Conscious Capitalism and the 2011 Tulane BPC
Criteria for Participants and Explanation of Principles
The Tulane Business Plan Competition is focused on ventures that adhere to the principles of social entrepreneurship, right livelihood, and conscious capitalism.
For a new venture team to be selected to compete its business plan must reflect a venture and a management team that meet the following criteria and are committed to the following principles:
1) Through the delivery of its products and/or services, the venture seeks to positively affect its stakeholders and the society in which it operates.
2) The venture may be either a for-profit or non-profit venture.
3) The geographic focus of the venture is not a factor in determining the winner. The geographic focus of the venture maybe a community, or the world, or anywhere in between.
4) The venture is committed to the optimization of stakeholder alignment rather than to a singular focus on maximizing the returns to the shareholder stakeholder
5) The venture exhibits a long term strategy of sustainability with regards to its relations with all of its stakeholders: customers, employees, shareholders, vendors, the environment, the local community, and the government.
Further explanation and examples:
Right livelihood means that one should earn one's living in a righteous way and that wealth should be gained legally and peacefully. It is based on the belief that you can do good for the world while doing well for yourself.
Social entrepreneurship is the work of a social entrepreneur. A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change. Whereas a business entrepreneur typically measures performance primarily in profits realized, a social entrepreneur assesses success in terms of the impact s/he has on society. Social entrepreneurs can work through for-profits, non-profits, citizen groups and the governmental sector.
A for-profit social entrepreneur is not solely focused on the single bottom line of profit, but the triple bottom line of people, planet, and profit.Although conscious capitalists do not start their ventures with a social mission in mind, they nonetheless accomplish great good in the world by adhering to principles of right livelihood, creating jobs and wealth, fulfilling marketplace needs, paying taxes, and supporting their communities with philanthropy. All social entrepreneurs are conscious capitalists, but not all conscious capitalists are social entrepreneurs.
A conscious capitalist company focuses on optimization of stakeholder alignment. Such a company recognizes that no one stakeholder can be compensated in such a way that it damages any other stakeholder and jeopardizes the sustainability of the organization. For example, if the customers were given a level of service and product value that was not fairly reflected in the price there would not be sufficient revenue generated to fairly compensate employees, reward shareholders for risking capital, and making investments in R&D to ensure the future growth of the company.
If the shareholders were paid dividends that were out of balance or employees paid and benefits and wages that were out of balance than other stakeholders would suffer to the point that the organization would become unsustainable.
Above normal returns to any stakeholder that jeopardize the peaceful alignment of all the stakeholders ultimately compromise the ability of the organization to fulfill its purpose and mission.
A venture can be started based on the principles outlined above or it can be converted to these principles over time.
Can a ball bearing manufacturer or an oil and gas exploration company be organized around the principles of Social Entrepreneurship, Conscious Capitalism, and Right Livelihood?
Absolutely. A ball bearing company meets the above principles if it adheres to the spirit and the letter of all environmental laws and seeks to minimize waste and pollution in order not only to both protect the environment and its workers, but also to enhance long term profitability. The company provides a safe working environment and fair wages to its workers and incentive based compensation that rewards them for finding ways to improve the performance of the company. The company rewards its shareholders for the capital risk taken, contributes to the welfare of the community it is located in, pays its fair share of taxes, and provides its customers with the best possible product at a competitive price.
While a ball bearing company does not have a specific social purpose driving the business, by adhering to the corporate philosophy above it contributes to the improvement of society.
One might argue that an oil and gas exploration company could not possibly fulfill its responsibility to protect the environment stakeholder when compared to a wind or solar energy company. This argument does not recognize that the global economy cannot transition to cleaner fuels over night and that we need Conscious Capitalist fossil fuel extraction companies that adhere to the spirit and the letter of environmental laws. Ultimately such companies will develop competitive advantages over their less environmentally evolved competitors by developing technology to reduce pollution and remediate unavoidable waste streams more efficiently. These companies will attract better skilled and responsible employees and will suffer less governmental intervention and penalties.
Please see John Mackey's (Whole Foods CEO) slides on conscious capitalism here.