Can Madison become the next ‘Capital of Conscious Capitalism?’
Here's why the mindset is good for our region
“Business is the only mechanism on the planet today powerful enough to produce the changes necessary to reverse global, environmental and social degradation.” –Paul Hawken, founder of Erewhon Trading Company and pioneer in the natural food industry.
It’s a little jarring to read that statement about the impact of commerce by Erewhon Trading Company founder Paul Hawken, especially to those of us with some history or experience in philanthropy, government, the arts, education, nonprofits or even (heaven forbid) journalism. Yet if we are to understand the concept of conscious capitalism and its limitless potential, the notion of business’s unsurpassed power to do good is a decent place to start.
Despite its alliterative allure and New Age-y feel, conscious capitalism is really a simple two-word descriptive phrase that is neither trademarked nor proprietary. Its general foundation is that profits are secondary to a higher business purpose, which is serving the interests of all stakeholders, from customers to employees, to suppliers and investors, and society at large. As more and more businesses–including some high-profile companies we’ll introduce here as examples–are embracing these values, many, many more are no doubt put off by the seemingly self-destructive unreality of not having a laser-like focus on profits first. But as we ponder the future of Madison’s business sector, and indeed the future of Madison, we can make the argument that conscious capitalism is one of the main tenets of that future.
While the idea of conscious capitalism as a business philosophy is perhaps a decade old already, its acceptance and use as a guiding principle is still new. As our region makes the transition to a more entrepreneurial, knowledge-based economy, the convergence of established and influential conscious capitalists and startup innovators makes Madison an inviting environment for exploring the potential of higher-purpose business practices. In other words, it’s time. It starts with the examples set forth by a few companies and their leaders who are redefining notions of the lasting value that businesses can bring to stakeholders and society. But to become a real force–to take the mantle of leadership of conscious capitalism–these new approaches need to be embraced by a broader set of entrepreneurs. The extent of Madison’s success as an epicenter for business with a greater purpose also relies on the degree to which the necessary talent is here locally, and whether the right infrastructure is in place to nurture more companies committed to what some may see as an unconventional approach to business success.
Seeds of Conscious Capitalism
It’s worth noting that the case for a conscious capitalist future is also deeply rooted in Madison’s past. The Madison Creed, adopted in 1915 by the Board of Commerce, the precursor to the Greater Madison Chamber of Commerce, envisioned a conscious capitalist future that was rooted in the values of the time. The creed included the pledge “I believe in … a city destined to be the abode of 100,000 people, where the poor shall be less unhappy, the rich less self-satisfied, for the one should have a more intelligible understanding of the other where jails shall be empty of prisoners, streets clear of beggars and neither shall the aged in want be cast upon the charity of strangers; a city where friends shall be true friends; neighbors real neighbors; a city where the strong shall really sympathize with the weak; where there shall be even more respect for those who have traveled the longer road; and even more hopeful confidence in the promise of glowing youth; a city where progress shall be the result of retaining the good of the old and accepting the tried of the new.”
Greater Madison Chamber of Commerce President Zach Brandon laughs as he reads the population estimate, but he embraces the legacy of the business community as described in the creed. “It’s been a business community that, since its start, has understood the role of humanity … in shaping Madison as this place,” says Brandon. The chamber itself is modeling that with its decision to sell its former building to Dane County for use as a day resource center for the homeless. An action, might we say, anticipated in the creed? “The hope for this building,” says Brandon, “is that a homeless day shelter should be in the business of putting itself out of business. Then this parcel gets repurposed. It’s destined to be part of the evolution of this corridor. I believe the Blair and East Washington gateway is the transition from downtown to the east isthmus corridor. It still has that destiny, but in the meantime, it’s going to help solve one of our greatest challenges, a challenge that they called out 101 years ago.” In other words, says Brandon, it’s an example of conscious capitalism. “To me, I think it’s embedded. I don’t think you, as a business leader, can succeed in this city if you don’t have that mindset.”
Rob Gottschalk is principal planner at Vandewalle & Associates and the leader of its economic positioning/regional sustainability team. He does a lot of thinking about this kind of philosophy and its practices. He too, is big on the idea of building on what already exists. “It’s not like we’re making stuff up,” Gottschalk says. “Especially when you look at the variety of companies that are here that were started here by pioneering entrepreneurs, that these companies are now driving our private sector technology economy in this region. There’s an underlying focus on the employee and the customer.” The tenets of conscious capitalism found within these companies not only have to do with their leaders and how they’re driven, says Gottschalk, but also with creating a “Midwest oasis” of companies that display a greater purpose, and that, in turn, attracts “the best and the brightest talent from around the world in these fields” and “those people who really are driven by that success model.”
Gottschalk knows Madison and the Midwest don’t yet have the depth of talent found on the coasts, where conscious capitalist business ideals are more common. But Madison, the home of a world-renowned research university, is first and foremost a region of higher thinking. “I think that connects with the bigger mission that ties with business very directly,” Gottschalk says. “I don’t think you can pull those very easily apart. Those threads go hand in hand. That’s really some of the essence of it. Those tenets of conscious capitalism are serving a higher purpose: serving your employees, your customers, your suppliers and your investors. If that philosophy exists, it really helps drive greater organizational power and strength because there’s a purpose that drives success and profits.”
We’re already home to businesses that are recognized as consciously capitalist. Epic Systems, Electronic Theater Controls, commonly known as ETC, and Promega, all started and led by local pioneering entrepreneurs, have well-deserved and documented reputations for their nontraditional business philosophies. And there are many others with similar approaches that are simply not as high profile. All of which create an environment for growing like-minded businesses moving forward.
While acknowledging that one can never predict the outcome of the kind of legal challenge Promega is facing from a few disgruntled longtime shareholders, it appears the spat is unlikely to affect the company’s reputation among students of conscious capitalism. So, Epic’s laser-like focus on the users of its software and its Silicon Valley-like workplace environment and employee amenities, ETC’s similar customer-service vision and its recent transformation to employee ownership, Promega’s artful campus in Fitchburg and significant impact on companies in its supply chain–combined with the global reach of all three companies–put them in the company of Google, Southwest Airlines, Whole Foods and other recognized conscious capitalist corporations.
Leaders with a Higher Purpose
Things like art in the workplace were very much on Raj Sisodia’s mind during his visit to Promega last May when he spoke to the annual International Forum on Consciousness. Quoting Plato, Sisodia said, “Beauty is its own reward,” as he turned to Promega founder and CEO Bill Linton and told him he had a beautiful building. Sisodia is the F.W. Olin distinguished professor of global business and Whole Foods market research scholar in conscious capitalism at Babson College in Wellesley, Massachusetts. Sisodia talked about the toxicity of a culture cultivated through traditional, antiquated business practices and how his work includes looking at businesses that rate highly or poorly in customer loyalty and trust.
“There’s a way of thinking about business that is very different, that is rooted in caring for people first. And yet it works,” Sisodia said. It was a little jolting to be in Promega in the midst of the aforementioned company shareholder legal battle and hear Sisodia describe unconscious capitalism as the misguided belief that CEOs have a fiduciary responsibility to maximize profits above all else and to be responsible primarily to shareholders. Not true, he said. The fiduciary responsibility of CEOs and boards is to see to the long-term flourishing of the company. He would say later you can’t have a conscious business without a conscious leader, and that Linton is widely recognized as such a leader.
Sisodia’s presentation was studded with insights and observations. There is now commonly accepted data proving capitalism is helping to end poverty, a notion that is music to the ears of conservatives, but is begrudgingly accepted by even the most enlightened liberals. Sisodia used per capita income numbers over centuries to make the point. He also said 88 percent of Americans work for a company that they feel doesn’t care about them as human beings. He quoted Herb Kelleher, the co-founder and former CEO of Southwest Airlines, who said, “The business of business is people.” And he offered some amazing evidence of the rise of feminine values and women’s influence in the world of business that is deserving of a story all its own. Sisodia said bluntly that leadership today requires a lot more of the values he describes as feminine–compassion, empathy and nurturing–and less of masculine values of domination, aggression and ambition.
We are in the Age of Transcendence (after the Age of Empowerment in 1776 and the Age of Knowledge in the 20th century), said Sisodia, and to flourish in this third historically significant age, businesses must “wake up, grow up and show up.” Each business has to recognize its individual higher purpose: Why it is important that it exists and what it would mean if it didn’t exist?
Brandon knows there are businesses in Madison beyond the aforementioned big three that are recognizing that higher purpose. Research Products is one of them. Brandon says he recently visited there and they spent more than 90 percent of the time talking about health and wellness programs and how they’re encouraging their employees to get out into the community and how they encourage the philanthropy beyond just giving at the office. Or American Family, where Brandon says: “They’re creating a new foundation with a new philosophy and new ways to invest and new ideas to engage their employees.” Or Virent: “Conceivably the ones who figure out how to change the way we think of fossil fuels,” Brandon says. Cellular Dynamics “will conceivably be the company that becomes the platform for the cures of the most horrific diseases in this world.” And Lynx Biosciences is led by “a young woman who has been in the labs of Madison and got her doctorate here who, if she’s right, is going to create new ways of attacking cancer. Everyone can say, ‘Well, I’ve got a company that I think is going to cure cancer.’ But it feels far more real here. Even for failure, it feels that it moves the ball even further down the field.” Brandon says they are destined to solve these kinds of world challenges, but they can’t do it without importing. “We are not that good that we can do this without bringing new people, new money and new ideas into our community,” he says.
And yes, Brandon has an example of that, too. Zendesk, a software company that started in Copenhagen, has an office here. “When you walk into the office,” says Brandon, “there’s only one piece of paper at their welcome desk, and it’s a memorandum … that says, ‘We shall donate this amount of our time. We will do the following things.'” In 2016, 80 percent of Zendesk’s employees engaged in community service which totaled over 860 hours. “They walked in and said, ‘We want to have a commitment to this community and here’s how that commitment will manifest itself.’ I think it’s something about the culture that is here,” says Brandon. “These types of investments that are made in our community are not seen as just good PR, they’re seen as corporate responsibility.” He says the people who find success here are those who see the bigger picture.
The Millennial Influence
It still feels important to ask: Who are those people who see the bigger picture? And are any of them to be found in the growing millennial/entrepreneurial/innovation scene exploding around the Square and down East Washington Avenue? StartingBlock executive director Scott Resnick says the simple answer is yes.
“This is something that is almost ingrained in the mindset of many millennials, whether it’s the idea of recycling, being politically active and aware, or being socially conscious.” Citing examples of startups-on-the-verge-of-home-run-success like EatStreet and PerBlue, Resnick says, “We’re at a very interesting critical mass at a number of these companies, [and asking] how does that bridge actually take place? They’re trying to figure out issues, whether it’s racial divides in Madison, socioeconomic issues or just perennial issues, and you might call these progressive issues, but it’s a mentality that you’re seeing in this younger generation.”
The chamber’s Brandon says that for perhaps the first time, there is a convergence where talent wants the same things the business community has wanted, something he calls the nature of giving and joining.
“The millennials are no longer content to give at the office,” says Brandon. “That mold no longer works for them. They want to have philanthropy permeate every aspect of their daily life. They physically want to touch it, see it, smell it, hammer it, build it, mold it. They want a hands-on approach. It’s not enough just to say, ‘Here, donate.’ And they also want to leverage philanthropy and humanity in how they spend their money.”
Brandon says some people try to paint the millennial mindset as “they just want everything to be shared and nonprofit.” But, he says, that’s not the case. “They still believe in capitalism, firmly. But they believe that capitalism can coexist with people, humanity, planet and habitat … At the end of the day, we’re talking about creating successful businesses. And I think that’s really the tie-in. I think that’s where we sometimes go wrong, to say that this is what we’re giving back. No, we’re trying to improve the entire ecosystem. When you’re thinking about conscious capitalism, I would think about it in the same exact light.”
The Talent Factor
So we need to hit pause for a minute. Earlier in this piece, Brandon said “We are not that good that we can do this without bringing new people, new money and new ideas into our community.” Amy Gannon, Edgewood College business professor and Doyenne Group cofounder, says maybe those “new” people are already here, and to think talent and ideas cannot be found in abundance in Madison is selling the community short.
“I always say there’s a difference between a city that has a startup scene and a startup city,” says Gannon. “Right now, we’re more of a city that has a startup scene. So what does a startup city look like? It looks like anyone (and everyone) in that city has access to resources if they’re willing to build ventures in the range of roles all the way on the spectrum. And be able to build businesses that are profit[able] and purpose[ful] simultaneously and not be minimized for that. Which also means it’s not just a sliver of the population doing that. It’s people not having the background being able to have access to the entrepreneurial process.”
Gannon’s Ph.D. dissertation was about African American entrepreneurs and how identity shapes the entrepreneurial process. She makes the case for the overlooked but limitless potential of people of color, especially women of color. Through her teaching, research and leadership of the Doyenne Group, supporting “aspirational, modern women,” driving each other in pursuit of entrepreneurial endeavors, Gannon interacts daily with women who would be part of the startup culture but must “navigate through cultural pressures that want to put you in buckets: I’m a for-profit with a social mission, or, I’m a nonprofit that needs to make money.”
In other words, says Gannon, the women she’s working with must feel the entrepreneurial path is a viable, possible option for them in addition to a job that pays the bills and provides health insurance. This way, they can still pursue “a passion project” because they can’t live without trying to make the world a better place.
Gannon says she wants to unleash the potential that is in our own backyard. “That’s how we move to [being] the city of conscious capitalism. We put our dollars in unleashing the potential of all our community members.” She says that means shifting some of our philanthropy dollars into investment dollars and into programming. Then, “We stop looking at people doing entrepreneurial behaviors and calling it a whole bunch of things it’s not: Abuse of the system, defiance [and] all of these things that if you have a different shade of skin and a different background, rather than being viewed as independent and risk-taking it’s, ‘You should know your place and stop doing that and do as you’re told,’ when people are just trying to find a path.”
What Gannon wants to know is: “Where is the on-ramp for the startup city? Everybody has to have an on-ramp. Not everyone is going to choose it; I’m not suggesting that. But I’m suggesting that you are not a startup city or a consciously capitalist city if there are no on-ramps, and we don’t consciously and intentionally invest in the potential that is right here. It makes me crazy when I hear we have to import talent and that we have a talent problem. I think if we get out of our own way and actually do the work and take the risks and invest in the potential that is here, we could blow it out of the water. And that is when Madison becomes what it thinks it is. We are not who we think we are.”
The Infrastructure Equation
However, Gannon raises some challenges to the notion of supporting businesses that want to be consciously capitalist. “Where do you get the support, where do you get the investment for that? What infrastructure in our city, state or country really supports that work?” For her and others, part of the answer is government policies like Benefit Corporations, or B Corps, that allow for-profit companies to be relieved of the obligations of directors and officers of the corporation to maximize shareholder value and, instead, consider the corporation’s effect on its community, employees and customers, the environment and other socially responsible matters. Wisconsin is considering creating such a law to allow a company to term itself a B Corp. It would build on the “slow money” philosophy of accepting a slightly lesser return on investment in exchange for a larger and ultimately more rewarding payback in social good, a complementary philosophy to conscious capitalism.
And there are more examples of conscious capitalist thinking in Wisconsin than most of us are aware of. S.C. Johnson & Son is a Wisconsin legacy company with a recognition of a higher purpose as part of its mission. TREK Bicycles is another. Company president John Burke spoke in September at the Greater Madison Chamber of Commerce’s annual dinner about his parents’ commitment to “making a difference.” The Wisconsin Environmental Initiative just celebrated its 20th anniversary with a program titled “Doing Well by Doing Good: What Happens in Wisconsin If We Get This Right?” And the Wisconsin Alumni Research Foundation, the Morgridge Institute for Research, StartingBlock Madison and other companies recently co-hosted a day-long seminar on social innovation called “Force for Positive Change” that included awarding four $25,000 grants to organizations that demonstrated they are addressing social challenges and making positive changes in our state, recognizing that Wisconsin social enterprises are blurring the lines between traditional for-profit and nonprofit models.
This year’s annual Epic Users Group Meeting, with some 18,000 attendees, combined extraordinary focus on customer and employee contributions, with representation from 12 foreign countries, and included a commitment to serve Syrian refugees through the American University in Beirut as well as underserved populations in the U.S. ETC’s conversion to an employee stock ownership plan prompted one employee (quoted in the Milwaukee Journal Sentinel) to say, “It seems like a company that was employee-owned already, because we all feel so strongly about the product and our fellow employees and the customers.”
And Promega’s Awakened Consciousness and Evolution of Business conference was largely successful in answering the question, “What does it mean to awaken to the potential for workplace and broader business practices to transform our view of self, others and society–to focus on purpose and meaning through the work we do?”
Madison As a Change Agent
So Vandewalle & Associates’ Gottschalk asks a fundamental question: If these are common success factors of our largest, most successful companies, is there a common thread that could be the foundation of our long-term economic success as a region? Gottschalk and a few others are analyzing the economic impact on the Madison region and beyond of companies like Promega, and the results will be part of the fundamental case for Madison as a capital of conscious capitalism–a case that will highlight the importance of the Madison region’s economy to the health and vitality of the entire state, and perhaps change the perception of Madison’s relationship to the rest of Wisconsin, and vice versa.
“If this business and leadership philosophy becomes the soul of our economic ecosystem,” says Gottschalk, “would we have a nationally competitive advantage for attracting talent and companies that share the desire to be surrounded by companies and people who drive a higher social and economic purpose?” And, he says, if this philosophy took hold and sparked economic and social success in this region, could it help propel a national economic movement? And finally, he wonders, could that national movement help drive our nation’s long-term economic success and make the world a healthier place?
“If this became a foundation of who we are and how we do business,” says Gottschalk, “and that attracted companies that wanted to be alongside that, and it empowered the next wave of new companies and that’s how they thought, then, my gosh, would other cities try to replicate our success? That would be interesting.”
And it would emanate from the capital of conscious capitalism.
“Would that ripple effect be many places trying to replicate that model that actually, at the end of the day, helps play a role in shifting the global economic philosophy and create a better planet? Wouldn’t that be cool?”
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