Conscious Capitalism with John Mackey of Whole Foods
John Mackey, co-founder and CEO of Whole Foods, is starting a new movement—“conscious capitalism.”
Whole Foods CEO John Mackey (Picture above/ Photo Credit: Wikipedia)
It’s time to balance business with social impact. “Profits are one of the most important goals of any successful business and investors are one of the most important constituencies of public businesses,”Mackey wrote back in 2007. “Although it may seem counterintuitive, the best way to maximize profits over the long-term is not to make them the primary goal of the business.”
His latest book, “Conscious Capitalism” (co-written with Raj Sisodia), tackles the same questions of profits versus impact and argues that business can be “good” for society.
Esha Chhabra (@esh2440), writer and social entrepreneur, caught up with Mackey to chat about conscious capitalism.
Do you feel that your company embodies the principles behind conscious capitalism? Where do you think that Whole Foods could improve?
This is a never ending journey. Whole Foods Market tries to embody all of the principles of conscious capitalism all the time but like any person or company, we sometimes fall short. We think we can improve in all four areas, and if you look at our history, that is what we have done—become more conscious as we have grown. One very powerful way in which we accomplish this is through our “Future Search” process, through which we bring representatives of all of our stakeholders together every five years to think about how we can continue to grow and evolve as an organization and as an ecosystem of interconnected players.
One of the primary issues with Whole Foods is that the stores are largely located in well-to-do areas. How does Whole Foods intend to make healthy food available to all?
If you look at the locations of our 350 stores, you will see that we are now much more demographically diverse. But of course, we are by no means present in every market. We do take seriously our responsibility, and growing ability, to educate people about healthy eating and giving them greater access to nourishing and affordable fresh food. We have a major new initiative underway that will start to tackle this issue head-on in 2013. We will start to bring healthy food options to people in several other cities, starting with a new store in mid-town Detroit that will open in May. We are even looking to create a new non-profit to help make this a reality. We will announce something official this year.
You’ve said that business has been the central vehicle to create change and improve the quality of life globally. If business plays such a central role, where do governments, nonprofits, and the citizen sector fall into place? Are there limitations of capitalism?
A healthy society rests on three pillars: business, government and civil society, or non-profits. Each has a distinct and important role to play, and all three need to work together synergistically to create the most value for society.
We strongly believe that the business sector needs to be the lead player.
It offers the most sustainable way to satisfy the vast majority of human and societal needs. Well managed businesses generate satisfying livelihoods and healthy profits, which are the source of funding for all governmental initiatives through taxes.
Non-profits play an essential role in filling those societal gaps that business is unable to do profitably. They rely heavily on donations and volunteer energy that draws on the powerful altruistic impulse that is a key aspect of what it means to be human.
The role of the government is to ensure a sound infrastructure, enact and enforce sensible laws and regulations, provide for safety and security, and provide a reasonable safety net.
Governments must constantly guard against their tendency to overreach and grow beyond a level that is productive or healthy. They must ensure that economic and political freedom remains as high as possible. The greatest danger is when governments fail to act in the public interest and start to serve the narrow self-serving agendas of politically connected elites, including businesses.
This “crony capitalism” is a cancer that saps the vitality and dynamism of a well-functioning market system.
Food waste is becoming a serious issue in America. What does Whole Foods do to avoid food waste in its stores? Does it donate all the food at the end of the day, or would it consider selling the prepared foods at a discounted price near closing hours to avoid food waste?
We work with hundreds of community partners to help supply food to those who need it. We also take foods from one department to the other to minimize waste.
For example, slightly bruised apples in produce can be used in prepared foods for apple tarts. And, we also have a composting program where we make our own compost and distribute it to farmer partners or sell it in our stores. This is an area where we have made big improvements over the years and we will continue to do so as we get more and more conscious and more and more innovative.
A few years back, Bill Gates spoke of “creative capitalism.” Is conscious capitalism significantly different?
We discuss how conscious capitalism related to creative capitalism and a few other related ideas in Appendix B of the book. Creative capitalism’s vision is to help meet the needs of the poorest people. It applies to products with high fixed costs and low variable costs, meaning that companies can use variable pricing to make products affordable to poor people and still make a profit.
It admirably emphasizes impact maximization rather than profit maximization. The limitation of creative capitalism is that is largely an add-on to traditional business models.
It applies to a relatively small group of industries that have the cost structures that allow for large variability in pricing. Conscious capitalism incorporates much of what creative capitalism does but goes much further to transform the very core of the business.
Is there a fear ever that companies such as Whole Foods, Costco,Google, etc. can scale and grow too much? How much is enough?
We’ve been asked that question ever since we expanded from one store to two! There is nothing wrong with growth when it is the outcome of a business offering superior value to all of its stakeholders, who start to “vote” in favor of the business in increasingly large numbers. There is a danger that when a company becomes quite large, it can start to lose its sense of unique identity and purpose and become “just another business.”It is essential that the company consciously pay attention to the four tenets of conscious capitalism and continue to embody them in a deep way. Eventually, a conscious way of being has to become part of the DNA of the company. Once that happens, the company can continue to grow without losing its essence.
Of course, the market puts a natural limit on how much a company can grow—no company can keep growing its market share indefinitely. But companies can always broaden their business definition and start offering customers additional value in areas adjacent to the core business. We then realize that the limits to growth for a conscious business are far greater than we ever imagined.
As for Whole Foods Market, there are plenty of cities where we do not have a presence in the U.S. and we only have a few stores in Canada and the U.K. at this point. We have a long way to go before we reach the limits of our growth potential.
This story is brought to you in partnership with Forbes.