it is not from the benevolence of the
butcher the brewer or the Baker that we
expect our dinner but from their regard
to their own self-interest now if you’ve
ever taken economics 101 you’ve probably
heard this quote from Adam Smith in his
1776 book The Wealth of Nations even if
you haven’t taken econ 101 you’ve
probably heard about the invisible hand
that results when everyone in the
economy is following their own
self-interest so where has this taken us
well Adam Smith is regarded as the
father of modern capitalism because this
is really underlying much of our economy
today and in 1820 85 % of the world
lived on less than a dollar a day today
that figure is down to 17 percent the
average person today is better off than
kings of centuries past by certain
measures if you think about their
lifespan or their access to information
Milton Friedman said that the only
corporate social responsibility a
company has is to maximize his profits
or as Gordon Gekko summed up nicely in
the movie Wall Street greed is good
so while capitalism has brought us
incredible prosperity it’s also led to
massive inequality right now we’re at
the point where the top point one
percent controls more wealth than the
bottom 90% combined it’s no wonder that
51% of Millennials in a recent Harvard
University survey actually said that
they no longer believe that capitalism
is the best form of organization for our
economy now there’s an alternate view of
capitalism and that is called conscious
capitalism now in conscious capitalism
there is a higher purpose beyond just
making profits they have a stakeholder
orientation that rather than prioritize
the needs of the stockholders balances
the customers the community the
employees in the environment they have a
leadership that rather than being
command and control actually prioritizes
how can we
unleash the potential of all our
employees and they have a culture that
focuses on the well-being of all those
employees and in a 2007 book called
firms of endearment that started this
conscious capitalism movement it
actually showed that ironically by not
focusing just on bottom-line profits
these companies actually made more money
and were far more successful companies
that were included in this study
actually were Wegmans and Southwest
Airlines in Google so how can we rectify
these two different views of capitalism
well I want to invite you to think about
the peacock now why is it that the
peacock has such a large tail well it’s
to attract a mate now a peacocks tail is
generally a pretty good approximation
for the overall health of the peacock
it’s been well fed so the peahens
without being able to take all the
Peacocks to the doctor for a full
checkup they can just look at the most
visible sign of their health which was
the tail but over successive generations
as those tails grew larger and larger
the Peacocks were actually incentivized
to shift more and more of their
metabolic energy into the tail and away
from other aspects of their health and
so by focusing on just the most visible
measure of success they actually led to
less success and less overall health now
how do we do this in our companies well
think about profits yes profits can be a
very effective way to show how
successful a company is or the stock
price as it grows can show that a
company too is growing and yet because
it’s the most easy to measure does not
mean that it’s the best way to measure
the success of the or the health of the
company think about other ways that you
can do it yes you can increase your
stock price by increasing sales but you
can also do it by announcing layoffs now
at the national level think about the
way that we measure GDP you can increase
your GDP by selling tobacco or you can
increase it by selling vegetables and
yep if you’re thinking about the
well-being of the nation it’s pretty
clear which is correlated with the
overall well-being of the nation Simon
Kuznets who actually created the measure
of GDP actually warned us that the
well being of a nation cannot be
measured by GDP alone and yet this piece
of his wisdom is often lost to history
now when we think about unrestrained
growth of a part that loses sight of the
health of the whole at the cellular
level we actually call that cancer think
about it a few cells continue to grow
and multiply grow into a tumor and their
self interest actually ends up damaging
the health of the whole now how do we do
this sometimes in our companies you know
if you actually recognize that there are
cancerous mutations that go on in our
cells every single day and yet we’ve
evolved a mechanism for dealing with
many of these otherwise unrestrained
cancers our immune system evolved to
take care of that unrestrained growth
Adam Smith actually recognized this he
actually said in a less red book called
the Theory of Moral Sentiments he said
that to restrain our selfish and to
indulge our benevolent affections
constitutes the perfection of human
nature many of us probably haven’t heard
that quote from Adam Smith so how can we
create the kind of cultural immune
system that can take advantage of the
self-interest that brings us prosperity
from the butcher the brewer and the
baker following their own self-interest
but also balance that with a benevolent
love of our neighbor and caring with the
belonging of our entire planet and the
sense of shared fate that that creates
now what would you do if you are trying
to evolve the most successful company
well survival of the fittest competition
right maybe it’s select for the most
productive employees and and try to
create more and more of those in your
company well in an experiment by
evolutionary biologist William Muir he
actually did this with chickens he was
trying to build a super flock of
chickens and so what he did was from
each coop of chickens he took the most
productive chicken from each coop and
bred them over successive generations
now do
I end up with the most productive flock
he didn’t end up with the most
productive flock of chickens because
actually what happened was that there
were very few of them that were still
alive after six generations because by
incentivizing that individual
productivity he unknowingly actually
incentivized for aggression the chickens
that were the most productive were
actually the ones that were pecking away
at their neighbors and maybe even
stealing their food how often do we do
this in our companies we incentivize
individual behavior believing that it’ll
bring the most productive overall
company now in an alternative view of
this experiment what Mir actually did
was rather than incentivize the most
productive chickens he actually bred the
most productive coops he took each coop
and after each generation whichever was
the most productive with the largest and
most eggs he bred those and over
successive generations was actually able
to improve their productivity so let’s
get back to conscious capitalism because
there’s a little bit confusing right
should capitalism follow this greed is
good
what about evolution so these conscious
capitalism companies they have a purpose
beyond just making profits when you
think of when you ask someone why a
company exists they’ll often say to make
money and yet if you ask them about why
a doctor exists it’s to save lives or an
architect exists to build beautiful
buildings that will last for generations
why have we allowed businesses to purely
just have a purpose of making profits
similarly when you think about the
stakeholder orientation of a conscious
capitalism company rather than just
focusing on the stockholders rather than
just focusing on profits and stock price
to grow the largest tale because that’s
the most visible what if we instead
measured what matters what if we
balanced the needs of the customers the
community the employees the environment
this whole system that surrounds and
supports the company additionally these
conscious capitalism companies use the
evolutionary wisdom of those chickens so
they have a leadership that create
a culture that takes care of an immune
system that takes care of those
unrestrained self-interests before they
become cancerous these conscious
capitalism companies have created over
the long term the way to survive
evolution is the longest-running
experiment in history and over such a
long longitudinal study can reveal some
great truths now should we throw out
this survival of the fittest competition
view of evolution well not so fast
because the Latin root of the word
competition is comb patear patear means
to aim at to seek or to strive for and
comb means together so to compete is
actually to strive together for our
shared success and nobody ever said that
survival of the fittest meant to peck
away at your neighbors what if instead
of survival of the fittest being
survival of the winner what if it was
actually survival of the most
cooperative now as we’re thinking about
how we can evolve business what if we
evolved business to take advantage of
the self-interest of the butcher the
brewer and the baker to bring us
prosperity but we also had a love for
one another and a sense of shared
purpose and shared prosperity that could
reboot capitalism through the evolution
of business thank you
you
butcher the brewer or the Baker that we
expect our dinner but from their regard
to their own self-interest now if you’ve
ever taken economics 101 you’ve probably
heard this quote from Adam Smith in his
1776 book The Wealth of Nations even if
you haven’t taken econ 101 you’ve
probably heard about the invisible hand
that results when everyone in the
economy is following their own
self-interest so where has this taken us
well Adam Smith is regarded as the
father of modern capitalism because this
is really underlying much of our economy
today and in 1820 85 % of the world
lived on less than a dollar a day today
that figure is down to 17 percent the
average person today is better off than
kings of centuries past by certain
measures if you think about their
lifespan or their access to information
Milton Friedman said that the only
corporate social responsibility a
company has is to maximize his profits
or as Gordon Gekko summed up nicely in
the movie Wall Street greed is good
so while capitalism has brought us
incredible prosperity it’s also led to
massive inequality right now we’re at
the point where the top point one
percent controls more wealth than the
bottom 90% combined it’s no wonder that
51% of Millennials in a recent Harvard
University survey actually said that
they no longer believe that capitalism
is the best form of organization for our
economy now there’s an alternate view of
capitalism and that is called conscious
capitalism now in conscious capitalism
there is a higher purpose beyond just
making profits they have a stakeholder
orientation that rather than prioritize
the needs of the stockholders balances
the customers the community the
employees in the environment they have a
leadership that rather than being
command and control actually prioritizes
how can we
unleash the potential of all our
employees and they have a culture that
focuses on the well-being of all those
employees and in a 2007 book called
firms of endearment that started this
conscious capitalism movement it
actually showed that ironically by not
focusing just on bottom-line profits
these companies actually made more money
and were far more successful companies
that were included in this study
actually were Wegmans and Southwest
Airlines in Google so how can we rectify
these two different views of capitalism
well I want to invite you to think about
the peacock now why is it that the
peacock has such a large tail well it’s
to attract a mate now a peacocks tail is
generally a pretty good approximation
for the overall health of the peacock
it’s been well fed so the peahens
without being able to take all the
Peacocks to the doctor for a full
checkup they can just look at the most
visible sign of their health which was
the tail but over successive generations
as those tails grew larger and larger
the Peacocks were actually incentivized
to shift more and more of their
metabolic energy into the tail and away
from other aspects of their health and
so by focusing on just the most visible
measure of success they actually led to
less success and less overall health now
how do we do this in our companies well
think about profits yes profits can be a
very effective way to show how
successful a company is or the stock
price as it grows can show that a
company too is growing and yet because
it’s the most easy to measure does not
mean that it’s the best way to measure
the success of the or the health of the
company think about other ways that you
can do it yes you can increase your
stock price by increasing sales but you
can also do it by announcing layoffs now
at the national level think about the
way that we measure GDP you can increase
your GDP by selling tobacco or you can
increase it by selling vegetables and
yep if you’re thinking about the
well-being of the nation it’s pretty
clear which is correlated with the
overall well-being of the nation Simon
Kuznets who actually created the measure
of GDP actually warned us that the
well being of a nation cannot be
measured by GDP alone and yet this piece
of his wisdom is often lost to history
now when we think about unrestrained
growth of a part that loses sight of the
health of the whole at the cellular
level we actually call that cancer think
about it a few cells continue to grow
and multiply grow into a tumor and their
self interest actually ends up damaging
the health of the whole now how do we do
this sometimes in our companies you know
if you actually recognize that there are
cancerous mutations that go on in our
cells every single day and yet we’ve
evolved a mechanism for dealing with
many of these otherwise unrestrained
cancers our immune system evolved to
take care of that unrestrained growth
Adam Smith actually recognized this he
actually said in a less red book called
the Theory of Moral Sentiments he said
that to restrain our selfish and to
indulge our benevolent affections
constitutes the perfection of human
nature many of us probably haven’t heard
that quote from Adam Smith so how can we
create the kind of cultural immune
system that can take advantage of the
self-interest that brings us prosperity
from the butcher the brewer and the
baker following their own self-interest
but also balance that with a benevolent
love of our neighbor and caring with the
belonging of our entire planet and the
sense of shared fate that that creates
now what would you do if you are trying
to evolve the most successful company
well survival of the fittest competition
right maybe it’s select for the most
productive employees and and try to
create more and more of those in your
company well in an experiment by
evolutionary biologist William Muir he
actually did this with chickens he was
trying to build a super flock of
chickens and so what he did was from
each coop of chickens he took the most
productive chicken from each coop and
bred them over successive generations
now do
I end up with the most productive flock
he didn’t end up with the most
productive flock of chickens because
actually what happened was that there
were very few of them that were still
alive after six generations because by
incentivizing that individual
productivity he unknowingly actually
incentivized for aggression the chickens
that were the most productive were
actually the ones that were pecking away
at their neighbors and maybe even
stealing their food how often do we do
this in our companies we incentivize
individual behavior believing that it’ll
bring the most productive overall
company now in an alternative view of
this experiment what Mir actually did
was rather than incentivize the most
productive chickens he actually bred the
most productive coops he took each coop
and after each generation whichever was
the most productive with the largest and
most eggs he bred those and over
successive generations was actually able
to improve their productivity so let’s
get back to conscious capitalism because
there’s a little bit confusing right
should capitalism follow this greed is
good
what about evolution so these conscious
capitalism companies they have a purpose
beyond just making profits when you
think of when you ask someone why a
company exists they’ll often say to make
money and yet if you ask them about why
a doctor exists it’s to save lives or an
architect exists to build beautiful
buildings that will last for generations
why have we allowed businesses to purely
just have a purpose of making profits
similarly when you think about the
stakeholder orientation of a conscious
capitalism company rather than just
focusing on the stockholders rather than
just focusing on profits and stock price
to grow the largest tale because that’s
the most visible what if we instead
measured what matters what if we
balanced the needs of the customers the
community the employees the environment
this whole system that surrounds and
supports the company additionally these
conscious capitalism companies use the
evolutionary wisdom of those chickens so
they have a leadership that create
a culture that takes care of an immune
system that takes care of those
unrestrained self-interests before they
become cancerous these conscious
capitalism companies have created over
the long term the way to survive
evolution is the longest-running
experiment in history and over such a
long longitudinal study can reveal some
great truths now should we throw out
this survival of the fittest competition
view of evolution well not so fast
because the Latin root of the word
competition is comb patear patear means
to aim at to seek or to strive for and
comb means together so to compete is
actually to strive together for our
shared success and nobody ever said that
survival of the fittest meant to peck
away at your neighbors what if instead
of survival of the fittest being
survival of the winner what if it was
actually survival of the most
cooperative now as we’re thinking about
how we can evolve business what if we
evolved business to take advantage of
the self-interest of the butcher the
brewer and the baker to bring us
prosperity but we also had a love for
one another and a sense of shared
purpose and shared prosperity that could
reboot capitalism through the evolution
of business thank you
you
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