John Mackey's Whole Foods Vision to Reshape Capitalism

Enlarge

Photograph by Dwight Eschilman

Enlarge

BUILDING TO SCALE Jeffrey Hollender recently converted Seventh Generation into a B Corporation, a new for-profit status that imposes social as well as financial goals. | Photograph by Bob O'Connor

---

Related Content

related link

Conscious Capitalists Focus on the Ideals of Businesses

Just to be clear, John Mackey isn't Moses. "It's not like you go up to the mountaintop and God talks to you: Here is your purpose -- execute," he says.

"It is something you discover and also create." Mackey, founder and CEO of Whole Foods Market, is riffing on the gospel of what he calls Conscious Capitalism. It has been a brutal couple of months for Mackey, who simultaneously became both the punching bag of the progressives and the poster boy of the right wing late last summer, after writing an op-ed in The Wall Street Journal that railed against a government health-care option. Liberal Whole Foods customers organized nationwide boycotts, while self-described "radical conservative" Tea Party types rallied around Mackey, calling for Whole Foods "buycotts." Now, sitting in a soulless beige conference room in Whole Foods' Austin headquarters, with Mount Bonnell looming beyond the window and two protective publicists at his side, Mackey finally starts to relax.

"You see, Conscious Capitalism is a fairly new idea, but it's going to have a huge impact," he begins, describing the philosophy he developed as he built his tiny natural-foods store into an $8 billion retail beast. "I do believe it will become the dominant paradigm of business in the 21st century." Conscious Capitalism, Mackey insists, moves corporations to refocus on purpose instead of profit. In theory, it underscores the importance of all of a company's interdependent "stakeholders": employees, customers, shareholders, suppliers, community, and the environment. When all of those constituencies' interests are factored into the company's decisions and aligned, his thinking goes, all -- including, not incidentally, the bottom line -- will flourish.

Two years ago, Mackey began rolling out his Catalyzing Conscious Capitalism Summit, which he will be expanding to Europe and India next year. He's building a Conscious Capitalism Alliance to help formalize the enthusiasm and sells a two-and-a-half-hour audio series that lays out the blueprint for aspiring Conscious Capitalist companies (he has trademarked the phrase). Mackey, 56, has also hit the road, visiting more than two dozen universities to inspire the next generation with his seductive message.

It would simplify things if Mackey's theory proved true. "Businesses that are more conscious of making a positive difference in the world make the world a better place from just being there," says Mackey, whose office sits next to the Austin store, an 80,000-square-foot altar to wholesomeness. "That all results in higher profit and higher return on capital. There are no losers." That sounds mighty appealing. But haven't we been down this road?

The rise of Whole Foods Market reads like creation myth at this point. It was Austin in the late 1970s, and Mackey, the shaggy-haired college dropout, wanted to meet some "interesting women"; so he moved into a vegetarian co-op popular with the ladies. He got a job at a natural-foods store, realized retail was a pretty simple game, and resolved that he and his new girlfriend (scored, of course, at the co-op) would open their own natural-foods store and café in an old Victorian house. "I was 24 years old. I started out wanting to have a company that had good healthy food and to earn a living," says Mackey, in a lulling Texas cadence. "Did I start out wanting to change the world or change people? Of course not, it would take a total megalomaniac to do that."

Since his teens, Mackey had been on a quest for meaning and purpose. During his college years -- all seven of them -- the philosophy and religion major was your typical lefty. "Both business and capitalism were based on exploitation of consumers, workers, society, and the environment," he wrote in 2009's Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World's Problems, describing his early "crunchy granola" political views. "I believed that 'profit' was a necessary evil at best and certainly not a desirable goal for society as a whole." However, once Mackey started running his own company, he quickly found himself on the dark side: His customers thought his prices were too expensive; employees complained of being underpaid; and the government "was slapping us with endless fees, licenses, fines, and taxes." "According to the perspective of the political left," he wrote, "I had become a greedy and selfish businessman."

The identity crisis sent him into an existential tailspin. Then Mackey, the son of an accounting professor, discovered the writings of Milton Friedman and Ayn Rand, the high priest and priestess of modern free-market capitalism. He slipped on the Libertarian mantle. "What I love most about the freedom movement, another name for the Libertarian platform," writes Mackey, "are the ideas of voluntary cooperation and spontaneous order that, when channeled through free markets, lead to the continuous evolution and progress of humanity." The beauty of Conscious Capitalism, says Mackey, is that self-interest and altruism can not only coexist, they can both thrive simultaneously without a lot of government meddling. "One of the things that I'm trying to philosophically just destroy," Mackey told Time magazine last year, "is this bifurcation that human beings are either greedy, selfish, only in it for themselves -- or they're saints."