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Time for a New Humane Capitalism ... or Else

For decades we have engaged in a type of capitalism that is simply unsustainable, an approach to industry that is not only bad in some ethical sense, but also fundamentally impractical in a business sense.
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Despite the claims of Massey Energy's CEO Don Blankenship that Massey does not place profits over people, the evidence to the contrary is overwhelming. All signs (and unpaid fines) suggest a company that is greed-based and, in terms of its leadership at least, essentially immoral. And yet to focus all our energy and rage at this obvious and easy target is to miss the larger point. The fact is we are all complicit in the deaths of the 29 miners at the Upper Big Branch mine -- complicit because we have blithely played along in this culture of "greed is good."

Don't misunderstand me. Blankenship and Massey, as well as the leaders of the financial meltdown, the fat cats at Goldman Sachs, JP Morgan, Citigroup -- they should all be held to account (and made to pay) for their egregious and destructive misdeeds. But focusing our outrage at specific dubious leaders or even at specific industries is to miss the forest for the trees.

For the better part of thirty years we have been engaged in a type of capitalism that is simply unsustainable, an approach to industry that is not only bad in some ethical sense, but it is fundamentally impractical in a business sense. It does not and cannot work long term. And we had better figure this out and soon. When you look at the big picture economically, we may have stepped back from the brink, but we have not yet changed our ways, and more importantly our thinking. And we're still not a safe distance from that brink, as the 14 million unemployed Americans (and 9 million "underemployed") will readily attest.

The good news is that as we begin to experience this slowly emerging recovery, we may have the space to now catch our breath and see where we really are. The irony, perhaps, is that the solution to this mess is right in front of us, and it is not only thoroughly humane, it is highly pragmatic and results oriented. That is to say, the solution not only puts people first, it also causes profits to soar. Dozens, surely hundreds of companies in the US have already begun to figure this out, companies like Southwest, Costco, and Whole Foods, to name a few. Doing good and doing well are not in conflict. In fact, believe it or not, for long-term sustainability, for lasting success, they require one another.

Over the past two decades I've been engaged with corporate executives in North America, Europe and Asia, working with them on a version of a leadership methodology known as Transformational Leadership. It is an approach that says, simply enough, that when the leadership of the organization systematically places the development and well being of their people above profits, paradoxically, profits surge "up and to the right," as they say, and success is readily sustained.

But let me be clear, this is not some squishy, soft methodology that says every child must get a toy, regardless of outcome. It is a way of approaching leadership from a rigorous mindset that says my job as a leader is to grow my people (and myself) such that at the end of the day they are not merely better organizational players and employees, but they are better people -- better parents, spouses, friends, members of the community -- fundamentally better human beings. And make no mistake about it, this is perhaps the most demanding understanding of organizational leadership there is -- it demands relentlessly from both the leader and the follower. But it also creates a work experience for the employees and the leadership that is nothing short of astonishing, truly meaningful. I've seen it time and again in the US and in Europe.

Transformational leadership is but one example of a phenomenon I see emerging out there in the marketplace that I call humane capitalism. Irrespective of what we call it, it is an approach whose time has come. It just makes sense -- you don't have to be a social psychologist to understand why people perform better, are more committed and creative, are more productive when they know they are cared for, when they are being developed and challenged. It's quite logical actually, rather intuitive. But we had better wake up and wake up soon to this humane pragmatism. Or we will simply continue to seethe as we read about more and more AIGs and Masseys, as we find ourselves inching back once more to the economic abyss. It really is time to wake up.