Time For Amplifying Capitalism For Good

There is a view in the traditional business ideology that it is difficult or one can not build a business which is sustainable and profitable to scale. Data shows that you can build green billion dollar plus businesses. In fact, they perform far better than their peers in the categories they operate. This edit looks at the research on those companies and suggests a construct for any organisation to be a billion dollar plus company and do capitalism for good. We bring insights from two different independent studies on capitalism for good.

“Just as people cannot live without eating, a business cannot live without profits. But most people don’t live to eat, and neither must businesses live just to make profits.”
John Mackey, Wholefoods Market

Let us look at the need for capitalism for good to start with.

#The need for Capitalism for Good

Free enterprises, capitalism has been very successful over the past two centuries and it raised the overall living standards for human, life expectancy and satisfaction. There is exponential growth in GDP per capita.

Edelman’s trust barometer 2019 shows the public’s trust in businesses and governments are lower than ever before at 56% (businesses), government (48%) and media (47%). NGO’s at 57%. However, if people do not trust these large corporations, they lack confidence and have cynicism. How will they innovate and contribute to their potential?

Why are corporations and businesses diverging from society and losing public perception?

With the exponential reach and availability of information through technology, the average IQ of people is increasing by 3-4% by a decade (Flynn effect). Most importantly, an average person today is more intelligent than 98% of people 100 years ago. With this growing intelligence, we can not people for granted. It will only go further up.

Here are few businesses who have built an enterprise with passion and purpose, rewarded all the stakeholders and the planet. Over a period of 15 years, these companies outperformed the market by 10:1 (vs S&P 500). The companies studied included Whole Foods Market, Southwest Airlines, eBay, Costco, Timberlamp, Google, JetBlue, Starbucks, Toyota, Honda, Caterpillar, BMW, Harley Davidson, Johnson & Johnson, UPS, Commerce Bank etc. courtesy: Conscious capitalism by John Mackey. Certainly, we all know the impact Patagonia is making and it is outside these studies as the company is still private.

# Traits of Capitalism for Good companies

Freya Williams, through her research, has come out with an abstraction of the traits of companies which she calls Green Giants. The companies in her study included Tesla, Toyota, GE, Whole Foods, Chipotle, Patagonia and Nike. Here are the five traits.

#1 The Iconoclastic Leader

These companies have a purpose beyond making money and social responsibility is part of their organisational fabric. Their business strategy is to weave social good into generating profits. This big shift needs an iconoclastic leader who owns every part of the process. They exhibit the following traits,

a) Conviction
b) Courage
c) Commitment
d) Contrarian

#2 The Disruptive Innovation

They re-invent categories through disruptive innovation with the following five principles,

a) Make it better, not just greener
b) Embrace the counter-intuitive
c) Bet on yourself
d) Engage the problem solvers
e) Cultivate pervasive innovation

#3 A Higher Purpose

Not profit but purpose motivates green giants. They work to make the world a better place, elevate the human experience and safeguard the environment. Purpose based companies constantly outstrip profit-focused competitors. Clarity of purpose gives them focus and direction.

#4 Built-In Not Bolted On

Corporate responsibility or sustainability is not an add-on for them It is woven into their,

a) Corporate Strategy
b) Organizational structure
c) Governance structure
d) Incentive structure
e) Reporting structure (corporate reporting)

#5 Mainstream Appeal

These green giants create products which have mainstream appeal with sustainability embedded in them. They take sustainability as a business reality, a business opportunity and a business driver.

In conclusion,

Building a conscious, green giant needs a unique blend of leadership, purpose and structures that enable the entire ecosystem of stakeholders in an interdependent way to create a win-win-win-win-win-win model, that includes even the competition.

Stylumia is built with the purpose of eliminating waste from one of the highest carbon footprint industries in the world “fashion”, (using cutting edge technology), and make the world economically and environmentally sustainable. This enables every fashion and lifestyle brand or retailer to build a core engine to be a “green giant”. We accomplish this by indexing the world of fashion information with consumer demand at the center. We augment our prediction engines which enable demand predictions for future commitments at the finest level of merchandise hierarchy. This enables consumer-centric informed decision-making by various stakeholders like designers, merchandisers, planners, consumer insights, and business teams.

We have thus far reduced the carbon footprint at the rate of 60 million garments per annum by working with our clients. Here is a published article on this. This is just the beginning and by impacting at scale, we can eliminate a lot of waste in the industry on a global scale. That is also one of the reasons, even the United Nations is sharing and spreading the Stylumia movement.

If you are in the journey of amplifying your conscious quotient for your business, or scaling your green enterprise or moving the enterprise to a greener space and wanting to scale value for all stakeholders like the green giants, please reach out to us.