Opinions about Whole Foods Market’s CEO John Mackey run the gamut, but one fact remains: he founded and leads one of the only Fortune 500 companies that places an emphasis on doing business consciously. Whole Foods Market has proven to the world that a business doesn’t have to sacrifice its bottom line in the name of ethics, but can, in fact, prosper as a direct result of its sustainable practices.
“Conscious businesses recognize the interdependencies that exist among all stakeholders and value those relationships equally.”
The Core Values at Whole Foods Market (WFM) speak volumes about the company’s culture. What is the most difficult part of bringing these to fruition? Are some more challenging than others and, if so, why?
John Mackey: We began with five core values and added more as we’ve evolved and as the company has grown in terms of geography, impact, and consciousness. We now have eight. They are our constants and they keep us grounded. So, I don’t think of it
as bringing core values to fruition, but rather using them as our guiding principles and a compass as we grow the business. The challenge is to keep them all balanced to create win-win situations that ensure all stakeholders are equally happy. This creates a sustainable, conscious business system.
We’d love to know about times that Whole Foods has gone through a strategy pivot. How did you conclude these pivots were necessary? Which of these decisions have come from a mission- or purpose-driven place as opposed to a profit-driven place?
JM: There’s a chapter in the book about our store in Madison, WI, that talks about how we fell short on caring for our Team Members and supporting their happiness and excellence in the workplace. Several Team Members there opted to call in a labor union for third party representation. Although a contact was never activated in that store and the Team Members who continued to work there ultimately voted against union representation, it was a wake up call for us and for me personally.
I traveled the country and visited every single one of our stores over the next 12 months, having one-on-one discussions and group meetings with Team Members to see how we could do a better job supporting them. We made changes to ensure leadership in Madison and across the company were actively serving the purpose and mission of the organization and that we were “walking the talk” on this front. It had nothing to do with profits, but preserving, spreading, and reviving the amazing culture that our Team Members have created over the years.
What have been some of the most difficult choices you have had to make regarding WFM?
JM: There have been many difficult choices along the way. I’ve found that if I truly follow my heart, the business decisions turn out to be sound ones. One very difficult decision was when I had to ask my father to move on from being the Chairman of the Board. He had been my coach and mentor from the time I was 25 until I was about 40. Without his guidance, I’m pretty sure I would have wrecked Whole Foods Market in my youth. But, there came a point when he wanted me to lead the company differently than I thought we should – conservatively and without taking risks – and something had to change. Our disagreements were interfering with our personal relationship. It was a very difficult decision, but it was the best thing for me and for the company. It was a huge leap forward in my own personal growth.
Can you speak to the challenges that WFM has experienced in the company’s impressive expansion and growth? Did any of these challenges come as a surprise?
JM: One of the most pivotal moments of the company happened early on during the Memorial Day flood of 1981, when Austin experienced the biggest flood in more than 70 years and which devastated the city. It left our store with nearly eight feet of standing water and almost wiped us out. That experience drew our young company together though. It demonstrated to us that all our stakeholders have the potential to form close relationships with us, to care and to commit intensely. Our Team Members grew closer together, our commitment to our customers was greatly deepened, and we came to understand that we were actually making an important difference in people’s lives. If all of our stakeholders hadn’t cared so much about our company then and come together in support, Whole Foods Market would have ceased to exist. It’s pretty humbling to think about that.
In the last five years, WFM has developed its Animal Welfare Rating System. Did WFM decide that this was a necessary step because there was nothing comparable in existence? What business challenges have come along with this significant shift?
JM: In 2003, animal rights activists showed up at the Whole Foods Market annual meeting and picketed us, trying to coerce us to stop selling duck meat from one of our suppliers. I began a dialogue with one of the activists, Lauren Ornelas, after the meeting ended. At the time, I believed Whole Foods Market already had the best animal welfare standards of any food retailer in the US. Lauren told me that, while I was well-intentioned and idealistic, I was also grossly uninformed when it came to animal welfare. I was taken aback by some of her harsh criticism, but I accepted her challenge to become better informed about animal welfare.
That summer, I read a dozen books about the livestock industry and animal welfare to better educate myself. By the end of the summer, I realized she was absolutely right – I was horrified by what I had learned. I personally changed my diet as a result of this experience and became a vegan, but I also wanted Whole Foods Market to begin to collectively engage with these animal welfare activists so they could help us improve our animal welfare standards. I felt the company had an ethical responsibility to do a better job finding suppliers who took better care of their animals. This conversation ultimately led us to the multi-stakeholder approach that resulted in our Global Animal Partnership 5-Step Animal Welfare Program, which is something we are extremely proud of as a company.
One of the company’s Core Values is selling the highest quality natural and organic products available. What challenges come along with this?
JM: Without a doubt, our quality standards are what set us apart in the industry and we’ve set the bar high in all departments. We don’t always get credit for the behind- the-scenes work we do on these standards, but our core shoppers know the lengths we go to and really appreciate the effort. They help us get better every day by demanding more transparency and deeper standards, which helps us constantly evolve and push the industry to prompt positive change.
The challenge is maintaining our standards but continuing to experiment and innovate so that we don’t become complacent. We’re a multi-regional company that empowers our stores and regions to experiment with new ideas and concepts and to take risks – great ideas are celebrated and oftentimes replicated, but we also have plenty of misses. If you aren’t willing to take risks though, you will never be able to grow as a company.
Many of the large grocery store chains now offer natural and organic products in a portion of their stores. Has this had an effect on WFM either positively or negatively? Has WFM shifted its strategy or operations in any capacity as a result?
JM: There was a time when Whole Foods Market was one of a handful of options when it came to the niche sector of natural and organic foods. The explosion of growth within the industry, which is in part a testament to the work Whole Foods Market has done over the past 36 years, has caused a spike in competition from small natural chains and conventional chains who imitate us. We need to continue to innovate, experiment, and differentiate ourselves at a faster rate than ever before to continue to give our shoppers an unmatched experience and the best quality products that taste great and differentiate us from our competition.
Increased competition has forced us to look more closely at our pricing strategy and do a better job of conveying our value offerings – we look at it as a good thing because it forces us to do better. Nobody in the industry can match the level of quality standards we maintain across all departments, so it’s about balancing the quality with value to ensure there’s something for everyone in our stores.
Do you feel that you have ever had to compromise on any of your Core Values as a result of your fiduciary responsibility to your shareholders?
JM: All of the decisions we make as a company support the company’s mission and higher purpose – we don’t make decisions solely based on profit. Conscious businesses recognize the interdependencies that exist among all stakeholders and value those relationships equally (we call this Win6 in the book). When the relationships aren’t equally valued, you run the risk of one of the stakeholders becoming overly dominant and potentially cancerous, threatening the well-being and balance of the entire system.
Every company needs to make money, but if that’s your sole purpose and you fall into the trap of tradeoffs at the expense of your other stakeholders, your business will eventually fail. When all stakeholders – customers, suppliers, team members, shareholders, the environment, and community – are seen as interdependent and everyone wins, the level of performance is elevated exponentially and so is the potential for future success.
Since the publication of your book, Conscious Capitalism, have you come across other companies that are operating consciously that you did not mention in the book and, if so, which ones?
JM: Conscious Capitalism is a revolution that has already begun. Since the book launched, Raj [Sisodia] and I have heard from hundreds of smaller, lesser known companies that are embracing the tenets of Conscious Capitalism. Companies like Oklahoma’s First United Bank, Nick’s Pizza & Pub in Illinois, and Studio Movie Grill are a couple examples, but there are many more. The incentive to participate in Conscious Capitalism is not only to do good, but to achieve higher financial performance, a sustainable business, and deeper and more beneficial relationships with stakeholders.
Besides costs and revenue, what are the most important metrics to measure for a purpose-driven business?
JM: There are four key tenets of Conscious Capitalism – stakeholder integration, conscious leadership, higher purpose and core values, and conscious culture and management. They represent the essential elements of an integrated business philosophy that must be understood holistically in order to be effectively manifested.
What have you learned from failure, both professionally and personally?
JM: If you want to learn and grow, you have to be willing to make mistakes. For many people, failure is something that’s difficult to admit to and they will defend their decisions at all costs when questioned, but if you don’t take time to pause and reflect on lessons learned, you’re bound to repeat your mistakes in the future. Learn from them and quickly move on. It’s not easy, but being more conscious and living “in the moment” is something that has helped me tremendously both personally and professionally. One of the biggest lessons I learned was from the SEC [Securities and Exchange Commission] investigation that occurred when the FTC [Federal Trade Commission] was trying to block our acquisition of Wild Oats in 2007. I explain the situation in detail in the book, but basically after the Commission downloaded all of my emails, they learned that I was posting under a screen name on Yahoo! message boards focused on Whole Foods Market and Wild Oats. I did it for fun and everyone uses screen names on the site, so I certainly didn’t think I was doing anything illegal. My reputation was smeared by the media and, because I was under investigation, I wasn’t allowed to publicly defend myself, so I had to listen silently as distorted attacks came in from all sides through the media. The SEC ended its probe concluding I did nothing illegal and the WFM Board concluded the same thing. The experience was painful, but instead of contracting and getting defensive, I expanded my consciousness and was able to turn a crisis into an opportunity for growth – personally, spiritually, and professionally. One of the most important lessons I learned was that I am a public figure now and I need to be more conscious of everything that I do, say, and write. From that point on, I began asking myself the question, “How would I feel if what I was doing right now appeared on the front page of the newspaper or ended up on the news? Would I still do it?”
What advice would you give to someone who is starting his or her own company?
JM: My biggest piece of advice is to follow your heart. Take time to ask the “big” questions like, “Why am I here? What do I care about? What excites me?,” and answer your true calling. Life is short, so don’t cheat yourself by doing something you don’t love and believe in.
What advice do you have for building a board?
JM: Look for people who are invested in the company over the long-term and believe in the higher purpose of the company. Those who are only looking for short-terms gains and an immediate return on investment aren’t going to help move the company forward in a way that’s mutually beneficial to all stakeholders.
What is your vision for the future for WFM?
JM: Our higher purpose is constantly evolving by tapping into our heightened level of consciousness for the good of Whole Foods Market, our stakeholders, and for society as a whole. Right now, we are focusing on contributing to solutions to improving the health of Americans by providing education and healthy foods. We are working on improving agricultural systems to make them more sustainable and humane, yet more efficient. And we are helping end poverty globally through microloans to women in developing countries.
Finally, what makes you smile most?
JM: I am an avid long distance hiker, so I really enjoy being in nature – it has its own rhythm and pace that helps me resynchronize. I also feel most at home with my wife, Deborah, when we are spending time out at our place in the Texas Hill Country or traveling together. Currently, we are in India, which is a very special place to Deborah.
"If you want to learn and grow, you have to be willing to make mistakes."