I witnessed this personally from my new home in Baltimore in April 2015 when the city erupted in riots after the killing of Freddie Gray in the back of a police van. What I saw, or felt viscerally, to be at the core of the protests was a sense that the system — economic as well as legal — was stacked against the citizens of West Baltimore. The upheaval was as much about economic opportunity as it was about social justice. And, in fact, the two are inextricably tied. Without economic opportunity, there can be no social justice. These two principles have always been integral to what makes a city or a society truly flourish.
Yet by every imaginable metric, income inequality in the US is bad and getting worse. (See sidebar, next page.) Intelligence, resilience, and the desire and ability to work hard are equally distributed across our society. Opportunity is not. The opportunities for great jobs, access to capital, and the best education are sorely missing from the poorest neighborhoods. The hopelessness that results can make or break a city and a society.
In allowing this inequality to continue, not only are we creating an environment for more social unrest, we are also cheating ourselves of massive opportunities by leaving valuable human assets untapped. As my friend Richard May, chairman and cofounder of Baltimore’s Innovation Village, says: “If the Baltimore Ravens only fielded half their football team, we would surely lose every time we played. Not only would that scenario never happen, but if it did, the fans wouldn’t stand for it. Why, then, would we do the same with half the citizens of our city and find it acceptable?”
We need to address the income and opportunity inequalities in our society. Though there’s work to be done around tax policies or redistribution schemes, I’m a businessperson, not a politician, and society is demanding that business play an increasingly important role in healing its wounds. What we need is a mindset of abundance and shared prosperity as a path towards more opportunity, more equality, and more joy.
A MINDSET OF ABUNDANCE
When companies focus myopically on creating value for shareholders, there’s a natural tendency to view the world in a context of scarcity. Value decisions become zero-sum: If employees get more, then someone else — like shareholders — must get less.
By contrast, conscious companies see themselves as part of an ecosystem of stakeholders with an objective — a purpose, if you will — of improving the wellbeing of all of the stakeholders they rely upon. They adopt a mindset of abundance, as opposed to one of scarcity. They understand that in creating value for customers — that one thing all businesses must do — product or service quality is no longer enough. Employees must be engaged in the mission of the organization, or else they will look for the next best opportunity or, even more dangerous for the company, take what they’ve learned and disrupt the industry with their own new startup.
Conscious companies also understand that creating a relationship with a customer via a shared vision of how the world should work — socially, environmentally, or in some other way — is more compelling and more profitable than simply competing on price or quality. Fair pricing and good quality must be strategic table stakes in our economy. But the thing that will set you apart is not what you sell me, but how you make me feel.
These practices and many others that are inherent to running a conscious company are also practices that lead us to a mindset of abundance. They lead us to understand that paying a fair wage, one that allows our employees to live with dignity and care for their families, isn’t anathema to creating value for shareholders. When an entrepreneur starts to consider the real societal purpose of her business and how that business can create value for all stakeholders in an interdependent exchange, she starts to understand the shortsightedness of the scarcity mindset, and the benefit of finding ways to create a bigger pie.
These practices lead us down a path that opens our eyes to the value of investing in our schools, sustaining our environment, caring about what happens to the least of our citizens — and addressing these needs as an integrated part of the way we do business, not merely as some bolted-on notion of corporate social responsibility. In fact, with every new social entrepreneur or mission-driven business that comes through our programs at the Conscious Venture Lab it is becoming more apparent that the endearing and engaging treatment of all stakeholders is now one of the most powerful competitive advantages that any company can wield.
If we are to be a great nation, we need to create the environment for conscious companies to build and grow in the inner cities. At the Conscious Venture Lab, we are working to train and invest in thousands of companies in cities like Baltimore, Cleveland, Columbus, and Detroit over the next ten years. We all have a stake in this endeavor, but those of us who come from these cities and these neighborhoods need to take the lead. We entrepreneurs, executives, and investors of color who have had the extreme good fortune to be successful have a tremendous opportunity — I dare say responsibility — to change the narrative of the inner city; not by advocating for more philanthropy or government programs, but by investing in these urban areas and training entrepreneurs to build businesses that matter to their communities. I’ve seen precious little of this in the communities where we are working today. But I continue to have faith and push my colleagues to join us, and in doing so help us seed a new economy based on the principles of Conscious Capitalism — and, in the process, create a more just, joyous, and prosperous economy for us all.
SIGNS OF ECONOMIC INEQUALITY IN THE U.S.
The share of total US income for the top 1% of income earners has gone from 8.9% in the early 1970s to over 21.2% as of 2013.
Since 1979 the income of the top 1% of earners has increased more than 187% while that of the bottom 20% has increased a mere 39%.
The 400 people who make up the Forbes 400 list have more wealth than all 16 million African-American households in the United States combined. In 2014 corporate profits were at their highest level ever as a percentage of GDP, while total compensation to employees sank to a 65-year low.
Jeff Cherry is the CEO and managing partner of the Porter Group, LLC, an investment consulting and venture capital firm. He is also the founder and executive director of the Conscious Venture Lab, an accelerator for early-stage companies focused on purpose and profit: consciousventurelab.com.