THE BLOG
07/25/2013 01:18 pm ET Updated Sep 24, 2013

Conscious Capitalism and the Privacy Revolution

"The bottom line allows you to see where you've been, but not where you're going."
- Doug Rauch

What has happened to American capitalism? Somewhere along the line, it lost its luster, misplaced its meaning, became a dirty word to curse at in social circles. That's not just me pontificating here. According to a recent Gallup Poll, a mere 22 percent of Americans have confidence in big business. The annual Mood of the Nation survey reveals that 60 percent of Americans are dissatisfied with the size, power, and influence of major corporations, hardly conducive of warm, fuzzy feelings.

So where does that leave business? Taking a step back, I think lost in all the discontent is the fact that business at its core, acts as society's main value creator. Almost all forward progress in our culture has come from business. The medical profession as a business has helped keep us healthy and prolong our lives. Education as a business has guided our youth by providing the building blocks to go out into the world and achieve. Technology as a business has changed how we communicate with each other and receive and give information. The list goes on and on.

I think where business has failed is in acknowledging capitalism's evolution. Chrystia Freeland recently wrote in the New York Times, "The high-tech, globalized capitalism of the 21st century is very different from the postwar version of capitalism that performed so magnificently for the middle classes of the western world." She is right. We can make things better and more cheaply than at any time in our history. But with that comes a certain social responsibility.

Albert Wenger, a partner at Union Square Ventures, suggests that businesses need to figure out "how to distribute the benefits of progress more widely, how to live in better harmony with the environment, and how to provide affordable access to education and healthcare for all." What Wenger is touching on is an emerging paradigm known as "Conscious Capitalism."

Doug Rauch, former CEO of Trader Joe's and current CEO of Conscious Capitalism Inc., defines Conscious Capitalism as "recognition that we are interconnected and interrelated. That business at its core is a story of us." Jack Canfield, one of my company's (Sgrouples) advisory board members, describes it as building "sustainable, trusting partnerships with people and the earth, adhering to the core values of respect, integrity, and ethics." You can see the similar theme running through both of their descriptions: bettering the world at large.

With Conscious Capitalism, businesses set clear social objectives and are held accountable for those objectives. You can see examples of such behavior in major companies today such as Whole Foods, The Container Store, and Sgrouples. Whole Foods, for example, works with the Global Animal Partnership to certify its producers follow the 5-Step Animal Welfare Rating Standards. The company also forbids the use of artificial colors, flavors, and high fructose corn syrup in any of its products.

With Sgrouples, we have baked in "Privacy by Design", with a clear Privacy Bill of Rights that supports the ethical argument that law-abiding citizens' have the right to privacy regardless of how electronic this world gets. Similar to Whole Foods, it provides a standard of integrity. Only instead of banning harmful food additives, we draw a line against invasive data scraping, facial recognition, creepy tracking cookies, and message spying on the Internet. And we make money the old-fashioned way; respecting and treating our members as partners, offering them services and products that are helpful and beneficial for their lives. Even our patent-pending advertising model is revolutionary in its privacy protections.

States are getting into the act as well. In fact, Delaware recently passed a Benefit Corporation statute that provides the legal foundation for aligning businesses around social goals.

As Conscious Capitalism becomes more practice than theory, I think that the "us" that Rauch refers to will help sustain those businesses that best value each of us, outside and within an organization. I recently attended a two-day conference in San Francisco dedicated to business leaders practicing Conscious Capitalism and was encouraged by the camaraderie and sense of responsibility we collectively shared. I was inspired listening to real -life legends such as Fedele Bauccio of Bon Appetit Food Management, speaking about his decades-long crusade to build a healthy, sustainable food system in partnership with the earth. This is a core value of his enterprise (which serves more than 800 companies and 200 universities). Many of the executives present have similarly aligned their corporate cultures to make positive impacts on challenges such as hunger, unemployment, and poverty while supporting conservation and education.

I sincerely believe in capitalism as an economic concept, one that can move society forward in profound ways. Yet capitalism and by default business can't ultimately survive unless it creates value for its customers, workers, and society at large. I look forward to seeing more businesses undertake the philosophy that embraces financial profit and social/ethical responsibility, not as polar opposites, but rather as brothers in arms that together nurture and invigorate their higher purpose and success.