Business is the ultimate positive sum game in the society because it is possible to create value for everyone
We need to think of people not as a resource, but as a source and help them evolve, grow and flourish through organisations
In conversation with Dr Rajendra Sisodia, Professor of Marketing, Bentley University and Co-Founder & Chairman of the Conscious Capitalism Institute, about the linkages between conscious business and profitability.
In many of your papers you have talked about ethics, about doing business differently. However, companies approach ethics as a tertiary concern if at all it’s a concern. Do you think they should change the approach? If yes, how?
Being ethical is a fundamental requirement of operating a business, not only because we are living in a transparent and interconnected world, but also because ethics impact business performance. There is also data to substantiate benefits of ethical behaviour. If you look at the world’s 100 most ethical companies, you see a direct link with performance. Those companies are doing better. There is an element of risk management as well. Unethical companies are taking extraordinary risks and those risks will hurt them sooner or later.
You founded the Conscious Capitalism Institute. So, what should capitalists be conscious about?
Consciousness is about being awake, mindful and aware of all the consequences of your actions. A capitalist or a business of any kind has to understand that it is impacting people’s life in multiple ways. That it has a potential to create as well as to destroy, not only financial wealth, but also people’s sense of emotional, spiritual, physical well-being, the environment, the culture and the social capital.
It’s like when you are in a boat and you look behind you and there is what you call a wake, the water that is spreading out. Most of us in life and as businesses are focused on a certain goal and we are only looking ahead.
We are not conscious of the impact that we have on the world. Conscious business is aware of the total impact that it has on the world. And it doesn’t accept as inevitable the idea of negative side effect: If I want to create profits and make money, therefore I must inevitably cause certain damage.
We believe that it is possible for a company to create financial wealth and at the same time improve its environment, provide people with a sense of meaning and purpose in their lives, improve health of their internal and external customers, have profitable suppliers and pay taxes. It is a mental model that prevents us from doing that. We operate with a zero sum view of the world. We operate with a view that there are inevitable winners and losers in all transactions.
So, what is that mental model that we are talking about? And how do you attack the mental model?
The zero sum thinking is that in order for me to win somebody has to lose. Business is the ultimate positive sum game in the society. If you look at the other aspects of what we do, just to take simple examples, sports is sort of win-lose, conflicts or wars are lose-lose in the long term, because even if you win today, you are sowing the seeds of a future battle. Business is the ultimate positive sum game in the society because it is possible to create value for everyone. It is possible to do business in ways, which are beneficial even to the competitors.
How do you do that?
Conscious business looks at its competitors not as enemies to be vanquished, but as teachers to learn from. The idea of a noble competitor makes me better. I do not compete with you in order to destroy you, I compete with you while learning from what you are doing and doing it even better. So, it’s a continuous race to the top rather than race to the bottom. Just as human beings continue to learn and grow throughout our lifetime, organisations need to continuously learn and grow. Our harshest critics are one of our best teachers. It may sound idealistic, however it is profitable in the long run.
Do you think the strategic dimension in business, which was till now occupied by marketing, should now shift to HR, given that people are becoming increasingly critical to business success?
Every business is a people business, not only the people who work with you, but also those whom you serve and the community. Any business that is not people-centric will not be successful and will not create value in this world. I do believe that businesses need to be people oriented, however that does not mean necessarily as HR in the traditional sense. People are not resources; they need to be thought of in a different way.
People are a source with tremendous amount of dormant energy, capacity for love, care, growth and evolution. We need to think of people not as a resource, but as a source, and help them evolve, grow and flourish through organisations. Not just our employees, but all the people that the organisation comes in contact with.
How do you measure marketing productivity and how do you improve it?
We need to look at the desirable outcomes. From marketing perspective, the outcomes are - customer satisfaction, customer loyalty, customer trust and customer advocacy. We need to measure the extent to which we are achieving loyalty, trust and advocacy in our business operations and the amount of investment that we are making. Marketing productivity ultimately is about achieving emotional loyalty with minimal amount of spending.
The only real way to achieve emotional loyalty is by rethinking the whole business model. It is not about the tactics of marketing, it’s about why the company exists, and how does it relate to its stakeholders. And when you operate a business along with what we now call conscious capitalism, you simultaneously achieve high levels of loyalty, advocacy and trust from all your stakeholders without spending much money on advertisements, coupons, promotions etc.
Stakeholders are now better informed, better connected and are motivated by higher level aspirations. They do not look at the immediate value proposition, but what the company stands for and what is the overall impact that the company creates. It’s sort of a paradox, that the way to achieve high marketing productivity is not to think about it at the marketing level, but at the business level.
When you have a legacy, undoing things that have been done for years is far more difficult than doing new things. That is the problem with India or any company that has a strong legacy. What should be the strategy to attack that?
That’s a tough challenge because there is inertia in a system that has been around for some time. Things get hardwired into the culture and people’s way of thinking. It takes an extraordinary leader who comes in and says -- here is a vision of something that is completely different from what we have done in the past. That is a very hard thing to do, but I think it can be done. There are societies that have fundamentally transformed themselves.
To summarise, change is driven by a deep sense of dissatisfaction with the status quo and a well articulated vision on where we want to go.