‘Conscious Capitalism’ is an emerging concept and has been accelerated due to COVID. Is good governance and its relationship with capitalism the key to moving this forwards?
If we are to talk about ethics and values in an organisation, or
perhaps even governance,
then it would not be unreasonable to assume that organisations should be working towards a vision to provide the best services or products it can to its customers.
Capitalism, or creating value, encourages you to find a group of people who have the right potential and the determination to work towards goals, to make the optimal use of resources, manpower and develop ideas to solve a problem.
When you’re trying to understand the ‘problem’ of any organisation, it’s really important to identify, observe and then study the root cause.
So, whenever we talk about problems within organisations and we try to resolve or rectify these problems, we need to look, not only in the present, but also the history. This will help us to discover and encounter the different possibilities that exist to solve the problem and nurture the generation of innovative and creative solutions.
In some circumstances, these problems may need quick attention and could be issues surrounding productivity, leadership succession, information flow, communication quality, weak organisation structure, or poor relationships with customers.
Invariably, these problems emerge from poor governance. There might be difficulties in making good decisions, challenges in operational efficacy, or simply a lack of skills, knowledge or capability of employees.
However, the foundation of good governance comes from an organisation’s culture.
Its values, and
The behaviour and quality of leadership.
So, if we are to solve problems, develop a capitalistic organisational model and truly serve our customers; culture and governance are central.
Looking at our list of problems, then. Almost all of them are completely under an organisation's control. However, taken as a collective , this list is pretty daunting. Where do you even begin?
As already noted, perhaps the first stop is governance and culture and how the organisational management structure may play a role in both solving the problems, as well as perhaps creating them unknowingly.
Most organisations have key characteristics, which make them believe they’re different: like a combination of business models, mission, product, and other factors, but when you look more closely quite a bit about them is the same too.
Serving their customers well.
Delivering value to all stakeholders.
Creating a sense of purpose.
Organisations should perhaps look closely at the four pillars that guide a business towards being both responsible and stable. These pillars are the foundation of capitalism and more recently, conscious capitalism.
This is the idea that every organisation has a purpose that goes beyond just making money. While making money and generating profits is essential for the vitality and sustainability of a business, it is not the only or even the most important reason a business exists.
This has been illustrated as one of the emerging outcomes from the COVID crisis, but was also evident in the declaration made by the Business Roundtable, in August 2019, where they redefined the purpose of an organisation to promote an economy that serves all in the community.
Accordingly, a business should seek to inspire, engage and energise its collective stakeholders, promote value driven leadership so to inspire and foster transformation and to bring out the best in their employees.
Then comes culture, which is again an important aspect, which permeates the atmosphere of a business environment and connects the stakeholders to each other and to the purpose, people and value that comprise the company.
The idea is captured in an acronym TACTILE: trust, authenticity, caring, transparency, integrity, learning and empowerment.
The four pillars above must reinforce these dimensions, which are all connected to adding value. These activities, without doubt, if practiced properly and consistently, are the most enduring and profitable ways to build a sustainable business.
Adding value, whether it’s to customers, shareholders or other stakeholders, is one of the primary focuses of an organisation.
This is at the heart of capitalism, and
The central theme to moving an organisation towards value creation, is good governance.
This blog was written with the support and insight of one of our contributors. Thank you, Divya. As an MBA student specifically interested in marketing, she is a contributor to the Perrin Carey blog. If you would like to contribute to moving governance forwards towards a more ethical and human centric framework, please contact Perrin.