There's a common view of business today that says for-profit organizations neither can nor should have any higher goal than maximizing the bottom line and shareholder value. Everything else -- people, organizations, assets -- are just items to be used in service of that goal. Raj Sisodia and Michael Gelb offer a wildly different take on that topic in their book The Healing Organization. In their view, businesses should prioritize the alleviating of suffering and the elevation of joy, and serve every stakeholder -- from employees and clients to the planet itself. In this episode of Rule Breaker Investing, host and Motley Fool co-founder David Gardner has invited Gelb and Sisodia to talk about why they see business as a powerful tool for making the world better.
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This video was recorded on Oct. 22, 2019.
David Gardner: Last week, I aimed to give you my route understanding of Conscious Capitalism, sharing a talk I gave to Europe, where I tried to combine both Conscious Capitalism's fundamental framework together with practical tips and coaching for how to improve your business and improve your stock-picking by recognizing such businesses. Well, this week, I'm going to take it one step further.
Conscious Capitalism as a framework should now be well known to you, to any fellow Fool worldwide who's spent almost any time listening to this podcast, most particularly last week. But my guest authors this week, Raj Sisodia and Michael Gelb, are here to challenge us further, think harder, reach higher. They say that business -- yours, mine, the ones we're working on, the ones we're investing in -- should be -- you ready? -- sources of healing. That's right, businesses of every kind, sources of healing. Healing Organizations, this week on Rule Breaker Investing.
Welcome back to Rule Breaker Investing! Well, as I mentioned at the top, I'm joined by two authors this week, co-authors of the book The Healing Organization, my friends, Raj Sisodia and Michael Gelb. Both gentlemen, both deep thinkers about business, successful doers of business, who advocate business may well be the very best source of healing available to us in the world today. Business done right, of course.
Well, I have the pleasure of being joined in studio by Raj Sisodia, and over Zoom Audio, by Michael Gelb. Raj, Michael, welcome! Raj, great to have you in studio, and Michael over the phone. Raj, I'm going to go to you first. I want to start with the question of a skeptic. Now, I'm not a skeptic, for the record, but I can imagine more than a few of my listeners from around the world might be. So, Raj, how can it be that business could be a source of healing in the world?
Raj Sisodia: There's a lot of hard boiled eggs out there who feel they have to be skeptical and cynical about this. I could almost turn around and say, why do you assume that business should be a source of suffering? How did that become OK? But I think, if you think about business and the role of business in a free market society, governments are not supposed to take care of our needs. We create the conditions in which businesses bring up sensing and meeting our needs. So, we have the opportunity, but also then the responsibility of taking care of each other through that mechanism of the free market. When we serve each other, and we take care of each other's real needs, that is actually a healing act, if we lead from that energy of actually wanting to take care of each other. I think business is the greatest invention that we've created for us to care for each other at scale. We have to keep that energy in the forefront.
However, if we use other people, and view them as a way for us to achieve our personal goals, then we end up using them and probably causing suffering, even though we were not intending to do so.
Gardner: You even say at the end of the book, Raj, quote, "Now more than ever, the purpose of business must be to alleviate suffering and elevate joy by serving the needs of all stakeholders, including employees, customers, communities, and the environment." So you're really going strong toward, the purpose of business is to do those things.
Sisodia: Yeah, I believe business is fundamentally about healing because it's fundamentally about meeting people's real needs and taking care of people. When you meet somebody's real need in any area that you choose, you're healing them in that dimension. I think if all of us do that in all the myriad ways in which we run our businesses and the things that we do, we're engaging in these small acts of healing all the time when we do it that way. That's going to result in tremendous alleviation of suffering.
Unnecessary suffering is what this book is about removing. There is a kind of suffering that can be noble, from which we grow. We can't remove all suffering from the world, obviously. But there's a lot of suffering that is unnecessary, and is us inflicting it on each other, or even on ourselves, from ignorance, from a lower consciousness way of thinking.
Gardner: We're definitely going to go toward some stories, some of your favorite stories from the book that illustrate this for our listeners. But, Michael, let me welcome you in now. You both quote Dickens from A Tale of Two Cities early in the book to talk about our age, and which path we will take. Because I never get to quote Dickens enough on this podcast, I'm going to requote those famous lines that you have educed in your book. I quote, "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness [...] it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way."
Michael, you and Raj are saying that business is both the cause and the solution of all the world's problems.
Michael Gelb: Yes. Maybe not so much even the cause as the exacerbator, but also the solution. We quote Dickens, and in the book we also quote the great philosopher Homer -- not the Greek Homer, but actual Homer Simpson. One of the great Fools of all time. [laughs] Homer says, "Alcohol, the cause and solution of all the world's problems." And he's funny, but he doesn't have it quite right. It is effectively business that, if it doesn't cause problems like obesity, or the opioid epidemic, or gun violence, or massive numbers of our citizens who are incarcerated, or suicide rates in the United States of America being up 30% in the last 20 years, it certainly exacerbates those problems. And, it can also heal those problems, heal those issues, by focusing purpose on something beyond just short-term self-aggrandizement, focusing beyond just the doctrine of shareholder value being the supreme guiding principle. We're all obviously tuned into the fact that the Business Roundtable recently publicly recognized that there must be a better way. The Healing Organization goes into what that better way really can be.
Gardner: I guess using a word like healing, which you gentlemen both do unabashedly -- in fact, as Raj just said, what, is the purpose of business then to cause suffering? We are here to heal. I can accept that. It does imply that something is broken, that something is wounded, that something needs healing. Now, Michael, you just mentioned a number of bad things that have happened and do happen today in our world. Business, as you say, is at least exacerbating them. Whether or not, in some cases, it might be causing them is a secondary point and not that important. But is it a natural state of humanity to be broken, to be wounded? And therefore, does business rush in to heal?
Gelb: This is the point of the wonderful Dickens quote that we shared earlier, which is that business has uplifted humanity, even unconscious capitalism. We look at the last 250 years, the world is more prosperous. There are 250,000 people being lifted out of material poverty every single day.
Gelb: This is largely attributable to the effect of capitalism. As Raj said earlier, this might be humanity's greatest idea, the idea that freedom and the rule of law and opportunity leads to prosperity. That's the genius of Adam Smith in the Wealth of Nations. But as Raj and I emphasize, Smith also wrote the Theory of Moral Sentiments. That's the side of capitalism that is empathic, that's oriented toward its core purpose, which is healing. When we say healing, let's define what we're talking about. The word healing means to restore to wholeness. Who doesn't want that? [laughs] When business takes the view of concern for all its stakeholders, when we consider our communities, when we consider our employees, when we consider our customers, when we consider the environment, what Raj and others have demonstrated and freely provided the data, we're going to return more to our shareholders. That's holistic. That's healing. That's an integrative approach, a wiser approach. And that's also what Adam Smith had in mind.
Gardner: Really well put. I have to admit, I think I've read a little bit of The Wealth of Nations, but I've definitely not read... it was The Theory of Moral Sentiment?
Sisodia: Yeah, that came 17 years prior. That expressed the human need to care. One of the ways I phrase it is that capitalism had a mother and a father, and they were both Adam Smith. He articulated that father energy in The Wealth of Nations, which was about achievement, about freedom, about striving, about success. And he talked about our need to care, which is the mother energy. As we often do in life, we ignore that, or we take it for granted. We strive to succeed in the world, and achieve that definition of success. Therefore we have ignored -- we write in the book how capitalism and democracy evolved in the U.S. in a very hyper-masculine way. Each was missing that feminine energy, which is such an essential part of being human. But we have suppressed women and we have suppressed feminine energy for almost all of human history and just about every civilization, with a few exceptions. That has caused enormous suffering. That is what has caused us to use each other, exploit each other, hurt each other, enslave each other, damage each other, in a hugely destructive way. Human history is one war after another.
Gardner: I really appreciate that point, Raj, and Michael. I read the book The Empathic Civilization by Jeremy Rifkin. He traces empathy -- if that were a stock, he shows the graph over time, and it kind of looks like the stock market itself. It starts in the lower left corner centuries ago, and it goes high up and to the upper right corner today. Now, we're not all the way up that journey, but it is a reminder that, I think things today are better in many ways than they've ever been before. And it's in part for that reason, Raj, that our consciousness is now at a higher level, and we can start looking higher than we ever could have dreamed a century ago.
Sisodia: Yeah, absolutely. And the more we become conscious of that, the more, actually, we can accelerate on that journey. For most of human history, most human beings have lived on the edge of survival. When you're there, you can't really think about the long term, you really can't think about the impact on others, because you're operating in that survival mode. But I think more and more of us, partly and maybe largely due to the rise of capitalism, are now able to think about life in a deeper, richer, more fully human way. I think we can aspire to so much more. That's really what our movement -- as you well know, you're on the board of Conscious Capitalism and have been there nearly since the beginning -- that's what that movement is about. And this, I think, for both Michael and I, is a logical progression of that way of thinking. How do we take it even beyond what we've talked about as the pillars of Conscious Capitalism, this idea of healing?
Gardner: Alright, I'm about to ask you each your favorite story, because your book, The Healing Organization, which is just out in the last month. Your book is full of stories. Stories of transformation and healing, large companies, small, from every industry. One story after another. I know you're both wonderful storytellers so I'm going to ask you to be disciplined and think of your favorite story that you'd like to share.
Michael, I'm going to ask you to go first, especially because I know you are off to the Italian Embassy very shortly so you'll be dropping out of our podcast shortly. So that might be your last hurrah. But before we go to your favorite story, Michael, I do want to just briefly ask Raj -- this is something you've poked some fun at over the years. Maybe not fun, you're fairly serious. But at one point in the book, you do take a jab at a very influential author that I think most of us regard as a very good man. Probably you, too. But maybe he's been missing something. I'm thinking of Jim Collins, author of many works, but in particular here Good to Great. You have the gall to subtitle a section in your book, and it reads this, "Good to Great Isn't Either." Raj, please explain.
Sisodia: [laughs] Well, as you said, Jim Collins obviously is a good man. He's done some wonderful work. I particularly admire Built to Last, the book that he wrote prior to Good to Great, which was about companies that indeed last, they stand the test of time. And they indeed had many of the qualities of what we call conscious companies. They had a purpose, they had a social conscience, and they sustained their performance over time. But Good to Great to me was a step backwards. First of all, the definition of greatness was purely financial. If I recall, the criteria were companies that, after a period of average performance, where they match the market, they enter into an extended period of outperformance by at least three to one over at least a 14-year period.
Gardner: Which we don't mind at all as investors on the show.
Sisodia: Of course.
Gardner: We love to find these companies, although we'd like to hold them maybe for longer than that.
Sisodia: Right. But you also want to look at, how are they making the money? It's not just about the outcomes. 11 companies made the cut based upon those two criteria. That included some great companies, of course, but it also included Circuit City, which has gone now. Near the end, I think they did a whole bunch of very unconscious things, like fire all their employees who were making anything above minimum wage in the stores, just so they could cut costs, regardless of performance. Nobody really misses Circuit City today. They had Walgreens in there, which is fine, but, again, nothing that appeals in terms of, what are they doing that's so extraordinary? But also Philip Morris. The world's largest tobacco company was cited as a great company because, obviously, they were financially successful in that time period. But we have to say, is the world a better place because of that company? When we look at the fact that six million people will die this year, the numbers from some years ago, maybe a billion people will die this century, and lifespan decreases by 15 years, and public health systems spend hundreds of billions of dollars every year dealing with the consequences of tobacco -- that's your impact on the world. So, when we talk about greatness purely in terms of financial impact, we are ignoring all of the other impacts. So, we say, what is true greatness? It's a company that enhances our well-being in multiple dimensions, the world is a better place for it. So, that is my main criticism of that book, is how do you define greatness?
And this word greatness, I think, has become corrupted. Because I think in order to be great, you must first be good. And I think we lost that. We put goodness over here, and we put greatness on the other side. And somehow, greatness seems to appeal to this idea of winning, being No. 1, right? It seems to address the ego and the insatiable thirst for power and influence and money. And if you look at human history, and all the empires and all the emperors who wanted to be called the Great, right, that was their driving motivation, because they wanted to be more powerful than anybody else, and the way they achieved that was through enormous suffering, through wars, through conquest, through killing people. And ultimately, all of that had no lasting legacy beyond the suffering, because those things fall apart as soon as that emperor dies. So I think this idea of greatness is a trap. I think we should aspire to goodness. The more good we can do, I think that should be the definition of greatness.
Gardner: Thank you! That was so eloquent. Now, we have Michael for about five minutes more. We'll see. Michael, I want to give you an opportunity to share in approximately five minutes your favorite story told in The Healing Organization.
Gelb: I'd be delighted to do that. I'd also like to add to what Raj just shared about goodness, the importance of goodness -- because we have a lot of people who engage in this wonderful podcast, are really interested in investing, and they like to do good, and they're ethical, and they think of themselves as good people. We all want to get a good return on our actual investments. It's really important to emphasize that the companies that Raj and his co-authors highlighted in Firms of Endearment have outperformed the good to great companies in Jim Collins' book. So, purely on a financial basis, over the longer period, goodness is a better investment. That's just important to emphasize, since we have lots of investors who we're talking to.
Gardner: You bet.
Gelb: You make more money while making the world a better place. This is the real point of the book, is to help people imagine a world in which business makes human flourishing its first priority. That was Adam Smith's vision. That's the vision of Conscious Capitalism. That's the vision of The Healing Organization.
My favorite story -- I love them all. Which is your favorite child? But, the one I'll share, it's the story about Hillmann Consulting. And it's "Thank You For Poisoning My Microscope." And the name of the story comes from Chris Hillmann, the namesake of Hillmann Consulting. 30 years ago or so, he was a young engineer. He was working to assess asbestos levels in a school. And he found that they were dangerous. So, he wrote his report. And the company he was working for at the time didn't share the kinds of sentiments that we are discussing today, so he was offered a few thousand dollars to change his report. Chris said, "Wait a minute, you want me to accept money to poison schoolchildren." He said, "I quit." But, he's a person of such integrity, he felt he still had to give two weeks' notice. So, he was continuing to work for two weeks before his resignation would come into effect. And one day, he was going to look at a sample in his microscope, and fortunately, before he put his eyes on the oculars, he noticed that someone had put dispersion fluid that would have burned his eyes to punish him for not going along with the bribe.
Gelb: So, he walked out that moment, and he started Hillmann Consulting. And they do wonderful work anyway. They have a noble purpose. They make safer environments, safer buildings, they do air quality analysis, they help in the remediation of mold and other toxins, asbestos. So, over the years, just because he's a good person, he built this good company, and treated his employees really well, and gives lots of money to his community.
I began working with him and his company four years ago. I led their strategic planning program for them. We redefined their vision and their mission and their values to be consciously conscious and consciously good. And this has generated tremendous enthusiasm in the company. Chris says sales are going up because now, he does what he calls the culture sale. He tells them not just, "Here's what we do," but, "Here's why we do it. Here's our higher purpose." And they've been named one of America's great places to work. Their growth is up, their profits are up significantly.
This past strategic planning session -- I work with them every year -- Raj came in. Together, we introduced the idea of the healing organization to them, even before the book came out. And Chris stood up at the strategic planning meeting and said, "I officially proclaim that we are healing organization. We do what we do because we want to make the world a better place, and profit is part of what we do." Now, here's a guy who could just sell his company and live on a yacht for the rest of his life, but he loves the idea of helping communities, providing great employment for people, making the world a better place.
Here's what the story gets even better. The Healing Organization book comes out, and one of the people who's mentioned in it is Hillmann employee who has just opened their Northern California office. Her name is Stephanie Cesario. Stephanie wrote to me just two weeks ago, she said, "I just read The Healing Organization, and this books speaks directly to my heart." She said, "I just took over our Northern California office, and I was on my way to a meeting with a client." She said, "I really had to step over the bodies of all the homeless people on my way to the meeting. And I just felt in the depths of my conscience that this is not OK, and that Hillmann Consulting is going to lead the way with a consortium of other businesses to help transform and heal this problem in our community." So, here's somebody who's already conscious, aspiring to healing, and then taking it to the next level.
And there's a whole stream of stories and people who are already good people, already want to be conscious, already want to make the world a better place, but they need to know that they're not alone. They need to know that there's a playbook, that there's guidance, that there's a positive examples, and that's why Hillmann's my favorite story. Just, good people doing great things.
Gardner: Michael, thank you for sharing that! I'm going to bid you adieu. Would you like to tell our audience what you're about to do later this evening? We're taping, by the way, on Tuesday, the 22nd of October.
Gelb: In honor of the 500-year life of Leonardo da Vinci, 500 years ago that he lived, my wife Deborah, who's a world class mezzo-soprano, and I are going to be celebrating this at the Italian Embassy. I'm going to speak about how to think like Leonardo da Vinci, seven steps to genius every day. Deborah is going to sing. And then we're going to drink some great Italian wine. [laughs] It'll be a fabulous event. It's so great to be with you. Ciao! Arrivederci! See you soon!
Gardner: Thank you, Michael!
That's one of the better exits ever made from this podcast. We're always poorer for any exit, but we're very rich, Raj, to have you throughout the rest of this conversation. So, let me now turn to you. I'm not going to say you're going to top Michael's effort, because that's probably hard, and you guys are healers, not competitors, are you?
Sisodia: [laughs] No.
Gardner: Raj, what is your favorite story from The Healing Organization?
Sisodia: My test of a great story, and this happened numerous times in this book, is the one that moves you to tears. Tears of empathy, but ultimately tears of joy. And there were many such stories in this book, from an electric utility in Detroit to a bakery in Yonkers to a call center company called Appletree Answers, and many, many others.
But I would have to say the one that touched me most deeply is called Jaipur Rugs. This is a company that is based in the city of Jaipur in India. It was started by a man named Nand Kishore Chaudhary, who is now known as the Gandhi of the carpet industry. And the reason he got into this business was, he understood that the people who produced these beautiful carpets -- this is an ancient art form that has been handed down from generation to generation, but in India, many things happen in different costs, right? It's a hereditary kind of an occupation. There's a weaver class, and people are born into that. And most of these carpets, because they require such fine work, are made by women. I would say 80% to 90% of the workers are women. Unfortunately, this is one of those castes that is considered untouchable. And this is one of the worst things about India, which is this idea that some people are born into a life where they are going to be regarded by other people as being untouchable -- in other words, other people would feel themselves to be soiled just to touch them. Some people feel soiled even to just look at them. Imagine what that kind of existence is. And in the past, there was no way out of that. Today, there are more opportunities, fortunately, in India for people to get out of that; but it has been and still remains for many people a constraint, and it's sort of a prison that they cannot escape.
So, imagine now being born a girl into an untouchable family. So you're now the lowest of the low in that society, because the boys get fed first, they get educated, if at all. If there's anything left over, then the girls are able to eat and get nutrition and get some education. But often that doesn't happen. And so they are deprived on both those fronts. And then soon, at an early age, instead of going to school, they end up looking after their siblings, and they end up helping with housework. When they are in their early teens, they start having to make carpets. They're put to work. And then a few years later, they're married in an arranged marriage to another weaver family, where they're expected to do all of those things and have children, right, and cook and clean for the household, as I said, and continue to make carpets and bring in income.
Well, they find themselves exploited by the contractors who bring in these contracts. They bring the design and they bring the yarn and say, "OK, we need within 90 days for this carpet to be made. This is what we're going to pay you." And then at the end of that period, they may or may not pay them, or they don't pay them on time, or they will subtract a large amount of that money by just pointing out one or two blemishes in the carpet. There's other forms of abuse as well that those women are subjected. So, their lives are pretty hellish.
Gardner: It sounds as if there could be some healing.
Sisodia: Yeah, I mean, their life is just unending suffering. Nand Kishore Chaudhary says, "These women are the innocents. They have never hurt anybody and they have never asked for anything from anybody. All they do is work and they serve. And I want to serve them, and I want to make their lives better." So he created a company where the first priority is the wellbeing of the weavers, and making sure that not only are they paid well, they are paid on time, but they're treated with respect and dignity, and they are given a hand up. They are educated. There's a foundation that actually gives literacy, reading, writing, arithmetic, and even basic accounting skills. And they try to make them into somewhat entrepreneurial, not just weavers, but actually they can take charge of a loom, they can hire other women, they can expand their work within the context of this company.
I met one of these women. Her name is Chanti. She' probably about 55 years old but she's been doing this for 40 years, probably, at this point. She's been involved with this company for the last 10 or so years. And before that, her life was what I just described. She had five children, she almost came on the verge of starvation, she was abused many times, she had to sell her own jewelry, sometimes, to pay her workers because the contractors didn't pay her. And then she was discovered by Jaipur Rugs, and she became part of that family. And if you look at her today, her life has completely transformed. When I met her last July, she said, "If you met me some years ago, I would not even be able to look at you. I would be sitting on the floor with my head covered." And today, she walked up to me, and she shook my hand, and said, "How are you?" in English. I was told that Paul Polman, the CEO of Unilever, had been in her home a few weeks prior, and she had cooked a meal, and he sat down on the floor and ate with her family. That's how far she has come. And now she runs four looms, and there are 20 women who work with her. She has five children, four girls and a boy. The oldest has already graduated from college. The second one is in 11th, there's one in 10th, one in the ninth. The youngest is a boy who is in seventh grade. So, there are five kids from this formerly illiterate woman who are now going to graduate from college. And her life and the life of her children and their children has been transformed because this company saw this need for healing.
And I asked her, "How do you feel about Mr. Chaudhary?" They call him Bhaisahab, older brother. And she couldn't talk for a few minutes. She just started crying. And she said, "I don't even have words." She said, "He is to me much more than my mother and father because he gave me life. To me he is God. Before I met him, I didn't have a life. I was just trying to exist and it was suffering all the time. And now I actually have a life which is filled with joy and laughter and lightness."
So that is the power of a healing business. Another 40,000 women working and making carpets in this company. Their lives are transformed, and therefore, their families and their children's lives are transformed. To me, that was the most moving example.
And these are for-profit businesses. We were very careful, even though healing organization can be a nonprofit too. But we wanted to emphasize that business can do this. You don't have to start a nonprofit to be a force of healing. Too often our nonprofits are there to clean up the mess left behind by businesses. If all businesses operated as healing organizations, we wouldn't need most of the nonprofits that exist out there. They're there to deal with the consequences of how we work.
Gardner: What a wonderful and moving example! Again, your book has many stories, so it really gives it short shrift. We're just a podcast, so I can only fit so much. But, short shrift, just to allow you and Michael each to tell your favorite story.
Before we press on, Raj, you and I last week were at the Conscious Capitalism summit, once again in Austin, Texas. I was thinking of last year's summit. Not this one. The MC that was with us those several days, I think was Magatte Wade, who is a female entrepreneur born in Senegal, and she started the whole summit by saying, "For a lot of you, capitalism might be a way to make money. But for someone like me, who was born in Senegal, capitalism was my only hope." So for a lot of people, I think Jaipur Rugs is another good example, it's actually their only hope. And often in the developed world, we take for granted that just businesses are around, and some of them are good, and some of them are bad. But in lots of places in the world, maybe the majority of the world today, Raj, it would be a small miracle for a good, healing organization that is a for-profit entity to show up and save people.
Sisodia: Yes, it is, because businesses don't have as prominent a role in many societies. And many of them are further behind in consciousness as well. They're kind of emulating the old American model of business, which was shareholder value or profit-centered and short-term in nature, very financially oriented and very short-term. One of the interesting things about a place like India is that there's a lot of ancient wisdom that a lot of people have become disconnected from, but if you go back -- and that's true not only for the Indian tradition, but many traditions around the world -- those lessons about how we should think about leadership, how we think about work, how we think about business, all of those actually do exist in many wisdom traditions. That was brought home to me when I wrote my book, Firms of Endearment. One of my professors in Bombay, who I gave it to, once he read it, he said, "I'm really enjoying your book, but as I read it, I realize it's nothing new." I said, "What do you mean? For me, this was radically different from everything I've been taught in business school." And he said, "Yeah, everything you're writing here was written 4,000 years ago. It's all there in the Gita." The Gita is one of India's ancient sacred texts. I had never read that. Nobody ever told me to read the Gita. I had no connection to the ancient wisdom. So after that, I started to read not only the Gita, but also wisdom from other traditions, the Judaic tradition, the Sufi tradition, the Buddhist tradition, Christian tradition, etc. There's a lot there that we've detached from or we have compartmentalized. We say, "That applies to your home life, and this applies to your work life." I think it's all one life. I mean to bring the same principles and the same ethics to bear in both aspects of life.
Gardner: So, Raj, in the final phase of our interview, I'm sure a lot of us now have been moved, I hope, maybe had our consciousness raised a little bit by the time we've spent together. But we might still be wondering, what exactly is a healing organization, the title of your book? There are three core principles of healing organizations. I want to make sure that we cover each. So, maybe five minutes or so, give me some storytelling and some thinking, maybe ways to think better for my own business for each of these.
So the first one, and I'm just going to the book, very simple, core principle No. 1 of being a healing organization, "assume the moral responsibility to prevent and alleviate unnecessary suffering."
Sisodia: Yes. I think this is key. And one of the ways I've started to phrase it now, it's not in the book, but the language that I'm using now is that there are two things that are hiding or hidden or locked away in the corporate closet, that are not allowed to come into the open. The first is unexpressed love and care. We human beings, as we talked earlier, have a need to care. It is as powerful as our drive for self-interest. Any parent can identify with that, but even otherwise, we can identify with that. There are things that we are willing to sacrifice and take great risks for. We are wired to care. Unfortunately, most business places are not hospitable to that. They essentially want us to put on our mask and armor and come to work and go to battle and win in the marketplace. We think about business almost like a jungle or a warfare. All of our language is suffused with that. So, people don't feel like they have permission to actually show caring. Somehow that is seen as a sign of weakness. So there's all this pent up desire for human beings to express their care. And organizations can either amplify that or suppress that, and most of them suppress that. The way I think about it is, that love that is not expressed is like a check that is never cashed. It doesn't do any good for anybody. It needs to find expression. That's been locked away.
The other thing that's locked away is silent suffering. If we could put a thought bubble over the head of everybody that we have in our offices and really understand what's going on in their lives, what their challenges that they are dealing with -- they might have a mother with Alzheimer's, they might have a child addicted to opioids. There's a million different things that people struggle with. Life is difficult in and of itself. And then, on top of that, we, in most workplaces, create environments where people are subjected to enormous stress. Heart attacks are higher on Mondays. 120,000 Americans die every year due to work-related stress. 17,000 Chinese die every day because of overwork.
Campbell: You said heart attacks appear most frequently on Mondays?
Sisodia: Yes, it's about 20% higher on Mondays. Life is difficult enough, and then we add to it. So there's all this suffering. So silent suffering and unexpressed love are both locked away in the corporate closet. I think what we need to do as leaders is to open that and allow that love to bloom and to serve as a balm on to that suffering. That's going to heal both the giver and the receiver. And in some cases, I might be the giver, you might be the receiver. And for something else, it might be the opposite. People heal when they receive that and people heal when they give that and people heal when they observe that in somebody else. One of our speakers was Ramón, he talked about the poverty alleviation program that FIFCO did in Costa Rica --
Gardner: Ramón Mendiola at last week's summit. He was a keynote speaker.
Sisodia: Yeah. They found out that a certain percentage of the people, despite being well paid by Costa Rican [...] are still living in extreme poverty, and they decided they're going to not rest until each and every family was lifted out of that. So about 3.5% of the people were directly impacted by that, but 97% of people observe that. And their engagement scores went up by about 12% in one year. Gallup had never seen such an increase. But people really saw what this company stood for.
So what you do is you create the conditions in which suffering not only is OK for people to share, but then, so is your ability to do something about it. Those forces, in a way, are liberated. And it's almost like the leader creates the conditions. It's not like the leader has to solve all of those problems. We create the conditions where people are going to do that for each other, and the company can engage its creative efforts in order to alleviate more and more suffering over time. And when you do that, you replace suffering with joy. You alleviate the suffering and you elevate joy. I think that's ultimately what this is about.
Gardner: Mm, yeah. Ramón Mendiola. His company is FIFCO. It's a Costa Rican company. And as you mentioned, Raj, his consciousness is raised to such a level that he decided, "We shouldn't have anybody at this company who is in extreme poverty." And somewhere, as you mentioned, 3.5% -- he told a great story of healing, frankly, at last week's summit, and there were many others. And a lot of them featured in your book, as Ramon is as well. Thank you for covering that first core principle, Raj!
The second core principle that you and Michael put out for healing organizations, this one I'm going to have a little bit of a bone to pick with, but I think we'll both understand each other. You assert that core principle No. 2 is, recognize that employees are your first stakeholders. I read that, and I have to admit, I walk around our office often saying, "All of our stakeholders matter," so in the end, it's a bunch of ties going to this or that. But I always think that the purpose of a business is to serve customers, otherwise the business wouldn't exist. So I would have said that customers first. I realize a lot of employee abuse can happen if you have a customer purely first mentality. But anyway, Raj, just to get back to your principal, you say recognize that employees are your first stakeholders.
Sisodia: This is a debate we often have in Conscious Capitalism. Of course, all stakeholders matter. I like the way Doug Racuh frames it in terms of customers and employees, most people would put those two up near the top.
Gardner: The former president of Trader Joe's, Dough Rauch.
Sisodia: Yes, who was our CEO of Conscious Capitalism Inc. for a number of years. And he said, they're like the wings of a bird. Customers and employees are like the wings of a bird. Without one of those wings, you don't fly very well. But I think what we mean here is that healing needs to begin at home. You can't give what you don't have. If you're not focusing on the wellbeing of the people whose lives are most greatly impacted, and who have the most invested -- more than investors, actually, employees have a lot more invested in the company, right? They're spending most of their waking hours there. They are being impacted physically, mentally, emotionally, spiritually, and socially by what goes on at work. Not only are they being impacted, their children are being impacted, their relationships are being impacted. All of that is a consequence of the experience that they have at work. And unless we heal that, everything else that we may try to do -- we may try to do wonderful things for customers. I think there are many companies where I would say there's a tyranny of the customer. When we say things like, "The customer's always right." Well, I'm sorry, customers are not always right.
Gardner: I certainly agree with that.
Sisodia: We have to look at our employees, and the fact that their lives are going to be impacted so much by us, and not only that. Some of the companies that we have in the book, like JBN Consulting out of Atlanta, they not only treat the employee as an extremely important stakeholder, perhaps the most important, but also the children of those employees.
Gardner: The children of the employees, also stakeholders.
Sisodia: Also considered stakeholders. And some of these companies go as far as to have families evaluate them annually, to say, "How are we doing? How are we impacting your lives?"
Gardner: Wow, I love that idea!
Sisodia: There's another company called Menlo Innovations in Ann Arbor, Michigan, which also is all about joy. They started a practice some years ago somewhat accidentally of not only allowing people to bring their babies to work, but actually making that a practice. I saw 26 babies have grown up in that office. It's created a workplace of joy.
So I think that's the spirit in which we say that. Not to denigrate other stakeholders, but to say that healing must begin at home. And if you don't do that, nothing else ultimately will be truly able to heal, because you're going to ask people to give something they don't have. You need to make sure that they're OK. You have to fill your cup before you can start filling other cups.
Gardner: Yeah, put on your oxygen mask first. I understand. I certainly get that. It is also true, for most businesses, not every, but the vast majority, you're paying your employees far more than any single customer is paying you. So, if you do the math of it, it probably makes sense. I like Doug Rauch's two wings of a bird anyway, because they count for almost everything together. But that would itself be a misnomer, right, Raj? Because it's not just two stakeholder groups. It's your partners and suppliers, it's the Earth in some cases, or your community.
Sisodia: Yeah, and I think communities, the planet, the environment, that's becoming really more and more urgent now as a stakeholder to think about. I've actually also started saying society is the ultimate stakeholder. We have to be on the right side of society. We cannot be adding to the problems in the world, we need to be part of the solution. Every single business needs to be part of alleviating challenges that we face at a societal level as well. And when we do it in our micro context at work, but we also have interfaces in multiple ways with communities and with society, and we need to make sure that we're having a positive impact. And I talk about having business be done with a spectrum of positive effects, because we create or we can destroy at least eight kinds of wealth through our businesses. And traditional businesses have always said, "We're about profit maximization, and everything else therefore is a side effect." And unfortunately, side effects tend to be negative. And what we say is, there's no such thing called a side effect. You do things, and these are the effects. And just because you put fine print or say it really fast doesn't make it less important. It could be the most significant outcome from your action. We do things and there are effects. Can we do business with a spectrum of positive effects? Can we create financial, intellectual, social, emotional, spiritual, physical, ecological and cultural wellbeing through our business? And it can be done. We know that it's possible because it does exist. There are companies doing it.
Gardner: And you do a great job of highlighting them in The Healing Organization. Well, the third and final core principle, and I feel like you don't have to speak to this one as long because I feel like the whole hour or so has been about this, but your third and final core principle to be a healing organization is, and I quote, "Define, communicate, and live by a Healing Purpose."
Sisodia: Yes. And I think this is now what gets to the external world. We talked about treating employees and making sure you're a place of healing. The way we say it is that your business should be a place of healing for those who work there. It should be a source of healing for those it serves. Customers, communities, and others. And it should be a force for healing in society. This is really getting at the idea that this is a source of healing, that our purpose itself for all the stakeholders that it impacts -- primarily customers, but others as well -- is actually going to be a healing purpose. And this actually is the origin of this book. I was using healing, the word healing, as an acronym for the qualities of a great purpose, which are Heroic, Evolving, Aligning, Loving, Inspiring, Natural, and Galvanizing. Now, I think we've changed that a little bit. We've changed galvanizing into grounded, right, etc. But it's essentially similar. So, those are the qualities of a great purpose. And then, as I thought about it deeper, I said, "Actually, that is more than just an acronym for the qualities of a great purpose. That actually is the reason for the business to exist internally and externally, to be a force of healing and a source of healing and a place of healing."
Gardner: Wonderful! Raj, can you repeat -- I know you love acronyms. This is just one example. You have many in your books. They're mnemonics, right? It helps us remember, helps you remember. Could you say each of those seven words? Grounded being the final one, in the book anyway, although galvanizing is great, too. Just so my listeners can hear those seven again in order.
Sisodia: Yes. So the first is Heroic. Every great purpose is a heroic purpose, is trying to do something that is not easy to do, but is important and is worth doing. It Evolves. It evolves as the world changes, as society changes, as the business evolves, the purpose can also evolve. And the third is Actionable. So the purpose is not just pretty words on a wall, but actually has consequences in terms of how we make decisions and what we do daily. The fourth is Loving. The purpose has to be rooted in love and care for people but beyond that, for the planet, for all living things on this planet. It is Inspiring. That's one of the most critical elements. When you have a purpose that's inspiring, it actually then aligns all of the stakeholders together. Now you're no longer literally operating at cross-purposes, because you have a shared purpose, so, inspiring everybody. Everybody connected to that business. So when you're Whole Foods, your suppliers believe in what you're trying to do, which is to educate people about what they put into their body makes a difference to their health and the health of the food system and the health of the planet. Your customers obviously come to you for that. Your employees are passionate about that. That's why they choose to work there. Investors put money into that company, because they want to see that happen and they want people's lives to be improved in that way. Etc. So everybody is now on the same side of the table. You have a shared purpose. If you don't have that, you're literally at cross-purposes, because you're now saying investors care about maximum profit, employees therefore care about maximum pay and minimum work, customers care about lowest price, suppliers care about highest margin, society wants highest taxes. Everybody becomes a taker when you don't have that inspiring purpose.
Then it's Natural. It's in harmony with nature and it is natural for this business to have that purpose. It is not out of left field. It's not saying, "We're a bank, and we're about the forests," or whatever it might be. And the last is Grounded. It's grounded in the practical realities of the marketplace that we operate in.
Gardner: I do want to put in a quick word for shareholders. At least within Conscious Capitalism, it's natural to say, "It's not about shareholder maximization," because that's maybe where we came from in so many cases. But we still want to put in a word for the importance of good returns. I think it's hard to be integrated and successful and sustainable unless you are, in fact, a profit-making enterprise.
Sisodia: Absolutely! The evidence shows that these companies actually generate, even though they are not profit maximizing, that's not their objective function, that's not what they're about. They're trying to achieve their purpose and do it in a way that includes all of the stakeholders and their wellbeing. These companies are actually more successful and they're more profitable. And the way I say it is that profit is a social good, and it is socially irresponsible not to be profitable, because a free society doesn't function without corporate profits. Governments don't create wealth. They can only tax and spend the wealth created by private enterprise. Therefore, if we don't have profitable businesses, we don't have infrastructure, we don't have public education, public health, whatever we care about collectively in society, that doesn't happen unless businesses make profits. And conscious businesses make very healthy profits. But it matters how you make the money.
Gardner: It sure does, not just for companies, but every single person in life. I often ask, how did that person make their money? And it's a really important answer, whatever the answer is.
Another analogy I just want to throw out there before a special closing moment for this podcast is the analogy to people who are after happiness, and whenever you hear somebody's trying to be happy, it's unlikely that they find it in most cases. It's instead by serving others, adding meaning by adding value to other people's lives, that's what makes us happy. It's the same thing for companies that seek profit as an end. They tend to not really find it or get it. It's when they serve a higher purpose that the profit, ironically, maximizes.
Sisodia: Yes. That's actually straight out of Viktor Frankl, Man's Search for Meaning. He said, people do want to be happy, and that's worthy, but happiness cannot be pursued, happiness ensues. It is the outcome of living a life of meaning and purpose. And that comes from doing work that matters. It comes from loving without condition, because that's who we are. That defines us. And, it comes from finding meaning in our suffering. Of course, those ideas can be directly applied. You could change the name of the book to The Corporation's Search for Meaning and you could change the word happiness to profit. The same thing applies. Profit cannot be pursued, profit ensues. It is the outcome of a business that is working toward a higher purpose, a business that is built on love and care, and a business that grows through adversity. The same exact ideas. It's one of those objectives that is best pursued obliquely, not directly.
Gardner: Thank you for reminding me of Frankl and his work, that I was unconsciously channeling that, quoting that. You're right. And that's an amazing book on its own.
Well, for anybody who's getting to know Raj Sisodia for the first time, and Michael Gelb, his co-author as well, I'm delighted to have shared them with you today. I hope that this has been, without overstating it, transformative for some of you as you think about your own business, or where you want to put your money as an investor. Raj, not just the movement itself, Conscious Capitalism, but you personally have added a lot of value to my life and to the life of The Motley Fool. I'm delighted to have somehow found you and been connected with you for 10 years. It's really a pleasure to share you with so many of my friends listening today.
I do want to mention, this is not Raj's first appearance on Rule Breaker Investing. He was, I just checked, May 2nd, 2018, talking some about Conscious Capitalism. So, if you cannot get enough of this co-author of The Healing Organization, feel free to go back into our Rule Breaker Investing archives. You can just google it and hear more from Raj.
Raj, you all close your book in the epilogue with the healing organization oath. You say, "We see this book as part of a movement to change the world of business and make it about love and healing instead of fear and survival." You go on, "If you'd like to be a part of this movement, begin by taking the healing organization oath." And that's what I'm going to do right here to end the podcast and thank you for this. I'm so delighted to be able to put my left hand on my heart, which you ask me to do here, and raise my right hand, and proclaim, and here I go,
"Primum non nocere" -- first, do no harm: I will operate my business in a way that causes no harm to others or to the Earth.
"Malus eradicare" -- root out evil: I will never enable or collude with abuse or exploitation. I will be an everyday hero who stands up for fairness, truth, beauty, integrity, and basic goodness.
"Amor vincit omnia" -- love conquers all: I will operate from love. I will measure success by the fulfillment, abundance, and joy I generate for others.
Gardner: Thank you! Thank you, Raj!
Sisodia: And you had witnesses here.
Gardner: [laughs] I had a lot of witnesses, far more than I had at my own, for example, marriage ceremony, where I swear another oath, arguably as or more important!
Sisodia: Thank you! Thank you, David! That means a lot to us!
Gardner: Thank you very much! This is available on page 235 of Raj and Michael's book, The Healing Organization. If you're moved to make it all the way through, I hope you will, you'll find that oath. And I think that the more businesses and organizations -- for-profit and non-for-profit -- that can raise their hand and say that in front of their employees or the world at large, all of their stakeholders, the better this world gets.
Raj, I want to thank you and Michael again for being with me this week on Rule Breaker Investing!
Sisodia: Thank you for having us! The world is a much better place because you and Tom started this wonderful company.
Gardner: Thank you!
Well, thank you again to Raj and to Michael for sharing their wisdom! I hope this changed how you think about business. I hope you realized you can do better, I can do better, and that's whether we're in business or whether we're investing in business, because it's all connected. I learned this from Raj -- everything is connected.
As always, people on this program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at rbi.fool.com.