How to Be an Ethical Business: 2 Elements to Incorporate

How can you lead an ethical business? How should you prioritize people and good leadership in a business?

To build a consciously capitalist company (CCC), you need to incorporate two elements. According to Conscious Capitalism by John Mackey and Rajendra Sisodia, these two elements are prioritizing a good cause over profits, and practicing enlightened leadership and management.

Let’s look at how to be an ethical business below.

1. Prioritize a Good Cause Over Profits

Mackey and Sisodia argue that to learn how to be an ethical business, you must work for a good cause—instead of prioritizing profits, prioritize making the world a better place in a particular way. For example, the authors explain that Whole Foods Market’s good cause is to promote nutritious eating and environmentally friendly agricultural practices. A good cause is especially important for employees: The authors argue that employees who don’t believe in the company’s cause—or who see that there is no cause beyond making money—won’t perform as well at work (which ultimately harms the company) and won’t be happy in their own lives.

The authors say there are four kinds of good causes—helping others (for example, by providing medical care), maximizing knowledge (for example, by performing research), promoting art (for example, by creating stylish clothing), and transforming the world (for example, by building the first AI). Founders usually already know the company’s cause when they establish a company. But if a company’s cause is unclear, Mackey and Sisodia recommend assembling a group of representatives from each interested party, from investors to environmentalists, to discuss and explicitly define the company’s cause.

2. Practice Enlightened Leadership and Management

According to Mackey and Sisodia, enlightened leaders and managers are the most important element of a CCC because they have the decision-making power to ensure that all interested parties win. They explain that leaders and managers occupy different roles: Leaders supply the ideas that propel a CCC forward, while managers put those ideas into practice. Next, we’ll explore each position in detail; then, we’ll discuss best practices that help enlightened leaders and managers ensure that everyone involved with the company wins.

What Enlightened Leaders Do

According to the authors, enlightened leaders differ from traditional leaders because they’re motivated by the company’s ability to make a difference in the world, while traditional leaders are motivated by the prospect of power or profits. 

Leaders can become enlightened leaders by practicing the following techniques:

Develop your emotional and spiritual intelligence. The authors argue that while traditional intelligence—your ability to use logic and solve problems—is valuable, it’s not enough. You also need emotional intelligence (a combination of introspection and the ability to connect with others) and spiritual intelligence (an ethical code) to lead effectively. To develop your emotional intelligence, they recommend making a conscious effort to love all of life and engaging in self-reflection practices like journaling. To develop your spiritual intelligence, they recommend contemplation and studying philosophical and religious traditions.

Act with integrity. The authors argue that it’s the leadership’s job to ensure the company never stops prioritizing its good cause. This means that enlightened leaders have to align their actions—and the company’s actions—with the company’s values at all times, even when it’s hard. They must admit and learn from their mistakes and immediately correct their course. Acting with integrity also entails supporting the growth of everyone involved with the company by treating them with dignity and setting them up for success.

What Enlightened Managers Do

According to the authors, enlightened managers differ from traditional managers because they promote employee autonomy, while traditional managers need employees to rely on them for direction in order to keep their jobs. Managers can become enlightened managers by practicing the following techniques:

Give employees the opportunity to make decisions. For example, this could mean something as simple as relaxing your dress code so your employees can dress in a way that’s still work-appropriate but feels authentic to them. 

Encourage experimentation at all levels. Mackey and Sisodia say that businesses often make the mistake of assuming that only higher-ranking employees have the knowledge or ability to innovate, and they restrict lower-ranking employees to simply following the rules. They argue that this stymies much-needed creativity at the lower levels of your company—which ultimately slows the evolution of your company and puts you behind your competitors. Instead, they recommend giving all employees room to try new things and balancing experimentation with accountability: When experimenters succeed, they should be rewarded and their ideas should be promoted. When they fail, they must be held responsible—for example, via demotion.

How to Be an Ethical Business: 2 Elements to Incorporate

Katie Doll

Somehow, Katie was able to pull off her childhood dream of creating a career around books after graduating with a degree in English and a concentration in Creative Writing. Her preferred genre of books has changed drastically over the years, from fantasy/dystopian young-adult to moving novels and non-fiction books on the human experience. Katie especially enjoys reading and writing about all things television, good and bad.

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