originally imagined by our forefathers! We have strayed from the intent of our founding fathers, it’s time to reembrace these fundamental principles and reclaim what is rightly our heritage.
Remarkably and ironically, embracing these tenets leads to higher profitability. This profitability is well-documented in the chart from the Firms of Endearment book below noting a cumulative return of an FoE firm at 1681% versus 118% for an S&P firm over a 15 year period!
Firms of Endearment organizations outperformed S&P firms by 14 times!
There are a number of signs that 2019 is the year in which more organizations, companies and business leaders understand that supporting free markets requires more than just good business. Perhaps the direst warning came from the notorious vulture capitalist Michael Milken at the May 2019 Milken conference: “reform capitalism or face revolution”.
In August the Business Roundtable, comprised of some of the most influential CEOs in the United States, redefined the purpose of business. In an echo of the tenets of conscious capitalism, the statement articulates a broader notion of enterprise: stakeholders, not shareholders or shareholder profit, is the purpose for business.
Capitalism’s power to positively change lives has been absolutely proven; it’s the misuse of capitalism’s power that has led to misconduct and exclusion.
This is a call to act — to make these practices conscious by implementing them in your businesses and educating others, especially your employees.
Firms of Endearment argues that we are at a ‘bifurcation point’, literally the point that the future can go in either direction. If that is true, it makes the task of supporting the foundations of free enterprise all the more urgent.