John Mackey's Whole Foods Vision to Reshape Capitalism

From Fast Company December 2009

By: Danielle Sacks

John Mackey, the Libertarian CEO of Whole Foods, says not to worry: Capitalism and the invisible hand will cure the world's ills. But isn't it a little late to start believing in magic?

These days, Mackey finds himself in the role of accidental prophet. "Pioneers are the ones who have to hack through a jungle and create a road," he tells me, offering an allegory for his Conscious Capitalist quest. "The only thing that frustrates me sometimes," he adds, "is that I feel like I've been hacking away with a machete in the jungle for the last 30 years, and sometimes people come up and say, 'Man, this is as far as you've gotten? You should have done more.' "

But the way Mackey sees it, Whole Foods has already left the world in better shape than he found it. "If I get run over by a truck later today, I will have already in my life made a difference in helping many people," he says. "Customers are better off because millions of people are eating in a way they never would have had we never existed. Our team members are better off because we've created a company that's a great place to work. Our suppliers have flourished along with Whole Foods and have made a lot of money from their association with us. And our investors have made a ton of money."

For those companies aspiring to become Conscious Capitalists, Mackey says there are four ways to get there. They can pursue one of four ideals -- the good, the true, the beautiful, or the heroic -- or any of them in combination. "Plato said the good, the true, and the beautiful, and I added on the heroic," he allows. Indeed, Mackey has always considered himself a philosopher in the making, once telling Time that if his ex-girlfriend had never persuaded him to launch Whole Foods, "I'd probably be in an attic somewhere scribbling off insane philosophies that nobody reads." The pursuit of any of these shiny goals, he says -- harmonized with the needs of all a company's many stakeholders -- will deliver the enterprise to a Conscious Capitalist state of perfection.

Yet Mackey's interpretation of what constitutes higher purpose can be perplexing. He singles out Nordstrom and Southwest Airlines (for their deeper pursuit of great customer service, or "the good") and Four Seasons Hotels and Berkshire Hathaway (for their obsession with perfection, "the beautiful") as examples of companies that have attained an ideal state. "Do you know what Southwest Airlines' stock symbol is?" Mackey asks me, busting to spill the punch line. "It's L-U-V, love! Think about the businesses you most admire in the world. You'll find almost all of them are pursuing one of those deeper passions."

Another of Mackey's Conscious Capitalist exemplars is the Container Store. "Our purpose is to organize people's lives to save them space and time. There's a certain Zen quality to being organized," says Kip Tindell, CEO and cofounder, noting that the company's other deeper purpose is "to be the best retail store in America." Ever since Mackey turned Tindell on to the Conscious Capitalism model, the purveyor of plastic tubs says he's seen the light. "Capitalism has a bad public image," Tindell says. "Socialism doesn't work, communism doesn't work -- this [capitalism] is the winner. It just needs to be modified a bit, practiced in a way that isn't so mercenary."

Tindell, says Mackey, is a pursuer of the good. And indeed, the Container Store pays its employees very well -- some 50% above industry average. But he doesn't seem overly concerned with the "holistic" attention to all stakeholders that purports to be at the center of Conscious Capitalism. When I ask Tindell what he meant by the Container Store being a "sustainable business," he replies, "The business will endure long after I'm gone." The retailer's obligation to the earth -- arguably a critical stakeholder -- consists of little more than a corporate-recycling program. Meanwhile, the environmental policy on the company's Web site borders on parody: "A commitment to sustainability includes having salespeople who anticipate customers' needs so they get everything they need in a single trip to the store." At the same time, Tindell (who recently joined Whole Foods' board and is hosting a Conscious Capitalism Summit next year) is not shy about the financial rewards of his message: "We're not just a couple of altruistic guys espousing nice views; this stuff really works. If all you wanted to do was make as much money as possible, as fast as possible, this is the way to do that."

In Mackey's eyes, Whole Foods itself pursues both the good and the heroic. And the nation's largest seller of natural and organic foods does boast many noble practices: Nonexecutive employees hold 96% of the company's stock options; 5% of the company's after-tax profits are given to charity every year; no executive can make more than 19 times the employee average; and after much criticism from activists, it has shunned purchasing meat from factory farms. "The rule is not conflict of interests -- it's harmony of interests," says Mackey, who reduced his salary to a dollar in 2007 (he still owns about $36 million in stock). "The leader needs to manage the enterprise in a way that you're creating synergies rather than trade-offs -- that's the art of conscious leadership."

Read the rest @ Fast Company