RPL Explores Relationship Between Inner Work and Outer Change

SPEAKER 1: Harvard Divinity School. 

SPEAKER 2: Inner work and outer change, spiritual foundations for transformative leadership, October 28, 2025. 

TERRENCE JOHNSON: Good evening, friends. I'm Terrence Johnson, director of Religion and Public Life. Welcome to tonight's event. We're located on the traditional and ancestral land of the Massachusetts. The original inhabitants of what is now known as Boston and Cambridge. We pay respect to the people of the Massachusett tribe, past, present, and honor the land itself, which remains sacred to the Massachusett people. 

The Religion and Public Life Program provides a way to understand religion and context, with special attention to questions of power, peace, and conflict. Our approach is non-devotional and academic, acknowledging that there are multiple authentic representations of religious expressions in the world. One of the goals of our PL program is to bring analysis from experts, including academics and practitioners, to deepen the understanding of the power of religion, to imagine a world just and at peace. 

It is a deep honor and privilege to welcome back to HDS our esteemed colleague, University professor Rebecca M Henderson. An internationally recognized scholar, Professor Henderson is one of Harvard's 25 University professors, a research fellow at the National Bureau of Economic Research, and a fellow of both the British Academy and the American Academy of Arts and Sciences. 

With more than 25 years of major public board experience, she is a sought after advisor to leading corporations and global finance organizations, alongside an extraordinarily stellar scholarly record. Indeed, her research examines how the private sector can help build a more sustainable economy. Her publications include accelerating energy, innovation, insights from multiple sectors, leading sustainable change and organizational perspective, and political economy and justice. 

Many of us at HDS know her work through her acclaimed 2020 book, Reimagining Capitalism in a World on Fire, for which, echoing the category Michael Walzer calls a social critic, she urges determination and resilience during a time of profound ecological and economic change, in quote, "crony capitalism too often leads to the diminishing support for public goods, such as hospitals and education." "At issue," she writes, "is not free markets," quote, "but uncontrolled free markets, or the idea that we can do without government and without shared social and moral commitments to the health of the entire society on which effective governments depend." 

Tonight's lecture inaugurates a year long partnership between HDS faculty and students and Arizona State University's Department of religious studies, chaired by our colleague, Doctor Evan Berry. In keeping with Professor Henderson's call to renew our shared social and moral commitments, this collaboration will examine the relationship between religion and capitalism through dialogue between two distinctive institutions and an innovative public University and the nation's oldest University. 

Our aim is to equip students with resources to think deeply about religious, historical, and ongoing role in debates on justice and capitalism. And I want to thank our Dean, Marla Frederick, for supporting this endeavor and our PL. So now, friends, please join me in welcoming our esteemed colleague, Professor Rebecca M Henderson, for her lecture, inner work and outer change, spiritual foundations for transformative leadership. [INAUDIBLE] 

REBECCA HENDERSON: Thank you very much for that kind introduction. Terrence has basically told you what I'm going to say. But I'm going to say it with a bit more data and some story. In 2020, I published a book called Reimagining Capitalism, which was about really rethinking what capitalism might be and what it could do. I was very proud of the book, and it had some success, despite the fact that it was in the middle of COVID. 

It went into seven languages, and I ended up giving hundreds of talks to thousands of people. But I learned something important. I learned that I had made a major mistake in the book. I had made an instrumental case for reimagining capitalism. I had laid out the business case, the economic case for business to act in very different ways, and it was clearly not enough. 

As I gave talk after talk to men in very expensive suits over Zoom, it became clear that they were not prepared to actually act. They didn't disagree. People would say, that's very interesting, Professor Henderson, but they were unwilling to take the risks to make the emotional investment required to really rethink the way capitalism is run. And so I ended up on a quest, a quest for an answer to the question of whether in a development, in a work, spiritual renewal, in this talk, I'm going to play fast and loose with these terms, which I understand at the Divinity School is a super dangerous thing to do. 

But my training-- my background is deeply pragmatic. I was trained as an engineer and an economist, and I don't really care what it's called. But some turn to the inner life, to the transcendent, to a sense of something more than just the day to day. That's what I'm pointing to. And I'm going to argue that it is essential to reimagining capitalism, that it is integral to many of the leading firms who are moving this all forwards, and that there is reason to believe it might be generalizable. 

So that's where I'm going. So the inner life of capitalism, I told my husband I was going to give a talk on the inner life of capitalism, and he said, does it have an inner life? Which, I think, is, perhaps, representative, but nonetheless, I'm going to try and persuade you of two things. It says three, but only two. Two things are that capitalism can be reformed. I work enough with people under 35 to know that this is a highly controversial proposition. 

But I'm going to try and persuade you we're better off reforming than destroying. And I'm going to try and paint a picture of what that reformation might look like. And I'm also going to move my mic so that it stops, hopefully, stops coming in and out, if that's any better. That's better, more even? Yes, a little more even. And then I'm going to suggest, as I said, that inner work is essential to this transition. 

So I want to start with a story about HBS and HKS students, give you a sense of the terrain. So I teach a course called reweaving and ourselves in the world, new perspectives on leadership, both at the Kennedy School, and it admits graduate students from every graduate school at Harvard except dentistry. I don't know why the dentists haven't started coming, but they're not there. 

Everybody else shows up. We've got law school students. Ed school, urban planning, architecture, business, government, law, and it's a very mixed class. About a month into class last spring, one of the business school students complained that one of the Divinity School students had accused her of being evil. Essentially said, I don't think you should be here. I don't respect the work you're doing. Business is essentially a corrupt and evil institution. 

It's not an unusual sentiment on our campus. But it led to a really interesting conversation because the business school students got miffed. So we did an exercise. We divided the schools by school and we had the business school students go off and the law school students go off and Divinity School students go off. We asked them to think about three questions. 

The first is, what is the gift you bring to the world as the kind of student you are? And the second question was, is there any stereotype that the rest of the world imposes on? And the third was, is there any truth to that statement? So the business school students came back into the room and they stood up and they said, we have a gift. We're the people who make things get things done. 

The rest of you, it was a broad brush, and they were more polite than this. But the rest of you sit around thinking great thoughts, except, possibly, the lawyers because we have lawyers. But we're the people who can really put the solar panels on the roof and grow the food that's going to feed the world. This is business. We're here to act. This is us. 

And yeah, there is a stereotype that sometimes we go too far and we care only about greed and profit, and we do cause some problems. And well, since you ask, there is some truth to that stereotype. And Divinity School students stood up and said, we bring a gift to the world. We think about what really matters. We think about values. 

We ask the right kinds of questions. We are the group that can ground these discussions in what's really important and what really matters. Well, there is a stereotype. We know, or we think we know that you think we're, excuse me, flakes who have no idea what we're going to do next. Well, there is a teeny bit of truth to that. 

And all the groups went through this, and it changed the whole tenor of the class because, of course, we need everyone in that room to solve these problems. And there's a little bit of truth in all the stereotypes, but every student in that room was motivated by passion and commitment and wanted to build a better. And so as I tell you a story of how capitalism can be reformed, I hope you'll remember those business school students. 

They really think they're doing the right thing. So how do we think about this? So first, of course, capitalism in its modern form is highly problematic. Anglo-American capitalism, as we see it now, is deeply, deeply [INAUDIBLE]. But it worked. It worked a treat. 

In the last, how many years, just under 100 years, the population of the world has tripled. GDP per head has quintupled. Capitalism absolutely has faults, but does it deliver toothpaste and cornflakes? Yes, it does. So unbelievably productive. Life expectancy has accelerated enormously. 

Hundreds years ago, most of us would not have lived beyond the age of 40. A hundred years ago, my ancestors were Scottish peasants eating turnips, dying young. Once you have done a few things, child mortality has collapsed. Fewer children and mothers die in childbirth now than in the 1800s, not on a proportional basis, but in total. 

So any time we start to criticize capitalism, believe me, I learned this the hard way working with business people and my colleagues at the Business School, you have to start with an acknowledgment of what it can be, an unparalleled source of innovation, productivity, and choice. Modernity had a promise. 

Its promise was unrestricted autonomy. You can do anything you want, seamless progress, security and order, and happiness and comfort. This is from a book by Vanessa de Oliveira called Hospicing Modernity. And she likens modernity to a house, a beautiful house, lined with teak, with warm baths and enough to eat and shelter from the rain. 

That is the house that the Global North built. That is the house that modernity built, and it had its promise. And part of the problem of our current moment is the people who benefited from that promise, and I'm going to use us. Forgive me, those of you for whom this is not appropriate, but I'm going to use us as the educated, prosperous, those people who got to live in the house. 

For us, it worked [INAUDIBLE]. And part of the problem of the current moment is we don't want to let that. We really don't want to understand to admit that, of course, modernity came with a shadow. And the shadow was complexity, entanglement, systemic violence, and most, obviously, planetary limits. We could cut down all the forests. We could take all the water, we could burn all the coal, we could throw the waste out the window, and the world would die. 

And the world is dying. Six of nine critical planetary boundaries trespass, fossil fuel consumption continues to increase. The Saudis are building a ski resort in Saudi Arabia. Global heating continues, current projections anticipate 3.3 of heating by the end of this century. Our grandchildren will see the end of this century. It will be unimaginably different world. 

It will be much hotter. These are days above 28 degrees C wet bulb at 3.3. So 28 degrees C wet bulb. Wet bulb is 100% humidity. 28 degrees C wet bulb is when the human body begins to break down. You can see that, particularly in the tropics, in South America, in Southern US, here, and in India, there will be, on average, the expectations are always-- the models are not perfect, but on the order of a month, a year, when it will be impossible to work outside. 

This will result in enormous suffering. People are already dying in India. Famous case of a young woman helping to build a building who dropped dead just a few weeks ago, and lots and lots of forced migration. This will be accompanied by huge variation in precipitation patterns, droughts, and floods. I know at least one major European government that is actively planning-- well, they're not, that actively believes expects to see rolling systemic breakdowns. 

So this is two or three months breakdowns in water, energy, food, transportation by 2030. They have suppressed the report, which was designed to explain how this particular government came to prepare for these events because they don't want to put to extensive need to pump up the military budget, deeply worried about populism, can't afford to spend money on psychosocial and other forms of resilience right now. 

So the world's going into this largely prepared or unprepared or actively running backwards, and at the same time, as you know, inequality has significantly increased. Wealth gaps by race and ethnicity remains significant. Democratic institutions are under attack, partly because of the huge increase in inequality. Strong men are rising. The world is at war. No one knows what's going to happen with AI. 

We have a massive mental health crisis. The technical term for this is "polycrisis." I'm just curious. Anyone heard the name-- how many of you have heard of polycrisis? OK, so a polycrisis is when you have multiple crises that interact and accelerate each other. And so we are in the midst of a deeply problematic moment. We probably all know this. It's not a surprise, right? 

Why do I stress it? I stress it because I spent the first 20 years of my career studying change in large organizations. And because that was what I did, I know that humans have enormous difficulty understanding that the future may be very different from the present, particularly when it's going to be very different in the wrong direction. So many people, literally, cannot think about this. 

The major breadbaskets are going to fail. Nobody knows when, 10 years? Maybe we'll be lucky and it's 20. But most people are walking around like it's cool. It's true. Got to get the good job. Got to take care of myself. Well, very, very good reasons. If you're working two jobs and you don't have enough to live on, and food stamps were just cut and you're about to lose your health subsidy, you are not thinking about the costs, you're thinking about survival. 

What that means is people like us have better damn [INAUDIBLE] because, of course, sometimes if I had a chalkboard-- this looks like a chalkboard. Is it actually a chalkboard? 

TERRENCE JOHNSON: Yes. 

REBECCA HENDERSON: Oh, it's a kind of high-tech chalkboard. 

TERRENCE JOHNSON: [LAUGHS] 

REBECCA HENDERSON: OK, thank you. So a lot of people, if you ask them what they expect the future to be-- this is performance, and this is time-- they say, oh, it's going to be great. 

Well, a lot of people where I live at the Business School, AI, it's going to be fantastic, the technology. And it could be great. We have the technology to address these questions. We have the technology and the resources to arrest climate change, feed everyone on the planet, and give everybody [INAUDIBLE]. We have the resources. This is the crazy thing. 

Is this is going to be fine? No. As you can probably guess, I think this is delusional. So where do we go after that? Well, the natural place to go is this, often called "doomerism." So this is techno-optimism. This is the current rulers of our country. This is doomerism. Anyone any doomers? There's a few of you, especially among young people. 

We have strip mined the planet. We have taken everything, and it's going to crash. It's a large group and it's not crazy. You can talk yourself into doomerism quite easily. But what's actually going to happen is more complicated, I think, and more interesting. Things are going to get worse. And then the question is, we could go all the way to ecosystem collapse. 

Probably not, actually, and we could talk about the technology. Why not? This seemed likely 15, 20 years ago if we did nothing, now it looks less nice. So if you were a betting person, you might go for techno feudalism. A dramatic reduction in complexity of our society, with most of the power concentrated in very few hands. In fact, it is our job [INAUDIBLE]. Let's call this the great turning. 

Some of you may the work of Joanna Macy. Some people claim it's an evolutionary moment, that the human race is being pushed by the universe through an evolutionary bottleneck, where the only way through is to learn to cooperate at larger scales, to really engage with other people as definitely human beings that are must be included in the system. No idea if that's the case. I do know that when you look at most civilizations, what they actually, if, well, talk about a generality, maybe the history of the human race looks like this, where you tell me this is the decline of the Roman Empire. 

This is the Black Death. This is World War II. Are we going into something? And so it's not about optimism or pessimism. It's about what we [? do. ?] So what can we do? This is the same diagram, just [INAUDIBLE]. So our problems have many causes. Denial, short-termism built into all our systems. We have great difficulty cooperating, particularly at global scale. We have concentrated incumbent power, which is very politically powerful in the fossil fuel nations, Saudi Arabia-- Saudi Arabia, Russia, and the US. 

And we have a spiritual crisis. And again, I feel a bit nervous saying that at the Divinity School, but, hey. We have told those in power that they have no responsibility but to maximize their own profit and their own well-being, that they are separate, that their own good is the good of everyone, and they are strip mining the world in the future in response. So that is the problem. 

We teach our students that they have a duty to maximize investor or shareholder value, because that maximizes public welfare, and that managers are agents for their investors, and they should do what their investors want, and what their investors want is just to get as much money as possible. Both of these propositions are now highly, highly doubtful, but the managers who are in power right now, this is what they were trained on. 

It still viewed, and I have more than 20 years experience on major public boards, including a Fortune 200 company, and one of the most rapidly growing firms over the last 20 years. And so I can tell you, in the boardroom, shareholder maximization, often, viewed as a legal requirement, if we don't do this, we will not meet our duties, our fiduciary duties, a moral duty. If we don't maximize shareholder value, we're making the market less efficient, and we're betraying our duty to our investors, and an economic necessity. 

If we don't maximize shareholder value, my company will go down or I, personally, will be fired by angry investors. And of course, maximizing shareholder value has made everyone very, very rich. But while managers do have duties to their investors, their duties of care, candor and loyalty, it's almost certainly illegal to announce that you're about to reduce shareholder value to benefit for other reasons. 

So for me to say I am running this company, but I think global warming is a problem, and I'm going to cut next year's profits by 10% in order to invest in climate change technology, that's a really bad idea. That's probably illegal. But except in a few well-defined situations, managers have no legal duty to maximize shareholder value in the short-term, and investing in other goals is entirely appropriate if they have a reasonable belief that doing so will increase long-term profitability. 

So if managers were to change their minds, we could change the world. And here's the thing-- markets only maximize welfare when they're fully competitive, when they have full information, externalities are fully priced. So things like carbon and water pollution and microplastics are in the prices. Everyone can play. There's no collusion, and when firms cannot distort the rules of the game in their own favor. And there is no evidence that existing American capitalism even approximates this. 

We are living in a moment where those who control the largest firms are intimately wired into the politicians, and the politicians have told them exactly how much money they need in order to write the rules in the favor of those firms. And the firms came up with the money, and now the administration has written the rules. We are in a classic corrupt oligarchy, and there is no reason to think that maximizing shareholder value under a corrupt oligopoly will maximize general welfare, although it will make you personally enormously rich, not that I feel strongly about this. 

OK, so what do we do? If this is the general terrain, what do we do? Well, I'd love being a college professor, right? Step one, create shareholder value, make money and solve the big problems. No problem. We have over 300 cases at HBS, detailing specific, just getting good, just-- I know, Dean. Lovely to see you. Thank you very much. Thank you. 

Make money, solve the big problems. We have over 300 HBS cases going through the business case for doing this. We know that firms can take-- reduce their energy use, reduce their water use, build entirely new businesses based around these new technologies, and make money. You're going to ask me, would this take you the whole way? No, it takes you about halfway. The statistics we have suggest you could, for example, address about half of the environmental problems we have quite successfully on an NPV basis. 

So that's exciting. I want to give you a concrete example because, again, what I want to come back to is I think the only way this is going to happen at the scale and speed we need is if we can change minds, if we can persuade people that doing inner work is essential. And in today's IPO globalized, very rich senior elite classes, that's a weird proposition. So let's talk about that. You may find it obvious. 

So I want to tell you another story. I want to tell you a story about a man called James Rhee and the women of Ashley Stewart. So James was a first generation South Korean immigrant. He came to the US. He got degrees from all kinds of fancy places, including this one, and went to work in private equity and investment banking. He was very, very good at it. 

But in 2017, he found himself in a warehouse full of bugs without internet service in New Jersey, working with a company called Ashley Stewart. Ashley Stewart made large sizes plus size fashion for a largely African-American audience, and they were right on the edge of going bankrupt. And James, who had recommended to his partners that they invest in this company, felt guilty about it. 

So he agreed to move to New Jersey for six months to turn this company around. And you can see him looking slightly uneasy. So here's his story. We won't see the whole thing, but I'd like to show you a bit of it. 

JAMES RHEE: So today, I'm going to talk about the word goodwill. Goodwill, did you know, is a technical accounting term. It's an asset that's, literally, only created when a buyer shows up and pays a purchase price for a company that's more than the fair value of that company's net assets. So this unexplained differential is named goodwill, and with it, accountants actually can make balance sheets balance. 

Now, of course, this isn't how most of us think of goodwill. We experience the more human definition of goodwill. And I remember very clearly when that definition first entered my life. It was 1976 and I was five years old, and I was sitting there one morning in kindergarten class when in walked the father and older siblings of one of my friends. And they handed me a present. 

They gave me a little toy red helicopter that looked like this. And in the moment, I didn't really understand why they were giving it to me. I just remember sensing that they were happy and sad at the same time. And it wasn't only until much later that I had my uh-huh moment, that my friend had lost his mom recently, and that this gift, it was a thank you because I would, often, share my lunch with my friend on the many days that he would come to school without any lunch of his own. 

And over time, as things happened, I lost the toy, but I never forgot the lesson, especially how it made me feel. My friend's father had rewarded kindness without cheapening it, and he made it tangible with an object, and he made it human in that exchange, and he made it shareable with the story. And in doing all of this, he created real value out of thin air by turning kindness into a scalable, collectively owned asset called goodwill. 

And then for us, for many of us, my life, the years just passed at a dizzying pace and I collected a couple fancy degrees. I became a dad myself three times over, and I found myself wheeling and dealing as an investment banker and a private equity investor for many years. And the lessons from that red helicopter, they seemed incredibly childish and weirdly misguided in the world of business and finance, because let's face it, non-revenue generating investments in people, they're, generally, not measured, let alone rewarded. 

But something happened in the summer of 2013 that would forever changed the way I thought about kindness, goodwill, and their roles in reshaping business. I was on a series of just deflating board calls, involving a failed investment in a company called Ashley Stewart. Ashley Stewart is a clothing retailer that has served and employed, primarily, plus sized, moderate income, Black women in neighborhoods across America since 1991. 

And I felt accountable to my former employer, to my former investors, to the 1,000 plus employees at Ashley Stewart. And frankly, to myself, because I had saved this company from a near death bankruptcy filing just three years prior. And so this time, I did something. I took an action. I made a choice. I resigned as chairman of the board, and I agreed to serve as a first time CEO of this broken company. 

But I agreed to do it just for six months. I just wanted to avert a nasty liquidation, and then I wanted to come home and get on with my life. I had immediate pangs of regret during those first few weeks at Ashley Stewart. The corporate headquarters was a converted warehouse. I just remember there being a lot of bugs. There was no Wi-Fi at the headquarters, and the stores didn't have computers, and because there was a lack of trust, there were vendors in the lobby demanding to be paid, in cash, up front. 

And because of them, a lot of my employees were scared. And so I ended up having to hire an armed security guard to protect them. And I felt alone on every dimension you can think of. Geography, industry, gender, and, yeah, race. My first town Hall, it went something along these lines. Hi, I'm James. I've never done this before. 

I may be the least qualified person to run this company, but I'm here, and I'm willing to learn. Oh, and, by the way, after this speech, I got to head out to the DC. That's a distribution center. So I got to head out to the DC, and I got to find stuff to sell to fund payroll. But don't panic, because I think that if we can center kindness and math together, that, maybe, we can get out of this together. 

And I don't know why I said some of these things with my outside voice, I may have panicked just a little bit, but the words were true. And they did come from my heart. And what happened was that the people who really wanted to solve these problems, once and for all, they stepped up. And it was the women. It was the employees and customers alike at the stores in those neighborhoods across America who came forth. 

And they offered me insight after insight as we worked side by side together. And some of the customers sensing that we were in a lot of trouble, they even offered to bring back their clothes hangers so that we could save money. I know what you may be thinking. You might think, geez, there were a lot of reasons why that the ladies of Ashley Stewart might have rejected me, but they didn't. 

They did the exact opposite. And store after store I worked this way. They would say, you're James? You're the new CEO of Ashley Stewart? Well, OK. Well, let's go. And this played out in town after town, city after city, and their generosity toward one another-- 

REBECCA HENDERSON: And as you can guess, it ended very well. I need help getting back on my slides. If someone could get me back on my slide. He gave the investors a six times back their money. The company became number 10 [INAUDIBLE]. He created enthusiasm and commitment [INAUDIBLE]. 

And he did it through kindness and math. So what was kindness and math? What did it really look like? It meant that one of the first things he did was change out all the light bulbs in the stores. It turned out the stores were very badly lit. The people running the company had never bothered to actually go to the store, and so the bulbs were kind of yellowish and dull looking, and the bad illumination meant that many people were falling off step ladders in the stores because they couldn't see. 

He saw there was an insurance bill. He was like, what's happening? Why are people-- why are people getting sick. And so he went to the store and said, this is ridiculous. He invested several million dollars in dramatically upgrading the lighting. What did that do? Firstly, it meant that kindness was no longer a word. Why did the employees trust him? 

Because he invested a great deal of money in their safety right at the beginning, with no guarantee of return. And when there was better lighting, people fell less off the step ladders, insurance costs went down, and the buyers of the clothes worked out that the clothing was dingy. It was kind of brown and gray because, hey, the source hadn't been licked. So why buy decent clothes? 

So they started buying much more interesting, much more brightly colored clothes. And because the stores were brightly lit, and because the employees enjoyed being there, they became places that people felt safe sending their children to hang out after school and going to pick them up and spending time at the store. They became community centers. They became places that celebrated middle income African-American women and their lives, and dressing them up, and making them feel good. 

And the customers started taking photographs of each other. And that kicked off a huge social media campaign, and internet sales took off. Six times the investment back to the investor because James bothers to run the company thinking about the people as people, and because he ended up being willing to spend seven years in suburban New Jersey. 

So kindness can make a huge difference-- 

SPEAKER 3: In a cooked-up study, five out of six amateur food critics-- 

REBECCA HENDERSON: So I would show you a cool video. But for those of you who stay, a couple of really cool videos of the employees doing their stuff, it's really amazing what James built. But I want to tell you that James's story, it's not common, but it is not unusual either, that some firms are run much better than others. This is a surprising fact. I spent 20 years in windowless conference rooms trying to make go away. 

Within the average industry, the plant at the 90th percentile of productivity, that is the 10% most productive plants, make more than twice the output of the least, the 10% least productive plants, with the same inputs. The economists hated this, 20 years trying to make the result go away. It had to be something about the quality of their education, of the labor force, or the nature of the managers, or the price cost margin, again and again and again. 

But it turned out to be robust. It happened in a bunch of industries. This happens to be airline kitchens, exactly the same, employee base, exactly the same inputs, and the most productive, kitchen was three times as productive as the least, three times the amount of food coming out of the kitchen. It's not about information, it's not that some firms have this magical secret and that-- that's what makes them more productive. 

It's not about competition. The economists thought, well, maybe firms that were in more competitive contexts, they tried harder, they were more productive. No. It comes from the adoption of high commitment work practices, treating everyone with dignity and respect, investing in intensive skills training, using high-powered incentives, and promoting on merit, building world class teams, communicating extensively, giving everyone as much information as possible, and distributing power. 

Huge effects on productivity. Not necessarily huge effects on profits. Why not? Because managing this way is expensive. You have to pay your people decently. You have to distribute power, and, sometimes, there are mistakes. You have to make the investments like upgrading the light. So no guarantee you get super rich managing this way, James did. Brilliant manager. 

But every guarantee that you can survive, every guarantee that you can survive. This is a firm called Mercadona, a famous Spanish retailer, family owned. They run this way and they are outstandingly successful. No one makes money in grocery stores. Just no one, no one, no one. Trust me as a business school professor. And they do. Most profitable chain in Spain. 

Why? Trust. Distribution of power. Treat everyone as a human being. Pretty radical, huh? Super radical. I have a bunch of scholarly work about why it takes so-- why it's so slow to diffuse. But it's really summed up in this slide. OK. So if you manage with purpose, if you really say and act that the business is there to cause the flourishing of humans and that making profits is a means to an end, not an end in itself, you see a shared vision of where we're going, much deeper levels of meaning and authenticity among the employee base, and strong levels of identity, even the accountants in these firms do better because they're proud of who they're working for and what they're doing. 

And these, in turn, give you strategic alignment, intrinsic motivation, trust, and this gives you a very strong result in the literature. But we don't see people, we don't see people adopting these techniques. They're super slow to diffuse. Why are they so slow to diffuse? Because it takes time and energy. Because you have to trust that managing this way will make a difference. And typically, that means two or three years of lower profits as you get the new ways of being into action because you have to redesign the operations of the firm to take advantage of the engagement and the excitement of the employees. 

So Ashley Stewart, all the ordering used to be done at the headquarters. Everyone was micromanaged. James stood that on its head. So everyone ran their own store, picked the merchandise that was best for their own customers, could price in the way that made most sense to them. That takes time to put into place. And it takes trust, and it takes a willingness to believe that your employees are actually people and just as important as you are. 

We have built a system in which people manage on numbers and have taken numbers to be the ultimate measure of work. So the idea that, you, who sell plus sized fashion could be the equal of me, with all my fancy shiny degrees and my bank account, it's a hard thing to think. And if I do think it, well, that means I have to actually connect to you and ask about your kids and know how you feel. 

That's expensive. I actually think that's the most expensive part. And we have created a system which screens for people who are not interested in doing it. He loved the idea that you just manipulate the numbers, and that gets you where you need to go, and no messy human stuff. So why is inner work so important? 

And my guess is everyone in this room could have given this talk. So firstly, what is inner development? What do I mean by inner work? Well, I know enough about inner work to know that I don't really know. So there's a ton of different ways you could think about it. And I'm happy to share these slides with anyone who might find them interesting, and the syllabus of the course I teach where we try and unpack this. 

But you could go hang out with a therapist to get more developed. You could try and connect your inner core to be cultivating qualities, cultivating things like compassion and generosity. You could learn to access stillness and be more present. A number of the great faith traditions have really doubled down on this one. You could become more embodied through dance, music, art and ritual, ditto great faith traditions, right? If we think about religion. 

Big investment here, big investment here, and then you could learn to relate more skillfully to others. This looks like a church. This looks like a sangha. This looks like a listening circle. And of course, we have more modern techniques, such as Social Presencing Theater, but their roots go back thousands of years. In general, can we open to the intuitive, the relational, the experiential? 

And if we had more time, we could go off into a deep and interesting conversation about why it is that our society has so privileged the cognitive, the analytic, the separate. It's partly because of those slides I showed you before. It really worked. It really worked when we broke the world into pieces, when we separated ourselves, we got all this stuff. We didn't have to eat turnips and die at 40. 

But what we lost was most of this. I mean, you show this slide to the average MBA student and they're like, well, you saw James. He said, we don't really do that in finance and private equity. I'm getting good quality giggling to my right here, which is entirely appropriate. But this is the answer. This is the answer. So all we need to do is rediscover this. 

And I thought, you might be curious, like who was James? How did he end up doing this? Why did the people he worked with trust him? Super interesting. This is James with his mother. First generation South Korean immigrant, highly trained in Korea, ended up working retail and cleaning jobs in the States to give a better life to her children. 

And when James walked into Ashley Stewart, he didn't see plus sized African-Americans. He saw his mother. And they could see that he saw that, people trying to get through under terrible circumstances and consistent discrimination. Deep spiritual stuff. He doesn't use spiritual language with friends now. He doesn't use spiritual language, but he's a deeply spiritual person. 

So why inner work? Well, if we could support people in doing this, why might it help? Well, it might help us in building the emotional capacities and nervous system regulation that would let us really face what's happened. It might take us back to our values, allow us to cultivate empathic connection, liberate the imagination, build a sense of agency, and get some sense that there's more going on than just me. 

This is not a crazy list. Most human societies for thousands of years invested heavily in making sure that their children had these skills. We can do so again. And here's the good news about these codes. I think it's going to become quite obvious that the model is broken. The hunger for connection, the hunger for community, the hunger for meaning, the hunger for the idea that there is a way through is going to get stronger and stronger. 

I don't think there's going to be a mass spiritual awakening overnight, although I have friends who believe that, and I always say, I really, really hope you're right. What I think we might see are groups working together to manifest these qualities and to build the alternate economic system. So here are a few of the people I've worked through over-- worked with over my career. This guy, for example, is particularly spiritual, and I'm not making this up, particularly spiritual and raise the compensation of his lowest employees by 20% in a single move, nearly got himself fired. 

So could this be a route to reimagining capitalism, and politics, education, and civil society? If we grounded capitalism in purpose because, and this is my book, if we really created shared value, if firms work together to address those problems that weren't profitable for any one of them to handle, if we rewired finance and accounting, lots of work on how to do this, we know how to do this so that our measurement system reflects the Economic system we want, so that it creates human flourishing and not mere profits. 

If we rebuild our institutions, and if we ground our politics in love, this is another two hour lecture, but it's not crazy. Democracy was always grounded in love. You have to love other members of the society to trust them. If I'm going to let you take power, I have to have respect for you. I have to think that our shared love of this common institution is worth taking the risk of you guys get a turn in office. 

And this diagram that for years I put up so easily, I'd just say, well, we just need free markets and effective government, healthy democracy, rule of law, free press, a voice for labor, it turns out that these are not based in rules. They are based in hearts. They are based in norms. They are based in beliefs. And so for years, having carefully avoided any mention of inner work, or love, or connection, or compassion, I have come to believe that it is absolutely essential that we could begin to build what, sometimes, called islands of coherence. 

These examples of a new system in action, that as the world starts to fall apart, could be places that people look at, imitate sources of hope. There's a whole bunch of systems theory behind what I'm saying. But essentially, as things fall apart, it creates openings. And in those openings, you want to have examples of what might work as places for the new thing to crystallize around it. So all we need to do is rethink government, reimagine capitalism, build massive social movements, and, oh, yes, do them over. 

And as I say, I am not suggesting that this will happen overnight. I am not suggesting that the mass of people will go, gotta meditate, gotta pray, gotta dance. No. I'm suggesting that we [AUDIO OUT] We [AUDIO OUT]. But this is what leadership at this moment is. Every student at our great University should at least be exposed to the idea that going inside, rooting in love is absolutely the important thing. 

And then, of course, exposed to, and what would that look like in institutions. That's why I took you through the Ashley Stewart example. I wanted to give you a sense that this is not crazy, that how to build governments and firms built on love, and that it will not destroy our economy, rather the reverse. So thank you very much. If I'm happy to share slides with you, I'd be delighted to share the syllabus of the course I teach, which is all about, OK, A, what is inner work and what would it mean you did on Tuesday morning. 

I ask everyone to meditate and dance and do rituals and the whole thing and let's do it. And then what would it look like in action. So examples, case examples, what would it look like, and has this ever happened before. Has it ever happened before? So thank you very much. 

SPEAKER 4: Sponsored by Religion and Public Life at Harvard Divinity School. 

SPEAKER 5: Copyright 2025, the President and Fellows of Harvard College.