Ed Miliband, Conscious Capitalist? I, for one, am applauding Ed Miliband, leader of Labour in the United Kingdom. While I may not agree with Ed’s approach, he did deliver a glittering riposte to what’s going on in business and banking in the UK – two indicators of the economic and business disasters that are rife in the Eurozone and indeed all over the world.
Ed bravely broke the ranks of mild-mannered politics, the kind of sitting on the fence that politicians can be so guilty of. He directly targeted a number of problems in culture and society, but from my perspective most importantly he targeted business itself. He managed to put his finger on the pulse of that which most irks all of us about capitalism and business in today’s world: fast-buck capitalism, the “take what you can, fill your boots, who cares as long as you get away with it” behaviour of bankers, executives (and business in general) and the dismaying gap between executive pay and their employees.
Ed gave some pretty good examples of reckless capitalism, such as Sir Fred Goodwin, former CEO of Royal Bank of Scotland, who pushed the bank to collapse in 2008 and walked off paying himself £17million. Or Southern Cross, the company that runs care homes for the elderly, which stripped assets for short-term profit, in the process treating tens of thousands of elderly people like commodities to be bought and sold. My favourite quip from his speech: “They may not have sold their own grandmothers for a fast buck. But they certainly sold yours.”
What didn’t work about Ed’s approach, however, brave as it was to face up to British capitalists, is that it came from a place of reaction. It had the intoxicating effect of rousing the rabble, but dividing others, and today Ed had to back down and explain himself and pare down his message because the capitalists were upset.
That’s the problem with being in reaction: you always get an equal and opposite reaction.
So what’s to be done? Clearly we need a change – we are ready for a change. Things can’t go on as they are and we can’t go on living with the effects of what we’ve created in business, in economies, in countries, in the world. To continue along our path is ripe only for self-destruction. And to get ourselves into reaction simply divides people and brings about a backlash.
Here’s a solution: Conscious Capitalism. Now I know that anyone reading this in the UK is more than likely thinking this is a new-fangled, hippy fad suitable only to lentil-punting cooperatives. It’s not.
Here’s one word about conscious capitalism. Profit. In fact, more profit than you get if you are aiming short-term for your own pocket, or that of your shareholders, first. The facts of it show: there is more profit to be had by delaying your immediate gratification for profit and taking care of the needs of all your stakeholders first.
Conscious capitalism is not for everyone. It’s so much easier to take what we can and ignore the effects. But this is not sustainable; that much is abundantly clear from the world we’ve created for ourselves these days. Capitalism as it is currently practiced has the effect of separating us – profit separates us because greed separates our humanity.
So what is conscious capitalism? First and foremost, it’s about creating conscious profit. Conscious capitalism is unapologetically in favour of free trade, free markets and entrepreneurship. It’s not corporate social responsibility (or, not only CSR) and it’s not about giving away the shop. It’s certainly no not-for-profit outfit.
How does it differ from today’s capitalism and businesses practices? Firstly, it is about purpose above profit. It’s about getting in touch with, and getting all of your stakeholders in touch with, the purpose of your business beyond making a profit. Getting in touch with this purpose tends to energise everybody, from your employees to your leadership to your suppliers to your customers (we human beings love and are searching for more meaning and purpose), and consequently results in greater activity in your business and greater profit.
Secondly, conscious capitalism is about taking a stakeholder-centered – not a shareholder-centered – approach to your business. Conscious businesses regard the needs of all the stakeholders in their business – employees, suppliers, customers, shareholders and the community/society in which the company operates – as equally important. They do whatever they can to minimize the negative effects on stakeholders from one profiting at the expense of another. In the land of conscious business, it’s not a zero-sum game. I don’t have to lose out if you win, and you don’t have to lose out if I win. If you win, I win too.
How refreshing is that for business? Not Southern Cross’s approach, that’s for sure.
Conscious business, conscious capitalism. You may not like the terminology, but the results are inarguable. Business methods needs to change. Even business leaders themselves are now raising concerns about capitalism that used to be raised only by critics of capitalism. Business leaders need to begin to see themselves as part of the solution.
That solution is conscious capitalism. It is the front-runner in a more sustainable, intelligent and profitable-for-all way of doing business. It is, as Ed Miliband said (even though I doubt he knew he was referring to conscious capitalism) not an anti-business approach but an anti-business as usual approach.
If you, as a leader, feel yourself to be in reaction to this, ask yourself: ‘What am I afraid of losing?’