Message from South Africa .

I have never stepped inside a Whole Foods store, nor do I own stock. I’m a part time student at the Graduate School of Business in Cape Town, South Africa busy with an entrepreur assignment. This is my comment to you personally after reading your essay ;

It appears your life task was not starting Whole Foods Market , nor redirecting an ethical means we ( humans )view and produce food, but possible pioneering a new direction in corporate and invester consicousness. You must have done something wrong to be this unlucky in this mission ………..

While you, nor I , will probably live to see a 180 degree change in corporate capitalism, dont give up your quest to question, challenge and write what most people on this planet are grapping with.

I dont have any suggestions on how to fix the worlds growing dissatisfaction with corporate greed, while we all apply double standards by asking for better returns on our savings. Goodluck , I hope you successed in setting a new moral standard which generations from now will look back at, and regard you as an ethical corporate pioneer who help make the Western world more balanced.

Nine years later, standing in the Crossings, having already chosen my path, I realized that the road is indeed integrated, life is whole, and the difference between business and meaning, purpose, and hope, is an arbitrary and potentially harmful distinction too often made. I knew from years of counseling and community leadership that business was falling far short of its potential in pursing simply profit, growth, and market leadership. Most of my friends in business disagreed. I was told, “You will be eaten up.” I just disagreed and saw brighter horizons. Then I did as I always did; I followed them.

It was this love and engagement with human potential and human experience that propelled me on this journey of discovery. It propelled me to a Jesuit College, Canisius, to learn business jargon and history while earning an MBA. This vision lifted me further to the campus of Cornell University in Ithaca where I focused on conflict in Industrial Labor Relations and became convinced that the concepts associated with empowerment, diversity, and conflict management were inadequate to apply fairly in the business system.

But flashing back for a moment to standing in the Live Oak Auditorium at “The Crossings” in Austin Texas, surrounded by interfaith symbols, art and aesthetics exemplifying beauty, and with people who not only shared this holistic, connected vision, of business, of life, and of fun, I realized I had crossed back to a human home. That is the home in my heart, the home I knew, yet still wanted to build or be a part of building. The challenge to define purpose and pursue it more enthusiastically, with the emotional and mature support of like minded and hearted souls, was held up among us as a trophy or degree of accomplishment to envision and embrace. The “force”, conveyed upon me at that interfaith meeting, has been, and now is, visibly, with me. That force is purpose. That force is human and universal. We are that force. I am happy 

The journey, like Michael Gelb points out in his biography on his “Mind Mapping” brochure, has some areas that are supposed to be educational but really teach us nothing. I have focused on the areas they teach but in significantly different ways which empower each person to pursue their own purposes. Michael Gelb made a clear observation about the usefulness of what is taught in much higher education, to which I would like to add, “The teachings in schools all over America are designed to support the “industrial system” of business and the society that it supports and, unfortunately, perpetuates. I have taken what I consider the very basic or essence of what people need to know to follow after their purpose and crafted a life time of experience and study and feeling into it. My purpose is to set the pent up productive power of people free to work in everyone, everywhere I can.

How did I come to these conclusions, dimensions, and insights (if you find them insightful)? Part of the foundation of them is from my continuing pursuit of excellence in life long learning demonstrated by my inclusion in a PhD program on Human and Organizational Systems at Fielding Graduate University. I’ve earned my third Master’s degree from there en-route to my PhD. Our entire society is based on dynamic interactions that tend to reinforce themselves in a way that seems “real” rather than “created” by leaders and followers who follow them. My goal has always been to make everyone a leader by supporting them to lead themselves with confidence, insight, and honor. I call my core ideas, “Executive Education for Everyone”.

Entrepreneurs, including educators and trainers, move this “dynamic interaction” in new and mostly healthy directions. I am both an educator and entrepreneur who proudly associates with Conscious Capitalism. It is the embodiment of both who I am and who I wish to become. It represents the world I wish to leave, through ideas and ideals, to my grandchildren and beyond.

This event of gathering and starting the movement of Conscious Capitalism will best be benefited by momentum maintenance. Inertia is on our side. The present crisis is a challenge, but in Akido style we can turn the power of this crisis toward our own ends of inter dependence and a “business school of human relations”, which we are. This effort requires all of us, a big “we”, and a “super society” when compared with what we have been. It is time for the next level of social evolution that recognizes how developed human kind has become and how powerful we are yet to become as we head toward freedom, intuitive happiness, and even singularity of growth and purpose in living life.

One clear distinction that allows for human evolution is the different type of system represented by conscious capitalism. Conscious Capitalism is an open system, always taking feedback from the wider system of human existance, including stakeholders and the environment. Capitalism, as it is now generally practiced is a closed system looking only on the internal factor of “profit” as feedback. Closed systems tend to implode without an external source of energy. The earth is a closed system except for the sun, which keeps it going. Capitalism needs to open up to the entire system of human life and living with positive expectation and embrace. Short term profits easily lead to defection and short sighted “cut and run” defection. Those in for the long run have more net present value than those with a “do what you must for profit” mentality. This distinction is crucial and form the basis for an improved business model. Our lives are long and depend on society to survive and thrive. Conscious Capitalism leverages this to a point of profit maximization through sustainability. Which would you rather have, an annuity (conscious capitalism), or deal to deal profit (capitalism)?

With my deepest happiness and appreciation,

James Smith

Managing Member
i4 Advantage, llc

I have been observing Whole Foods over a period of time and I would like to start with applauding you for the great company and vision you have created.

I red the blog and my constructive feedback and ideas on improving the essay and the sustainability of conscious capitalism business model are below.

In the “Voluntary Exchange” section, you are mentioning that voluntary exchange of information between all the main constituencies of an organization for mutual benefit is the ethical foundation of business (and capitalism).

I agree with your definition and would like to point out a few important facts on how information technology and tougher economic conditions have been impacting these voluntary exchanges within the concept of conscious capitalism.

Information technology has transformed and is continuing to transform the way most industries operate. The amount of information access we have is directly proportional to our bargaining power. When a shopper buys a product, her level of satisfaction with the price is relative. She may not be getting the best deal but she may be happy with her purchase if she did not know that the same product was at half price at a retailer down the street. She would be un-happy if she knew she paid more. Given the improvements in information technology, we have more access to the information we need and at the right time we need it. Therefore, the rules of the voluntary exchange are getting tougher. If price is the most important element in her decision tree, she will always figure out where it is the cheapest and buy it from there.

For a business to be able to continue its operations, voluntary exchange between customers, employees, suppliers and investors should create incremental value for all as a result of these exchanges. The value conscious capitalism emphasize is NOT through large scale purchasing power and lowest prices. Conscious capitalism emphasizes the value created through efficient operations, service and selection. This is how Whole Foods defines value and its business model. However, the challenge during tough economic times is that the definition of “value” in consumers’ minds tends to shift due to changes in their ability to satisfy more basic needs. Consumers tend to become more price conscious.

I support the Conscious Capitalistic Business Model; however, I find it difficult to sustain during rough economic times. I support it primarily because I can still afford to pay more for better service, selection and quality knowing that I directly or in-directly made a meaningful contribution to myself, the environment and the economy. Supporting environmentally friendly products and helping small businesses, which are the most significant elements of an economy are just few examples that Whole Foods provides through the conscious capitalism business model. Every time I shop at Whole Foods, I know I am in-directly impacting a good cause.

On a separate note, one risk I see for conscious capitalism is a potential change in leadership during difficult economic times. I get the impression that you may also have the same concern John. There are multiple sections in which you are mentioning the potential change of the business purpose after the founding entrepreneurs retire or leave.

I tried to provide my constructive feedback and my well-considered suggestions on how to improve the essay. I hope this voluntary exchange would be valuable. Moreover, I also have another suggestion to improve conscious capitalism business model. As I mentioned above, I see efficiency through the use of information technology and a differentiated customer service and selection as the most critical elements to support Whole Foods business model. When you have some time, I would like to tell you more about how I can help support this model through an innovative information service. I appreciate your attention to consider this voluntary exchange and I would be delighted if you can reach me directly at the e-mail address I provided. You can also get an introductory view at the web site I provided.

Sinan Gurman

I’m very much looking forward to your June 12th FLOW event on Conscious Capitalism in Austin.

HIghest regards,
-Tory Gattis
Founder, President, and Social Systems Architect
OpenTeams LLC – Talent Unbound
http://www.OpenTeams.com

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The Economy and Organizations

People have needs. A common articulation of these broad needs would be Maslow’s hierarchy of needs in order of priority (see http://chiron.valdosta.edu/whuitt/col/regsys/maslow.html). People grow and mature up through Maslow’s hierarchy through repeating cycles of contentment -> discontentment -> aspiration -> achievement -> contentment, i.e. as they satisfy lower level needs they aspire to meet higher level ones.

In a capitalist economy, people specialize their skills and then trade their services to meet these needs. Organizations act to coordinate large numbers of people and their skills toward creating a set of products and/or services for customers to meet their needs. Money can be thought of as “tokens of gratitude” that people give in exchange for having their needs met. Profit is a measure of value creation: input resources are transformed into output goods and services, and the difference (profit) represents the amount of value created (i.e. items with less total value to people have been transformed into items with more total value to people). High profits act as a signal to attract additional capital to grow to meet the market need, both to the organization itself and to its competitors. Competition keeps a lid on profits. Creativity/innovation enables the meeting of more needs with fewer resources, which can also be expressed as maximizing return on assets (RoA) or improving productivity.

A more productive/efficient economy allows a broader portion of society to evolve faster through Maslow’s hierarchy. Since relatively fewer resources are required to meet a need, it becomes more affordable for more people. It also frees up society’s resources for meeting higher-level needs (i.e. fewer resources required for housing and transportation allows more resources for education, therapy, and meditation teachers).

A new type of asset that has risen to prominence in recent years holds tremendous promise for vastly improving the productivity of our economy. Traditional assets, like land, physical equipment and employees’ time, have a one-time acquisition fixed cost, ongoing variable cost, and limited utilization (i.e. they can only be used for one function at a time). We might refer to these as “scarcity assets.”

On the other hand, this new asset type still has a substantial one-time fixed cost, but little or no variable cost and unlimited utilization/duplication. Examples include intellectual property, databases, knowledgebases, software, medicines, brands, processes/methodologies, and educational and entertainment content. We might refer to these as “abundance assets” – once they have been developed and investors have received a return on their investment, their availability to society should be unlimited and their long-term price should move towards zero. Abundance assets have the potential to dramatically improve productivity, increase global wealth, and accelerate the evolution of society through Maslow’s hierarchy.

So the net economic, social, and even moral purpose of organizations becomes clear:

· help more and more of society evolve up Maslow’s needs hierarchy
· by meeting customers’ needs
· using fewer and fewer resources
· through investing in abundance assets
· to improve productivity.

(aside: this works with Spiral Dynamics as well as Maslow, but I used Maslow since it seems to be more broadly known, understood, and accepted)

Much of your argument for “Conscious Capitalism” is an adaptation and extension of Socrates’ classic arguments against Thrasymachus in The Republic, Book I, and your replies to critics here who say that all that a corporation can be *really* interested in is profit follow the lines of the (very standard and convincing replies) to the claim that all people are *really* interested in is their own happiness/desires/interest. Excellent stuff!

One worry I have about your Conscious Capitalism is that it clearly requires a sacrifice of short-term gain for long-term interest on the part of investors. For example, a Conscious corporation might grant the workers extra benefits, or make a change to a more environmentally sustainable production practice, with long term goodwill and positive feedback in view. Unlike WalMart, they will therefore run at quite high costs. The trouble with this is that the entire business/investment world is not thinking that way. Aren’t your Conscious Capitalist businesses always going to be vulnerable to takeover from, for example, unscrupulous private equity firms who will sacrifice long-run goals for short-term cost reduction and a better-looking bottom line? Those sorts of takeovers can result in policy changes which are not transparent and can therefore generate the appearance of improving the company while doing no such thing. Nevertheless, the end result is that private equity firms or the like take the cash to the bank after a short-term selloff, while corporate consciousness has slipped out the back door.

1. Behavioral economics