Think:Act Magazine "Rethinking Growth"
Raj Sisodia on the healing organization
Conscious Capitalism proponent Raj Sisodia says that business needn't be a source of suffering, and how it can heal instead.
with Raj Sisodia
by Neelima Mahajan
"Organizations take wholesome people, chew them up and spit them out," says Raj Sisodia, the FW Olin Distinguished Professor of Global Business at Babson College. Sisodia, one of the leading proponents of the idea of Conscious Capitalism, despises this reductionist approach taken by businesses, which ends up leaving people, communities, societies and the environment worse off in the end. Business, instead, can be a source of healing, he and his co-author Michael Gelb, argue in their book The Healing Organization: Awakening the Conscience of Business to Help Save the World. How? Think:Act finds out.
Think:Act: In recent times, we've started to see a call for increased introspection by businesses on what their purpose is. Why do you think there is a sudden awakening now?
Raj Sisodia: The pressures for change have been building under the surface. When an earthquake erupts, it is actually the culmination of years of pressures building under the surface: planetary, climate and environmental issues, and on the other side, the rise of populist movements, economic suffering and financial stress. There's no job security, no benefits and it is getting worse. At a time when the stock market is at record highs and unemployment at record lows, what's the reality of life? The recognition of the social contract to business and to society is not working. It is leading to mass unrest.
Unless business changes, we could very well see revolutions. Nobody wants to go down that road because with that comes a loss of freedom and a loss of prosperity. So it's a long-delayed awakening and recognition of the reality of the world today.
Evidence of two kinds has been mounting: [one], the benefits of doing business with a broader purpose and a stakeholder mindset which my research and others [have pointed to, such as] The Purposeful Company Report in the UK. Lots of research shows that that actually works for everybody in the long term.
There's no financial penalty to do that. In fact, you outperform the market. And then on the other side, the evidence is mounting that the shareholder perspective is bad for people, families, communities, the environment, as well as shareholders. It causes suffering.
The combination of those things is finally leading to that realization.
A big premise of your work is that businesses create wealth but can also destroy it. Can you shed some light on the destruction aspect?
If you look at the financial crisis of 2008, the estimate I saw was $34 trillion of financial wealth was destroyed. Now some of that wealth was illusory to begin with, because it was based upon bubbles. But still, real suffering resulted from that.
There have been every decade or so, financial crises and all kinds of things [that are] cyclical and these crashes come with some frequency. So there's a lot of wealth destruction.
Then you look at other kinds of wealth, such as ecological wealth. The estimate was that – I forget now as this is an old study – nature provides $34 trillion worth of value to human beings and society every year, and the asset that's giving us that is depleting rapidly.
We are destroying people's emotional well-being. Depression, anxiety, drug addiction, and so on is all on the rise. A lot of it has to do with work-related stress. Jeffrey Pfeffer's book Dying for a Paycheck, estimated 120,000 incremental deaths a year [in the US]. China estimating conservatively 600,000 people dying a year, that's like 20,000 a day. Japan and China both have invented words for death from overwork. That said, the financial stress that people are under – 100 million Americans living paycheck to paycheck – leads to physical symptoms, illness, all kinds of things. So there's a lot of suffering. Emotional, spiritual, lack of purpose, lack of meaning, drudgery, the impact on our bodies. We are using and exploiting people and not serving and taking care of them.
You once said that organizations take wholesome people, chew them up and spit them out. It's very intuitive that this is a very counterproductive way of functioning. Why then do organizations go down that route in the first place?
It's a lack of consciousness or lower consciousness. It's people who lack empathy, who view people simply as a resource to be used for their benefit. And in certain societies there are so many people. So even if you chew them up and spit them out, there's a line of more people waiting. That's allowed people to get away with it.
But it's just fundamentally wrong.
Human beings deserve all the respect and dignity and love and care. Man has to be at the center of everything that we do. Herb Kelleher, [former] CEO of Southwest Airlines, said the business of business is people, yesterday, today and forever. It's all about elevating the lives of people, including our employees and their families. We have lost a lot of that. We have made business purely about self-interest. We have devolved into selfishness and greed and somehow we celebrated those as virtues. Those can ever be virtues.
Then we left out the need to care. The whole discipline of economics is based upon economic value maximization, a rational, narrow view.
Businesses have traditionally focused on financial outcomes. And we've seen the consequences of that. Now if that isn't so relevant anymore, what should be the measure of success for a business?
It has to be multiple measures. You have to look at the value you're creating for all stakeholders. This whole idea that business managers need a single metric to lead by, manage by, or base upon is just silly. It reduces business to a math problem. It's a complex, interconnected, interdependent system that has many impacts on our lives. We need to manage it simultaneously for the benefit of all, so we need to have customer-based, employee-based, community-based and environmental-based metrics. And we need to reject this idea of externalizing costs.
We're allowed to externalize so much of the impact, we don't actually capture the true cost of doing business. Part of that is regulatory that companies should not be allowed to do these things.
Part of it should be voluntary. We should factor in the cost of what we are doing. When we do that, we'll realize that the human cost is the highest cost. It doesn't have to be that way.
Human beings don't have to be depleted and stressed out and burned out. We can be the opposite. I don't like to think of people as assets but people can be appreciating [assets] but not depreciating.
How would you define a healing organization?
A healing organization consciously tries to be a place of healing. I define healing as reducing suffering, elevating joy and promoting healthy growth.
There's a lot of suffering in the world and in many ways the suffering is increasing. Capitalism has given us prosperity in the last 200 years. Obviously, we're living in a time of relative peace, but psychic and planetary suffering is on the rise.
People face challenges all the time and then they come to work and we add to those burdens by the way we lead, manage or organize. People come in [to work] and by the end of the day, they're depleted, exhausted, in a bad place, and that impacts their family and other aspects of their life.
But done right business actually can be a place of healing. People can leave at the end of the day, mentally, physically, emotionally, spiritually and socially in a better state than they came in.
Bad things are guaranteed to happen to all of us. We can't prevent that, but we can choose how to respond to that. So there is a way in which certain kinds of suffering can be turned into something positive.
What we're talking about is unnecessary suffering. There's a kind of necessary suffering in the world we all have to go through, but there's unnecessary suffering of the kind we inflict on each other at work because of the way we think about work: the way we think about managing, supervising, bosses, etc.
So this is about eliminating unnecessary suffering and making the workplace a place of joy.
But how did we get to this point where we have to guide businesses to the right path?
How did we take this institution that's rooted in freedom and dignity for individuals and create a world where most people are alienated, disconnected, cynical, semi-burned out?
I trace the history of capitalism and democracy and how it evolved, and a big part of the story is hyper masculine energy.
What starts out as healthy masculine becomes toxic hyper masculine. So strength, courage, resilience, focus, determination becomes domination, aggression, excessive competition, winning at all costs. Everything becomes a kind of war. There's this whole energy behind growth, an empire building energy, just like the empires of human history were built. There's 3G Capital of Brazil, which to me is empire-building energy. They acquire companies, do massive layoffs, put stringent financial targets, relentless cost-cutting goals. Life becomes very harsh. They have huge carrots and sticks for the managers. They are being sued by many people now for brutal practices. We sanction this brutality in the business world somehow.
[On the other hand] Bob Chapman of Barry-Wehmiller bought 108 companies, never sold a single one. He buys dying businesses, turns them around by treating people [well]. He cares about the fact that everybody has a precious human being.
Last year he told me he was looking at 10 to 12 acquisitions. I said Bob, "You already have 108 companies. Maybe you have enough."
He said, "I don't know how much time I have left. And on my deathbed, I will not be proud of the machines we built, or the money I made. I'll be proud of the lives we touched. I want to touch as many lives as I can." When Bob Chapman comes to town, people have hope and life gets better. That's healing.
So essentially, there are different ways of viewing growth.
Bob Chapman feels an obligation to grow the businesses almost obsessively. 3G Capital's founders are continually obsessed with the next conquest, because there's always a bigger fish to catch. All they do is inflict suffering. Those businesses perform for a while and then they fall off a cliff. Because there's only so far you can push people. I can chase you with a gun and make you run fast. At some point, you will collapse.
Clearly the right kind of growth for the right reasons is important. Do we have 'deliberately developmental organizations', Bob Kegan's idea [that organizations grow] when people grow? That's why we say promote healthy growth in people and in business, reduce suffering and elevate joy.
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