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In this presentation, I share my journey. I journey from being a traditional shareholder-oriented capitalist to a destination of conscious leadership. In the presentation, I define conscious leadership, conduct a sample group meditation, and review the science and research behind the link between contemplative practice (mindful meditation) and effective leadership. The presentation draws from a large body of research that demonstrates strong correlations between conscious leadership and financial performance. With conscious leadership, we experienced positive changes in most performance metrics within my company. We often describe the five years leading up to the company’s acquisition as a ‘magical’ period. We embraced conscious leadership and transitioned the company from a shareholder to a stakeholder orientation in this period. Following is a summary of the presentation:
Conscious Company Performance
Conscious companies perform better. They measurably outperform traditional businesses. For example, articles presented in Harvard Business Review and Forbes magazine claim out-performance for conscious companies of 10.5X when compared to returns from the S&P 500 over the same period. The Forbes magazine article further claims out-performance of 3.2X when compared to the “Good to Great” companies listed in the bestselling book of the same name, by Jim Collins. More recently, articles appearing in The Motley Fool and on Yahoo Finance continue to recognize the significant out-performance of conscious companies. In our company, we saw a substantial acceleration in financial metrics and KPI performance coincidental to the period of conscious leadership – and our transition to being a conscious company. The period starting in 2015 until the company’s acquisition at the end of 2019 saw a 90.1 percent increase in profitability and a 26.2 percent increase in revenue.
The list of high-profile companies that embrace conscious leadership and facilitate conscious culture is long and noteworthy. Many of these are brands few would suspect as being ‘conscious.’ The list includes many automobile manufacturers and industrial companies. It also includes many technology companies and information processing organizations.
Further, conscious leadership and contemplative practice have found a place in the world of sports. Many professional and college sports organizations have instituted programs. They often use other titles for their conscious facilitators. Some of these titles are Director of Mental Conditioning, Mental Skills Coordinator, or Mental Strength Coach. As with businesses, sports organizations that employ or support programs for conscious leadership tend to outperform. As a result, these organizations are disproportionately contending for championships.
However, a conscious company paradox is all-important: ‘The fact that conscious companies have much better performance than benchmark companies cannot be your reason for being a conscious company. Because if it is – then you are not.‘ Consciousness for leaders is an embodied practice, motivated as a moral imperative or a quest for self-improvement – separate and apart from desired financial outcomes. As Confucius said, “The superior person understands what is right; not what will sell.”
History
Conscious leadership is part of a larger business ecosystem. The ecosystem is ‘Conscious Capitalism.’ The pathway through the ecosystem is first to change ourselves. Then, after we have changed ourselves, we can change the organizations we lead. Finally, if we can change enough organizations, we can change the world.
In 1957, Ayn Rand wrote her iconic book ‘Atlas Shrugged.’ I read this book early in my professional career – and it profoundly influenced me. Atlas Shrugged advocates for a pure, unfettered brand of capitalism that is wholly shareholder-oriented. It proselytizes a profit-first perspective. The book goes so far as to declare profit optimization to be a moral imperative. The rationale is that ‘the stakeholder benefits from a shareholder orientation.’ If we focus only on optimizing profits, the benefits of doing so will trickle down to all stakeholders. This perspective’s mantle has been picked up by many over the years, including the prominent economist Milton Friedman. We were all believers. I was an evangelist. Even in Hollywood, we had Gordon Gekko in the movie ‘Wall Street’ and Blake in ‘Glengarry Glen Ross’ telling us that ‘greed is good,’ and ‘always be closing.’
The book ‘Conscious Capitalism’ was written in 2013 by John Mackay and Raj Sisodia. Inspiring their book was a look back at companies that reversed the premise of Ayn Rand’s shareholder capitalism. Instead, these companies operated from the perspective that ‘the shareholder benefits from a stakeholder orientation.’ It is a refutation of the views of Ayn Rand and Milton Friedman. The empirical evidence works powerfully in favor of Mackay’s and Sisodia’s perspectives – validating the out-performance of companies that eschew shareholder in favor of stakeholder orientations. However, because authenticity is essential for consciousness, the stakeholder orientation of these companies is not motivated by their potential out-performance. As previously stated, consciousness is an embodied practice that is viewed only through the lens of self-improvement and morality, in and of themselves.
Conscious Capitalism
Conscious leadership is one of the four pillars of conscious capitalism. The other three are higher purpose, stakeholder orientation, and conscious culture. My experience was that these were hierarchical, starting with conscious leadership – the changing of myself. From conscious leadership, I could foster a conscious culture in the organization. Many companies use active facilitation to foster their conscious culture. I chose not to facilitate actively. Instead, I changed the quality of my interactions and put the change in my personal values on display. There is more about that further into the presentation.
The culture change was manifest in a shift from a shareholder to a stakeholder orientation. This transition was a natural shift that emerged from the empathy and compassion fostered by contemplative practice. With the growth of empathy, we care more about people and less about money. Compassion is how we apply this newfound empathy. This application of compassion is the essence of the shift in orientation.
We found that higher purpose naturally followed the shift to the stakeholder orientation. This outcome is intuitive – that we birth a higher purpose when people see themselves as stakeholders or when we elevate stakeholder status. We viewed everybody that the company interacted with as a stakeholder. Our stakeholders included employees, customers, vendors, landlords, agents, and contractors. We also considered the government and even our competitors to be stakeholders.
Higher Purpose Versus Core Purpose
We journeyed through the process from conscious leadership to higher purpose. The ‘higher purpose’ pillar is where we deviated from the script. I believe this is an important deviation. A ‘higher purpose’ can be the same as a core purpose – but is not necessarily so. So, we made a distinction. A higher purpose is the same as a core purpose if the company’s primary business is service to the community. This is more often the case in ‘B’ corporations and non-profits. If the primary business is not service to the community, then the core purpose and the higher purpose are not the same. Core purpose answers the question, “Why do we exist?” Higher purpose answers the question, “how do we serve the community?” A core purpose does not preclude a higher purpose. (Nor does a higher purpose prevent a core purpose). Any company can have the higher purpose of adding value for its community of stakeholders, regardless of its core purpose.
We took the company through the process of discovering its core purpose – answering the question “Why do we exist?”. Through an arduous discovery process, over time, an answer emerged. It was that “we exist to delight customers with a uniquely superior experience.” This was a complex answer to the question. The complexity was in the breaking out of ‘unique’ and ‘superior.’ Each answered secondary questions. ‘Unique’ answered the question of what we could do that our competitors could not. ‘Superior’ answered the question of what we would do that our competitors would not. The former was model dependent. The latter depended on the company culture. This core purpose was consistent with the stakeholder orientation because it targeted a stakeholder – the customer.
After we discovered our core purpose, we were able to discover our core values. Our core values were the behavioral manifestation of the core purpose. They answered the question, “How do we behave?” Core values are unchanging – they always exist. However, the narrative in applying these values changed significantly with the emergence of our stakeholder sentiment.
Because service to the community was not our core business (we built and sold window blinds), we had a different and emerging higher purpose. A stakeholder orientation facilitates higher purpose in many ways. When we viewed employees, community, customers, and vendors as stakeholders, we instinctively added value in all of those areas. We raised employment quality, got involved in philanthropic and community initiatives, and became better customers to our vendors.
Stakeholder Orientation
Before the discovery of our higher purpose, our stakeholder orientation was emerging. The transition from a shareholder to stakeholder orientation is an emergent process from an outgrowth of the authentic empathy and compassion grown through contemplative practice. It is essential to make a distinction between empathy and compassion. We viewed empathy as necessary for compassion and, at the same time, insufficient in and of itself. Compassion requires adding rational contemplation to empathy. Without rational contemplation, empathy can be dangerous for our companies. It can result in making poor decisions that sacrifice a more significant benefit for the benefit of an individual or a smaller group. It trades a group for the individual. Adding rational contemplation checks against this risk.
In the shareholder orientation, we execute through a win/lose, zero-sum game prism. We see business as similar to sport or war. For every winner, there has to be a loser. In the transition to a stakeholder orientation, the prism changes to ‘win/win’ – mutual benefit. Here, in every transaction or interaction, there must be mutual benefit. Instead of a zero-sum, we see a cumulative benefit. In a fully realized stakeholder orientation, the mutual benefit becomes a test by which we permit transactions or interactions to move forward. If there can not be mutual benefit, we don’t move ahead. We also have an extensive list of stakeholders that likely includes every individual or community we transact with.
For companies (like ours) where the core business is not community service, we turn the ‘win/win’ into a ‘win/win/win’ – with the third win being the outside community. In this case, we separate our direct from our indirect stakeholders. The direct stakeholders are those within the core business community. The indirect stakeholders are those outside of the ‘core business’ community.
My Journey
My journey toward conscious leadership began in 1997. We were only four years removed from inception, and although doing well, we suffered the fragility of a typical boot-strapped start-up. We were severely under-capitalized and relatively unsophisticated. I was working countless hours – doing everything from helping to build blinds to making sales and doing installations. It was evenings and weekends in addition to full workdays.
And then, in 1997, a much larger and more established company of significant financial means stormed our marketplace intending to displace us. As I was sure of our demise, I became dysfunctionally stressed and was very much at risk of losing everything. Through this process and motivated by the survival of the company, I sought out stress counseling. I was fortunate to find someone that could make a difference. What was supposed to have been a few months of therapy turned into a twenty-year relationship of life coaching. (We did survive this competitor, although the battle lasted ten years and we incurred monstrous amounts of debt).
Through this counseling relationship, in 2013, I was introduced to mindfulness and mindful meditation. Before this time, I was an unlikely candidate to embrace the practice. But it changed me, changed my worldview, and changed the company.
This new contemplative community introduced me to an organization called ‘Mindful Leader.’ This organization held an annual four-day ‘summit’ every November, beginning in 2015. The summit was business-oriented. It consisted of presentations from prominent companies with well-known brands. In addition, there were workshops and breakout groups. Through this experience, I learned my most valuable lesson in business: ‘profit’ and ‘purpose’ are not only compatible – they are interdependent.
From attending the summit each year, I learned how to apply consciousness to leading the company. This epiphany (the relationship between profit and purpose) was the inception of a magical five years leading up to the company’s acquisition.
The Practice
Here, I take the group through a five-minute meditation session.
- Sit in an upright and alert position.
- Take a couple of slow, deep, cleansing breaths. In through the nose – out through the mouth. In through the nose – out through the mouth.
- Breath through your nose. Focus on your breath. Through your nose, focus on your breath.
- Silence
- Your mind will wander. This is normal – bring it back to your breath. Feel the breath in your body. Inhale-exhale-inhale-exhale.
- Move your focus to one part of the breath. Perhaps the entry point of your nose, perhaps the lungs, or perhaps the abdomen. Stay there. Focus on one point of the breath. Stay there.
- Every time your mind wanders, bring it back to your breath. Shut down your thoughts – only the breath
- Silence
- Open your eyes
From here, I give guidance for meditation daily. Ten minutes to start – and then working up to thirty minutes, using a timer.
The Science
Our objective, with practice, is to remain calm and present when confronted with much stress and noise around us.
Meditative practice changes our brains. Studies from NIH and The University of Wisconsin ‘HealthEmotions Research Institute’ demonstrated, through fMRIs, increased activity for regular long-term meditators in the Anterior Insula area of the brain when presented with selected stimuli. The Anterior Insula area of the brain is associated with empathy and compassion. A more recent study from the ‘HealthEmotions Research Institute’ also demonstrated increased electrical activity in the left-side part of the brain’s frontal region when a group of non-meditators engaged in weekly meditative practice. A control group that did not engage in weekly practice did not see the same results. This part of the brain is associated with positive emotions.
Dr. Dan Siegel, an adolescent Psychiatrist at UCLA, reports that guided meditations improved the emotional health of his patients. In Dr. Siegel’s model, emotional health is a process of centering on a continuum between rigidity and chaos. He effectively demonstrates that mindful meditation is useful for the emergence of centering.
The science behind Mindfulness Meditation primarily involves two portions of the brain. These are the amygdala and the pre-frontal cortex. The amygdala is part of our Limbic System. It is an older portion of the brain where our fight, flight, freeze reaction lives. It is ‘reactive’ to stimuli. As such, the amygdala enabled us to survive our years as hunters and gatherers. Reactively, we knew when to run and when to fight.
The pre-frontal Cortex is the newest part of our brain. Unlike the amygdala, it is proactive. This part of the brain provides skills for planning, cognitive behavior, decision-making, and impulse control.
From millions of years of evolution, we are conditioned to a fight, flight, freeze reaction when presented with stressful stimuli. This is true for the daily stresses of running a business. With mindfulness meditation, we learn to utilize the pre-frontal cortex to regulate the amygdala. Stated differently, we learn to use rational contemplation to regulate the fight, flight, freeze reaction. As we become less reactive and more responsive, we become better leaders. All of us can relate to experiences of reactivity in our organizations that proved unproductive. The difference between ‘responsive’ and ‘reactive’ leadership is the ability to ‘create’ a response rather than react instinctively.
When we can create or regulate our responses, we can move from ‘fight, flight, freeze’ to a condition we call ‘attend and befriend.’ In its application to business, it occurs to me that ‘fight, flight, freeze’ looks a lot like our shareholder, win/lose orientation. Attend and befriend looks like our stakeholder, win/win orientation.
So, from contemplative practice or mindful meditation, two benefits are derived: We move from reactive to responsive leadership and we develop increased levels of authentic empathy and compassion. We can think of these as two wings of a bird – working together so that we can fly.
In our company, within this magical period that started with my contemplative journey, there was a cascading where the emergence of a stakeholder orientation made us an attractive place to work – a place people wanted to be. Our newfound desirability resulted in hiring ‘superstar’ executives who enabled me to work ‘on’ rather than ‘in’ the company. And with this change, we effectively transitioned the company from ‘rules’ to ‘values’ centricity.
Leadership
Contemplative practice (or mindful meditation) is how we become Conscious Leaders. Through ‘practice,’ we know that we develop an ability to regulate the amygdala using the pre-frontal cortex. This process occurs as an emergence of a pause or gap between stimulus and response. The gap is the difference between ‘reacting’ and ‘responding.’ It is within this gap that we have the power to create a response – rather than to only react.
In their book, Conscious Capitalism, John Mackay and Raj Sisodia identify four types of intelligence: Analytic Intelligence (IQ), Emotional Intelligence (EQ), Spiritual Intelligence (SQ), and Systems Intelligence (SyQ). (here I give a brief verbal description of each)
‘Contemplative practice’ cultivates EQ, SQ, and SyQ. IQ, to a lesser degree. This group of intelligences, taken together, creates the mechanism by which the gap is empowered to optimize the leadership response.
Through a contemplative practice or mindful meditation ritual, we can put this intelligence construct to work in the gap between stimulus and response. We should view this process as emergence rather than strategy. It is a foundation for effective leadership – and it ‘just happens’ as an outgrowth of ritualistic practice.
In their book, Mastering Leadership, researchers Robert Anderson and William Adams identify four levels of leadership. Each of these is progressively effective: Reactive, Creative, Integral, and Unitive. They conclude that 70% of leaders are ‘Reactive’ – the least effective leadership style. Twenty percent are ‘creative.’ So, ninety percent of leaders are either reactive or creative – with a significant difference in the effectiveness between these. If we move only from reactive to creative, we become measurably more effective as leaders.
Interestingly, in Mindful or Conscious Leadership, there are also four levels. They are: Reactive, Responsive, Pluralistic, and Mindful. Each of these parallels the four leadership styles identified in Mastering Leadership. The progression through these is an emergent process that grows out of contemplative practice. It is mindful meditation or contemplative practice that births the emergence. Growing the gap – and the efficiency within the gap between stimulus and response transitions the leadership levels. It is worth noting that the work of Anderson and Adams was an extensive research project. Its effect was to validate the more theoretical and academic model for conscious, or mindful leadership.
The Application to Business
As I continued my mindfulness meditation practice, I realized the practical benefits – as an application to the running of the business. Through contemplative practice, we cultivate non-judgmental awareness. This awareness manifested itself as improved KPI development and utilization. There was also a stronger affinity for – and a better understanding of employee relationships and integrated systems. With awareness of false internal narratives, I could diminish their effect on decision-making and unleash more of my potential.
With the emergence of empathy came more compassion. I came to understand that compassion is the most universal language. It resonates with everyone. A compassionate workplace is a more desirable and engaged workplace. The improved desirability and engagement enabled hiring better talent and building more stable teams. An analysis of failed start-up businesses had “an inability to build the right teams” near the top of the list.
Perhaps most significant was a measurable improvement in employee engagement. Engaged employees are happier, more productive, and less likely to exit their employment.
Closing
I conclude the presentation by citing the work of Rasmus Hougaard, in his book “The Mind of the Leader.” From assessments of thirty-five thousand leaders and two-hundred and fifty C-level executives he concludes that today’s leaders are failing to meet the basic human needs of purpose, connection, and happiness. Seventy-seven percent of leaders surveyed believe they are engaging their employees – however eighty-five percent of employees say their leaders are ‘not’ engaging them. The conclusion is that the most important qualities for leaders today are mindfulness, selflessness, and compassion.
Cicero famously said, “The beginnings of all things are small.” Contemplative practice or Mindful meditation is a small beginning that can change our lives and companies. Meditation is challenging – and staying with it is even more challenging. It is not self-reinforcing in the same way as is distance running or endurance cycling. But turning practice into a ritual and a ritual into a habit is how we develop good habits. Conscious leadership and the good it produces can be an extraordinary journey from a small beginning. Let’s get started!
