Is Whole Foods A Viable Model For The Future Of Capitalism?

The organic food giant’s CEO John Mackey’s new book touts a vision of making money and doing well, but is the story of Whole Foods a path for all businesses to follow or just an interesting individual case study?

Stacked against the expediency of most American commerce, Whole Foods is a stand-out: It rewards its employees reasonably, emphasizes their autonomy and creativity, pays its execs at non-plutocratic multiples, sets standards for animal welfare, gives a leg-up to artisan producers, has strong environmental commitments, uses 100% renewable power. And so forth. It is also profitable. Last year, Whole Foods had sales of $11.7 billion, and income of $744 million.

Is it a model for the future of capitalism?

John Mackey, who founded the supermarket in the late '70s, thinks so. And his new book, Conscious Capitalism, written with the marketing professor Raj Sisodia, lays out the plan in great detail. According to the authors, Whole Foods is in the vanguard—along with Google, Amazon, Starbucks, Panera Bread, UPS, and others—of a new type of business: purpose-driven, inclusive of stakeholders, capable of "doing what is right because they believe it is right." And they want others to join them, not only because it’s the right thing, but because capitalism itself needs saving.

"Businesspeople have allowed the ethical basis of free-enterprise capitalism to be hijacked intellectually by economists and critics who have foisted on it a narrow, self-serving, and inaccurate identity devoid of inherent ethical justification," the authors say. Capitalism has an "intrinsic goodness and virtue"—but too many managers operate with "low-consciousness," and believe "profit maximization" is their only responsibility. The result has been significant environmental impacts, "stressful and unfulfilling working conditions," "unhealthy appetites and addictions," and a fall in business’s social legitimacy.

The solution is "conscious capitalism," which involves companies appreciating their "higher purpose," so that stakeholders are "less likely to care only about their immediate, narrowly defined self-interest." It means integrating stakeholders to "create win-win-win-win-win-win … solutions to transcend … conflicts and create a harmony of interests." It means developing leaders with "finely developed systems intelligence" that "transcends the limitations of the analytical mind that focuses on differences, conflicts and tradeoffs." And it means a work environment based around "decentralization, empowerment, and collaboration."

Much of the book is taken up with explaining these four requirements in detail, and including lots of examples of where Whole Foods—and occasionally other companies—have come up to the mark. The point is to show that "conscious capitalism" is achievable. If Mackey can create a large Nasdaq-listed business, anyone else can—and they should.

The thing is, a lot of what Mackey and Sisodia say is quite old hat, by now. The idea that companies should cater to their stakeholders as much as their shareholders, and that there might actually be benefits—financial as well as moral—is well established. To hear it from someone who has done it is inspiring, of course.

But more seriously, there’s a question of how practical the blueprint is. Many of the ideas are generalized, as if every company can adopt them. But that’s unlikely. For example, some companies will struggle formulating a purpose, because they don’t really have one (beyond producing a certain product or service). Hence, when Mackey and Sisodia talk about the purposes of existing companies, they come up with vague phrases like: "To use our imaginations to bring happiness to millions" (Disney), "To alleviate pain and suffering" (Johnson & Johnson), "To enable people to experience the joy of driving" (BMW).

In an interview, Mackey says companies should bring together 200 to 300 stakeholders for a multi-day "purpose search." He concedes the decided-upon purpose may have to be "broad and encompassing"—but "it can still be meaningful and resonate with stakeholders," he says. "Any product or service, no matter how seemingly mundane, can be infused with deeper meaning and relevance." But is that conscious capitalism?

In the appendix, the authors respond to anticipated criticisms of their argument—for instance, that only companies operating in premium categories can afford to be conscious. Their answer is to say: "Conscious Capitalism works for all kinds of businesses because it achieves a level of effective efficiency that traditional businesses can’t match. Conscious businesses generate higher sales relative to their asset base, have highly productive and effective team members, spend money where it makes a real difference to customers, and do not squander resources on things that do not add value." There is no evidence for this claim, however, and no definition of what a conscious business is, beyond the vague idea that there are new types of businesses out there that operate differently.

All in all, the heart of this book is in the right place. But it takes an awfully long time to get there, and it’s framed with a lot of wooliness, spiritualism, and wishful thinking. Find your purpose, integrate your stakeholders, and keep shopping at Whole Foods, if you must.

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