Whole Foods Is All Teams

The main vehicle for competition at Whole Foods is an elaborate system of peer reviews through which teams benchmark each other. The "Store Tour" is by far the most intense. On a periodic schedule, each Whole Foods store is toured by a group of as many as 40 visitors from another region. It's not a casual visit. The touring group includes regional leaders, store team leaders and associate store team leaders, and leaders from two operating teams (say, grocery and nutrition) who work intensively with their colleagues in the store. The tour is a two-day mix of social interaction, reviews, performance audits, and structured feedback sessions.

Sometimes competition becomes excessive. About a year ago, senior executives began sensing that the hoopla and preparations surrounding store tours were getting out of hand, even becoming counter-productive. "People were over-buffing their stores to the point that the tours weren't truly representative of what the store was like," says Chris Hitt, 46, president of the northeast region for Whole Foods. Hitt has been with the company since it was just four stores and a warehouse. "People were coming in at two in the morning to get ready, making special T-shirts for the tour, putting together four-color booklets. They were exhausting the staff. It was hell week. People have toned it down since then."

The TCS review ("The Customer Snapshot") is another key exercise. Ten times a year, each store is toured by a headquarters official or regional leader and rated on 300 different items. Unlike store tours, the TCS is a surprise inspection. It lasts a full day, and the ratings carry great weight inside Whole Foods. Once a month, every store's TCS results go to every other store. The ratings become yet another way for stores and teams to compete with each other.

"What this has built in the company," says Whole Foods President Peter Roy, 39, "is a culture of incremental progress."

Lateral learning -- finding out what your colleagues are doing right and carrying those practices into your organization -- has become a driving force at Whole Foods. Ron Megahan routinely examines printouts of the top-selling products in other stores and regions to find out what he can learn. "This isn't rocket science," he says. "I want to see the products that are moving in another region."

John Mackey puts it another way: "If you don't cross-pollinate, you become a hick."

Sustainable Success

Whole foods market has spent 16 years refining its culture of democracy and discipline. That culture is about to be put to its most serious test. The company wants to jump from 43 stores to 100 stores by the year 2000, and at least to double sales to $1 billion. The question isn't whether it can make the numbers, but whether it can become a billion-dollar company without losing its character.

One way to transfer a culture's values is to transfer people who embody them. Today when Whole Foods opens a store, it looks for company veterans willing to accept major roles at the new location. In general, the company likes to recruit up to 30% of the new staff from its existing supermarkets. The recently opened Georgetown Bread & Circus in Washington, D.C. is typical. Its staff includes a produce team leader from a Providence, Rhode Island store; meat and seafood team leaders from its Austin stores; a grocery team leader from Boston; a beer/wine/cheese team leader from North Carolina; a front-end team leader from Ron Megahan's store in Wellesley.

Peter Roy says sustainable growth has been a worry at Whole Foods from the beginning. But he's philosophical about the challenges ahead: "When we went from one store to two, people said, 'It's not going to be the same feeling; you're getting too big.' When we opened the third store, people said that would push us over the edge. Now we're opening store 43, and the company is definitely getting too big! But it's not the size of the company that creates the feeling. It's the core values. It's like making yogurt or sourdough bread. You can't dilute it too quickly."

Charles Fishman (fish@nando.net) is a journalist based in Raleigh, North Carolina.

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