What is the most powerful force in the world? And I think you would agree that is a big idea if it is in the hands of an entrepreneur who is actually going to make the idea not only happen, but spread all across society. And we understand that in business but we have need for entrepreneurship just as much in education, human rights, health, and the environment as we do in hotels and steel.
Entrepreneurs cannot be happy people until they have seen their visions become the new reality across all of society. They learn how to master whatever skills are necessary. I am, for example, modestly an introvert. However, I spent most of my days dealing with people. It helps hugely that my daily interactions are with wonderful, caring, creative entrepreneurs from whom I learn and with whom I connect. My decision to commit to the Ashoka vision turned in part on recognizing how important this balance would be. My escape for long backpack trips in the wilderness also helps. And so, of course, does finding colleagues who are complements–and with whom I and our values-based entrepreneurial community share so much that the fit works.
What would a conscious business environment look like?
The most significant observation would be the total absence of abuse,shame,and threat. People would take responsibility for their behavior and deal with each other honestly and respectfully. They would hold themselves and each other accountable for adhering to some set of agreed-upon values and for working toward an agreed-upon vision. Deviations and errors would be an opportunity for learning and growth,rather than an excuse for blame and punishment.
There would still be problems,people that don’t get along,and losses. A conscious business environment is not a Garden of Eden where everything is always blissful. The marketplace is a turbulent place with no guarantees of success. The main difference displayed by a conscious business environment is that in addition to the drive to achieve their goals,people would experience also the commitment to operate according to their values. This commitment is the source of unconditional dignity that would give the organization and its members a core of luminosity from which to extend into the world.
A conscious business environment would be a challenge,an invitation to develop people’s physical,emotional,mental,and spiritual spheres. The conscious organization is a crucible where people refine themselves through service and partnership. As Khalil Gibran would say,a conscious business is a place where it becomes obvious that work is “love made visible.”
Now,the truth is that in order to make more money,I believe you have to face what’s really going on,you have to share truthful information,and you have to bring the conflicts to the surface and deal with them creatively and respectfully. You don’t have a choice. Your only other choice is not to be as effective or as profitable as you could be.
My private agenda was to suggest that in order to make money you have to serve other people – for me that’s the beauty of conscious capitalism. The essence of business is to serve the customer and give the customer more value than the cost of your product – or more value than what they have to pay to acquire your product or service. So the key is not so much what you are doing,but how you are doing it.
I had always tried to live my life fairly simply and by 1991, knowing what I knew about the state of the environment, I had begun to eat lower on the food chain and reduce my consumption of material goods. Doing risk sports had taught me another important lesson: never exceed your limits. You push the envelope and you live for those moments when you’re right on the edge, but you don’t go over. You have to be true to yourself; you have to know your strengths and limitations and live within your means. The same is true for a business. The sooner a company tries to be what it is not, the sooner it tries to “have it all,” the sooner it will die.
While our managers debated what steps to take to address the sales and cash-flow crisis, I began to lead week-long employee seminars in what we called Philosophies. We’d take a busload at a time to places like Yosemite or the Marin Headlands above San Francisco, camp out, and gather under the trees to talk. The goal was to teach every employee in the company our business and environmental ethics and values.
I took a dozen of our top managers to Argentina, to the windswept mountains of the real Patagonia, for a walkabout. In the course of roaming around those wild lands, we asked ourselves why we were in business and what kind of business we wanted Patagonia to be. A billion-dollar company? Okay, but not if it meant we had to make products we couldn’t be proud of. And we discussed what we could do to help stem the environmental harm we caused as a company. We talked about the values we had in common, and the shared culture that had brought everyone to Patagonia, Inc., and not another company.
We are living in a phenomenal age. If we can spend the early decades of the 21st century finding approaches that meet the needs of the poor in ways that generate profits and recognition for business, we will have found a sustainable way to reduce poverty in the world.
I hope corporations will dedicate a percentage of their top innovators' time to issues that could help people left out of the global economy. This kind of contribution is even more powerful than giving cash or offering employees' time off to volunteer. It is a focused use of what your company does best. It is a great form of creative capitalism, because it takes the brainpower and makes life better for the richest, and dedicates some of it to improving the lives of everyone else.
...one of the most inventive forms of creative capitalism involves someone we all know very well. A few years ago, I was sitting in a bar here in Davos with Bono. Late at night, after a few drinks, he was on fire, talking about how we could get a percentage of each purchase from civic-minded companies to help change the world. He kept calling people, waking them up, and handing me the phone to show me the interest.
Well, it's taken time to get this going, but he was right. If you give people a chance to associate themselves with a cause they care about, while buying a great product, they will. That was how the RED Campaign was born, here in Davos.
RED products are available from companies like Gap, Motorola, and Armani. Just this week, Dell and Microsoft joined the cause. Over the last year and a half, RED has generated $50 million for the Global Fund to Fight AIDS, tuberculosis, and Malaria. As a result, nearly 2 million people in Africa are receiving life-saving drugs today.
The challenge here is to design a system where market incentives, including profits and recognition, drive those principles to do more for the poor.
I like to call this idea creative capitalism, an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world's inequities.
As I see it, there are two great forces of human nature: self-interest, and caring for others. Capitalism harnesses self-interest in a helpful and sustainable way, but only on behalf of those who can pay. Government aid and philanthropy channel our caring for those who can't pay. But to provide rapid improvement for the poor we need a system that draws in innovators and businesses in a far better way than we do today.
Such a system would have a twin mission: making profits and also improving lives of those who don't fully benefit from today's market forces. For sustainability we need to use profit incentives wherever we can. At the same time, profits are not always possible when business tries to serve the very poor. In such cases there needs to be another incentive, and that incentive is recognition. Recognition enhances a company's reputation and appeals to customers; above all, it attracts good people to an organization. As such, recognition triggers a market-based reward for good behavior. In markets where profits are not possible, recognition is a proxy; where profits are possible, recognition is an added incentive.
Why do people benefit in inverse proportion to their need? Well, market incentives make that happen.
In a system of capitalism, as people's wealth rises, the financial incentive to serve them rises. As their wealth falls, the financial incentive to serve them falls, until it becomes zero. We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.
The genius of capitalism lies in its ability to make self-interest serve the wider interest. The potential of a big financial return for innovation unleashes a broad set of talented people in pursuit of many different discoveries. This system, driven by self-interest, is responsible for the incredible innovations that have improved so many lives.
But to harness this power so it benefits everyone, we need to refine the system.
I used to be skeptical of global warming, but now I'm absolutely convinced that the world is spiraling out of control. CO2 is like a bushfire that gets bigger and bigger every year.
All of us who are in a position to do something about it must do something about it. Because Virgin is involved with planes and trains, we have even more responsibility. So we've put aside quite a lot of money to invest in alternative fuels. Over the next four years, we'll invest something like $1 billion in alternative fuels.
The money is going into a whole series of different things like building ethanol plants. We're looking into wind power. We're looking into solar. And we're also actually working on developing a new kind of fuel, which I can't say much about but which is quite exciting.
Well, my motivation behind Tesla is really to do as much good as possible for the environment and the electric-vehicle revolution. I think there is still a lot of work to do and if we were to sell to a big company, I'm not sure it would progress at the same pace.
Yeah, leading an examined life, I always say, is a pain in the ass. It adds an element of complexity to business that most businessmen don't want to hear about. They just want to call a fabric manufacturer, and say, "Hey, give us 10,000 yards of shirting."
...we've teamed up with some Japanese companies to, basically by 2010, make all our clothing out of recycled and recyclable fibers. And we're going to accept ownership of our products from birth to birth. So if you buy a jacket from us, or a shirt ,or a pair of pants, when you're done with it, you can give it back to us and we'll make more shirts and pants out of it.
Which is a different idea about consuming. Right now the world runs on consuming and discarding, and we're saying that we're taking responsibility for our products from birth to birth. Can you imagine if a computer company said, "When you're done with your computer, we'll buy it back from you and make more computers out of it." Instead, they sell you computer and you can't even get service from them!
It's a different way of accepting responsibility.
We need an honest bottom line. Today that bottom line is vastly subsidized. If anyone of us were paying the full cost of oil our bottom lines would be very different. If you internalize the cost of oil, look at the cost of the war in the Middle East or the cost of global warming for future generations, if you internalize those external costs and what you pay, that bottom line would look very different, what ever business you are in. If we somehow put a value on species extinction and factor that into our costs that bottom line would look very different. IF we put any resource depletion into costs our bottom line would change. So what we have is a dishonest market that does not take into account all the costs when it establishes its prices. We need an honest marketplace before we can let the market work for sustainability rather than against it as it works today.
The status quo is a product of our culture or our culture is a product of the status quo -- I’m sure which is the effect and which is the product -- there is probably a feedback loop there that is mutually reinforcing. But we have a culture that says "hey, look around. This place called Earth was created for you and you can do anything you want with it."
And of course we know that is flawed. We belong to it, it doesn’t belong to us. It’s a flawed world view. You see evidence of it all around us -- this idea that resources are limitless and we will never run out. Or that we can put anything we want to into the earth, throw poison into the sink. It’s very adolescent thinking. But yet there is a growing sense of ethics. We see a clear cutting in an old growth forest we say "that’s wrong." We see fish that are deformed from PCBs and we know that it’s wrong. We are waking up to the environmental ethics of living in paradise.
The status quo is a very powerful opiate and when you have a system that seems to be working and producing profits by the conventional way of accounting for profits. It’s very hard to make yourself change. But we all know that change is an inevitable part of business. Once you have ridden a wave just so far, you have to get another wave. We all know that. For us, becoming restorative has been that new wave and we have been riding it for 13 years now. It’s been incredibly good for business.
We began to tackle the face of mountain we identified as waste. We defined waste, by the way, as any cost that we incurred that does not add value to our customer and that translates to doing everything right the first time, every time. It’s not just waste material, scrapped and low quality and so forth. If you send something to the wrong destination and have to get it back and reship it -- that’s waste. If you incur a bad debt -- that’s waste. So we defined waste very broadly and over time we actually said that any energy that comes from fossil fuel by our definition is waste and we need to eliminate it. We really began to think in different ways about our business in terms of climbing this mountain and it became very clear very quickly this was the smart thing to do. Not only did we start to generate answers for those customers, they embraced us for what we were trying to do. The goodwill in the market place has just been stunning. The rest of the business case is pretty simple. I cost it down not up.
During the last five years, those four advantages—costs, products, people, goodwill—have been the salvation of Interface during a recession that saw our primary marketplace shrink by 38% from peak to trough—38%! As a heavily leveraged company with over $400 million in debt, we might not have made it without the sustainability initiative and, especially, the support of our customers. This revised definition of success—this new paradigm—has a name: “Doing well by doing good”. It is a better way to bigger profits.
For nearly 11 years, now, we have been on this mission; we call it, “climbing Mt. Sustainability”, a mountain higher than Everest, to meet at that point at the top that symbolizes zero footprint—zero environmental impact. Sustainable: taking nothing, doing no harm.
...there's no such thing as sustainability. There are just levels of it. It's a process, not a real goal. All you can do is work toward it. There's no such thing as any sustainable economy. The only thing I know that's even close to sustainable economic activity would be organic farming on a very small scale or hunting and gathering on a very small scale. And manufacturing, you end up with way more waste than you end up with finished product. It's totally unsustainable. It's just the way it is.
What they don't realize is that I'm not in the business to make clothes. I'm not in the business to make more money for myself, for Christ's sake. This is the reason Patagonia exists -- to put into action the recommendations I read about in books to avoid environmental collapse. That's the reason I'm in business -- to try to clean up our own act, and try to influence other companies to do the right thing, and try to influence our customers to do the right thing. So we're not going to change. They can go buy from somewhere else if they don't like it.
As the year draws to an end, I face a question that annually lurks in the back of my mind, (and I suspect in the minds of most entrepreneurs), "Do I have the energy and passion for another year?" Though someone from the outside might assume the answer is always, "Yes," people on the outside tend to glamorize the real work of leading a mission-driven company. I encounter so many job applicants drawn to Honest Tea because they want to change the way business is done -- organics, Fair Trade, healthier products, bikes for employees -- but then when they find out the way to make that all real is by walking in the rain lugging 50 pounds of heavy bottles or standing in the hot sun giving out samples, they find out they aren't quite as entrepreneurial as they thought they were. (Internally we say their "Kumbaya factor" isn't as big as their "Get it Done" factor.)
Define Intention in the 'real world' you ask, It is one 5 days before Christmas, All expenditures, whether from the heart or the wallet, in the past or present, big or small, can be viewed as either "depleting" or "enriching."
Enriching works for me.
An entrepreneur plows the field and it weakens the idea that change isn't possible. He seeds with some very user-friendly idea. The next entrepreneur comes, and there's more plowing, more seeding. Then hundreds. As we wire the world together, ideas flow from Bangladesh to the United States and Brazil, and back. This becomes multiplicative. The network becomes a distribution channel.
We need to reverse three centuries of walling the for-profit and non-profit sectors off from one another. When you think for-profit and non-profit, you most often think of entities with either zero social return or zero return on capital and zero social return. Clearly, there's some opportunity in the spectrum between those extremes. What's missing is the for-profit finance industry coming in to that area. Look at the enormous diversity of the for-profit financial industry as opposed to monolithic nature of the non-profit world; it's quite astonishing.
As a for-profit entity, if you're successful in getting a good return on capital, you will attract more investment. You become a magnet for resources with which, in turn, you can do more. Taking that a step further, if you're a socially responsible for-profit, and you're successful in earning a return on capital, you will attract further investment, to create still more value, and be able to have a greater positive impact on society and the world. Essentially being a for-profit creates opportunity for doing greater good. And financial success as a for-profit with a social conscious carries greater credibility with your peers, potentially influencing actions of other businesses.
