Driving Innovation Through Conscious Capitalism

In a conscious environment, the profit motive exists equally alongside other considerations. What’s even more remarkable is that these types of companies which “put people ahead of profits,” often end up making more profits anyway, with conscious companies outperforming the S&P by a significant margin.

Posting by Dan Blacharski in The Huffington Post 

Innovation isn’t just about great ideas and new products. You can be an innovative company even while manufacturing and selling the same thing as everybody else. In fact, innovation is less about product design, and more about a deep commitment and a sense of ownership and buy-in by all employees, team members and partners throughout the entire company ecosystem, all the way through to the end customer.

“Innovation is a hard challenge,” said Daniel Dworkin, Partner at Schaffer Consulting. “If you take a step forward, you take three back. You get doors closed in your face. You have to fight hard to get in front of customers to break through the noise, to get resources from your sponsors, and you have to have a deep sense of passion for what your organization is doing and for the strength of your idea to really succeed.”

The concepts of conscious capitalism and conscious innovation – launching and operating businesses based on ideals that transcend the profit motive – solve those common challenges. The passion that employees and partners at conscious companies exhibit transforms employees into stakeholders, and it transforms customers into member of a larger community with interests that run deeper than business basics such as price and SKU mix. “Innovators that work for conscious companies innately have that deep sense of engagement and resiliency, to get up, despite setbacks, and keep going to whatever innovation outcome you’re trying to achieve,” said Dworkin.

Make no mistake, profit remain important, and a company, no matter how conscious, cannot survive without it. But in a conscious environment, the profit motive exists equally alongside other considerations. What’s even more remarkable is that these types of companies which “put people ahead of profits,” often end up making more profits anyway, with conscious companies outperforming the S&P by a significant margin.

Richelieu Dennis, CEO of Sundial Brands, the largest black-owned beauty brand in America, started out making soaps from his grandmother’s recipes in his Queens apartment, and selling them on New York City streets. “We started our company out of a need to survive, but we’ve built it based on a mission not only to help others survive, but to prosper. In fact, we view ourselves as a mission with a business, rather than a business with a mission,” said Dennis.

Sourcing raw materials is usually a matter of simple economics and logistics for most companies, but Dennis holds his company to a higher standard. “We ethically source Shea butter from 14 women’s cooperatives in Northern Ghana and invest in more than 6,500 women entrepreneurs,” said Dennis. “When we invest in these cooperatives, we don’t just buy their products – we help them develop self-sustaining businesses. An ethical wage premium is paid to these enterprising women, and we aid in monitoring practices to ensure that the efficiency, health, profitability and quality of life is elevated for members of the co-ops.”

It doesn’t stop at just paying a premium for raw materials. “We’ve also made infrastructure investments in the co-ops to bring piped, fresh water for the first time (enabling the girls to go to school rather than be tasked with fetching water all day) and in warehouse storage (so the women can harvest the Shea nuts longer and not be forced to accept basement ‘end of season’ pricing from large conglomerates).”

Command-and-control doesn’t always work

The traditional command-and-control method of management doesn’t always lend itself to innovation. “What’s happening at conscious companies is the way leaders lead,” said Dworkin. “It’s the way they inspire and enable people. Their whole frame of reference to their job is to create an environment and create the conditions for their team to thrive. You’ll find that consistently, conscious companies are actively developing and promoting leaders who operate in this sort of servant-leadership orientation.”

Dworkin says that “The innovation process can’t be commanded and controlled. Innovation is much more organic. It’s about testing things out, many times failing, and going back to the drawing board talking through different options, going out and testing those, and constantly learning and reflecting about what we could do better to get a different outcome. It’s not suited to an environment where you’re being dictated to. It needs an environment that’s much more oriented towards asking great questions, and encouraging people to explore their own interests and passions, get outside their formal roles and responsibilities. That’s why you find that conscious companies are far more effective at innovation than some of their more traditional counterparts.”

Traditional command-and-control leaders are set up to execute strategy, says Dworkin. “They have a hard time innovating. And it’s precisely because they are set up to execute strategy. They are great at taking a repeatable task and doing it very well, figuring out how to tweak it, manage it to a schedule, and get things done. Innovation is a totally different animal. It represents a massive change in the way you operate your business.”