Liberating the Heroic Spirit of Business

For Whole Foods Market CEO John Mackey, It's all about the spirit of the thing

The largest audience ever for a Dean’s Distinguished Speaker event—more than 500 people—turned out in February to hear John Mackey, co-founder and co-CEO of Whole Foods Market, promote the ideas in his book, Conscious Capitalism (Harvard Business Review Press, 2012). The event was co-sponsored by Capital Public Radio, a Business Partner of the School.

Mackey has led Whole Foods Market from its first store in Austin, Tex., to an $11.7 billion Fortune 300 company, with more than 365 stores and 78,000 team members worldwide.

In a wide-ranging discussion with Dean Steven Currall, Mackey shared Whole Foods’ origins and phenomenal growth, and his thoughts on being an entrepreneur, shareholders and accountability, executive pay and the need to make both good and bad decisions. He spoke of what’s possible with passion—and the need for business to commit to a higher purpose.

Q Dean Currall: Within a couple of years of opening your first store in 1978, you’d merged with another to  found Whole Foods Market—which quickly became the highest-volume natural foods store in the U.S. One of your first “grand adventures” was the Austin flood in 1981.

“Eight months after we opened Whole Foods Market, Austin had its worst flood in over a hundred years…”

A John Mackay: Eight months after we opened Whole Foods Market, Austin had its worst flood in over a hundred years. There were eight feet of water in our store—our produce cases were dumped over and everything was wrecked. We didn’t have flood insurance and so we were bankrupt.

But the next day, the most amazing thing happened: dozens of customers showed up to help us clean up. They said, “We love Whole Foods Market,” so stop moping and start mopping—which is what we did.

And then we found out our suppliers would give us new inventory, on credit, even though we couldn’t pay for the last inventory. And our bank loaned us more. And our investors kicked in more money, and our team members worked for free because we couldn’t make a payroll. These people loved us because we were an ethical business; we were getting value for them. They didn’t let us die. And that was an awakening for me.

“It’s a living entity of 78,000 team members who are cooperating to create value for our customers.”

Q: Whole Foods has expanded dramatically since then. What are your thoughts about future growth?

A: Whole Foods won’t get too big to manage because of the way we’re structured. We’re organized into 12 geographical regions that cooperate and exchange information and ideas. But each is running its own business. And the stores in each region are also autonomous to a large extent, with the store team leaders running their own businesses. And then each store is organized into self-managing teams: produce team, grocery team, meat team—in a sense they’re running their own businesses.

We also manage ourselves through our values. Whether we’re at $12 billion [in annual sales], or at $15 billion or $20 billion, these principles of decentralization and empowerment will still exist. There isn’t somebody in Austin, Tex., behind the curtain pulling a bunch of wires and making it all work. It’s a living entity of 78,000 team members who are cooperating to create value for our customers. [And if we get larger], then we’ll have 100,000 people figuring it out together.

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