What kind of capitalism do you want to live under?
Quarterly capitalism is like being on a hamster wheel, under pressure every single day. In contrast, a few years ago, the concept of conscious capitalism appeared.
Last week I had the pleasure of interviewing Kip Tindell, the founder of a conscious American retail network called the Container Store, the original storage and organization store. The conversation was fascinating and was published in the session Interviews with CEOs in Corall’s blog. And one of the topics we spoke about was a polarity: conscious capitalism versus quarterly capitalism.
Quarterly capitalism is where most of us spend most of our time. In it, companies need to present better and better quarterly results, to outdo themselves each cycle. It’s like being on a hamster wheel, under pressure all the time. The sales of one month have barely been closed, and someone is already asking about next month’s sales. Executives often work for financial market investors, whether they be major shareholders, market analysts or a private equity firm. This creates an attitude throughout the organization: immediacy and a focus on short-term results. And what are these implications? Exacerbated pressure for numbers, cost-cutting, personnel cutting, disconnect from a larger view and often from the market itself, resulting in disengagement of collaborators and less innovation, which just makes things worse. The financial market may be happy, but no one else will.
In contrast, a few years ago, the concept of conscious capitalism arose. In it, companies see profits as necessary for their continuation, not as the reason why they exist. They have a greater purpose, something they give to society and they seek to achieve results for all their stakeholders: shareholders, customers, employees, the environment, society, government, etc. Their focus is to have a positive impact on the world, and interestingly, they are more loved for this and obtain even better results. But they know that results are just the consequence of a broader world vision, not the final objective. Many privately held family-owned companies operate from this perspective, seeking the well-being of all. This is somewhat intuitive for many founders, and it leads to good results, but curiously it has been lost in recent decades.
Paul Polman, CEO of Unilever since January 2009, challenged the conventional wisdom by creating an agenda that is primarily focused on sustainability, guided by moral and ethical principles. That same year, one of his first actions was to abolish quarterly reports and leadership by profit. He was strongly criticized. Normally, meeting shareholder demands and requests is the principal motivator of business decisions, but Polman wanted to change this, since he believed it was actually a limiting factor. Polman also began to play an active role in the selection of investors: he chooses investors who have objectives that are coherent with those of Unilever, instead of those focused exclusively on the bottom line.
John Mackey, founder of the Whole Foods natural supermarket, told us the same thing: when asked about how he maintained an alternative organization model (one that is more human, more conscious), while being a publicly traded company, he replied “each company has the shareholder it deserves. If you are explicit in your strategy and your priorities, you will attract investors who connect with your company.”
We often do not even realize that we are living under a type of capitalism and that we feed it; we have a choice. If you are the president or one of the directors of the company, it is easy to see that you choose through your business decisions, through your dreams and through your courage. And even if you are just a “mere mortal,” you still have a choice: you choose through your investments, where you invest your time, your talents, your passion. But you are also choosing with your daily actions: the bank where you put your money, the companies you invest in by purchasing stock, the products you buy on the market, how you obtain loans if you need them. Each action promotes a type of capitalism. If each and every one of us makes these choices more conscientiously, we will be helping to transform the economic situation, and in the end, will be transforming society as a whole. Each action promotes a world view, promoting either quarterly capitalism or conscious capitalism.