Kris Safarova  00:40

Welcome to the strategy skills podcast. I’m your host, Kris Safarova, and this episode is sponsored by strategy training.com and you can actually access the key insights and practical action steps from today’s discussion at firms consulting.com forward slash action. And we also prepared some gifts for you today. Number one is you can access the first episode of how to build the consulting practice level one, and you can get it at firms consulting.com forward slash build. And firms consulting is f, i, r, M, S, consulting.com forward slash build. Then we have the overall approach to well managed strategy studies, which you can download at firms consulting.com forward slash overall approach. And you can also get McKinsey and BCG win resume, which is an example of actual resume that led to offers from both of those firms, and you can get it at firms consulting.com forward slash resume, PDF. And today we have with us Raj cisodia, who holds a PhD in marketing and business policy from Columbia University, co author of conscious capitalism with John McGee of Whole Foods and as well, co author of 16 books, including everybody matters. He also has consulted major global enterprises, from Tata to at&t. Raj, welcome.

Raj Sisodia  02:12

Thank you. Kris simer, wonderful to be with you, Raj.

Kris Safarova  02:15

So you started your career as an engineer in India and ended up shaping how global business thinks about leadership with all your work over the last many, many years and continue doing so, what is the story behind that shift for you?

Raj Sisodia  02:31

Wow, yeah, that’s going back a long way. You know, I became an engineer because in those days in India, you know, you have to remember India is not back then. Was not the India like it is now, right? Which is a dynamic, fast, growing economy. In the 70s, India was kind of a semi socialist country with a very, very slow growing economy, not a lot of innovation. You know, it was highly protected. There were massive tariffs on imported products the government produced. Many of the products were, you know, industries were owned by the government, etc, etc. So there were very few opportunities. And therefore the options were quite limited. If you came out of high school, if you were good in science and biology, you tried to be a doctor, and if you I didn’t like biology, and therefore I was good in science, so and math, so I went to engineering, but I didn’t really have a passion for engineering. I would say I spent five years getting a degree, and then I started working as an engineer in Bombay, in an electrical switchgear factory. But then somebody told me that there’s a thing called MBA, and if you get an MBA, your salary would be double compared to a an engineer, and you would work in an air conditioned office, okay? Now, as an engineer, I was making about $100 a month, okay, and working in a very hot factory in Bombay, so when they said MBA would double the salary and you work in an ISA, okay, then I applied for MBA. I only worked for one month as an engineer, and then I went to I joined a business school in Bombay, and sure enough, fast forward two years, I had a job offer that was two and a half times what I was making before a nice consulting firm. But then I came down for breakfast one day and I saw a group of seven of my friends were dressed up and going somewhere in our graduate dorm in Bombay. I said, Where you guys going? We don’t have any classes today. They said we’re going to the US Information Agency to get GMAT applications, the Graduate Management Admission Test, because we want to apply for a PhD in business in the US. I said, Oh, I didn’t know you can get a PhD in business. Give me five minutes. I’ll come with you. Okay, so the irony is that I’m the only one from that group of eight that ends up coming to the US for a PhD in business. So suddenly my life changed and took a different direction, because I came down for breakfast at that moment. Now, I had lived in the US as a child for a few years. My father was working here, went back to India when I was 12, and so that just became a way for me to come back to the US. I had no dreams growing up of being a professor of marketing. I don’t know. With many children who have that dream, you know, some people dream of being a doctor or whatever, but, you know, this just became a way for me to come back to the US. And I got a full scholarship, as you mentioned at Columbia, and I got a PhD in marketing. Why marketing? Because I didn’t like finance. That was kind of my, you know, I didn’t like biology, therefore I became an engineer. I didn’t like finance, therefore I became a marketing professor, and then I started teaching as a marketing professor, and I could see, you know, all of the sort of negative ways in which we operated as businesses in the US. You know, there was, first of all, so much marketing. You know, average American gets exposed to, like, 2000 marketing messages every day, ads and coupons and junk mail, you know, coming in your mailbox every day. And and I said, What are we spending on all of this, and what are we getting for it? Is it good for the world? Good for society, good for people. And I estimated that we were spending $1 trillion 1000 billion dollars a year on ads, coupons and junk mail in the year, 2004 and that was more than the GDP of India, 1 billion people were living on much less $700 billion than what we were spending here on ads, coupons and jagmeal. So what are we getting for customers, for companies and for society? And I found that most of the effects were negative. We’re getting people to buy a lot of stuff and consume a lot so it’s stimulating the economy, but at the same time it’s making people unhappy, unhealthy, diabetic, obese. We’re using women’s bodies to sell products, so that creates eating disorders and body dysmorphia and depression among teenage girls. You know, we’re aggressively marketing junk food to children and getting them addicted to things that are not good for them. We’re doing a lot of things with that money right, which are not good for society, not good for customers, and even not good for companies. So that all of that frustration and looking at what is not working led me to ask the question, what is the better way? Is there a better way? How can we improve this? And that question ultimately led me to ask, is there a better way to think about business and marketing, right? And that led to a book called Firms of Endearment, companies that are loved by everybody. The name comes from a movie called Terms of Endearment, but this is firms, companies that are loved by everybody. Customers love them, but so do employees love them, etc. And what makes that happen? I discovered the four pillars of conscious capitalism. In that research, there’s a higher purpose to what you do. Every one of us, I’m sure you have a purpose in your life. I have a purpose in my life. Every human should have a purpose. You take care of all of your stakeholders, customers, employees, families of your employees, communities, suppliers, investors, and the planet, other species. You take care of everybody. And you have conscious leaders who care about the people and the purpose. They’re not just about money and power. And you have a caring culture so that people actually love going to work. Most people hate their jobs and they don’t look far. They say, Oh, thank God it’s Friday and I can get out of here. And Oh god, it’s Monday, you know. And so those four pillars came to define what we now call conscious capitalism, and my research showed that companies that actually practice that over time, were far more successful financially. They made more money and better shareholder returns than companies that are simply operating trying to make as much money as possible. Okay, so these companies actually are better for employees, better for customers, better for the planet, better for all they say, and they’re making more profit at the same time. It’s not a trade off to say you can either be purpose oriented or you can be profit oriented. The way to make real profit is by having a compelling purpose and taking care of everybody.

Kris Safarova  08:29

Of course. How did you end up working with John McKee?

Raj Sisodia  08:33

So in the book Firms of Endearment, I wrote about 28 companies that were, in fact operating with these principles, and Whole Foods was one of them. But I had never met John Becky. I had done all my research using publicly available, published materials, but he read the book. Somebody gave him a copy of the book even before it came out, and he reached out to me, saying, I read all the business books, and most of them, I don’t learn anything about this book I really love, and I completely agree with everything that you’re writing about, and I’d love to meet so he invited me to spend a day with him in Austin, Texas A few months after the book came out, and I did, and he showed me the story. He talked about the philosophy alive at the end of the day, we ended up in a restaurant for an Indian restaurant for dinner, and I showed him my vision. I said, John, I want to dedicate the rest of my life to this story of business, because I remember writing parts of that book and some of the stories, and I was literally crying as I wrote that book, because for the first time, my heart was opened up in my work. You know, I realized looking back, I had six years of business education, right? Two years MBA, four years PhD, it was all about the head and the wallet, right? It’s all about the numbers, the theories, the frameworks, and then everything is about the bottom line. What about the heart and the spirit in between? I was never inspired in my business education. I was never emotionally moved. And now suddenly I found myself emotionally connected. I said, Wow, business can be beautiful. So business can be loving, business can be heroic. Business can be noble, right? When you do it in this way. And so now I felt proud that I was teaching business before that, I felt almost ashamed that what I was doing was was spreading, you know, some of these negative things in the world. So I said, John, I know that for the rest of my life, this is what I want to do. I was calling it the Institute for new capitalism, or Inc, and I make an acronym about most things, you know. And he looked at it and he said, that is exactly my vision. But I like the phrase conscious capitalism, which was a phrase first used by Muhammad Yunus, the creator of the micro lending idea in Bangladesh, for which he won the Nobel Peace Prize, you know, the Grameen Bank, as it was called, you know, giving money to very poor people so that they can start a little business. And so, but he used conscious capitalism to define what we now call a social business that only has a social purpose. We were using it more broadly to say every business should be done with higher consciousness about the impact that we have on people’s lives and the impact that we could be having. It’s not just about making money, it’s about improving people’s lives and creating a better future for everybody. And so that’s how we started. We met in October of 2007 and we said, Okay, let’s try to start a movement. So we had a retreat at John’s Ranch outside of Austin, Texas in February of 2008 we invited about a dozen people for three or four days, and at the end of that, we said, Okay, let’s try to start something. And we started with a conference in Austin in October of 2008 and that was the beginning of our movement. And now it’s 17 years later, we have chapters in about 25 US cities and about 20 other countries, and it’s become a global movement where we’re trying to change and uplift. We say we want to celebrate capitalism, but we want to elevate it, because if you don’t do that, we will destroy it. We will decimate capitalism. Because many people, 62% of young Americans now from 20 page 20 to 29 feel that socialism is a better idea than capitalism, and that’s a very dangerous thing. Socialism doesn’t work. You know, it’s kind of romantic and, you know, it feels, feels like a nice thing, but actually doesn’t work. But people are frustrated with the way capitalism has been practiced. So we need to celebrate capitalism has uplifted humanity more than any other idea, but we also need to elevate it now with higher consciousness and with love and purpose so that we can do even more. If we don’t do that, then there will be revolutions like Venezuela and Cuba and Chile almost had one, and Colombia and Bolivia and so many countries are now struggling, even Mexico as a populist leader and many countries right because of the suffering is real. People are struggling. You know, tell us about that retreat, the retreat at John’s ranch. Well, it was a meeting of souls. You know that our fellow travelers, without realizing it, all of them are thinking about business differently, but they thought they were alone in the world, you know. And then you bring together other people who also are feeling that, that pain, you know, that, that absence of love and absence of meaning and absence of inspiration, right? So it became, you know, a meeting of souls. And then from that, even more than the that retreat, that first conference, was a magical, magical experience, because we had people there. It was the most uplifting and inspiring and joyful three days of my life, you know, comparable only to the birth of my children that level. It was so, so beautiful. And we had amazing people there, you know, from Sir Ken Robinson was our MC, and we had the Blue Man Group, and we had wonderful leaders and wonderful spiritual teachers and authors and, you know, activists and so forth. It was just, yeah, I still remember almost three days, it

Kris Safarova  13:50

was lovely. And then tell us a little more about what happens after the conference. So you do the retreat, it goes well. You see, there’s definitely need for this work. Then you do the conference. What next?

Raj Sisodia  14:03

So then we said, Okay, how do we now perpetuate this and systematize this? So we created two entities. We created the conscious capitalism Alliance, which was to take this idea into businesses and create a consortium of leaders who thought like this, right for them to actually support each other, but then also to bring in others. So that was the business side. And then we created the conscious capitalism Institute, which I was the head of being a professor at my university, to say, we want to spread this in academia. We also want to do more research, and we want to have cases about companies and so forth. So we have these two parallel tracks going so we had a CEO conference every October in Austin. They called it the conscious capitalism CEO Summit. And then we had a conscious capitalism. Initially it was the global academic conference, but then it just became an open conference in April in Boston, where it was open to everybody. The October conference was only open to CEOs. This was open to. Everybody. And so we did about four of those in Boston. And then we realized it wasn’t just academics, because, you know, academics weren’t so interested in the new idea because it wasn’t well known. So we started getting more businesses coming to that. So ultimately we said, Okay, we’ll just focus on getting businesses to understand and adopt this idea, right? Because, as I said, we we were not asking people to say, Forget about profit and only live for purpose. Now. We were saying, this is a better way to generate real profit, right? My research showed that these companies Firms of Endearment, even though they are not trying to maximize profit, they were actually more profitable than traditional businesses that are operating with the normal way. Right? They had outperformed the market by nine to one over a 10 year period, over the s and p5 100, right? So this was a superior way to make more financial profits and returns, even while you’re creating a positive impact on your employees, on your customers and your communities, on your suppliers and the planet. Traditional businesses, they tend to make money, but meanwhile, they have what they call side effects or externalities. They’re damaging the air, they’re damaging the water, they’re damaging the health of their employees. Their customers might be becoming, you know, unhealthy and obese, and you know, because we are feeding them junk or selling things to them aggressively that are not good for them. So you have so many negative effects to go along with your profit, that if you really try to quantify those negative effects, maybe it’s more than your profit. You might be making a billion dollars of profit, but you’re causing $3 billion of harm in the world, and nobody’s sending you a bill that does not cause any negative side effects. Because the fact is, there are no side effects. We do things and there are effects. Everything we do has effects. Can we look at all the effects and make sure they’re all positive? That’s what we try to do. And so that’s, that’s, that’s the basic behind, you know, we say that we are. Some people think conscious capitalists don’t really believe in capitalism. We really believe in capitalism. We think it’s the most powerful idea we’ve ever had. But we believe we can take it higher. There’s no, there’s nothing on this planet that cannot be made better. There’s always a better way, even capitalism, if you elevate it with higher consciousness, higher purpose, capitalism is like a tool, and it’s one of the most powerful tools we’ve invented, and the consciousness of the user determines what happens with the tool. A surgeon can use a knife to save a life, and somebody else can use it to end a life. Capitalism is an incredibly powerful tool, so the consciousness of the user determines what kind of effect we have. Same thing with AI. Now, by the way, AI is probably the next most powerful tool we’ve ever invented. How are we going to use it and with what consciousness will determine everything

Kris Safarova  17:39

I definitely want about AI, but before we go there, let’s just clarify for our listeners, how does a conscious business actually work differently from a traditional one, beyond just having only positive effect impact on supply chain?

Raj Sisodia  17:56

Well, it starts with a purpose that this business, of course, has to make profit to survive and grow. That’s that’s a given. Profits are essential for a business to be viable, and profits are like the oxygen, you know, like I need oxygen as a human. I need red blood cells to live. But I don’t dedicate my life to producing as many red blood cells as possible, right? I use that in order to do what I want to do with my life. So first thing that differentiates is that the driving energy of a conscious business is around fulfilling their purpose. What are we trying to do in this world? What kind of a Whole Foods purpose is to educate people that what you put into your body makes a difference to your health, the health of the food system and the health of the planet, right? And therefore, everything that they do is about that, if it’s nourishing the people and and the planet, right? So everything that they do Google’s purpose to organize the world’s information and make it easily accessible and usable, that has taken them from a startup to, you know, $3 trillion company today, right? So there’s something that’s very powerful about having a compelling purpose that excites people, that makes them Patagonia, is to save our planet, right, to heal Mother Earth. That gets people excited about going to work and really releases their creativity and their commitment, you know, to their to their jobs. It goes beyond that. So that’s the big difference. A conscious company operates with that clear sense of purpose, and they have what we call key purpose indicators that look at our how, to what extent, how are we achieving our purpose, and they look at every decision with the lens of saying, is this going to further our purpose in the world, or are we going to be doing something like CDs as a pharmacy chain here that is about health, right, and promoting the well being of people. But they were selling tobacco. They were selling cigarettes, and once they adopted that purpose, which is about health, then they said, Okay, how can we continue to sell cigarettes if we actually believe in our purpose? So they actually gave up $2 billion worth of revenue that they were getting from cigarettes because. They want it to be truly purposeful, right? And they want to make that up in other ways. So it starts with that purpose. The second thing is that we look at the stakeholders not as a means to an end, but an end in themselves. The well being of our employees matters to us. We treat people as my co author on everybody matters as everybody is somebody’s precious child. Every employee deserves to be treated with love and respect and dignity. So we treat the well being of our employees and their families matters to us. So we want to create not only conditions where people can be productive and thrive, but also where they can be helped healthy and happy, because we want them to be healthy and happy, not because that makes more money for us, but just because that’s why we, you know, as human beings, we want that for our fellow human beings, and we know that healthy and happy employees will then be better parents and better in their marriage, you know, and have just a better life, right? Customers, we want to make sure that our customers are not they don’t just look at them as consumers. We look at them as our friends and our neighbors. We want to improve their life, right? And not sell them stuff that is bad for them, etc. So we start to look at everything through that lens of, is it creating more well being, as I say, is it reducing suffering and bringing more joy into the world through our business for every stakeholder, right? Is it making their life better? And then leaders? You know, leaders are very different in a conscious business. Traditional business leaders are just about the numbers, right? Bottom line, share price, profitability. They get a big bonus, right? There’s their pay is tied to the share price. In conscious company, the leaders care about the people, and they care about the purpose, and they’re not in it just for power and ego and money. So these leaders tend to get paid, not as much as leaders in traditional companies, but they are very much driven by the purpose of the organization. They are more they have their own Higher Consciousness in that sense. You know, in our culture, we act like money is the most important thing in the world, and we think life is all about. Can you die with as much money as possible? You know, that’s not what life is about, you know. And conscious human beings understand that when they’re dying, they don’t say, I wish I had made a more million dollars, you know, they should say, did I? Did I live a loving life? Did I make a difference in the world, you know? And so those are conscious leaders. And then a culture where you create a culture, you know, people are excited to go to work. You know, I was in a Patagonia once on Monday morning. And normally Monday morning is, people are tired, Oh God, I have to start working again. People are excited. They’re running up the stairs, you know, because they’re they love their work, right? So what I say is Freud Sigmund. Freud, the psychologist, said something like love and work and play, what define what it means to be a human being. Okay, we’re about the giving and receiving of love. We work is important in our human life, and we like to play as well. And my question was, why can’t we combine these things? Why do we have to say love belongs at home with your family? Work is what you do here. You put on your mask and armor and you go to battle in the marketplace and play is what you do, maybe on the weekend with your friends. So why can’t we love the people we work with, love the work that we do, love our customers, and why can’t we have fun while you’re doing it? Right? So combine love and work and play. So you find that these conscious companies, they are joyful environments. You can walk into a conscious business, you will feel the excitement, the love, the positive energy. You know, everybody is just happy to be there, and they have a sense of purpose, and they feel respected and cared for. You know, there’s a high level of psychological safety and joy at the same time.

Kris Safarova  23:41

So if you and bob chapman rewrote, everybody matters today, what new challenges? Specifically, AI related technology advancement related with the address differently, yeah.

Raj Sisodia  23:54

So, I mean, we have written some of that in the 10th edition of the book, 10th year anniversary, which comes out today, actually, right? You know, so AI, as we said earlier, is a very, very powerful tool. And the question of, What can ai do for us, it’s not a neutral question. AI can do for us, what we ask AI to do for us? So it’s not like, what can ai do, but who are we being when we use AI, and what is our intention with their AI can amplify our intentions. So if I’m running a traditional business, and I think of business purely as profit driven, and there’s a very simple equation, even a fourth grader can understand profit equals revenue minus cost, right? So if I’m purely profit driven, then I say, Okay, what does that mean? I need to maximize revenue and minimize cost. What does that mean, I need to sell as much as I can. I need to charge as much as I can, whether people need it or not, whether it’s good for them or not. I figure out clever marketing and other tricks that we have right, and then I need to minimize cost. What does that mean? I pay my people as little as possible. I. I squeeze my suppliers, pay them as little as possible. I externalize whatever burden costs I can onto society, right, the environment, etc. I just minimize whatever I’m spending. Right? I view everything as a cost to be minimized. And I’ve made my profit on AI. I can use AI to say, okay, how can I sell more? How can I charge more. What can I do? Right? AI will help you figure out some of the tactics. And how can I reduce costs? How can I find more efficiencies? How can I get people to work harder? How can I track them and monitor them, you know, and just focus on efficiency. AI will help you do some of that. But meanwhile, you’re not tracking the health of your people, the well being of your people, what’s happening to their children, what’s happening to your happening to your communities, what’s happening to other species, you know, in the air and the water that you’re polluting, right? What’s happening to your suppliers when you don’t pay them well and they can’t pay their own people and they’re going on, you know, all the those things are not even factored in, because you’re not looking at them, right? So that’s AI can turbocharge an exploitative, extractive zero sum, as we say, mindset of business that says that every dollar I give to my employee is $1 that is I’m taking away from my profit. Now a conscious company knows that that is not true, and it says, Okay, how can we operate in a way that, first of all, we can look at each of the pillars, at purpose. How can we develop a purpose that really matters, how it’s very compelling, and then how can we make that purpose real for our people in every decision that we make? How can we have the purpose that matters also to not only customers, but employees and investors and suppliers and communities? How can we go deeper and further in that? How can we measure and track the fulfillment of our purpose, not only at the aggregate level, but at an individual level, for every employee, for every customer. AI gives us the possibility to do all of that, you know, and creating value at a deeper level for all of our stakeholders, and figuring out how to make it a positive sum, not a zero sum, right? How can I pay my people well? Like, if you look at Costco, you look at Trader Joe, you know, you look at Patagonia, you look at me, they pay their people very well, right? And they’re also profitable, even though Costco prices are low, Trader Joe’s prices are low. Quick Pick is another company retailer, right? How do we figure out how to do that? So for example, when Costco pays their people double of Walmart, they say, Wow, how can they afford to do that? Well, their sales per employee are three times higher. And you know, the annual employee turnover is 70% at Walmart. 70% of the people leave every year voluntarily. You have to replace Walmart. Had to replace 2 million people every year just to replace those who left voluntary. There’s a huge cost associated with Costco turnover. 7% people join, and they stay for 20 years. They never leave, and they become more and more efficient and productive, and they come up with ideas and so forth. So therefore, you start to see that it works as a different philosophy. You pay your people not as little as possible, but as much as possible, and you give them good benefits and good working conditions, and those people then create all kinds of value for customers, you know, for alternative for shareholders. So I think AI can help us with all of those things. It can help us think through how to implement these ideas, how to enhance the well being of all of our stakeholders, how to have a strategy that takes into account, how to make sure that we don’t lose the culture while we’re trying to increase efficiency. I mean, all of those things, you know, you ask good questions. AI is all about the questions that you ask, and the questions that you ask are all a function of your consciousness. You know, what are you trying to solve in the world? I think AI we have, we have created our own AI tools that help companies, help leaders really implement these ideas in a way, deep way.

Kris Safarova  28:50

I knew that the new addition is coming out. The reason I asked because, of course, publishing takes time, and also the advancements in technology are happening at such an accelerated speed. So I was just asking what would be different. But yes, I knew that you guys are releasing a new edition. What do you say to people who feel outpaced or left already left behind, or really being afraid to be left behind by technology? How can they stay relevant while staying true to themselves?

Raj Sisodia  29:23

Yeah, no, I think this is a big challenge. Has always been a big challenge with technology, you know, going back to the Industrial Revolution, which was an even bigger disrupter in some ways. You know, because one machine could do the job of 100 people or 1000 people. Sometimes we literally had massive, massive displacement of occupations. And that continued even into this last century. There were jobs that were being done in the in the 20/20, century that, you know, like one of them was telephone operators. You know, they used to connect. Calls. You know, you’ve probably seen in the movies, right? To take a wire from your life. That technology existed and was there for, I don’t know, 6070, years. And then we invented a way to do that with a new technology, right, switching. The estimate is that if we still were doing it manually, that every single person in America would be doing that job. Okay? Because we have that many calls every day being switched. I know needed to be searched. So. So again, technology replaces people, but that, what kind of a job is it for people to be all day long just doing this? Right? That’s not using the human incredible capacity that we have, right? This is the most powerful, you know, creation and in the universe, right? A human being, you know, all of the things that we’re capable of doing, and the incredible gifts we have. We can imagine something and then make it real in the world, etc, most jobs on this planet, even today, are using a tiny fraction of what human beings are capable of. We’re treating human beings like a robot, like a machine, you know, like something, and those jobs once a machine can do them better. You know, they should be, they should be done by a machine. And we have to figure out the challenge we have today. How do I figure out how to use my humanness as much as I can, right? Empathy, my creativity, my understanding, my connection love these things matter more now. And how can I have create work that actually brings those elements to the front things that AI cannot do and should not do, the human elements, right? So at one level, of course, the personal services that people do for each other, whether it’s massages or whether it’s therapy, you know, all kinds of things, you know, but there are many other ways in which we’re going to have to figure out, I can’t say we have the answers yet, right? But we will have to figure out what makes sense for human beings to do in the future, and how can we use technology as a way to increase our ability to do those things, not to replace people, but to augment people. Right? Not to say, as a professor, that I don’t need to exist anymore, because AI can teach you every subject, and AI can grade your papers, and AI can do but then, how do I use AI to actually elevate the experience for my students beyond, you know, just the reading or just the learning of the basic things. You know, how can we use AI, get the basic things and now we apply those? And how do we learn? So? So I think we’re going to have to figure out it’s a big challenge, but I think we will figure out over time we have done it in the past. With every technological industrial revolution, even the computing revolution, there are many things computers did very fast that other people, that people used to do manually, you know, that that became automated, and then we found other things. So I think as human beings, there’s no limit to our creativity. And I think we will, we will figure out over time, there’s, there’s an adjustment period. It does take time, and in the short term, it can be quite painful when your job is gone, you know. But I think for companies, what we say is you should tell your people, we’re not going to fire people because of AI, you know, right away, we’re going to give you a couple of years at least, and we all will learn, you know, encourage your employees to learn all these tools and these technologies and now say, Okay, how is that going to make us more effective and efficient? How can we now we can double or triple our business with the same number of people? Okay, because each of those people, they’re now two or three times as efficient because of AI, you know. So don’t look at it as a way to cut costs, but look at it as a way to expand what we can do with our people, you know, but that takes a mindset. There’s some companies that are already saying, Okay, we don’t need 40% of our people who are destroying them, you know. I don’t think that’s the right approach. You know. You have to give people some sense of safety and have the patience to say, let’s figure it out together. Let’s see what we can do.

Kris Safarova  34:01

Rajen, many knowledge workers now rely on AI to write, think and plan and doing a lot of the tasks that they used to do themselves, to the point that they cannot do it anymore as well as they used to. What would be your advice on how leaders listening to us right now can make sure that their own thinking muscles not weaken?

Raj Sisodia  34:23

Yeah, no, I think that’s an important challenge we have, because, you know, you can put it on autopilot and just have aI ask the question and take the output and just use it. I think that’s dangerous. First of all, AI does make mistakes, as we know there’s hallucination, as it’s called, and so we have to engage with the AI in an interactive way. Not just give it one question and then get a huge, big output, you know, continue to interface with it back and forth. The AI system that I’ve created are one dialog. There are more dialogs, you know, it’s not just ask a question and get a bunch of output. You know, it’s. Is dialogs, and then advancing the thing in that way, and always making sure that there is that human element, even with the output that you get. You now have to look at it and say, what, what is missing here? Because there is something that you know, the AI cannot put in. You know, the soul, the love, the you know, the sense of the also the organic elements you know, that only human beings have. So we have to, not, you know, take ourselves out of that equation. I think we have to make sure that we still remain in that to not only correct the mistakes, but also to add elements that AI may not have thought about. And so I think it is about augmenting our capacities, not replacing them, and not not treating it like a bad black box, as in, you know, we don’t know what’s happening inside the box. We just input and output. You know, there has to be a way that we understand it deeply and make sure that we are using it with full understanding of what, the AI is actually doing. So we all have to learn. We all have to become, you know, there’s this idea of a growth mindset that we all have to embody, the growth mindset that I’m constantly having to learn. You know, in the past, you know, I went to school as an engineer, and I got my degree, and I learned some things, and now, for the 40 years, I just apply what I learned? You know, maybe I learned a little bit more here and there, but for the most part, now, doesn’t matter what your degree was in. You have to be a constant learner and evolve. And so I think all of us have to be in that mode of learning and growing and then figuring out what new things are possible. So it’s a very interesting time in human history. We don’t know, but we have to have faith in ourselves that we, human beings, will figure it out, and we will do it with the consciousness will be, how can I use AI in a way that does not exploit people, does not harm people, does not create algorithms that you know, like social media, that basically prey on their weaknesses and their insecurities, etc. How can I use AI to heal, right, to create richer, fuller lives for my customers, for my employees, for everybody. So I think, I think we will, and AI can also help us think through some of those things. That’s the interesting thing about it. AI can teach us how to use AI in a better way. It can help us with that question as well. It can be our ally. Ai, to me, is not the enemy, it’s not the threat. It’s another very smart thought partner that can work with us to create the future that we really want.

Kris Safarova  37:36

Rajan, how can you personally use AI anything that you feel comfortable sharing?

Raj Sisodia  37:41

No, I certainly use AI to summarize some of the research that is out there on different topics, right? I use AI also now as a tool to help leaders and companies think through so. For example, I teach a program called the journey to conscious capitalism. We take about 25 leaders from five companies over two days to expose them to these ideas and then get them to assess and evaluate their own company, on purpose, on stakeholders, on leadership, on culture, and then show them how they can improve. And we’re starting to now incorporate AI into that, right? So first of all, what is your purpose? How have you defined it? And now we can use the AI to evaluate that purpose and see how, how it meets the criteria, right and what in what ways maybe it can be enhanced. We also then look at their assessment of where they are today, with their purpose right on the different dimensions, 10 different questions that we ask on a one to five scale. So the maximum score is 50, and let’s say you get a 28 then we can give that assessment to the AI and say, Okay, how can I take my score from 28 to 50? What would I need to change, or how would I need to improve? Right? And it can come up with suggestions and ideas for things that you can do, that you may not have thought about, you know? So we’re starting to use it in that way. We also, as I said, have a version of an AI system called the conscious enterprise Oracle. We call it that actually works with the leader to help them address any challenges that they’re facing, trying to be a conscious business, right? And the way that we’re doing it is that we have a we have what we call the Oracle, which is kind of like the, you know, the main AI, but then we have created a council of of the experts that work with the with the Oracle, there’s somebody who’s a strategic thinker, right? That role is being played by one of these entities, somebody else who’s was a steward of the culture and the people side of things, right? Somebody else was about the creativity and innovation aspect, etc. So we have a team of four or five people. I call them the Jedi Council. And so any challenge that we have, it’s looked at with that lens, a strategic lens, a culture lens, people, etc, etc. And then to come up with with ideas and and suggestions for what we can do and how we can address that. So I think, as I said, we’re learning. We’re all new at this, but I think we’re figuring out what it can do and what it cannot do, and like now, there’s a lot of excitement about what it

Kris Safarova  40:18

can do. Could you share with us how would you ended up CO writing a book with bob chapman? Yeah.

Raj Sisodia  40:24

Well, you know, by this was 2013 so my book, conscious capitalism, had just come out in January of that year, and I think April or May, April or May of that year, I got approached by bob chapman. So there are some common friends that we have, Simon Sinek and srikumar Rao, and they had been introduced to Bob, and then they had gone and visited his company, some of the locations in Wisconsin, and they had experienced that culture and what what he was trying to do there. And they were very impressed. And they said, Bob, you need to write a book. You know, this story is very compelling. You know, it was a time when most people thought American manufacturing companies cannot compete with Brazil and China and, you know, other countries, especially the sort of low tech manufacturing smaller companies. And they said, what you created here is amazing, and you need to write a book. And he said, I don’t know how to write a book. So they said, Okay, we’ll connect you. So that’s how they introduced me to Bob because I had written conscious capitalism. And initially, when I had my first call with Bob and I looked up the website and watched a few there, I said, okay, it sounds like a wonderful company, a nice company, but I said, Honestly, we don’t have time. I wrote about 28 companies in funds of India, but right and then, so I said, we don’t really have time to write a whole book about one company, because my my focus is broader, right? So Bob said, Well, why don’t you just come and experience what we are doing here? So I wasn’t free for a few months. It was July that finally, Bob came to Boston in his private plane. He brought a team of people with him, picked me up, and then we flew to Wisconsin to two different locations, Green Bay and then Phillips. And then we flew to St Louis, where the headquarters are. And he basically had me experience what was going on. I remember the first meeting, put me in a room of people in in a tiny town called Phillips, Wisconsin, where there’s a company called PCMC that they had acquired five years before Bob Chapman’s company had acquired that, and it was a suddenly, almost a dying company, almost bankrupt. And so I was with a group of 15 men. These are middle aged men in their 40s and 50s, some in their 60s, all working in a manufacturing environment. Most of them don’t have a college degree. They’re less than high school educated, right? And blue collar people. And I was sitting with them, and I asked them initial opening question. I said, Okay, so tell me what your life was like before your company got acquired by Barry Weber, and now what your life is like now? What changed? I asked that question. And then there’s silence in the room. Nobody says anything. And I look around and I see three or four of those men have tears streaming down their face. And I said, What? What did I do? I just asked a simple question, you know, why is it making people cry? And then they started talking. So one man said, you know, when I was at PCMC, before we got acquired, you know, company would have layoffs every two, three years, something would happen in the market. The demand would be down. They would lay off 2030, 40% of us. We got no warning. We just showed up for work one day, and they said, Sorry, you’re out. Okay, and I don’t know if you’d ever get your job back. There was no, you know, they didn’t have any savings. There was no severance package or anything like that. You know, suddenly we were out on the street, and he said, I just had a new baby at that time when I got laid off, and I literally had like, $60 in the bank, I had nothing, and I had to buy food for the baby, like the infant formula, the milk, and I had no money. And I went to the football game at the stadium, and I went over the garbage bag, and I was picking up aluminum bottles, aluminum cans and gas bottles, and then taking them and returning them for five cents each. And then I was buying some food for my for my baby, you know, he was crying. Said, I mean, that’s what my life was. And he said, then bob chapman came and acquired this company. And he said, I’ll never forget the first day he brought us all together. And he said this company had already sent 50% of the manufacturing to Brazil. They had sent their machines, etc, so half the business was already gone to Brazil. Bob acquired it, and the first thing he said is that we’re going to bring back manufacturing back from Brazil, back to Wisconsin, right here. He said that we’re going to pay you fairly. And we’re going to treat you superbly, and we’re going to compete globally right here in Green Bay or Phillips, Wisconsin, right? Nobody’s going to lose their job. You have time. We’re going to help you figure out how to do this better. We’ve done it before. We know how to do this. We know how to help you. You’re going to do it, but we will help you. And, you know, don’t be in a hurry. We will do this together. So his life has completely changed. He said, Now I have security. I have a future. My family has a future. My children can grow up here. You know, my town has a future. I remember the mayor of that town pointed to bob chapman at one meeting I was there. He said, That man saved our town because this company had 600 people, and the town is 1400 people. And if this company died, the town would have died, because every single job in this town depended on that company, 600 people, directly. But then everybody who worked at the supermarket, all the people who are shopping there, employees of this company, and their families, right? And the church, everything was dependent on this company. The company dies. The town dies. And now, because he bought the company and he turned it around, now our town is thriving. So I heard multiple stories like that. You know, somebody else said that there was a fire in his apartment, and he thought he was destroyed. His life was destroyed. And the next thing they know, the company helped him find a new apartment, helped him with the furniture, you know, for the place, and, you know, just gave him his life back. So, so after that, I experienced all of this, and I said, Wow, this is something very powerful going on here. Because if you can get men and that too, blue collar men, right, not college educated, middle aged, blue collar men, if you can get them to be so open in front of each other, so emotional, crying like men normally don’t cry in front of each other. Men don’t cry at all, right? They think crying is weak, but the fact that they feel safe enough in this culture to be able to cry and to tell the truth. You know, I said there’s something beautiful going on here, something unusual. And so after experiencing all of that, I said to Bob at the end of the two days, I said, Bob, this is beautiful. What you have done here. And this book has to be written, and I want to be the one to try and write it with you. You know, because I said it’s not only, it’s not only a good example of conscious capitalism, but it’s actually deepening what we understand about Conscious Capitalism. Number one, the purpose. We thought the purpose has to be about the customers. But Bob says, you know, we make machines that make toilet paper, or machines that make cardboard boxes, or machines that make packaging for potato chips or whatever, you know, mundane, relatively mundane things. So our people are excited about our machines, but he said, our purpose is our people. Our purpose is to improve. We measure success by the way we touch the lives of people. And I said, Bob, that’s beautiful, because every company has people. So even if you don’t have an exciting product that’s going to make a big difference in your customers lives, you can still be a conscious company with a higher purpose, because you always have people, and if you can elevate the lives of people, that’s a noble purpose. So I came to realize purpose is broader than just what you do for a customer, that you have a you have a people engine and a product engine, like an airplane with two engines, right? And you have, you can have airplane can fly on just one engine. If you had to pick one, it should be the people, right? You can’t have a noble purpose for your customers, but then you don’t treat your people well. A lot of companies are like that. Second thing I learned was about leadership that Bob says leadership is the stewardship of the lives entrusted to us. So it’s not just what happens at work, nine to five, Monday to Friday, that leadership is also about what happens when these people go home, that the way we lead impacts the way people live. So leadership is, as he says, the stewardship of the lives. So it’s a much broader thing than just making sure that people are efficient and, you know, doing good good job at work. It is about what kind of life are they living. So leadership was defined in a much deeper way, you know, by Bob. So I said, Okay, those are two of the four pillars of conscious purpose and leadership. We’d have to think about it a little bit differently, you know. So that’s why I said yes, and I’m very glad I did, because that book is very important book. It has, it’s very practical work. The second half of the book is, how do you do this? A lot of people are implementing a lot of those ways of being right in their companies. You know, Bob’s track record is extraordinary. He has now bought 150 companies. Almost 150 never sold a single company, turned them all around. And he keeps growing. Every year he’s buying more companies. And I said to Bob, why? I said, Don’t you have enough? Why still buying more companies, even now they’re probably looking at 10 more acquisitions this year, you know? And I said, Bob, isn’t it enough? I mean, you’ve got all this money and you’ve got all these children and grandchildren and beautiful homes, and, you know, why aren’t you just playing golf and enjoying your family? And he said, Raj, I don’t know how much time I. Left, and on my deathbed, I will not be proud of the machines we built or the money we made. I will be proud of the lives we touched. And before I die, I want to touch as many lives as possible. And I said, Bob, you’re not growing a business. You are spreading a healing ministry. It’s like spreading a ministry that brings hope and love and future to people, right? And that is the energy with which that business operates. It is spreading healing in the world. And that is why I wrote another book called The healing organization, inspired by what Bob was doing, which is spreading healing in the world. I said every business can be a healing organization, it can reduce suffering and bring more joy into the world. And once you have a healing organization, then your reason for growing becomes very different. You grow not because you have a compulsion to grow or because you want more money in your pocket, but because you want to serve more people, right? Because you got something that actually makes life better for people. So that creates it come. And that’s why Bob, even at the age of 80, is still working so hard, because, you know, he wants, he wants more people to have better lives. You know, he Kris every time he gives a speech, you know. And he’s doing it because, you know, that’s what he has realized life is ultimately about, is us taking care of each other, and if you have the good fortune as a business, successful business leader, that you can touch hundreds of 1000s of lives. I mean, what a blessing that is, right? As opposed to other companies that say, Wow, we can use all these people to make us billions of dollars that we can put in our bank, right? But meanwhile, those people are burning out and they’re suffering, and their children are suffering, and those communities are suffering. I mean, what is that? You know, that’s not what human beings are here for. So I think that’s the beauty of that message, the title, I think, is beautiful. Everybody matters, and everybody needs to win.

Raj Sisodia  52:06

If somebody is losing in our business, that means we’re not doing it right. Everybody has to win.

Kris Safarova  52:12

Raj, thank you so much for being here. I really appreciate this conversation and all the work you’re doing, and 100% agree that we need to have healing organizations. This is how I approach my business as well. It’s much more than just delivering quality products and services. It is really what you can do and how many lives you can touch, and how many lives will be completely different because they came across your business and somehow interacted with it, whether it is an employee or a customer or a supplier and so on, or partner, business partner. Where can our listeners learn more about you, buy your books, anything you want to share?

Raj Sisodia  52:58

Yeah, so my website is rajsodia.com so they can go there, and they can also buy everybody matters, which comes out, as I said, officially today, and my I have many other books. I have a new book coming in January as well, called Healing leaders, which is the idea that you cannot have a healing organization without a leader who works on their own healing. And so you have to heal yourself so that you can be a leader who heals others and heals people in the world, right? So that book is about that journey. What does it take to heal yourself? It has seven steps. Know yourself, love yourself, be yourself, choose yourself, express yourself, complete yourself and heal yourself. Those are kind of the seven steps that that book is about. So you’ll find all of that on the website, large Raj sisodiamyname.com

Kris Safarova  53:46

our guest today again has been Raj Sisodia, co author of conscious capitalism with John McKee, of all foods, and author and co author of 16 books. Check out one of the books we discussed today, everybody matters with bob chapman. You can also access the key insights and practical action steps from today’s discussion at firms consulting.com forward slash action. It is f, i, r, M, S, consulting.com forward slash action. We also have some gifts for you. You can get access to the first episode of how to build a consulting practice level one at firms consulting.com forward slash build. You can get the overall approach used in the well managed strategy studies at firms consulting.com forward slash overall approach. And you can get a copy of a McKinsey and BCG winning resume, which is an actual resume that led to offers from both of those firms, at firms consulting.com forward slash resume PDF. And it is not because most of our listeners are preparing for McKinsey or BCG interviews. They’re much more senior, much further in terms of the career advancement, but it is really good to have a good resume, and this resume is a great example at the end. New level of seniority. So if you take a look at a good example, that will be a great example to use. That’s all for today. Thank you so much for listening, right? Chicken, thank you so much for being with us today.

Raj Sisodia  55:13

You’re very welcome. Thank you for having me. Kris, tuna, thank you

Kris Safarova  55:16

everyone for listening, and I’m looking forward to connect with you all next time.