In this episode, Jeff speaks with Doug Rauch, former president of Trader Joe's and CEO of Conscious Capitalism Inc.
Big idea #1:Values are More Important than Rules
Rules are created as a response to an existing situation, and as such, they always lag behind innovation and new developments. This means, that you can always find your way around them. On the other hand, because they are timeless, you can't circumvent values.
In the agriculture industry, government should step in and regulate/legislate, but it's a static body. There is a reason to regulate food for safety, but these processes can't replace values to guide good business practices.
Big idea #2: Business is a "Story of Us"
Business should be based on a shared value of optimizing the experience of each person. Normal capitalism is a "story of me," focused on entities extracting the values from people.
On the other hand, when those who are in power in the business are fired up about a shared community, then the employees are fired up. When employees are stoked about working, then the customers feel it. This creates a virtuous cycle.
Conscious capitalism is not a new concept. It's an expression of nature. If the economy were a human body, would the heart try to take all the cells away from the lungs? No, because businesses and the society they serve are fundamentally interdependent.
Scientific research, too, shows that people are wired for emphathy and not alienation. This business philosophy is in line with evolutionary psychology.
Big Idea #3: Conscious Business Creates "Ands"
Wealth building shouldn't focus entirely on the pursuit of profit, like a human body doesn't exist to create red blood cells. In fact, if a business focuses entirely on profits, they miss their true potential of wealth building.
On the other hand, if a body doesn't have enough red blood cells, it won't survive. A healthy company is measured by its financials. By optimizing the value for stakeholders you create "Ands."
"Ands" mean you don't have to choose between either/or, just as a body doesn't choose between red blood cells and health. If, for example, you create an environment that celebrates and rewards great customer interaction - creating value for both customers and employees - you can have both wealth and health in an organization.
Other Cool Stuff:
- Trader Joe's Recipe for Success
- Why Trader Joe's Stands Out From All the Rest in the Grocery Business
- Inside the secret world of Trader Joe's
About Doug Rauch
Doug spent 31 years with Trader Joe's Company, the last 14 years as President, growing the business from a small, nine-store chain in Southern California, to a nationally acclaimed retail success story with more than 340 stores in 30 states. He developed their prized buying philosophy, created their unique private label food program, and wrote and executed the Business Plan for expanding Trader Joe’s nationally.
Doug received his Executive M.B.A. from the Peter Drucker School of Management, Claremont University, where he won several honorary awards including the Early Career Outstanding Entrepreneur Award from Peter Drucker.
Since retiring from Trader Joe’s in 2008, Doug has served as a Senior Fellow in Harvard’s Advanced Leadership Initiative and now serves as CEO of Conscious Capitalism Inc. he also serves as a Trustee at Olin College, and Executive Partner at Apta Capital, Inc. and on the board of several for-profit and non-profit companies.
Much of his time is currently spent working on an innovative non-profit solution to the issue of “food waste” and hunger/obesity by bringing high quality, nutritious food at affordable prices to the underserved in our inner cities. He is a resident of Newton, MA.