A closer look at... Humanistic Capitalism

This month, I’m taking a closer look at… Humanistic Capitalism.

Coined by Brunello Cucinelli, Humanistic Capitalism is an approach to business that appreciates our shared human condition and encourages the moral and economic dignity of humanity.

To me, Humanistic Capitalism sets the tone for business as a conduit for connection.

What does this mean from an operational perspective? And, most importantly, how can all of us incorporate Humanistic Capitalism into our own work?

Friendly reminder - this is not part of our weekly newsletter curating connection. ‘A closer look at…’ series go out as monthly deep dives into conduits for connection. Past issues include a closer look at private members’ clubs and agritourism.

Did a friend send this your way? Sounds like they know you. Subscribe here.

Here’s to connecting,

Andy

Brunello Cucinelli set out to build his namesake brand in late 1970’s Italy at the ripe age of 25. A cashmere supplier and dyer later, Brunello was in business with six colored sweaters ready for sale.

Since, the company has grown to €1.1bn+ in sales, an EBITDA margin of c. 30%, and 152 stores worldwide as of December 2023. It went public on the Milan Stock Exchange in 2012 and has a market capitalization of €6.3bn as of the date of this publication.

Unsurprisingly, Brunello Cucinelli is called the ‘King of Cashmere’. His brand is credited for putting ‘quiet luxury’ in the map and his garments are worn by the likes of Oprah and Jeff.

Impressive for any man, let alone one growing up in rural Italy. What’s most impressive, however, is not what Brunello Cucinelli built but how he built it. That is, through Humanistic Capitalism.

Humanistic Capitalism is Brunello’s approach to business, which appreciates our shared human condition and encourages the moral and economic dignity of humanity. It’s putting human beings at the center of capitalism, as ‘brothers and sisters of the world’, arguing the model is as sustainable as the humanity that pushes it forward.

The roots of Humanistic Capitalism trace back to young Brunello himself. In his book, Il Sogno di Solomeo, Brunello recounts growing up in contact with nature as part of a large, closely-knit farming family. Their home, shared by 13 people, did not have electricity or running water. And even with plenty of mouths to feed, Brunello’s grandfather would give the first bale of wheat harvested back to the community. Despite this, or likely because of it, Brunello describes this period of his life as one ‘in harmony with Creation’.

To a certain extent, young Brunello took this harmony between individuals, communities, and the Earth for granted. That’s just how the world was - balanced. However, everything changed when his father took on a factory job. One day, his father returned home with tearful eyes and a ‘broken soul’ after being humiliated at work. Brunello took this offence not only personally, but also as a general offence to the dignity of human beings. He decided then and there that he would work his entire life towards promoting the moral and economic dignity of humans. Hence, Humanistic Capitalism was born.

This pushed Brunello to dream of how he would set up his business before knowing what his business would do. He envisaged more pleasant workplaces, where employees could enjoy views to the outside and natural light. Where everyone would earn ‘a little more’ and be treated as a ‘thinking soul’. Where products were made to delight customers and workers alike. Where beauty and creativity were a part of everyone’s work, regardless of their role (see: Danny Almagor’s concept of Beautiful Portfolio Theory).

A business where human relationships were humane. A business that made a profit, in an ethical and moral way.

Cashmere sweaters, in the end, were simply a tool for Humanistic Capitalism. A conduit for connection. Brunello was not in business to sell garments. He was in business to restore Human Sustainability through moral and economic dignity.

Fast forward to today, where Humanistic Capitalism at Brunello Cucinelli operates through six carefully outlined pillars: environmental, economic, technological, cultural, spiritual, and moral sustainability.

These pillars encompass humans as individuals, as part of a community, and as part of the planet. It’s what makes up Human Sustainability and what pushes Humanistic Capitalism forward.

Although these should be relatively straightforward to understand, here’s what the pillars mean from a business perspective:

• Environmental sustainability: Embrace practices that regenerate, reuse, repair, and recover resources. Ensure harmony with nature

• Economic sustainability: Advocate balanced and steady economic growth, fair wages, and a healthy work-life balance

• Technological sustainability: Support the responsible use and development of technology as a way to enhance human life

• Cultural sustainability: Make cultural resources available to all, foster a vibrant connection between culture and wellbeing, and invest in the arts

• Spiritual sustainability: Recognize the importance of spiritual wellbeing. Integrate beauty and contemplation into the every day

• Moral sustainability: Emphasize ethical business practices, fair pricing, and a responsible distribution of profits. Foster a culture of trust, respect, and honor

The functionality of Humanistic Capitalism and Human Sustainability is epitomized in the hamlet of Solomeo - Brunello Cucinelli’s headquarters. A two hour drive from Florence, the hamlet is not only the company’s home but also the man’s social and economic experiment.

As the company grew, so did the influence of Humanistic Capitalism and Human Sustainability in the town. Every year, the company reinvests 20% of its profits into the community as part of its Humanistic Capitalism approach. In the last few decades, and living up to the pillars listed above, Brunello Cucinelli has built:

• The Forum of the Arts: A theatre and amphitheatre for plays, concerts, music festivals and ballet;

• The Universal Library of Solomeo: A library and events space focusing on history, philosophy, culture, and dialogue;

• The Park of Dignity: Home to the ‘Tribute to Human Dignity’ monument. A place for reflection in nature; and,

• The School of Contemporary High Craftsmanship and Arts: Former workshops turned classrooms training the artisans of tomorrow

Besides restoring historical buildings and introducing beauty, art, and philosophy across town. None of which would bear any meaning were people unable to enjoy them. However, work at Solomeo and Brunello Cucinelli is structured according to Humanistic Capitalism and Human Sustainability. Among others, everyone gets a mandatory 90 minute lunch break during which the factory is closed and people are encouraged outside, emails cannot be sent to more than two people at once, and there is no work past 5:30pm or the weekends.

Side note: I wasn’t necessarily skeptical of this paradise, but definitely curious. After visiting in February 2024, I can say it’s magical. Beauty is everywhere. Values are literally written on walls. I spotted Brunello’s daughters strolling near the Park, like any other employee and citizen. It is a striking example of business as a conduit for connection.

Humanistic Capitalism is not for the faint of heart. The hamlet of Solomeo, a physical representation of the company’s values, has taken decades to build and restore. It’s probably also taken the company a few tough conversations, as caring for employees’ souls is an investment few would underwrite.

Wanting to prove financially what they believed morally, the team at Brunello Cucinelli set out to calculate its Social Return on Investment (SROI): ‘a quantitative measure of the social impacts generated against the economic value of the investments made by the company and related stakeholders’.

The conclusion: for any capital invested, the company had been able to generate a social return on investment twice as large. A value not (yet) flowing directly through the company’s P&L, but through its customers’ loyalty, its employees’ productivity, and the overall wellbeing of the hamlet of Solomeo.

The challenge for us is - how can we embrace Humanistic Capitalism and Human Sustainability in our own work?

If you got this far, I encourage you to build your own version of Solomeo. Understand that how you do business is as equally powerful as what you do. Above all, put people back at the center of the equation.

That simple, and that hard.

SOURCES

As per available public information.

All data pertaining to Brunello Cucinelli as of December 2023, as per latest available financial statements.

For more on Humanistic Capitalism, check out Brunello Cucinelli’s G20 speech and the company’s website. For more on Brunello Cucinelli himself, you can listen to his episode on Founders and read his book (heads up: it’s in Italian).

We’ll talk soon. Thank you for joining me at Casa Cinco.

Did a friend send this your way? Sounds like they know you. Subscribe here.

Was this marked as spam? ChatGPT that thing and take me to your main inbox.