Thinkers/Thinkers 50: Raj Sisodia says Indian businesses operate with a narrow perspective of wholesale importing the old American style of Capitalism

In an interaction between Amit Kapoor and Raj Sisodia, one of the thought leaders of the Conscious Capitalism movement globally, the latter shares his view on this concept. His book Firms of Endearment: How World Class Companies Profit from Passion and Purpose is considered a foundational work in explaining the precepts and performance implications of pursuing a conscious approach to business.

Could you share a brief overview of your academic journey thus far, from The rule of Three to 4 A’s of Marketing and now Conscious Capitalism?

I did my engineering and MBA in India, my PHD in marketing from Columbia University and started teaching in 1985. My focus initially was on marketing of services, marketing of information technology and then evolved over time into areas such as marketing productivity and also strategy, which is where the Rule of Three book came in. I always had a broad perspective and was not focused on sub-disciplines within marketing. Looking at business gently; marketing is a function of efficiency and effectiveness. I did a lot of research projects on the image of marketing and the negative feeling that people have about marketing and came to the conclusion that not only we have problems of efficiency and productiveness but also in terms of public trust. This led to a project that was tentatively called “In Search of Marketing Excellence” which looked for companies that spent less money than their peers in marketing and still had higher levels of customer loyalty, trust and satisfaction. Most of the companies are opposite of that. Companies spend a lot of money but don’t have high level of customer loyalty and trust. So that project led us to a number of companies which we had to examine in more detail and we found that what was true of customers was true of employees. In other words the employees also had high level of loyalty and trust towards the suppliers and they had a strong deeply embedded presence within their communities. The other unique thing was that there was a sense of higher purpose that they were in business to do something beyond the ordinary industry. Also these companies had leaders who were more driven by their purpose and less so by power and personal enrichment. This led to the book “Firms of Endearment”. The other book was Rule of Three and the book on globalization, which was called “Tectonic Shift” that was published in 2006. I also developed a new framework for marketing called the 4 A’s of marketing which came out in 2011 which addresses many problems that one faces in terms of efficiency and effectiveness. It is a way of making sure that our marketing efforts are creating value for customers and for companies and ultimately for society. I have been talking business for 20 years without even using the word “purpose” because the purpose is given to us and I realize that every truly great enterprise starts with a purpose and transcends with it and makes it an enduring company. This journey led us to non-profit conscious capitalism link that is finding global resonance, as the ideas are quite universal. The phrase “conscious capitalism” is a natural coming together of two great traditions of capitalism; American–the epitome of global capitalism and Indian, the fountain of consciousness. The combination is very powerful as there is real natural synergy in terms of India and the perspectives from the US. Countries like South Africa and Korea have responded very positively to this.

How exactly are you looking at this synergy?

There is a growing realization that there is a great wisdom that is embodied in the ancient traditions in general and which the world of modern business has tended to ignore or relegate to the sidelines. This was brought home most compellingly when I published “Firms of Endearment”. I have been studying the Bhagvad Gita for twenty years and most of the wisdom that we think there is today is actually been written about very deeply by some of the ancient sages. I believe in the theory of Karma and almost called this karma capitalism rather than conscious capitalism. There should be focus on community and actions without thinking of the outcome. Like wise the qualities of a conscious leader – and the idea of dharma or duty - are very powerful notions and resonate very well with audiences. During my talks in India, two common themes emerged – one was an advanced form of capitalism means we are still going through the growing pains of capitalism and this would take some time maybe 10-20 years when we are ready for this. We need to learn from mistakes of others rather than learning from our own mistakes. The second was that it was entirely consistent with institutional wisdom. In the future we expect lot of value and wisdom coming out of India, from scholars in India who will enrich our understanding of consciousness idea. Many western CEOs are into meditation and yoga which makes them highly effective leaders. There is a group of about thirty people from different walks of life who have come in as collaborators and set up “conscious collaborators” or “prasanga”. They view each other as travellers rather than competitors and this has a very important role to play. So many Indian academics who are in the US are using some of that wisdom in the work that they are doing with MNCs.

Shared value suggests that corporates should share wealth while building enterprise and creating wealth for people around. How would you compare the two concepts of shared Value and Conscious Capitalism?

The shared value is consistent with conscious capitalism, but I don’t think it goes as far. It really refers to a pragmatic approach that says if you want a license to operate in the future you cannot be creating prosperity for shareholders while you are creating consciousness for society. The western analogy is very practical as it says that we should figure out a way to do what is good for the society as that would be good for you. The deeper spiritual dimension is a part of conscious capitalism and in other words it provides a meaning and purpose in our lives. There is a whole new deeper dimension if you look at the difference between profit driven organizations and self-driven organizations. Conscious capitalism is having that real tangible sense of high purpose, which includes society as one of the staples. I think the spiritual dimension is meaning and purpose at an individual level, which is conscious capitalism and conscious businesses operate on the idea of love and care. There is an atmosphere of love and care and absence of fear. People can truly flower and bring out their creativity. When we operate out of fear we are in a survival mode. Take as example, General electric which has the rule that bottom 10% people get fired every year. The fact is there is tremendous amount of fear within the organization as 30%-40% think they might get fired. Then they start to behave in defensive ways by not helping other people. I think the emotional and the spiritual dimension are two important ways in which conscious capitalism is beyond the idea of shared value.

How would you react to the exploitative behaviour of organizations?

As a generalization, businesses operate with a narrow perspective and a lot of it has to do with the wholesale importing of the old American style of capitalism. We have got this paradoxical situation in a country where we are running into the same kinds of problems that other companies have faced. So we have to raise the consciousness about this to get people to see that this is not about sacrificing performance for the sake of these other things but it’s about aligning all the forces together so that you actually create a lot more value for everybody including westerners. We really have a significant challenge to change those mental models that people have about business. I think a separation of work from rest of life is really probably much more pronounced in India. Where people behave one way in mission of work and money and then in an entire other way in their personal lives. We can blend self-interest with the need to care. I think it’s a big part of the journey in India. We have all the wisdom that we need.

How can the government learn from the principles of conscious capitalism and become a conscious government?

I am working with a couple of co-authors on “Building of a conscious Society” that’s about taking the ideas of conscious capitalism from the domain of business and broadening them to other sectors that touch society. So, we need to have a higher consciousness in all the sections of society whether government, private, civil society, non-profits or a public sector. Every sector needs to operate with a high level of consciousness for its specific role and purpose. I think the unfortunate legacy in India is the government, which we have inherited from the British. Earlier, the government was there not to serve but to control, especially the administrative, the Indian civil Service which finally got changed to IAS but the emphasis remained on controlling and not serving. People who work in the government service really need to have that higher sense of purpose. I think one of the challenges that India faces is the socialist way of thinking. There is a certain set of activities that the government must do like providing infrastructure, ensuring lawfulness, security etc. and also fulfilling the needs of the society as a whole. That’s where you find efficiency and effectiveness. I think in our system, the government does a lot of things and there is tremendous scope in efficiency and effectiveness. Along with this also comes tremendous corruption. All businesses can get corrupted in a country where government has too much of a role. It becomes a gatekeeper.

You said that civil society is the third pillar for the whole system. How do you expect civil society to react?

My advice to members of civil society who want to start non-profits is to start something which could generate some profits. If you can create a for-profit entity that can accomplish the same needs that you are trying to meet, then-in-then the business is sustainable and scalable in the long term. However there would still remain things that cannot churn out profit, therefore, they have to be done by real people who have a passion to serve. That’s where non-profits would continue to have a role. I think the key thing for non-profits is they have a sense of purpose but many of them don’t really operate in an efficient way. I think non-profits need to learn from the world of business. I also think there is a lot of potential for cross sector collaboration, through markets that require the coming together of for-profit businesses and non-profits. There is a lot of potential for creative collaboration across sectors.

What are some of the critical changes you would recommend for the education sector?

I do think that we also need to change our education sector. From an early age, one has to incorporate wisdom; the ideas that make for a meaningful life; technical skills. I do think we also need to teach the skills that constitute “systems thinking”. It is shocking to see that such few people have an understanding of systems. Many institutes do not offer courses on systems and yet every problem that we deal with in the world is systems problem. When we don’t have the systems perspectives and start to think of it as a cause and effect problem then we ultimately end up with the opposite results. When we understand the whole system that applies to business, health care etc., we know every sector has tremendous need for systems thinking. That’s something that we need to do. Of course our business schools have an important role to play. I think India has a high number of consciousness b-schools like the “School of Inspired leadership” in Gurgaon. We need to change the education system to incorporate training in these skills and there is still a long way to go.

(This interview was first carried in Thinkers, a quarterly thought leadership magazine that features the brightest thinkers in the areas of economics and governance, philosophy and literature, science and technology, and management. To learn more about the magazine, please visit: www.thinkers.in)