April 13, 2023
April 13, 2023
By Rob Andrews with paraphrased content from Raj Sisodia, co-founder of Conscious Capitalism, in Firms of Endearment 2nd Edition
In perhaps the most important study of the 21st century, Raj Sisodia reveals that, over fifteen years, 15 companies driven by Conscious Capitalism (CC) outperformed the S&P 500 by 14 times and Good to Great Companies by 6 times. Conscious Capitalism (CC) entails being driven by a higher purpose, practicing balanced stakeholder engagement, and operating with conscious culture and leadership. I fell in love with Conscious Capitalism in 2018, when I discovered that its tenets are perfectly aligned with our own leadership architecture, Total Performance LeadershipTM (TPL). Interestingly, both were officially launched in 2012 and are nearly identical philosophically. Essentially, TPL is a more granular version of CC. The chart below from the Firms of Endearment website contrasts the financial performance of the S&P 500, the Good to Great companies, and the companies featured in Firms of Endearment (FoEs), which practice Conscious Capitalism.
To clarify, TPL and CC both advocate a higher purpose, above just making money, and a balanced stakeholder approach that does not favor one shareholder group over another. TPL advocates for a collective high-performance mindset, disciplined human capital practices, clarity in communications, measuring everything that matters, cost leadership, and a differentiated customer experience. CC advocates for conscious leadership and a conscious culture, which is consistent with our TPL approach. Our position is that the more granular principles of TPL constitute conscious leadership and a conscious culture.
Total Performance Leadership (TPL) is the result of Allen Austin’s commitment to making this world a better place. With 90% of the world’s workforce disengaged and a broken executive hiring process that results in nearly 50% failure, we believe this work is desperately needed. Clearly, the opportunity is significant to create a better, more productive global workforce. And we have the ability, indeed the responsibility, to help break the cycle.
Unfortunately, today, the power of practicing these CC/TPL principles goes almost unrecognized in mainstream business, even though companies driven by them outperform their next best peers by 35% or more. Thousands of books have been written on leadership, strategy, and execution, and we’ve read most of them. Very few, however, contain the secret sauce we believe is included in TPL. In his books Good to Great and Built to Last, Jim Collins alludes to the subject. Roy Spence’s It’s Not What You Sell, It’s What You Stand For, and Barry Schwartz’s Why We Work are also good examinations of the power of purpose driven organizations. However, reading great material wasn’t enough for us.
TPL is a journey and a commitment. It is a battle-tested, research-based architecture to help us fulfill our firm’s core purpose: To enhance the lives and the effectiveness of our associates, clients, and stakeholders. While our journey as leaders, managers, and management consultants began decades ago, TPL was born in March 2012 as we completed our own work to define our core purpose, mission, vision, values, and strategy. The journey was and continues to be transformational, and the results are amazing. In a nutshell, TPL is about building for us and assisting others in building high-performance cultures that engage workforces, consistently outperform markets, and deliver superior shareholder returns, high-performance boards, and exceptional leadership teams.
No amount of reading or studying can take the place of becoming totally immersed in your own process and spending time with those who have lived and experienced the benefits of practicing these principles. The things that we’re learning from incredible leaders who’ve led their own organizational transformations are astounding. And what’s even more amazing is that this group of phenomenal leaders has been willing and eager to share their “secret sauce,” because they fully support our effort to help others build extraordinary organizations.
Our research confirms that practicing the disciplines of TPL produces extraordinary results and delivers superior shareholder returns. The findings are irrefutable: organizations that practice TPL disciplines outperform their next best peers by 35% or more, deliver substantially higher customer satisfaction, have employees that are engaged and satisfied, and experience dramatically lower workforce turnover, a higher degree of strategic clarity, and much more effective execution.
Leaders of TPL organizations have made a commitment and a decision to start a journey that never ends. They’ve discovered a purpose greater than just making money. They’ve conceived and instilled vision, mission, values, and strategy that energize and engage the entire workforce. They’ve figured out ways to measure the things that matter most, including employee engagement and customer delight. They’ve committed to being the best in their sector, and they’ve removed cost from their enterprises where the customer can’t see it.
All of this notwithstanding, many CEOs, board members and senior business leaders see profit optimization and maximizing shareholder value as the primary purpose of their organizations. Most of their time and energy is spent focusing on strategy, tactical metrics, and financial statements. No surprise here – it makes perfect sense because this is precisely what is taught in most business schools.
Despite the overwhelming evidence supporting the value of TPL, why, then, are these disciplines not taught in mainstream business schools? In a 2014 interview on his radio show, aired on Business Radio Powered by the Wharton School, Stew Friedman, who leads the Work Life Integration Project at the Wharton Business School, asked Barry Schwartz the same question. Barry Schwartz is a 1971 Wharton Ph.D. and organizational psychologist whose practice focus is the workplace. Barry says, and we agree, that “the mainstream business community has been heavily influenced by two individuals – Adam Smith and Frederick Winslow Taylor. His workplace research asserts that as much as 90% of the world’s workforce is disengaged, thanks in part to what Adam Smith wrote in Wealth of Nations in 1776 and to Fredrick Winslow Taylor, who is seen by most as the founder of modern hierarchy and business processes. Both have had a profound effect on global business.
John Maynard Keynes said: “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”
TPL organizations look and feel good; the deeper you look, the better the view. Beyond exceptional returns, you’ll see trust, smiling faces, exceptionally low turnover, spirited and healthy debate, systems that are driven by purpose, frontline employees who sound like company spokespersons, and delighted, evangelistic customers. TPL organizations have frontline employees and customers who tell stories about them and are, in fact, their most effective salespersons.
Helping companies large and small, private and publicly owned, discover their purpose, vision, mission, values, and strategy is something we’ve done for a while. We go a step further and stick around to help them implement and execute their strategies and fill key leadership roles within their organizations.
We sincerely hope this piece has been helpful to you. Stay tuned and look forward to more information on building peak performance cultures.
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