The Practice of Conscious Leadership

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• As business educators, we have a responsibility to teach students to become conscious leaders whose organizations contribute to society far more than they take.
• The Conscious Capitalism simulation helps students learn to manage with purpose and to cultivate traits of conscious leadership such as compassion, mindfulness, and empathy.
• As students track their progress in the simulation, instructors act as coaches who offer students personal guidance on practicing responsible management.

For too long, as business educators, we have stressed that the sole purpose of a business is to create wealth. We have taught the traditional concept of leadership that focuses on command and control. It’s a concept that perpetuates the idea that good leaders effectively orchestrate workers and other resources as they build efficient businesses and maximize shareholder wealth.

However, this single-minded focus on creating wealth does not necessarily inspire social good and it can certainly cause harm. Managing a business does not give leaders the license to do whatever is necessary to create wealth. However, it does give them opportunities to lead organizations that contribute far more to society than they take.

It is time for us to focus on creating conscious leaders who champion change and care about having a positive impact on their communities. One of the best ways we can achieve this objective is through experiential learning, so that students can learn firsthand how to conduct business in ways that support diversity, promote sustainability, and have positive societal impact.

The Path to Developing Conscious Leaders

How do we train individuals—especially those who feel powerless to change the world around them—to develop the traits of conscious leaders? We can start by taking the following actions:

• Promoting diversity among our students, staff, and faculty, so that we can learn from different perspectives.
• Giving students room to cultivate compassion, mindfulness, and empathy in their professional and personal lives.
• Illustrating that great leadership starts by earning the respect of others, whether one is working in entry-level positions or senior leadership roles.
• Providing opportunities for students to practice conscious leadership.
• Offering mentorship and feedback to help them expand their perspectives.
• Encouraging students to engage in self-reflection.
• Devising scorecards and dashboards that measure and track the impact of decision-making on all stakeholders.
• Introducing leadership frameworks that help students gauge their strengths, identify their weaknesses, and measure their progress.

That last step is one of the most valuable ways we can develop leadership skills in our students. We can introduce leadership frameworks through lectures, readings, and case studies. However, students will learn even more through firsthand experiences that allow them to test their skills in true-to-life situations.

One way that educators can introduce students to responsible leadership is with the Conscious Capitalism simulation, a scenario developed by Marketplace Simulations in cooperation with Raj Sisodia, a co-founder of the Conscious Capitalism movement. The simulation also embodies concepts such as the triple bottom line (people, planet, and profit), socially responsible investment, and corporate social responsibility, as well as frameworks such as the United Nations Sustainable Development Goals.

We can introduce leadership frameworks through lectures, readings, and case studies. However, students will learn even more through firsthand experiences.

In the simulation, players start a profitable venture that targets a new niche in the bicycle business: 3D-printed carbon fiber bikes. Throughout the game, players must manage the impact of the business on community health, the environment, employee morale, customer safety, their reputations, and other areas.

As the scenario unfolds, students learn about emerging tactical problems, challenges, and opportunities through employee memos, operational data, market research, industry news, and communications from community leaders. With each new development, the simulation taps into what researchers Teresa Amabile and Steven Kramer call the progress principle—the idea that when people achieve small yet meaningful wins in their work, they experience greater joy, motivation, engagement, and creativity.

3 Facets of Leadership

The simulation energizes the learning process—and the cultivation of conscious leadership traits—by emphasizing several facets of leadership development:

Leadership among equals. Students work in teams and must make decisions as a group. Consequently, they must learn to listen to opposing perspectives, engage in meaningful dialogue, and resolve conflicts.

Even when students are not in leadership roles, they can demonstrate conscious leadership by holding fast to their principles, making decisions within a community context, and optimizing societal impact.

Just as important, they learn to articulate socially conscious viewpoints to diverse audiences. According to a January 2024 article in The Wall Street Journal, executives increasingly feel that they must choose their words wisely when they discuss responsible management and promote sustainable actions in ways that do not fan the flames of discontent. In the simulation, students find themselves in similar situations as they debate issues of inclusion, safety, and environmental impact.

These conversations focus not on abstractions, but on tough decisions with social consequences. Students cannot ignore the employee who is ill due to chemicals in the air, the poor morale affecting productivity, the news report about injuries caused by a company product, or the inquiries from the mayor about pollutants going into the local stream. As the WSJ article concludes, “It’s hard to be anti-responsibility” when faced with such realities.

Even when students are not in leadership roles, they can demonstrate conscious leadership by holding fast to their principles, making decisions within a community context, and optimizing societal impact. They learn that conscious leadership without authority takes courage—something that we need more of in business.

Leadership that combines expertise with responsibility. Students each assume responsibility for a major business function, based on their expertise. In these roles, they develop critical thinking and communication skills as they pitch ideas, justify their reasoning, accommodate opposing viewpoints, motivate others to follow their lead, and allow others to lead when appropriate.

When a problem or opportunity arises, the expert whose domain is most affected must lead the evaluation of potential risks and benefits to all stakeholders. When students find themselves in this place of authority, what will they say? What actions will they take or recommend? Where will they believe their responsibilities lie?

Students will also discover that doing good contributes to society, their firm, and even themselves.

Most often, students will find that these issues require practical (not political) decisions that can be resolved by following the principle of “do no harm.” Hopefully, students will also discover that doing good contributes to society, their firm, and even themselves.

Leadership with authority. Military academies develop leadership by rotating recruits through leadership roles and providing feedback on performance. Likewise, the simulation enables different students to serve as company president at each of the five phases of the business—starting up, testing the market, pitching to investors, managing growth, and conducting the final accounting.

As the president, students lead the discussions and decision-making, and the choice to highlight or downplay societal impact is theirs to make. They can manage with purpose and build a culture that acts in the interests of all stakeholders, or they can prioritize the interests of the business owners.

Either way, during coaching sessions, the instructor can shine a light on metrics of success that relate to positive outcomes not just for the business, but for the community.

5 Conscious Deliverables

Throughout the simulation, students must complete tasks that track the development of both the business and their leadership skills: 

The business plan. Midway through the exercise, students prepare a business plan highlighting the actions they want to take and explaining potential outcomes for their business and society. In the plan, they must weigh their financial sustainability and profitability against their desire to be conscious leaders—and hopefully realize that the two objectives are not mutually exclusive.

The pitch to investors. At this point, students must present a credible plan that shows how stakeholders will benefit from their product and how the business will manage any surprises that arise. The team must defend the plan in response to far-ranging questions from evaluators who are playing the role of either socially responsible investors or traditional wealth managers.

The stockholder report. At the end of the exercise, the team must account for its performance. They must explain the way they have allocated resources, the promises they have made, and the actions they have taken to evaluators, who now return as members of the board of directors.

Executive briefings. We recommend that students offer regular executive briefings where they can demonstrate how they have mastered their responsibilities. These briefings are opportunities for the instructor/coach to evaluate students’ analytical skills, use of management tools, business acumen, and ability to articulate logical arguments. These briefings are also the best venue for instructors to coach students on conscious capitalism, societal impact, and responsible management.

Peer evaluations. We also recommend that students engage in three peer evaluations during the exercise. In the first two, students offer feedback on how mindful each teammate is toward the others. In the third, students assess their teammates’ leadership behaviors and skills. For this exercise, instructors can remind students that leadership can arise even when a person is not acting in a traditional leadership role.

The peer evaluation process supports three learning objectives. First, students learn that being mindful of others is a way to find common ground, build relationships, and work constructively toward responsible management goals. Second, they discover that they must establish their own integrity if they want others to respect their goals, work ethic, and commitment to a cause.

Finally, they better understand the nature of professional behavior: Each time students evaluate their teammates, they also see how they should conduct themselves.

3 Ways to Enhance Learning

Finally, the simulation embeds three ways for students to track their progress and enhance their learning:

Scorecards. The simulation includes two scorecards. The balanced scorecard tracks typical business metrics such as profitability, wealth, customer satisfaction, and productivity, as well as employee morale, employee turnover, and firm reputation.

The conscious scorecard tracks whether students acted responsibly when given the chance. Did they ensure that production workers received equitable pay, learned new job skills, participated in planning, and received good medical care? Did they quickly fix a product defect? Did they invest in cleaning up the environment? Did they share profits with the community by supporting parks, bikeways, and educational opportunities?

Together, these scorecards show students how everything is connected—how high worker safety leads to improved morale, which increases productivity, which lowers costs, which improves profitability, which boosts the firm’s reputation. Students can see the business logic of being conscious leaders.

Coaching. As coaches, instructors can transform their classrooms into powerful learning environments, where they see everything students think and do throughout the simulation. This perspective allows instructors to offer students personal guidance on practicing responsible management and have deeper conversations about what it takes to be conscious leaders of thriving businesses.

Mindfulness exercises. Finally, we give students exercises in mindfulness, in which they practice engaging in focused, nonjudgmental awareness of the present moment. In these exercises, students pay attention to their thoughts, feelings, and bodily sensations with a spirit of acceptance. As students develop mindfulness, they enhance their emotional intelligence, situational awareness, adaptability, and holistic perspective—all crucial to building positive organizational cultures, managing with purpose, and positively impacting the community.

We Can All Be Conscious Leaders

AACSB’s accreditation standards expect business schools to develop leaders who will achieve societal impact. For our students to develop into such leaders, they must have opportunities to manage societal impact challenges in real-world scenarios. The Conscious Capitalism simulation helps students understand that creating business cultures that make a positive difference in the world is not about one-off initiatives. It is about thousands of decisions—large and small—made over time.

The simulation also emphasizes that conscious leadership does not require holding positions of formal authority. However, it does require living according to one’s principles and ideals and being unwaveringly mindful of the needs of all stakeholders. It’s about leading boldly to “advance economic well-being while strengthening one’s commitment to purpose, people, and planet.”

We can teach students to lead responsibly even when they are not in leadership roles, in ways that encourage others to follow them out of respect. As educators, we can model such behaviors ourselves. In the end, we can all be conscious leaders.