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Entries in conscious capitalism (2)

Thursday
Jun182015

Holism, a new economic approach to address world issues

Image Source: Huffington PostA recent article in The Guardian explores a new report released by U.S. think tank Capital Institute, which we find to be very interesting. The report suggests that a holistic approach to the economy is vital in order to avoid social, environmental and economic collapse. The institute argues that the world needs to look beyond the standard views of capitalism or socialism, and explore the "hard science of holism" in order to debunk outdated views held by both the left and the right.

Holism, a term coined by author Jan Smuts in his 1926 book, Holism and Evolution, is defined as the tendency in nature to form wholes that are greater than the sum of parts. Under this theory, focusing too closely on the individual parts of an organism could get in the way of understanding the organism as a whole.

Capital Institute founder, former JP Morgan managing director John Fullerton, says:

Society's economic worldview has relied on breaking complex systems down into simpler parts in order to understand and manage them.

For example, a traditional economic view generally views automobile manufacturing separately from the mineral mining, petroleum production and workers on which it relies, relates The Guardian. This runs the risk of overlooking the impact that automobile manufacturing has on the environment, politics and economics in a region. Taking a holistic view, on the other hand, takes into account the entire chain of cause and effect leading both toward and away from automobile manufacturing.

The report warns that the consequences of the current economic worldview are boundless, creating a multitude of challenges ranging from climate change to political instability. The institute argues that what the world needs now is a new systems-based mindset built around the notion of a regenerative economy, focusing on the whole, not the parts.

According to The Guardian, this type of mindset could lead to close analysis of supply chains, investigations of the effects of water use, circular economy initiatives, community economic development work or a host of other sustainability efforts. It also turns long-held beliefs on their head. Rather than approaching global economics from a capitalism-or-socialism perspective, it would approach global economics from a capitalism-and-socialism perspective.

What are your thoughts on the current way of viewing economic systems, and this new notion of taking a holistic approach to the economy?

-- Bruno Roche

Friday
Mar062015

Container Store -- ongoing case study of "conscious capitalism"?

Kip Tindell, the CEO of the Container Store, is featured in a Bloomberg Business article that looks at the tensions publicly-held businesses face between principles based on some form of mutuality and demands made by investors.

The Container Store's was launched in 1978, and was privately held (in partnership with a PE firm) until late 2013. It has operated from the beginning with a conscious capitalism business model that is summed up this way:

  1. Pay employees well and treat them with respect
  2. Consider suppliers and customers as family
  3. Have fun

However, by 2013 Tindell was was looking for ways to fund expansion to smaller markets, and to increase employee stock ownership options. He decided to take the company public.

In the lead up to the company's IPO, Tindell told his executives that he hoped to get along well with shareholders, and that he'd prefer long-term investors over short-term ones.  But on a public exchange, you can't pick who buys your shares.

If you retrieve your lure too fast you’ll never catch any fish. It’s stunning how slow you have to go. If you think you’re fishing slowly enough, fish half again slower, and you’ll catch many more.”

Since the IPO, Tindell has taken heat for not being aggressive enough on costs -- including employee salaries -- and not moving fast enough to shore up profit margins. He is standing on his principles for now, and hoping his shareholders will see the value in the long game.

Image source: Bloomberg Business

-- Clara Shen