How economic developers can apply the tenets of conscious capitalism to their own communities
By Noelle Salerno, Senior Consultant
Here at Avalanche, our mission and passion is to make communities more vibrant and prosperous – and the most effective way to achieve that is by embracing a holistic perspective that examines the interconnectivity of regional dynamics. Rather than working in silos, high-performing communities facilitate stronger, more inclusive collaboration and find win-win solutions to propel their economy forward.
The book Conscious Capitalism captures a similar sentiment, which was written to “inspire the creation of businesses galvanized by higher purposes that serve and align the interests of all their major stakeholders.” We believe economic developers can not only partner with conscious businesses located in their communities, but can also apply these tenets to their own organization and programs.
TENET 1: HIGHER PURPOSE
Businesses with a clearly-defined purpose focus on what makes them truly unique and how they can best serve their stakeholders, which in turn allows them to think about long-term value creation and competitive advantages rather than short-term profit margins. While businesses inherently generate value through their operations, many companies work to make the community they reside in a better place as part of their intrinsic purpose by donating their time, money, or unique capabilities such as infrastructure, intellectual capital, and networks to support economic development-related initiatives.
A recent example of the increasing shift to purpose-driven capitalism comes from BlackRock CEO Larry Fink, who wrote a letter to CEOs in early 2018 asking them to explain their purpose and how each company makes a positive contribution to society beyond financial performance: “Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world?” Economic developers, local businesses, and other key stakeholders should address these questions together. Doing so will make companies and the communities they operate in even more resilient.
Takeaway: Identify the engaged, conscious businesses in your community. Through your business retention and expansion program, connect with them on a regular basis, identifying what they need to thrive and how their intrinsic purpose can play a role in contributing to your economic development initiatives. Fostering these mutually beneficial relationships will leverage the collective strengths of your community.
According to Conscious Capitalism, conscious businesses outperformed the S&P 500 by a factor of 10.5 over the 15-year period of 1996-2011. Conscious companies were selected based on their “humanistic profiles,” considering factors such as sense of purpose, stakeholder satisfaction, culture, and leadership.
TENET 2: STAKEHOLDER INTEGRATION
The second tenet of Conscious Capitalism is stakeholder integration, which views stakeholders as connected and interdependent rather than siloed, opposing forces. Instead of taking a zero-sum approach, it is important to look for creative, win-win opportunities that benefit all stakeholders. During Avalanche’s strategic planning process, we conduct extensive stakeholder input because we view it as critical to building the trust and engagement needed to successfully implement the plan. We are inclusive, gathering a diversity of opinions along the way and bringing the community together around a shared vision. Through this process, seemingly opposing stakeholders can find common ground through a shared vision for the community.
Takeaway: Establish open lines of communication with your key stakeholders. Engage in civic education that helps your stakeholders connect the dots about how they directly benefit from specific economic development initiatives you’re taking on. As new programs are developed, make sure to engage stakeholders from the beginning to ensure you have the buy-in needed to succeed.
TENET 3: CONSCIOUS LEADERSHIP
While successful leaders have qualities such as analytical and emotional intelligence, Conscious Capitalism describes “systems intelligence”, or the ability to understand the relationships between interconnected stakeholders, as a distinctive trait of conscious leaders. Successful economic developers embody this trait, inherently understanding the underlying systems that make their community successful better than anyone else.
While economic developers are uniquely positioned to understand the interconnected dynamics of their community and should embrace this leadership role, they cannot work in a vacuum. Engaging other conscious leaders in the community will propel your economic development efforts forward. For example, Columbus 2020 collaborates with The Columbus Partnership, a non-profit, membership-based CEO organization of more than 65 CEOs from Columbus’ top businesses and institutions that serve as thought leaders, strategically considering how to improve the economic vitality of the region.
Takeaway: Convene the conscious leaders in your community. As an economic developer, you have community connections that few others do. Convene your top leaders and provide them with specific actions they can take to positively impact your community’s economic growth and prosperity.
TENET 4: CONSCIOUS CULTURE
Organizations with a conscious culture have the ability to align all stakeholders around common beliefs, values, and purpose. Whether identifying target industries or prioritizing strategic goals, one of the first steps in Avalanche’s planning process is uncovering a community’s core values. This provides a touchstone for making decisions even as communities adapt to the ever-changing competitive landscape.
Organizations with a conscious culture also apply this practice to their management style. Managing teams with a focus on empowerment and collaboration rather than a top-down, hierarchical approach ultimately results in more innovative, agile, and competitive organizations. This is critical when taking a collective impact approach to implementing community-wide strategies, which require a high level of empowerment, collaboration, and trust among the various entities that assemble to take action.
For example, we worked with the Atlanta Regional Commission to develop their CATLYST Strategy using elements of conscious culture and management. A core value for the Atlanta region is inclusion, and their vision is to be a region that works for everyone by empowering economic mobility. Using a collective impact approach, diverse teams will take on initiatives that address interrelated topics like affordability, talent, transit, and economic growth to move Atlanta toward its vision of being a region that works for everyone.
Takeaway: Work with your organization and stakeholders to identify your community’s vision and core values. Put this in writing and use as a touchstone for making decisions about new programs and initiatives. Use a conscious management approach of empowerment and collaboration when implementing new programs to leverage the collective impact of your stakeholders.
Applying the tenets of Conscious Capitalism to your own economic development programs and galvanizing the conscious leaders that exist in your community will allow you to facilitate stronger, more inclusive collaboration and find win-win solutions to propel your economy forward, ultimately making it a more prosperous place for all residents and businesses.