Conscious Capitalism: Creating a New Paradigm for Business

Hi Everyone,

 

I've been very gratified and impressed with your responses to my dialogue exchange with Michael Pollan over the last six months. The following lengthy essay is something I have been working on for several months; the ideas have been gestating for many years. The topic is Conscious Capitalism and I encourage you to read this material with your mind open to the possibilities inherent in these ideas. The essay is long and it may take extended time and concentration on your part to read. However, I think the ideas I articulate here are important ideas and they deserve to be read by an intelligent and critical audience.

 

Some of you may be aware that I am in the middle of two book projects. The Whole Story will relate my business and life philosophies along with my version of the story of Whole Foods Market, the company I co-founded 28 years ago. The second book, The FLOW Papers, includes several of my essays on topics related to the purpose of FLOW, a not-for-profit group I co-founded with Michael Strong in 2003-see www.flowproject.org and www.peacethroughcommerce.com. The following essay will appear in both books in modified forms.

 

I want to offer every regular reader of my blog an opportunity to co-create these ideas with me. I'm very interested in your constructive feedback. Specifically, I want to know what you like about the essay and the ideas presented within. I would also like your well-considered suggestions on how to improve the essay. Would you be willing to spend a few hours with me while reading and critiquing the following? As you may be aware, I do actually read your responses and often answer specific postings. I would like to begin a pro-active discussion of the ideas presented in the Conscious Capitalism essay.

 

I believe in the power of healthy systems to disseminate new ideas quickly. The internet is a great system for supporting co-creation of projects, ideas, and social movements. I invite you to help me provide an excellent example of just how powerful a collaborative tool this social networking system can be to help change the world. If I get valuable feedback on this essay that challenges my thinking and helps improve my presentation of the ideas via my blog, then I anticipate doing the same thing on all the other non-narrative chapters I'm writing for the book. I anticipate placing an additional chapter on the blog about every 3 to 4 weeks until my book is finished and ready for publication.

 

With love and in great anticipation of your helpful responses,

John

 

Conscious Capitalism: Creating a New Paradigm for Business

Do we need a new way to think about business, corporations, and capitalism for the 21st century? Do we need to create a new business paradigm? Corporations are probably the most influential institutions in the world today and yet many people do not believe that they can be trusted. Instead corporations are widely perceived as greedy, selfish, exploitative, uncaring-and interested only in maximizing profits. In the early years of the 21st century, major ethical lapses on the part of big business came to light including scandals at Enron, Arthur Anderson, Tyco, the New York Stock Exchange, WorldCom, Mutual Funds, and AIG. These scandals have all contributed to a growing distrust of business and further eroded public trust in large corporations in the United States.

 

Increasingly, many people believe there must be something wrong with both corporations and capitalism in the world today. The anti-globalization movement is primarily an anti-corporation movement. Many people have come to the conclusion that corporations want to dominate and control the world-in fact David Korten wrote an interesting book called When Corporations Rule the World. While many critics, including myself, take issue with Korten's assertions, the book does reflect this relatively common belief that corporations are slowly, steadily taking over the world. Since they are greedy, selfish, and uncaring, along this line of reasoning it follows that this corporate hegemony is not a good thing for the world. In short, corporations and capitalism are not generally in favor, and both have serious branding problems in the larger world today.

 

Our first theories of economics were developed during the Industrial Revolution. Prior to that, economics did not exist as a discipline. Economics was created as an explanatory response to the Industrial Revolution and initial economic models were based on industrial models of the economy. Although economic theory has evolved since Adam Smith wrote The Wealth of Nations in 1776, many economists continue using industrial and machine metaphors to explain how the economy works. Now that we are well into the post-industrial Information Age, these metaphors have become outdated and mislead our thinking about business. For example, recall the trinity of labor, land, and capital as "factors of production", and therefore as merely a means to the end of efficiency and profits. According to this model, business operates like a machine—various amounts of capital, labor, and land are inputted at the start, and spitting out on the other side of that machine are the profits. According to this model, the purpose of business, as most economists see it, is to transform factors of production into profit for the benefit of the investors.

 

The world has become much more complex since those simple machine metaphors were first developed. Unfortunately, current business thinking does not easily grasp systems interdependencies, and therefore often lacks ecological consciousness or a sense of responsibility for other constituencies, or other stakeholders, besides investors. Large corporations are still grounded in a theoretical model that does not acknowledge the complex interdependencies of all of the various constituencies. For business to reach its fullest potential in the 21st century, we will need to create a new business paradigm that moves beyond simplistic machine/industrial models to those that embrace the complex interdependencies of multiple constituencies. This is the reality in which corporations exist today and our economic and business theories need to evolve to reflect this truth.

 

I intend to raise several questions about current business thinking and practice in this chapter. Because my experience as co-founder and CEO of Whole Foods Market is in the retail grocery business, many of my examples, especially of new business thinking, will feature innovations and standard operating procedures at my own company. I encourage you to use your creative imagination to see the possibilities that exist for current business to escape outdated thinking and action, and build upon the Whole Foods Market model in future businesses youmay create as part of a new paradigm.

 

Voluntary Exchange

In a capitalistic market economy business is ultimately based on voluntary exchange; all the main constituencies of a business (such as customers, employees, suppliers, and investors) voluntarily exchange with the business to create value for themselves and for others. No constituency is coerced to exchange against their will. This voluntary exchange for mutual benefit is the ethical foundation of business (and capitalism). For example, if customers are unhappy with the prices, the services, or the selection of my business, Whole Foods Market, they are free to shop at another competitor. If our team members are unhappy with their wages and benefits, or the working conditions, they are free to seek a job with a different firm that provides more of what they seek. If investors in a public corporation such as Whole Foods Market are unhappy with the economic returns being generated, they are free to sell their shares and invest their money in some other alternative. If suppliers want better terms or different product placement than we are willing to give they are free to seek alternative outlets to sell their products. All the constituents therefore exchange voluntarily for mutual benefit, and they are free to exit the relationship whenever they wish. This voluntary exchange for mutual benefit creates the ethical foundation of business and that is why business is ultimately justified to rightfully exist within a society. This ethical foundation of business doesn't necessarily mean that everything any particular business does is always ethical, but only that voluntary exchange for mutual benefit is itself an ethical process. A business is still expected to behave ethically in its voluntary exchanges (not lie, steal, or cheat) and to be responsible for any negative impacts it may create (for example, environmental pollution).

 

The Purpose of Business

Have you ever asked yourself what is the purpose of a business? It is an interesting question that most business people never ask themselves. If you think about it, what is the purpose of a doctor or hospital? Is their purpose to maximize profits? Well, this is certainly not the purpose that they teach in medical schools or most doctors advocate. The doctor's purpose is to help heal sick people. What about the purpose of the teacher or the school? Do they exist maximize profits? No of course not. Their primary purpose is to educate the young and prepare them to live successful lives in society. What about the purpose of lawyers or law courts? All lawyer jokes aside, the purpose of a lawyer would be to pursue justice and our law courts exist to settle disputes in our society and to bring wrongdoers to justice. All of the other professions put an emphasis on the public good and have purposes beyond self-interest. Why doesn't business?

 

What then is the purpose of business and who has the right to define it? Professional economists routinely assume and teach that the purpose of business is to maximize profits for the investors. However, they seldom offer arguments to support this point of view beyond asserting that the business is owned by its investors who have a legal right to hire and fire the management (through the Board of Directors they elect) and also have a legal claim on the residual profits of the business. Both of these assertions are true, but these legal rights do not necessarily equate to defining the purpose of a business—why it exists and what its purpose and goals are. In most cases the original purpose of a business is decided prior to any capital being received from investors. While the capital from investors is obviously very important to any business, there is one participant in business who has the right to define what the purpose(s) of the business will be in the world—the entrepreneur who creates the business in the first place. Entrepreneurs create a company, bring all the so called "factors of production" together, and coordinate them into a viable business. Entrepreneurs set the company strategy and negotiate the terms of trade with all of the voluntarily cooperating stakeholders—including the investors. At Whole Foods we recruited our original investors and they freely invested with the understanding that Whole Foods had other purposes besides maximizing profits. Entrepreneurs discover and/or create the purpose of a business—not investors, or politicians, or lawyers, or economists.

 

I've known many entrepreneurs in my life, and with only a few exceptions most did not create their business primarily to maximize profits. Of course they wanted to make money, but profit was just one of the reasons they started their business. It may be that they were unable to work for anybody else, have strong authority issues, and therefore need to be their own boss. Or they need to be in charge of their own enterprise because that is how they get their sense of self-worth, value, and self-esteem. It could be that they have something to prove to their parents, siblings, or their friends and creating a successful business will exorcise unconscious childhood demons. It could be that they are very creative individuals who have ideas that they want to see tested in reality to see whether or not they work. It could be that they are idealists and want to make the world a better place, and their primary motivation for creating their business is to improve the world. It could be that the entrepreneurs create their business for the sheer fun of it. There are many, many reasons why people create businesses, and while I cannot deny that there are certain entrepreneurs who create their business primarily to maximize profits, I would say that in my life experience they are definitely a minority.

 

The founding entrepreneurs determine the initial purpose of their business, but eventually these entrepreneurs will retire or leave the businesses that they created. Does the original purpose that the founding entrepreneurs established remain in perpetuity or can it evolve over time? I believe the purpose of any business can evolve over time. This evolution of purpose is the result of the dynamic interaction of the various interdependent stakeholders with each other and with the business itself. Customers, employees, investors, suppliers, and the community all influence business purpose over time. While the investors will have the ultimate legal claim on the residual profits of the business, the purpose of the business itself evolves over time through the co-creation of the interdependent stakeholders. This is a fascinating discovery I've made about Whole Foods Market during the previous 28 years. Whole Foods Market's co-founders created the original purpose of the company in 1980, but the interdependent stakeholders have evolved it over the years. We started with a few simple ideals and core values for the company and then created very simple business structures to help fulfill those ideals. However, over time as the company grew a process of self-organization took place and layers of organizational complexity evolved year after year after year to fulfill the original core values. As the original core values were expressed over time, deeper meanings of those core values were discovered and/or created by the interdependent stakeholders. Whole Foods Market's purpose has become deeper, richer, and more complex as it has evolved over the years.

 

The "myth" that the ultimate purpose of business is always to maximize profits for the investors originated with the Industrial Revolution's earliest economists and is an idea that has remained with us ever since. How did this happen? The classical economists formulated their theories by observing and describing the behavior of various entrepreneurs and their businesses. They observed correctly that successful businesses were always profitable and that, indeed, the entrepreneurs who organized and operated these successful businesses always sought to make profits. Businesses that were not profitable did not survive for very long in a competitive marketplace because profits are essential to the long-term survival and flourishing of all businesses. Without profits entrepreneurs will not be able to invest the necessary capital to replace their depreciating buildings and equipment and won't be able to make the necessary investments to adapt to the always evolving and competitive marketplace. The need for profit is universal for all businesses in a healthy market economy.

 

Unfortunately, early economists went far beyond merely describing how entrepreneurs always seek profits as an important goal, to concluding that maximizing profits is the only important goal of business. Actually they went even further; the economists soon concluded that maximizing profits is the only goal they should seek. The classical economists went from describing the behavior in which they observed successful entrepreneurs engage while operating their businesses, to prescribing that behavior as the correct behavior that all entrepreneurs should always engage in all of the time. How did they come to this conclusion? I can only speculate here.

 

One possibility is that the classical economists became enchanted with the efficiency and the productivity of the industrial enterprises that they studied. Industrial and machine metaphors became the primary metaphors used to explain how the world really worked since this reflected the Newtonian scientific world-view that came to dominate the consciousness of the age. Every business was seen as a type of machine with various inputs and profits being the output. Profits from business became the primary capital that investors and entrepreneurs used to not only upgrade and improve existing enterprises, but also the capital used to begin new enterprises. The progress of the larger economy was dependent upon this capital accumulation, through the profits of enterprise being saved and reinvested.

 

In the United States today, we take for granted the availability of large pools of capital to invest in new businesses because our economy has been producing them for more than 250 years. However, at the beginning of the Industrial Revolution capital was quite scarce. The ability of successful enterprises to accumulate profits and the redirection of accumulated capital by the entrepreneurs and investors into new promising opportunities was largely unprecedented in history. Therefore it isn't too surprising that classical economists became enamored with the importance of profits, because profits had historically been very rare and they were essential to the continued improvement and progress of society. Industrial Age entrepreneurs had discovered a "perpetual motion machine"—enterprises organized to maximize profits, and through the reinvestment of these profits, the promise of indefinite continued growth.

 

Great Companies Have Great Purposes

If most entrepreneurs don't create their businesses for the primary purpose of maximizing profits, then what are their primary goals? The answer to this question varies tremendously from business to business—there are potentially as many different purposes for businesses as there are businesses. Entrepreneurs create their businesses for a diversity of reasons. However, I believe that most of the greatest companies in the world also have great purposes which were discovered and/or created by their original founders and which still remain at the core of their business models. Having a deeper, more transcendent purpose is highly energizing for all of the various interdependent stakeholders, including the customers, employees, investors, suppliers, and the larger communities in which the business participates. While these deeper, more transcendent purposes have unique expressions at each business they also can be grouped into certain well known and timeless categories. Philosophy dates back to Plato the timeless ideals of "The Good", "The True", and "The Beautiful" that humanity has been seeking to create, discover, and express for thousands of years. If we add the ideal of "The Heroic" to the above three we have the framework of higher ideals which most great businesses seek to express in some form or fashion. The following examples present these four ideals as created and expressed by great businesses in the world today.

 

The first great purpose that great businesses express is "The Good". The most common way this ideal manifests in business is through "Service to others". Authentic service needs to be based on genuine empathy towards the needs and desires of other people. Genuine empathy leads to the development, growth, and expression of love, care, and compassion. Great businesses dedicated to the great purpose of "Service to others" also develop methods to grow the emotional intelligence of their organizations, an emotional intelligence that nourishes and encourages love, care, and compassion towards customers, employees, and the larger community. While any category of business can be motivated by the deeper purpose of "Service to others", we find businesses that primarily depend upon the goodwill of their customers to be the most likely to express this particular deeper purpose and to devote themselves to it wholeheartedly. Some of the great businesses that best express the great purpose of "Service to others" include Southwest Airlines, Jet Blue, Wegmans, Commerce Bank, Nordstroms, REI, and The Container Store—all retailers and service businesses. Whole Foods Market also aspires to express the great ideal of "Service to others" as its primary purpose. Devotion to "Service to others" is a deeply motivating purpose that provides tremendous emotional fulfillment to individuals who truly embrace this ideal.

 

The second great purpose that animates great businesses is "The True"—the "excitement of discovery and the pursuit of truth". How very exciting it is to discover what no one has ever discovered before; to learn what has never before been known; to create a product or service that has never before existed and that advances the well-being of humanity! This great purpose is at the core of some of the most creative and dynamic companies in the world today. Google, Intel, Genentech, Amgen, and Medtronic are all examples of great companies motivated by the "excitement of discovery and the pursuit of truth". All these companies have greatly benefited humanity through their successful fulfillment of this great purpose.

 

The third great purpose that we find at the core of great businesses is "The Beautiful", which can best be expressed in business through the search for "excellence and the quest for perfection". A company that expresses beauty in the world enriches our lives in numerous ways. While we more commonly experience "The Beautiful" through the work of individual creative artists in music, painting, film, and artisanal crafts, we can also see it expressed through certain special companies who have tapped into this powerful purpose as they pursue perfection in their chosen endeavor. Some great companies who express this purpose include Apple, Berkshire Hathaway, and Four Seasons Hotels. True excellence expresses beauty in unique and inspiring ways that make our lives more enjoyable.

 

The fourth great purpose that inspires many great businesses is "The Heroic"— changing and improving the world through heroic efforts. The heroic business is motivated by the desire to change the world, not necessarily through "service to others" or through "discovery and the pursuit of truth", or through "the quest for perfection" (all three motivations that can have definite "heroic" impulses), but through the powerful promethean desire to really change things—to truly make the world better, to solve what appear to be insoluble problems, to do the really courageous thing even when it is very risky, and to achieve what others say is impossible.

 

The Ford Motor Company was once a heroic enterprise when Henry Ford first created it. Henry Ford truly changed the world in the early part of the 20th century. Microsoft changed the world in the later half of the 20th century, and so now will Bill Gates' foundation as it seeks to solve many of the world's major health problems from AIDS to malaria. One of the best examples of a truly heroic enterprise is the Grameen Bank in Bangladesh begun by Muhammed Yunus. His heroic dedication to ending poverty in Bangladesh and throughout the world resulted his winning the 2006 Nobel Peace prize. I recommend reading his book Banker to the Poor for an inspiring tale of heroic enterprise. Most heroic enterprises are begun by charismatic, heroic entrepreneurs and the organization's biggest challenge is to successfully institutionalize the heroic purpose after the founding entrepreneur dies or moves on. Very few heroic enterprises have been able to do this over the long-term.

 

I recommend two books that present the importance of business purpose in great detail are Built to Last by Jim Collins and Jerry Porras, and Purpose: The Starting Point of Great Companies by Nikos Mourkogiannis. I have especially drawn on Mourkogiannis's ideas for this section and heartily recommend his book.

 

The Paradox of Profits

My thesis about business having important purposes besides maximizing profits should not be mistaken for hostility toward profit, however. I believe I know something about maximizing profits and creating shareholder value. When I co-founded Whole Foods Market in 1978, we began with $45,000 in capital; we only had $250,000 in sales our first year. In 2006, Whole Foods Market had sales of more than $5.6 billion, with net profits of more than $200 million, and a market capitalization over $8 billion. Profits are one of the most important goals of any successful business and the investors are one of the most important constituencies of the business. Paradoxically, the best way to maximize profits over the long-term is to not make them the primary goal of the business.

 

I will use an analogy to explain the best way to create long-term profits. The analogy is "happiness" because in my life experience happiness is best experienced by not aiming for it directly. A person who focuses their life energies strictly on striving for their own self-interest and personal happiness is often someone who is also a narcissist, someone who is self-involved and obsessed with their own ego gratification. Ironically, chances are good that they won't actually achieve their goal of happiness pursuing it in this way. In my experience, happiness is a by-product of other things; happiness comes from having a strong sense of purpose, meaningful work, good friends, good health, learning and growing, loving relationships with many people, and helping other people to flourish in living their lives.

 

If we have a strong sense of purpose, good friends, loving relationships, meaningful work, and good health it's very likely that we will also quite frequently experience happiness in our lives. Yet, happiness is a by-product of pursuing those other goals and I think that analogy applies to business as well. In my business experience, profits are best achieved by not making them the primary goal of the business. Rather, long-term profits are the result of having a deeper business purpose, great products, customer satisfaction, employee happiness, excellent suppliers, community and environmental responsibility—these are the keys to maximizing long-term profits. The paradox of profits is that, like happiness, they are best achieved by not aiming directly for them.

 

Long-term profits are maximized by not making them the primary goal. A business is best not thought of as a machine with various factors of production working in tandem to maximize profits. A business model more in touch with our complex, post-modern, information-rich world is a complex self-adaptive system of interdependent constituencies. Management's role is to optimize the health and value of the entire complex, evolving, and self-adaptive system. All of the various constituencies connect together and affect one another. If we optimize the health and value of the entire interdependent system and the well-being of all the major constituencies, the end result will also be the highest long-term profits for the investors as well.

 

Conversely, if a business seeks only to maximize profits to ensure shareholder value and does not attend to the health of the entire system, short-term profits may indeed result, perhaps lasting many years (depending upon how well its competitor companies are managed). However, neglecting or abusing the other constituencies in the interdependent business system will eventually create negative feedback loops that will end up harming the long-term interests of the investors and shareholders, resulting in sub-optimization of the entire system. Without consistent customer satisfaction, employee happiness and commitment, and community support, the short-term profits will probably prove to be unsustainable over the long-term (assuming its competitors manage their businesses to create value for all of their stakeholders).

 

The most common objection to the above argument is that several thousands of businesses are highly profitable that are not actively managed to optimize the value for all of the stakeholders. Instead they put the interests of their investors first and they are also highly profitable. Doesn't this disprove my argument? No, because most businesses are simply competing against other similar businesses that are organized and managed with the same overall values and goals—maximizing profits. The real question is, how does a traditional profit-centered business fare when it competes against a stakeholder-centered business? The only study I know that tries to answer this question is Firms of Endearment: the Pursuit of Purpose and Profit by David Wolfe, Rajendra Sisodia, and Jagdish Sheth (2007 by Wharton School Publishing). I highly recommend this as one of the best business books I've yet read. The authors identify 30 companies that are managed to optimize total stakeholder value instead of focusing strictly on profits and track long-term stock performance of those that are publicly traded compared to the S&P 5001. The chart below shows this comparison.

Conscious Capitalism Figure 1

As the chart above indicates, companies that are managed to create value for all of their stakeholders have had extraordinarily high stock market returns both over the short-term and the long-term. This is no accident in my opinion. Rather it is the result of all 30 firms creating a superior business model-the business model that I believe will become the dominant business model of the 21st century.

 

Stockholders Maintain Legal Contro

l Optimizing value for all the interdependent stakeholders does not mean, however, a loss of legal control of the business for the investors. The owners/investors must legally control the business to prevent their exploitation by management and by the other stakeholders. However, the owners/investors do get paid last. What do I mean by this statement? The customers get paid first in their relationships with the business—in that they come in, find products or services they desire, purchase those products or services, receive those products or services fairly quickly, and often pay after the product or service has been rendered to them (for example, they eat before they have to pay at a café). Next, the employees render their services and get paid on a short-term, periodic basis. Whole Foods team members receive their pay every two weeks. The suppliers get paid, according to agreed up on terms and timeframes, and government taxes are remitted monthly and quarterly. The owners/investors are paid last, after everyone else has received goods, services, wages, or payment. The investors are entitled to whatever is left over, the residual profits. Because they are paid last, investors must have legal and fiduciary control of the business to prevent management or other stakeholders from exploiting them. Investors usually demand these conditions as a requirement for investing their capital in a business.

 

Management does have legal and fiduciary responsibility to maximize long-term shareholder value. However, the best way to maximize long-term shareholder value is to simultaneously optimize value for all the major constituencies, because they are all interdependent upon one another. This is one of the most important truths that I have learned while creating and growing Whole Foods Market. I cannot deny that occasionally there are conflicts of interest among constituencies, but in general a "harmony of interests" exists between the different constituencies, since they are so dependent on one another. The best way to maximize long-term shareholder value is to simultaneously optimize the value for all other constituencies. The health of the entire system is what really matters. The following graphic model illustrates one example of what I mean by the phrase "Conscious Capitalism".

 

The Whole Foods Business Model: Conscious Capitalism

WFM Model

 

Whole Foods Market's Conscious Capitalism

At the center of the Whole Foods Market business model illustrating holistic interdependence, you'll find our Core Values and Business Mission. Everything else extends from the purpose of the business reflected in the Core Values. Surrounding these central purposes are the various constituencies: customers, team members, suppliers, investors, and the community and environment. All are linked interdependently. Retail business provides a simple model to illustrate that management's role is to hire good people, train them well, and do whatever it takes to have those team members flourish and be happy while they are at work. The team member's job, at least at Whole Foods, is to satisfy and delight the customers. If we have happy customers, we will have a successful business and happy investors. Management helps the team members experience happiness, team members help the customers achieve happiness, the customers help the investors achieve happiness, and when some of the profits from the investors are reinvested in business you end up with a virtuous circle. I find myself continually astounded about how few business people understand these linkages. But market analysis increasingly illustrates that the businesses with a sole purpose of maximizing profits, in other words, those that do not understand that their profits are produced by an interdependent system of constituencies, are less successful over the long-term2.

 

Core Values

When businesses have a purpose beyond maximizing profits, that purpose is often expressed in the business mission. Core values constitute the guiding principles the business uses to realize its purpose. Whole Foods Market's core values very succinctly express what the purposes of the business are—purposes that include making profits but also include creating value for all of the major constituencies. I want to talk briefly about Whole Foods Market's Core Values. Our business talks and walks our values; we share them with our constituency groups, and invite feedback in the form of dialogs. The core values are: selling the highest quality natural and organic products available, satisfying and delighting our customers, supporting team member happiness and excellence, creating wealth, profits, and growth, and caring about our communities and environment.

 

Selling the Highest Quality Natural and Organic Products Available

Whole Foods Market is the leading retailer of natural and organic foods in the world;. We have developed strict and explicit quality standards, which we review regularly. We are very proud that we have helped improve the health, well-being and longevity of millions of people, and that we have proven that good health and pleasurable eating are compatible goals. Whole Foods Market resists the continuous trend toward the degradation of the quality of our food through the industrialization of food production. While this industrialization of our food supply has increased efficiency and lowered the cost of many food staples, both of which are beneficial to society, the process has also resulted in many negative unintended consequences. Many of the practices developed for the industrialized food system have resulted in lower nutritional quality for our food and negative environmental impacts such as pesticide contamination and concentrated animal waste products from CAFOs (Concentrated Animal Feeding Operations). We see this particularly in our animal foods production. Widespread factory farm production of our animal foods results in a tremendous cost to the well-being of the animals, along with severe, negative impacts to food safety and human health that are only recently becoming better known in the public arena. To combat this assault on multiple fronts, and to walk our core values, Whole Foods Market is very proud to be developing animal compassionate production standards, working in concert with concerned stakeholder groups.

 

Satisfying and Delighting our Customers

The customer is our most important constituency, since with no customers, we have no business. We are always aware that customers shop voluntarily—they are not coerced to shop. If they are unhappy with our business they will go trade someplace else. Because of the voluntary nature of business, we design our business model around the customer, who must be treated as an end and not as a means. What I mean by this statement is that the well-being of the customer must be seen as the most important goal overall and not as a means to profit for the business. In my experience, businesses that think of customers as means to the end of profit do not have the same commitment to service, empathy, and understanding of customers' well-being as the business that treats customers as ends instead of means. Customers are very intelligent! They know when someone is doing a sales job on them, and they know when someone genuinely cares about their well-being.

 

Supporting Team Member Happiness and Excellence

In order to treat the customers as an end we have empowered our team members to satisfy and delight our customers. New team members are trained to do whatever it takes to satisfy our customers. Happy customers create happy investors. In order to have happy customers we also need to have happy team members because the team members are primarily responsible for creating happy customers. When team members are frustrated, dissatisfied, and unhappy in their work they are unlikely to give the high levels of customer service that the business needs to flourish.

 

Within a complex interdependent self-evolving system, team members must also be treated as ends and not means. Their well-being and happiness must be an end in itself, not merely a means to the profits of the business. Our internal business model within each store is the self-managing team. These teams are the organizational cells of the business. The teams do their own hiring, work scheduling, and product procurement. They are running their own small business within the store, and they have full responsibility for the business. Each team is empowered on many levels, not only in customer satisfaction.

 

I also believe that it is absolutely essential to trust team members, and one way to show that trust is through open information. Whole Foods provides open financial information—on all levels since want to be as transparent an organization as possible—without making ourselves overly vulnerable to our competitors. I think it essential that the team members have a sense of shared purpose and power. If team members can align around the values and purpose of the business, they are going to have a greater commitment to the business. They will likely unleash greater energy and creativity through that sense of alignment and shared purpose. At Whole Foods, we consciously reject the command and control management style. This top-down, "Do It My Way" approach is the opposite of team member empowerment. We also teach the importance of "shared fate", and by shared fate I mean that the better the company does, the better the customers do, the better the team members do and the better the investors do. Once again, I reference the interdependent nature of the relationship of all the constituencies: happy team members create happy customers, happy customers create happy investors.

 

Another innovative practice at Whole Foods is the sharing of salary information, so that what everyone gets paid is open information. I believe this is the best way to deal with envy, which exists as part of human nature and in any organization. To deal directly with envy, a business must open up and becoming more transparent. When unjust employment compensation exists, the situation will be noticed and a feedback mechanism will develop to correct it. Conversely, by having such transparency, people can see what skills and qualities are most highly valued and rewarded in the organization so that they can know what to strive for with their own career objectives. We also have a salary cap at Whole Foods, which is currently 19 times the average pay (raised from 14 times average pay on November 2, 2006); more about that in just a second.

 

Conscious Capitalism Figure 3

 

Yet another innovation is our benefits vote, wherein we let team members vote every three years on what benefits they can enjoy. After fielding repeated and ongoing requests for various benefits as I traveled around to our stores to meet with team members, I realized that I was not smart enough to figure out the right mix of benefits for Whole Foods. Our team members were forever asking me if they could have this or that additional benefit. Requests for addition benefits are endless. But this is also true for every stakeholder—the desire for a better deal. Every stakeholder is always looking for more. Customers are always looking for lower prices and higher quality. Investors want higher profits. Team members want higher pay and additional benefits. The government wants higher taxes, and the community wants larger donations. I realized that I was not smart enough to figure out the right mix of benefits for Whole Foods team members; instead the executive leadership now decides what percentage of the total revenue will go toward benefits for the company, and then assigns a cost for every potential benefit. Every three years our team members prioritize and vote on the benefits that they most prefer. This process results in benefits that reflect the needs and desires of the majority of the team members in the company.

 

I also believe in promoting gain-sharing to the largest extent possible. Gain-sharing means creating incentive and compensation for every team member working at a company. Through this process, a team member basically receives his/her just rewards for efforts expended and teamwork is critical to success. A business should clearly define what it is that it wants to reward and then set up an incentive program around those criteria.

 

We also grant stock options to all team members in the company, and 93 percent of our stock options go to non-executives. We have instituted fully paid health insurance for all of our full-time (30 hours per week) team members, or close to 90 percent of all the people that work for Whole Foods. The remaining 10 percent part-time (less than 30 hours per week) team members are encouraged to buy our discounted health insurance if they wish. We also offer personal wellness accounts that allow team members many additional options for their health spending, and health saving accounts. These allow team members to cover the deductible for the health insurance plan or to pay for health services that are out of coverage, such as acupuncture and chiropractic. Money not used rolls over to the next year's wellness account or into a health savings account. We also grant stock options to all team members in the company, with an unprecedented 93 percent of our stock options going to non-executives.

 

 

The Distribution of Stock Options

Conscious Capitalism Figure 4

 

Our emphasis on team member happiness is working and when team members provide us with feedback, we respond. We are very proud of the fact that Whole Foods Market has been named by Fortune Magazine as one of the 100 best companies to work for during the last nine consecutive years through 2006. Does an emphasis on team member happiness pay off for investors? In a zero sum world it would not. Team member gains would necessarily mean investor losses. Fortunately we don't live in a zero sum world. Rather, we live in an interdependent world where the flourishing of the various stakeholders creates mutual benefits for each other. The chart below clearly shows that creating a great place to work and employee happiness does not necessarily come at the expense of the investors in the business. The companies comprising Fortune Magazine's list of the 100 Best Companies to Work For have significantly outperformed both the S&P 500 and the Russell 3000 indices since the list was first created in 1998. This is strong evidence that supports the ideas I'm articulating in this chapter.

 

Fortune's "100 Best Employers" vs. Stock Market 1998-2005

Conscious Capitalism Figure 5

Creating Wealth, Profits, and Growth

While creating value for both customers and team members are very important, so is creating value for the investors. All three stakeholders are interdependent upon one another. All must flourish together. As one of our core values, we feel that Whole Foods Market has a responsibility to create prosperity through profits and growth. We consider ourselves stewards of the investors' money and because of this, frugality is important. We strive never to waste the investors' money. Profits are created through voluntary exchange for mutual benefit, not through exploitation of people. This very important truth reveals as false the many critiques of capitalism, such as Marxism, which argues that all profits should belong to labor because labor creates all of the value of the business. However, this Marxist theory of labor value isn't true. All value is not created through labor in business, although of course labor does create a significant portion of value (and also receives the appropriate share of the value it generates). Management also creates value with strategic direction, proper resource allocation, and through organizing the business in effective and efficient ways. Investors create value through the capital they have invested. Without sufficient investment capital businesses are unable to buy necessary equipment or invest in necessary leasehold improvements to operate the business or make investments in research and development for the future. Investors deserve competitive returns on their business investments; otherwise they will withdraw their capital from the business and redirect it to alternative investments which give them higher returns. The different suppliers trading with the business also deserve fair returns in exchange for the goods and services they provide to the business, as do the landlords who provide the real estate to operate the business. Everyone trading with a business is trading voluntarily and their own profits are created through exchange with the business. Any money left over from the myriad of voluntary exchanges is justly owned by the investors in the business. This is their profit. They have been paid last after every other trader has completed their exchanges.

 

Profits create wealth, prosperity, and additional capital. Capital inputs fund most technological innovation and progress. For example, 200 years ago 95 percent of the world's population was considered poor. Today about 60 percent of the global population is still poor. In the last 200 years we have seen the poverty rate drop from 95% to 60%. At the current rate of growth, we are going to see world poverty drop considerably in the next 50 years; by the year 2050 only about 25 percent of the world's population will remain below the poverty level. We are seeing this happen right now with the explosion in the economies of two of the most populated countries in the world-China and India. These two economies are growing at extremely rapid rates and hundreds of millions of people are being lifted into the middle class and moving out of poverty. This illustrates one of the most important purposes of business. Business has the fundamental responsibility to create prosperity for our society and for the world.

 

The Whole Foods Market system of Conscious Capitalism and managing the business for the benefit of all its stakeholders works very well and it creates tremendous long-term shareholder value. Whole Foods is the fastest growing and the most profitable public food retailer, percentage-wise, in the United States. Our same store sales have averaged close to 10 percent for the last 10 years. If you compare that to conventional supermarket companies such as Kroger's, Safeway, Albertson's, Wild Oats or Wal-Mart you'll see that our same-store sales are somewhere between 300 and 500 percent greater than same-store sales at conventional markets. Our sales per square foot currently exceed $900, more than twice as high as any of our previously identified competitors. Our store return on after-tax invested capital is 34 percent overall, and higher for stores that have been open for more than one year. Whole Foods Market's stock price has increased almost 3000 percent since our IPO in 1992. The sum of $10,000 dollars invested during our IPO would be worth nearly $300,000 today.

 

Suppliers are Partners

The fourth stakeholder group consists of thousands of suppliers who provide us with invaluable goods and services. Without our suppliers we wouldn't have anything to sell and the business would quickly cease to exist. I believe the best attitude toward the various suppliers of any business is to view them as essential partners in the enterprise. To keep the system of interrelated stakeholders healthy, most of the suppliers of a business should also flourish through their voluntary trade with the business. While in the competitive marketplace it is impossible for all suppliers of a particular business to simultaneously succeed—inevitably some will fail through a lack of quality or efficiency—it is essential that most suppliers successfully flourish in order to have the capital to improve their quality and the efficiency of their products and services. Honesty, fair trading, and an attitude of helping one's suppliers to learn, grow, and continuously improve are valuable attitudes to have in relating to the vendor stakeholder group. As suppliers improve the quality and efficiency of their goods and services, this will also improve what the business can offer to its own customers. I've watched the suppliers in the natural and organic products marketplace continuously improve for almost 30 years. A large part of Whole Foods Market's success has been the result of the continuous improvements and countless innovations of our vendor community.

 

Caring About our Communities and Environment

The fifth constituency is our community and the sixth is the environment. I believe that business is best thought of as a citizen existing within the communities where it does business. Business even enjoys the same legal status as a person. As citizens, businesses have responsibilities to their communities just like every other citizen. These responsibilities are not infinite, just as we do not have infinite responsibilities as individual citizens to our government or to the local communities in which we live, but we do have some. Most community responsibilities are met through following all the laws that exist in the communities and by paying all the taxes assessed on the business. However, just as individuals may choose to give additional community support beyond simply complying with all laws and paying their taxes, so may business. Vital dynamic communities need philanthropic support from both individuals and from businesses that participate within the community.

 

I believe philanthropy is consistent with citizenship and should be managed prudently and efficiently just like every other aspect of a business. Philanthropy, executed properly, can also contribute to shareholder value through increased goodwill with customers, team members and communities. In my experience, philanthropy is not a win/lose situation, where money is being taken away from investors and shareholders and given to someone undeserving. Instead, with business viewed as an interdependent system of various constituencies, if you manage the business for the health of all the constituencies, optimizing the community constituency provides positive feedback effects on the shareholder constituency. For example, when our stores do the right thing by our communities, we create goodwill with our customers and team members, so that they both feel good about the business. We also tend to generate good public relations by doing the right thing in our communities, leading to positive media attention. We are enhancing the long-term brand and viability of our business and all of the above ultimately pays benefits to our investors.

 

In meeting our responsibilities as citizens, Whole Foods Market donates five percent of our after tax profits to non-profit organizations, with nearly 75 percent given away on a local basis. Whole Foods Market supports various food banks, local community events, school functions, and Boy and Girl scouts, whose families might also patronize our stores. We likewise support health initiatives such as fighting AIDS, and breast and childhood cancers. With 188 stores currently, we give to thousands of local organizations. Many of our customers belong to or volunteer with the organizations we support, and as they trade with Whole Foods Market, we are in turn supporting them in the communities in which we live and do business. Many of our stores also compensate team members for community service work, either on an individual basis, or as a group.

 

Whole Foods Market trades throughout the world and we recognize our responsibilities as global citizens, as well. Poverty remains one of the most serious global challenges, and one of the ways we are trying to be good global citizens is through the creation of Whole Planet Foundation. Our mission with Whole Planet Foundation is to create economic partnerships with the poor and developing world communities that supply our stores with products. Through innovative assistance for entrepreneurship, including direct micro-credit loans, as well as intangible support for other community partnership projects, we seek to support the energy and creativity of every human being we work with in order to help create wealth and prosperity in emerging economies.

 

Whole Planet Foundation's current efforts center in both Costa Rica and the Lake Atitlan district of Guatemala, in villages from which Whole Foods purchases pineapples, bananas, and coffee. Additional projects are being set up in India and Nicaragua, and eventually we will have micro-credit projects throughout the world. Whole Planet Foundation partners with Grameen Bank, which pioneered micro-lending to the poor (both Grameen Bank and its founder, Muhammed Yunnus won the 2006 Nobel Peace Prize). Most loans will go to women, who tend to be the most economically and socially marginalized constituents in many rural communities. Grameen's work in other parts of the world has shown that women have a huge impact on their communities when given access to credit with which to start small businesses. The system Whole Planet Foundation employs is consistent with Whole Foods Market's long-standing internal philosophy of empowerment. For more information on the Whole Planet Foundation go to http://www.wholeplanetfoundation.org/

 

The silent stakeholder that can never speak for itself is the environment. All of our other constituencies can speak up when they are unhappy about something. We consider the environment as linked to our community constituency. As a business, we exist within both a local and global environment. Whole Foods wants to be a responsible citizen in the environment in which we live. We do this by supporting organic and sustainable agriculture and by selling sustainably-harvested seafood.

 

From its start in 1978 as Safer Way, Whole Foods Market has promoted organic food and the agricultural systems from which it derives. By helping to develop markets, customers, distribution networks, and even the national standards for labeling for organic foods, Whole Foods has also promoted the environmental benefits that accompany the increasing number of organic farms, dairies, ranches and sustainable agricultural practices. For example, organic farms utilize no synthetic fertilizers and pesticides, resulting in reduced usage of fossil fuels, and less chemical contamination entering food chains and water supplies. While some products are transported long distance to meet consumer demand, Whole Foods Markets also stock as many locally-grown and/or manufactured products that meet our quality standards as are available in our market areas.

 

Organic and sustainable agricultural methods, in addition, build healthy, vital soil rich with microorganisms and nutrients, featuring superior moisture retention and a resistance to erosion. Other benefits include increased biodiversity when compared to the vast mono-cultural fields found on industrial farms, and the maintenance of food safety and the integrity of soil and crops by prohibiting the use of genetically modified organisms. Organic agriculture typically acknowledges the role food animals have in our foods systems and preserves the integrity of meat and dairy products by prohibiting the use of antibiotics and artificial growth hormones.

 

Whole Foods Market is working towards animal compassion with livestock animals and eliminating cruel practices in commercial livestock production. Whole Foods Market refuses to sell commercial veal from tethered calves, foie gras from force-fed ducks, or live lobsters, feeling that the methods used to produce and transport and display before sale these animals are too inhumane. Helping create alternatives to the "factory farm" methods of raising livestock is a goal that Whole Foods Market is strongly committed to and we have created animal compassionate standards through a multi-stakeholder process to try to raise the bar. Our standards can be seen in more detail at: http://www.animalcompassionfoundation.org/standards.html.

 

Industrial pollution and over-fishing cause tremendous damage to our oceans. Coral reefs have declined by 30% in the last 30 years. It is estimated that the total number of whales in the world has declined 90% in the last 100 years. World supplies of cod, swordfish, marlin, halibut, skate, and flounder have been reduced by over 50% in the last 50 years. We are fishing out the oceans, it is happening in our lifetimes. Whole Foods refuses to sell seafood species such as blue fin tuna that are considered to be endangered species by a consensus of seafood experts. We have long supported The Marine Stewardship Council, both financially and through participation on their Board of Directors.

 

Whole Foods Market addresses its energy usage in several ways. We track our energy use by store, and are moving that analysis down to the equipment level, so that we can track when outdated appliances need to be replaced. We utilize solar energy and other green building practices in our newer stores, and harness the idealistic energy of many of our younger team members in our Green Mission teams. Our Green Mission team members throughout the company are empowered to work together to systematically lessen our environmental impacts. Our Green Teams have been highly effective in moving the company forward to greater and greater environmental integrity through numerous reusing, recycling, and re-education initiatives.

 

Finally, in 2006, Whole Foods Market took the lead as the largest corporate purchaser of wind energy credits in the nation as we offset 100% of our building energy needs with wind energy credits. Each store and office has a comprehensive recycling program, and we open up many of our recycling initiatives to our customers.

 

In summary, Whole Foods Market meets its responsibilities to both local and global communities, often with innovative programs, and has led by example in many pro-environment initiatives. Whole Foods is also aware that its operations provide many opportunities for improvement in the future. As with our other constituency groups, we have no intention of becoming complacent.

 

Creating a New Paradigm for Non-Profit Organizations

I want to briefly discuss the limitations of the current non-profit models that exist in the world today. In my opinion, most modern American non-profit organizations operate with a mentality that creates inefficiencies, waste, and stagnation; most non-profits are ineffective in fulfilling their mission. Fully 99 percent of non-profit organizations are dependent upon donations from the business sector or private citizens in order to exist; they're not sustainable on their own. Most non-profits feel pretty good about themselves because they have idealistic, altruistic goals—they have stated purposes beyond maximizing profits. They are do-gooders, trying to do good things in the world. But these good intentions beg the question—are these altruistic goals enough by themselves to make non-profit organizations good and ethical, and do these goals also make them effective? Are the noble purposes by themselves enough? And just because the goals are idealistic does that mean that a non-profit organization is able to completely transcend self-interest? I argue, probably not.

 

It's my position that non-profit organizations also need to evolve to a more holistic model, just as business needs to. Below we have a great graphic depicting a common view of the good, altruistic non-profit organizations versus the evil, selfish greedy corporations.

 

Conscious Capitalism Figure 6

A wall exists between the non-profits and for-profits consisting partly of the stereotypes that exist in our society today. Non-profits are viewed as good because they have altruistic, idealistic goals. As you can see on the graphic, non-profits often believe that money "grows on trees", and because their ideals are altruistic, they are seen as "angels". Non-profits sponsor idealistic events like AIDS walks and they have an environmental consciousness. On the other side of the wall you see the clear contrast with the for-profit sector of business. You see the stereotype of the greedy businessman with dollar signs in his eyes, grasping after money, and smokestacks popping up all around the world. The world is plastered with high-rise buildings and the environment is being destroyed, with the angel being transformed into a devil because again, the only goal is to maximize profits and that it is seen as simply selfish and greedy.

 

I think these stereotypes have outlived their usefulness. As a global society we need both non-profit and for-profit organizations to become holistic and integral, the wall that separates them needs to be torn down, and the polarities integrated. Corporations must rethink why they exist. Corporations need to become more conscious, and identify deeper and more comprehensive purposes for why they exist. They must evolve past machine metaphors and learn how to think holistically in terms of creating value for all there interdependent constituencies. Likewise non-profits must become economically sustainable and must discover that money and profits are good, not evil, and that they are a necessary part of a healthy holistic organization. A great example of this is Grameen Bank.

 

Grameen Bank is a non-profit organization begun in Bangladesh by Muhammed Yunus that has not only helped millions of people lift themselves out of poverty, but it has also become financially sustainable. Grameen Bank provides a great model toward which other non-profits should aspire. Started in 1983 by Muhummad Yunnus, in his native Bangladesh, Grameen Bank offers small, collateral-free loans to (predominantly) poor women who pass certain criteria. Founded on the basis of trust and solidarity, Grameen (Village) Bank works with its customers on their business plans, and requires a particular code of conduct that emphasizes community building behaviors and actions. Principal and interest from the loans, typically repaid by small weekly installments, go back into the borrower's local operating funds, to fund new loans. By providing financial opportunity to traditionally underserved clients, Grameen Bank has realized a repayment record of more than 97% (one of the best bank repayment records in the world). This contrasts with a repayment rate of less than 60% over the same timeframe in the traditional Bangladesh banking world that caters to middle and upper class clients. In the 20+ years Grameen Bank has been in business, the income of more than 50% of the families of Grameen borrowers have risen above the poverty level.

 

In Bangladesh today, Grameen operates 1,084 branches, serving 2.1 million borrowers in 37,000 villages. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 94% are women. Although operating in the realm of philanthropic organizations in that it has altruistic goals and ideals, Grameen Bank employs a model that is self-sustaining. Although it welcomes donations, the alternative bank does not rely on the business or private sector for its operating expenses, and provides a sustainable model toward which other non-profits should aspire. Grameen methods are now applied in projects in 58 countries, including the US, Canada, France, the Netherlands and Norway.

 

Once the conceptual wall separating non-profits and profits is torn down, it becomes clear that businesses and non-profits are potentially much more alike than they are different. They both can become holistic, and at a higher integral level, non-profits and for-profit businesses look remarkably similar. An ideal non-profit's organizational model looks very similar to the Whole Foods Conscious Capitalism model introduced earlier. The non-profit expresses core values and it has similar constituencies to a business: employees, customers, suppliers, and investors/donors. The donors want the organization to achieve its societal mission, and if it does the donors will be happy, and will send increased financial resources to the non-profit organization. Just because it has a social mission does not exempt the non-profit from community and environmental responsibilities. The holistic non-profit has a very similar model to the holistic business, an important point I want to underscore. The following graphic illustrates the holistic model for non-profit organizations.

 

Non-Profit Business Model: Sustainability

NonProfit Model

 

Conclusion

The old paradigm of maximizing profits and shareholder values as the sole purpose of business has created negative unintended consequences. Businesses and corporations are seen as greedy, selfish, and evil. Business is seen as despoiling the environment and causing harm in the world. Business has a very bad brand. We can remove most the hostility toward business and capitalism if we can change the way we think about it and if businesses work on becoming better citizens. Business needs to become holistic and integral with deeper more comprehensive purposes. Corporations must rethink why they exist. If business owners/entrepreneurs begin to view their business as an complex and evolving interdependent system and manage their business more consciously for the well-being of all their major stakeholders while fulfilling their highest business purpose, then I believe that we would begin to see the hostility towards capitalism and business disappear around the world.

 

In summation, business is fundamentally a community of people working together to create value for other people, their customers, employees, investors, and the greater society. Business interacts within a harmony of interests. At the same time non-profits need to become economically sustainable and discover that money and profits are good, not evil, and necessary for them to fulfill their purposes. A holistic perspective is essential for non-profits. A new Conscious Capitalism paradigm will improve the effectiveness of each type of organization. But on a basic philosophical level, why try to "do good" in the world? Why isn't the pursuit of our own self-interest enough? Perhaps we need to look more closely again at what Adam Smith wrote. The Wealth of Nations was a tremendous achievement, but economists would also be well served to read Smith's other great book, The Theory of Moral Sentiments. There he explains that human nature is not just about self-interest. It also includes sympathy, empathy, friendship, love, and the desire for social approval. As motives for human behavior, these are at least as important as self-interest; for many people, they are more important.

 

When we are small children we are egocentric, concerned only about our own needs and desires. As we mature, we grow beyond this egocentrism and begin to care about others—our families, friends, communities, and countries. Our capacity to love can expand even further, to loving people from different races, religions, and countries—potentially to unlimited love for all people and even for other sentient creatures. This is our potential as human beings, to take joy in the flourishing of people everywhere. Let us each realize our potential for deeper love and extend it out into the world—let us together create this new business paradigm of Conscious Capitalism.


1The publicly-traded companies included in the study include: Amazon, Best Buy, CarMax, Caterpillar, Commerce Bank, Costco, eBay, Google, Harley Davidson, Honda, JetBlue, Johnson & Johnson, Progressive Insurance, Southwest Airlines, Starbucks, Timberland, Toyota, UPS, and Whole Foods Market. 2Sisodia, Rajendra, Wolfe, David, and Sheth, Jagdish, Firms of Endearment: the Pursuit of Purpose and Profit, (manuscript), Wharton School Publising, 2007.


Let me try to clear up a few misunderstandings about the ideas expressed in this chapter via the questions posed at previous presentations of this material:

 

Q: Why am I opposed to profit?

 

A: I am not opposed to profit. As I have pointed out, Whole Foods Market is a highly profitable company. Profits are good. Profits are an important part of what business is about, but profits are not the sole purpose of business. Business has other purposes than merely maximizing profits. Entrepreneurs who create businesses rarely create businesses solely for the purpose of maximizing profits and entrepreneurs are the ones who ultimately define, in my opinion, the purpose of the businesses they create. Most businesses have purposes besides maximizing profits, because entrepreneurs create them for other purposes. There may be certain occasions where an entrepreneur creates a business and is only concerned with maximizing profits; he or she is entitled to do so, it certainly is not unethical. But strictly profit based business probably won't be as successful or profitable a business over the long-term as it could be. I do not think it will compete well head-to-head with a more holistic and integral business model, if the business strategy and all other things are equal. I am not arguing that a business cannot operate solely for profits, I'm merely stating that many, if not most, businesses are not that way when entrepreneurs first created them. If business leaders become more conscious of the fact that their business it is not really a machine but part of a complex interdependent and evolving system with multiple constituencies, they will see that profit is one of the important purposes of the business, but not the sole purpose. They will also begin to see that the best way to maximize long-term profits is to create value for the entire interdependent business system. Once enough business leaders come to understand and accept this new business paradigm, I believe that Conscious Capitalism will reach a takeoff point and the hostility toward business will largely dissipate over the long-term.

 

Q: Does philanthropy equal social responsibility?

 

A: No, philanthropy is actually just a small part of the social responsibility of business. The social responsibility of business is about creating value for all of its constituencies. If you are creating value for your customers and employees, acting with integrity toward your suppliers, if you are a good citizen paying taxes, if you take responsibility for your environmental impacts, you'll fulfill most of your social responsibilities. However, if a business is responsible to its investors, employees, customers, suppliers, and the environment but refuses to contribute toward philanthropic organizations, it would be neglecting the important community constituency. It would be a stingy neighbor to have, but it could still be creating value in the world through the value it creates for its customers, employees, suppliers, government, and the environment. The contrary is also true: a business could be highly philanthropic to its communities, but if it is creating shoddy or harmful products, exploiting its employees, cheating its suppliers, and doing significant damage to the environment it can hardly be considered an ethical or socially responsible business no matter how great its philanthropy is.

 

Philanthropy is not primarily what social responsibility is about, but it is also not "theft" from the investors if a business chooses to contribute some money to the communities where it has a presence. That would be part of its responsibility as a citizen and such donations will not only help the community, but will simultaneously create good will with customers, employees, the media, and other citizens in the community. I believe that while philanthropy does not equate to social responsibility by itself, philanthropic donations are certainly consistent with being a responsible citizen in the community in which business exists.

 

One common objection to philanthropy is where to draw the line? If donating five percent of profits is good (as Whole Foods does), wouldn't 10 percent be even better? Why not donate 100 percent of our profits to the betterment of society? But the fact that a business has responsibilities as a citizen in the various communities it exists in doesn't mean that it doesn't have any responsibilities to investors or other stakeholders. It's a question of finding the appropriate balance and trying to create value for all of the stakeholders simultaneously. Whole Foods donates five percent of its profits to the community stakeholder (in addition to the taxes we pay). Is five percent the "right amount" to donate to the community? I don't think there is a right answer to this question, except that I believe zero percent is too little. It is an arbitrary percentage that the co-founders of the company decided was a reasonable amount and which was approved by the owners of the company at the time we made the decision. Corporate philanthropy is a good thing, but it ultimately requires the legitimacy of investor approval, and the investors as the owners of the business have the right and the authority to withdraw their approval if they wish. In my experience, most investors understand that modest philanthropy can be beneficial to both the corporation and to the larger society. They understand that philanthropy is consistent with creating long-term profits for the investors because of the interdependent nature of the business enterprise.

 

An argument that I frequently field is that corporations or businesses don't have any special competence in philanthropy; therefore corporations should stick to what they do best, which is maximizing their profits and allowing the individual shareholders to engage in philanthropy. This is a deceptive argument for a couple of reasons. Number one is that this line of reasoning overlooks the fact that business is legally treated as a citizen of the community in which it exists. If you want to maximize shareholder value in an integrated holistic system, philanthropy can be part of that strategy, and it is the responsibility a citizen has in his or her community in any case. The same people who argue against corporations engaging in philanthropy frequently argue that government is also incompetent in engaging in civic activities. As their argument develops, now they assert that business is incompetent and government is incompetent, so that puts all civic responsibility onto individual citizens. I ask you, are individual citizens inherently more competent in philanthropic endeavors than businesses? I would argue that because business taps into more complex feedback loops and may enjoy the results of more detailed research on the effectiveness of its investments, business probably has the potentiality to be more competent in philanthropic practice than could most individuals.

 

From my perspective, we need to acknowledge civic responsibility at the individual, corporate, and governmental levels. Civic responsibilities cannot be completely met by the voluntary individual sector of society. Corporations have great contributions to make in philanthropy. Perhaps some corporate philanthropy is misguided and money is wasted, however, I will point out that corporations make investments all the time that do not work out. Corporations make mistakes all the time, and they can make mistakes in philanthropy, just like they can make mistakes in other areas of their business such as the people they hire and promote or their investments in new equipment or facilities or their mergers and acquisitions. . Not everything a business attempts will succeed, but that simple truth does not negate the business process. Corporations may not always be successful in the philanthropic arena either; they will occasionally make mistakes. These mistakes do not negate the worthwhile value of most philanthropic efforts. In most cases business philanthropy creates beneficial social value.

 

Q: Who should control corporations, stockholders, or stakeholders?

 

A: One of the objections I hear frequently is that I am advocating for stakeholder control of corporations, replacing stockholder control. I am certainly not arguing for that. As I have already pointed out, stockholders own the corporation, they get paid last based on residual profits left over from the business and it's essential that they have the final say on who comprises company management through the Board of Directors. They need to have the ultimate power to fire management through the Board of Directors if they are unhappy with the performance of the company. Without that power it is inevitable that the stockholders will eventually be exploited by the management or some of the other constituencies of the business. I am not arguing, and have never argued, for anything that weakens the property rights of the investors and stockholders. That line of reasoning is a misunderstanding.

 

Q. What about conflicts between various stakeholders? How do you create balance between all the conflicting desires and demands of all the different stakeholders? For example: if more is given to the employees doesn't that necessarily result in less being available to the other stakeholders such as the investors and vice versa? How do you avoid conflict and keep all of the stakeholders happy?

 

A. Conflict between the various stakeholders in a business is inevitable from time to time simply because each stakeholder wants more. Customers want higher quality and lower prices, employees want higher wages and better benefits, investors want higher profits, governments want higher taxes, and community groups want greater donations. The potential for conflict is always there. However, the fundamental mistake that most people make when thinking about this issue of conflict between stakeholders is that they create analytical separations between the stakeholders and leave it at that. They see them as separate from each other and the business-each pursuing their own interests. When this type of analytical separation is done it also engages in a form of reductionism-it ignores the relationships between the stakeholders and the business and with each other. The business is more than just the sum of the individual stakeholders. It is also the interrelationship, the interconnection, the shared purpose, and the shared values that the various stakeholders of the business co-create and co-evolve together. No complex, evolving, and self-adapting organization can be adequately understood merely through analyzing its parts and ignoring the greater system that also exists. This is a very important idea to understand because while the analytic mind will focus on the conflicting interests of the stakeholders it will tend to ignore or fail to see what the intuitive systems mind understands-that the stakeholders are interconnected together in a "harmony of interests". In a healthy complex, evolving, and self-adapting system this harmony of interests between stakeholders proves to be far more important and resilient than the various conflicts of interest that the analytic mind focuses on.

 

A holistic business creates value for all of its stakeholders. Given the desire of each stakeholder for more how is the value divided between the stakeholders to keep them happy? There is, of course, ultimately no magical formula to calculate how much value each stakeholder should receive from the company. It is a dynamic process that evolves with the competitive marketplace. No stakeholder remains satisfied for long. It is the function of company leadership to develop solutions that continually work for the common good. It is the art of excellent leadership to seek the win-win-win-win-win solutions in the context of competitive market processes that optimize the value of the entire business system, and for each of the stakeholder participants within that business system.

 

Q. My final point of clarification is the quote from Adam Smith that is frequently used to try to negate my point of view. The quote is "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good." Adam Smith in The Wealth of Nations.

 

A. To me this quote has two parts to it, the first one is a reinforcement of Adam Smith's famous 'invisible hand' metaphor (which I think was the most profound insight into social history ever made) which implies that through a voluntary exchange people acting in their own self interest, pursing their own good create value for the greater society. That is true! I am not arguing against that. I believe in the invisible hand. Period. The second part of the statement, however, is what I disagree with, "I have never known much good done by those who have affected the trade of the public good." The fact of the matter is that much of the good that is done in this world is done by people who intend to do the good. The invisible hand metaphor correctly points out that much good is done for the public accidentally, so to speak, by simple pursuit of self-interest. Through voluntary exchange, acting in self-interest, parties both voluntarily exchange, and both parties benefit or the exchange wouldn't happen. That process creates a social good, true, but it is also true that very much good is done because people have an intention to "do good". All the "good" is not done accidentally.

 

I believe that the 'invisible hand' of Adam Smith should be supplemented by the 'visible hand' of intentional "do-gooding", and that individuals, governments, and businesses have endless opportunities to attempt to do-good in the world. Business has the opportunity to "do good" and create value for all the various constituencies that trade with the business voluntarily. I also believe that supplementing the 'invisible hand', with a 'visible hand', if done consciously, on an ongoing basis by individuals and corporations around the world, would help push humanity into an era of accelerated progress that would be unprecedented in world history. That is what Whole Foods Market is trying to do, and that is what Conscious Capitalism really means.

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John Mackey says …

To Bob Jacklin, I think we are probably talking past one another and aren't understanding the other person. I encourage you to reread my blog on Conscious Capitalism for I do not think you fully understand what I am trying to say here. You seem to understand and appreciate my point about deeper business purpose, but not my equally important point about the interdependent relationship between all the various stakeholders: "If business owners/entrepreneurs begin to view their business as a complex and evolving interdependent system and manage their business more consciously for the well-being of all their major stakeholders while fulfilling their highest business purpose, then I believe that we would begin to see the hostility towards capitalism and business disappear around the world." Wal-Mart indeed has a deeper purpose--"Always Low Prices--Always!" and they obviously understand the importance of taking costs out of their supply chain to fulfill this purpose, but the business is not being managed in a conscious manner to create value for the other interdependent stakeholders such as their employees, their suppliers, or the local communities they do business in. IMO Wal-Mart (despite its commitment to low prices to its customers) is not an example of a "Conscious Business" because it isn't being managed to optimize the entire interdependent system that it participates in. At best Wal-Mart is trying to optimize well being for only 2 of its stakeholders--customers and stockholders. Wal-Mart's strategy of strictly focusing on low prices as its only pupose has worked wonderfully well for them over most of the past 40 years, but today, in our increasingly transparent world, the flaws in this business strategy are beginning to become very apparent. Negative feedback loops have been created which are beginning to really hurt Wal-Mart. Despite their lower prices for their customers, their lack of genuine care towards their employees is now resulting in massive union attacks and various legislative efforts to force reform upon them (especially in health care). Various community activist groups organize to prevent Wal-Mart from opening in markets all around the United States. In addition, many, many suppliers voluntarily choose not to sell to Wal-Mart based on Wal-Mart's tendency to continually use their dominant market position to extract additional price concessions from the suppliers each year or lose the business. All these negative feedback loops are beginning to negatively impact Wal-Mart's business as their same store sales have dropped down to less than 2% in recent quarters. In fact, in the most recent month they actually reported negative same store sales. Look at Wal-Mart's stock chart over the past 5 years. You'll see that the stock is currently trading about 20% below what it was trading at 5 years ago. http://finance.yahoo.com/q/bc?s=WMT&t=5y&l=on&z=m&q=l&c= Things are not well right now in the Wal-Mart interdependent business system! Your argument for voluntary exchange at Wal-Mart is of course a valid argument. No one is actually forced to work there against their will (they aren't slaves) and the competitive market price system will always set the ultimate boundaries for employee pay. Any business which long ignores the competitive market price system will eventually go out of business. I'm not arguing for that. I am arguing, however, that Wal-Mart is a corporation that needs to rethink its ultimate purpose for existence and rethink its relationships to some of its key stakeholders--employees, suppliers, and communities. To its possible credit it may be rethinking its relationship to the environment as it has initiated some well publicized efforts to become more environmentally focused. So far, however, all its environmental efforts have been consistent with its primary business goal to take additional costs out of its cost structures to lower prices to customers and increase profits for its shareholders. It could be that their environmental commitment is no deeper than this and is simply being managed by the Public Relations firm they hired a couple of years ago to shore up their corporate reputation--"Greenwashing" in other words. Time will tell on this. If Wal-Mart's only purpose for existence is "Low Prices--Always Low Prices" and nothing more than this, then I predict it will increasingly struggle in the years ahead as our increasingly transparent world demands additional care and concern for employees, suppliers, communities, and the environment than Wal-Mart has historically provided. I encourage you to read "The Wal-Mart Effect" by Charles Fishman for a thoughtful and fairminded discussion of Wal-Mart. Your comments on my blog have made me realize that I haven't been clear enough in distilling exactly what I mean by "Conscious Capitalism". I will need to substantially rework my paper to make it more cogent before publication in my book. Here are the key principles for my version of Conscious Capititalism that I want to underscore: 1. Entrepreneurs create &/or discover the purpose of the business that they create--not economists, politicians, or lawyers. Entrepreneurs today are also entrepreneurs of meaning. 2. Every business has the potential for much deeper and more comprehensive purposes than only maximizing profits for investors. However, maximizing profits for investors is a legitimate purpose and not unethical--just narrow and uninspiring by itself. Great businesses have great purposes. 3. Machine/engineering/industrial metaphors are no longer the best metaphors to understand how a business or an economy really functions. Systems theory, Hayekian spontaneous order, and complexity science are better tools and metaphors for understanding both business and economics today. 4. The Paradox of Profits. Profits are maximized or optimized by not making them the the primary purpose of the business. They are a by-product of other things--deeper business purpose, customer satisfaction, employee motivation, successful innovations, superior business strategy, optimum systems leadership, competitive adaption/evolution, and many other factors. 5. Business leadership will be most successful over the long-term if it optimizes the entire interdependent business system and consciously creates value for all of the constituencies of the business. This will also maximize long-term profits for the investors as well. Optimizing the interdependent business system is not done blindly or arbitrarily, however, but is always done within the context of the larger economy which provides the necessary price information for leadership to make good decisions. The price system is a necessary tool for leadership to use, but not a God for them to obey. 6. The metaphor of citizenship is appropriate for business to use to understand what its appropriate relationship to the communities it operates in--local, national, global, and environmental. Citizenship entails certain responsibilities as well as privileges. 7. We increasingly live in a transparent world where everything we do is seen and communicated to everyone else who is interested. Transparency necessitates greater awareness and consciousness about all of our decisions and actions. Thank you, Bob, for the reading suggestions. I've read 10+ books by Thomas Sowell but not "The Quest for Cosmic Justice". I just ordered it. Sowell books I particular enjoyed include: "The Vision of the Annointed", "A Conflict of Visions", and his wonderful 3 book series including "Race and Culture", "Migrations and Cultures" and "Conquests and Cultures". Regarding Watchman Nee's "Spiritual Man"--I read these books 33 years ago when I was a practicing Christian. While Nee has some interesting insights about inner psychology I found these books obsessed with fears about "Satan" everywhere. They are no longer useful books for me personally as my personal spirituality has evolved in different directions. Since you are interested in Spirituality let me recommend a few of my favorite books in this category for you: "Essential Spirituality" by Roger Walsh, "A Path With Heart" by Jack Kornfield, and "A Course of Miracles" by The Foundation for Inner Peace. I found great spiritual value in all three of these books. I believe Ken Wilber is the most important philosopher living today in the terms of creating philosophical models which reconcile spirituality and science and giving us a firm foundation to move past mythologically based religions into authentic 21st century spirituality. I heartily recommend almost all of his books, especially--"A Theory of Everything", "The Marriage of Sense and Soul", and "Integral Spirituality". These are all good introductions to Wilber's ideas.

Tony Manasseri says …

John- I applaud you thinking. I worked as a managing executive at a fortune 100 company for 35 years. This company was one of the greatest success and innovation stories ever. When we were profitable, our corporate attitude, and our culture I might add, were similar to yours. Our business model looked much like yours also. But just as Maslow outlined in his hierarchy of needs model, we started worrying about food, clothing and shelter (basic needs) as our profits shrunk. Our culture held tight but the competition was fierce, especially from the Japanese. Their goal was to put us out of business with an equal quality product but at a price our good people could not achieve. When this happened things turned ugly. Shareholders were demanding higher returns and could care less what good corporate citizens we were. I hope your model continues to produce favorable results, ours did for years. We even won the Baldridge Quality award several times but it failed to produce the revenue and profit we needed. The company is still around but I'm glad I'm retired. Tony

Lucy Palmer says …

Hi John, I’ve really enjoyed reading your thoughts on conscious capitalism and noticing how the definition of that has expanded to mention spirituality and the interconnectedness of life. I was recommended to look at Whole Foods as an example of an organisation that is willing to seek ways of working that serve a higher purpose and yet are not seeking to be part of something that requires anyone to buy into their beliefs. It seems to me that you are offering an alternative model which demonstrates itself everyday through the existence of your business. It’s attractive to those who resonate with it, and for some the attraction is conscious, others don’t think about it they just keep choosing to work, shop or trade there. It occurred to me that over the years you will have evolved your thinking and conscious understanding of the business model you’ve created. I wondered how you shared that initially when you started the business and how you have managed any resistance or challenge to that approach along the way. As it became clearer, and is “the way things are done around here” I imagine that it becomes a self generating approach because the results exist and people can feel it’s different. There must have been times where the choices to cap salaries, or any of the other approaches you’ve adopted, seemed to fly in the face of the way people believed business should run in order to be successful. How have you supported yourself and others through these times? I am very interested in exploring ways of doing business that consciously recognise the movement of energy, the existence of universal laws and seeks to serve the bigger picture. I am in the process of gathering ideas and case studies that will support the creation of a book and study materials and I would really like to discuss this with you outside of your blog. I look forward to reading more. Although I am open to other approaches I recognise that I’m used to viewing the world of business in a particular way. Reading your book is challenging me to realise how many fixed beliefs I currently hold. Thank you Lucy Palmer (from Norwich, England)

John Mackey says …

To Tony Manasseri, I empathize with your competitive business experience. It is obviously much easier to have an expansive view of the world when a business is successful and prospering than when competition is beating it in the marketplace. I don't know any of the particular facts about the business you worked for so I can't comment specifically about it. I will say, however, that Whole Foods doesn't lack for powerful and aggressive competitors, many of them much larger and better capitalized than we are. IMO competition should be viewed as an "ally" of the business because it is through competition that we are forced to get better--forced to reduce our costs, forced to innovate, and forced to create new value for our customers. Whole Foods success over the last several years has greatly increased the competition that we are facing and has caused us to accelerate our innovations, lower our prices, and discover new and better ways to better differentiate ourselves and to increase customer value. It isn't easy to do this and we are not permitted to "rest on our laurels" for very long. We have to get better, get cheaper, or get out--same as every other business. It is this driving quest for continuous improvement fueled by competition from other companies that is the true source of the dynamism of capitalism. To Lucy Palmer, I can't summarize 28+ years of business experience in a blog entry. You'll have to wait for my book to come out--hopefully finished in 2007 and in print in 2008. I will let you in on one little secret--we have figured it out as we went along. There was no "master plan". We started out with very simple and easily understood values and built the organization around those values. The complexity that exists today has self-evolved over the past 28+ years. One other little secret--we are still figuring it out as we go along. We are still discovering our deepest purposes and still learning, growing, and evolving. Each day brings new discoveries and dozens and dozens of new experiments throughout the company. Whole Foods is a grand adventure that I believe has still barely begun. We shall never cease from exploration And the end of all our exploring Will be to arrive where we started And know the place for the first time. T. S. Eliot

Tony Manasseri says …

John- I agree with you that competition can be viewed as positive, it does cause us to become sharper than we might otherwise be. Another challenge of yours will be to communicate that to your people, in a way that they will embrace it like you have. What overtook us was the rate and velocity at which the competition came at us. That said, we were one of the few companies that were able to gain marketshare in the face of this stiff Japanese competition. It just took us a while. I don't think our senior leadership was as aware and knowledgeable as you seem to be. Later in my career I was involved with many successful change initiatives. If you are interested in knowing the formula we used I will be glad to share it. My only interest in doing this would be to help you succeed. I love your stores and employees and want them to be around a long time. So much so that I have given several free seminars on organics at your stores. Tony

Kajal Nanaiah says …

I second the views of Thomas MacGowan and to Christopher Neal I would like to add that living on less than a $1 a day is not poverty, it is simplicity. Why should the way of life in wealthy nations be used as a yardstick for measuring poverty? If everybody could live on less than a dollar a day, it would be good for their souls and mother earth would smile! I live in the US, but am from India where a large percentage live on less than a $1 and if by your stats the level of poverty has reduced in India, it has definitely not made it a better place, in fact all the places I cherished growing up there have been turned into ugly meccas of capitalism and consumerism fueled by globalization. Having more to spend doesnt make the world a better place, living on less does and thats not something capitalists favor!

John Mackey says …

To Tony Manesseri, My time is so scarce that I don't believe we can meet in person to talk over your ideas. I invite you to share your ideas by posting them on this blog. Thanks. To Kajal Nanaiah, Given the opportunity to materially better their lives and materially better the lives of their children most people in the world make the choice to do exactly this. Most people don't want to live on $1 or less per day and apparently neither do you, since you have chosen to live in the United States. Unless you are living homeless somewhere and eating out of trash dumpsters then I suspect you are spending more than $1 per day. How do you justify this? If you believe poverty (or if you prefer "simplicity") is a good thing, then why don't you voluntarily move back to India and live there on less than $1 per day? Any extra money you have you can give away to other poor people or donate it to The Whole Planet Foundation--www.wholeplanetfoundation.org. The Whole Planet Foundation is working with the Grameen Trust to end poverty throughout the world. We could use your money to loan to poor people through microcredit to help them climb out of poverty. I promise you that we don't loan any money to any poor women (100% of the loans are to women) who don't want to borrow the money. You might be surprised to discover that most really poor people don't like being poor and have powerful dreams to better their lives and the lives of their families. I believe in "voluntary simplicity" and personally follow that lifestyle myself. I believe each person must define what "voluntary simplicity" means for themselves and shouldn't try to coerce others to adopt their own particular lifestyle. For example, I believe that following a vegan diet and lifestyle minimizes one's environmental impact in many different ways, but I don't believe in trying to force my particular dietary choice onto other people. Each person must choose for themselves if they have the opportunity to do so.

Tony Manasseri says …

John- This change formula came from Richard Beckhart at MIT. Change = PxVxCRxTPL __________ Resistance Change will occur when people are faced with or are able to see the Pressure that requires the change. You could also call this UN for understanding the need. Pressure is not always bad like shrinking market share, it could be that you are very successful in the current model but need to change to grow the business or to get ahead of a new trend. Once they understand the what and why of change they must have a clear understanding or Vision of where they are being asked to go. What will it look like? Example, I understand I have to loose weight because of my diabetes but how much? Next you have to describe the Current Reality. Example, how much do I weigh now so I understand about how far I have to go to get to my vision? How bad is our Current Reality, how did it come about? Last is a Transition Plan showing the incremental steps planned to get the organization towards the new Vision, and their role in its success. Each of these has a multiplier between them indicating that every one must be addressed or the change will not be successful. 100 times zero is still zero. All of this is underscored by Resistance. Resistance is normal and should not be viewed as something to defeat. People will go thru the stages of resistance, there are four, at their own pace. Normally, about 50% of the people in the organization will go willingly along with the change. These are the people who like change or have, “I want to please" personalities. Another 30% will show some stage of resistance and will be difficult to influence. Keep the 50% motivated while you work on the 20% in the middle who often need a little more information or are waiting to see if this is real. 70% is enough for a successful change initiative. Frequent communication and plan updates will keep the effort from "rainbowing" and differentiates it from the latest management brain fart. Tony

Ranjit Mathoda says …

Hello Mr. Mackey. This is an interesting article, and poses an interesting contrast to the ideas of Milton Friedman, with which you appear to have some significant overlap, and some differences. Here's a few comments on your major points, which I hope may help you as you write your book. >1. Entrepreneurs create &/or discover the purpose of the business that they create--not economists, politicians, or lawyers. Entrepreneurs today are also entrepreneurs of meaning. I'm not sure if by entrepreneur you mean someone with an entrepreneurial spirit or a founder. I would argue that we all generate meaning by the acts and positions that we take. Sometimes we reinforce the meaning, sometimes we change it. Founders of a business often have significant potential to create the meaning of the business, but stewards of existing values or change agents who bring new values also change the meaning of a business. Also, I'd add that stakeholders make judgements on those meanings, and customers are the most significant judgement maker as to the meaning of a business; if the customer doesn't understand the values of a business organization, it may have to change. >2. Every business has the potential for much deeper and more comprehensive purposes than only maximizing profits for investors. However, maximizing profits for investors is a legitimate purpose and not unethical--just narrow and uninspiring by itself. Great businesses have great purposes. I'm not sure great businesses always have great purposes. But I can see that creating great meaning can help immesurably in bringing together the set of voluntary exchanges needed to create a coherent and effective organization. Certainly as customers in our modern world become more materially satisfied, they tend to look beyond just material satisfaction, to greater meaning, in their purchasing decisions. >3. Machine/engineering/industrial metaphors are no longer the best metaphors to understand how a business or an economy really functions. Systems theory, Hayekian spontaneous order, and complexity science are better tools and metaphors for understanding both business and economics today. I'm not sure that any particular set of metaphors is best. Probably having multiple metaphors at hand is the most critical. >4. The Paradox of Profits. Profits are maximized or optimized by not making them the the primary purpose of the business. They are a by-product of other things--deeper business purpose, customer satisfaction, employee motivation, successful innovations, superior business strategy, optimum systems leadership, competitive adaption/evolution, and many other factors. I think profits are maximized by solving a great unmet itch, and then figuring out a way to monetize the solution effectively. That's similar to what you said, but different. >5. Business leadership will be most successful over the long-term if it optimizes the entire interdependent business system and consciously creates value for all of the constituencies of the business. This will also maximize long-term profits for the investors as well. Optimizing the interdependent business system is not done blindly or arbitrarily, however, but is always done within the context of the larger economy which provides the necessary price information for leadership to make good decisions. The price system is a necessary tool for leadership to use, but not a God for them to obey. Agreed. >6. The metaphor of citizenship is appropriate for business to use to understand what its appropriate relationship to the communities it operates in--local, national, global, and environmental. Citizenship entails certain responsibilities as well as privileges. It is a useful metaphor, but it's also clear that sometimes companies under the guise of being good citizens engage in behavior that takes a particular point of view that may not match those of their owners. Owners can of course vote with their feet, either leaving or entering a stock of a business they believe in. But it is just as critical that corporate officers ponder whether a decision they make is actually for the benefit of the owners. If it increases the meaning that the whole organization or customers feel, that's probably not bad. But if it increases the personal meaning for the corporate officers, at the cost of company resources, without having real effect on the organization's interdependencies or on customers, then it is likely to be a waste of resources. >7. We increasingly live in a transparent world where everything we do is seen and communicated to everyone else who is interested. Transparency necessitates greater awareness and consciousness about all of our decisions and actions. Agreed. It's actually one of the big benefits of the information age that more scrutiny can be applied to all aspects of how things are done, if we care to apply it.

Charles Mukuka says …

John, I know where you stand in regards to organic foods. Just wanted to see your reaction from the latest issue on the latest findings by the U.S. Food and Drug Administration that Milk and meat from cloned animals is safe to eat. And also on the same level how safe organic meats will be once cloned meats enter the food chain?

michael antczak says …

John Mackey, I think first before one can answer the question, what is the purpose of business, one has to ask, what is the purpose of human species. It seems to me human species has the same purpose as every other species from bacteria to primates and that is to evolve. After 100 million years of evolution reptiles like alligators are equipped with teeth and guts that keep it going despite inhospitable conditions like draught, ice ages, human encroachment, egg eating mammals and meteorites. 100 million years has taught them a valuable lesson that being patience. Animals need water and when they come for water alligators keep motionless below the water line at the right moment tear limbs off unsuspecting creatures. A real master at survival. Science views mutations as random. Beneficial mutations will pass on to successive generations and unfavorable mutations will die along with less equipped bodies through natural selection. Random mutation it seems to me isn’t logical considering the exquisite speciality one observes in nature. Camouflage, intricate defense mechanisms, coloring, innate behavior, muscular structures designed for evasion or pursuit. I think there is likely a feedback mechanism from the environment back to DNA intelligence meaning mutation is not random but environmentally triggered. What is the trigger for future human evolution? I think humans are in a state of arrested development. Human species is ready for mutation. The earth is fully populated and it is time for us to scrap old systems and ways and move on. There may be two prominent forces at work influencing human development. One force is negative all together too pervasive and that force emanates from all existing organizations, bureaucracies, governments, parents, churches, in other words all conditioning forces existing in modern society. These institutions namely want one thing, to stick their ideology in your head and keep homosapien right where he is. One gives up youth, vitality and autonomy, getting little in return, paper money. What is the purpose of business? Whatever the owner wants it to be. Unfortunately most owners are primarily interested in money. In all probability CEO’s cannot define the purpose of their business once a company is public. Going public means a CEO is now controlled by Wall Street. But lets say you come across a high IQ visionary type CEO having enough confidence, brains and charisma to motivate its flock and appeal to single minded wall street types and a general public convinced they are making their own decisions but really are only selecting from a very limited number of choices offered by societies institutions. What might he do? If the purpose of a species to evolve then he might direct his business to that end. Our CEO having a background in many disciplines including Buddhism realizes consciousness is not a static thing rather a very dynamic thing that can be programmed and reprogrammed at will. Adepts having such capability can render any reality they wish. So our CEO wants his workers to undergo persistent brain change. He is changing the whole damn paradigm of business and society. He buys a 100,000 square mile parcel of land somewhere in Mexico (He is worth 50 billion). This space will house all workers and buildings. He builds a huge R&D center offering research capabilities from semi-conductors to outer space probes. Once complete he brings in the smartest scientists, programmers and engineers from around the world. His workers live rent free in 100 story buildings built for commune living. Workers own nothing but have access to everything they need. Schools are built serving kindergarden age children through college level. No grades are issued. Early schooling is geared to illicit creativity. College courses are geared to science, math, art, music and literature. All schooling is free. Cars are not used inside the community. Instead horses are used for personal transport. Workers have no possessions. They use any idle horse. Everyone is a vegetarian. No animals are killed for food. Many types of fruits, vegetables rice, dates, nuts are grown supplying enough nourishment for all. There is no use for money. All physical and spiritual needs are provided for. Our CEO tells his scientists and engineers he doesn’t want incremental change. He doesn’t want a better mousetrap. He wants quantum leaps in technology and invention. For example he tells his engineers he doesn’t want improvements made to the internal combustion engine, he was a new kind of engine. First task is to build a new car line. Cars are small and hydrogen powered with enough room for two. Cars however are designed to accept different body attachments. For example, somebody needing additional space whether it be space for passengers or cargo need only back up into the attachment module, press a button, and his two seat compact becomes a pickup truck or SUV or sedan. Modules are self-powered and conveniently available. When you no longer need the module you leave it at a dealer or Walmart or wherever. Warranty is 10 years 150,000 miles. Body design never changes. All engineering efforts go into functionality improvements. Once his cars substantially penetrate world markets new initiatives are undertaken. Engineers design heavy construction equipment using the same modular car concept. No longer do builders need very expensive specialized equipment for specialized tasks. A navigation module contains the brains and driver designed to connect up to all sorts of other task modules like digging modules, grading modules, lifting modules etc. Caterpillar and Volvo’s market share take a major hit dropping to number two and three respectively. Pharmaceutical drug development is another major initiative. Intelligence drugs are introduced for dirt cheap and the collective human genome begins producing homosapiens with better brains. Software engineers develop programs that create a brain computer feedback loop creating higher and higher brain functioning. Gone are emotional neurosis and general stupidity. Profits run 1 trillion dollars annually. No wages whatsoever are paid. Workers live, eat, socialize, work, do everything within the community. Every kind of animal runs free. All workers are guaranteed lifetime provisions. There are no laws and no police. There is no crime. All residents receive positive signals all day long. Music is played everywhere. Children run naked playfully chasing pheasant. Elephants immersed in large lagoons shoot water from their trunks. Eagles perch on window sills eating food out of a boys outstretched hand. Everything is in harmony with everything else. Classes are held in every kind of venue, along rivers, high in the mountains, around a midnight fire. Students learn ancient wisdom of China and India. They learn astrology and yoga from Indian masters. They learn magick from South American shamans. The stock price doubles every six months. All this effort is leading up to something really big, space travel for the average person. A space station is designed and built in space. In 2027 the station is ready for inhabitants. Ten people blast off every day destined for space living. There is indeed a trigger for human mutation and that trigger is zero gravity births. After several cosmic generations verbal language is thrown away like the club and spear. Communication is done by using telepathy. Bodies become small and light. Contact is made with other inhabitants of the universe. The human species finds its home at last.

Jennifer Davidson says …

Dear Mr. Mackey, Congratulations on your tremendous success and signficant contributions. I have been reading Conscious Capitalism and have learned a great deal from what you have written, so much so, that I felt compelled to chime-in. My husband and I are small business owners who are proud to manufacture an organic product that is sold on the Whole Foods shelves in Austin. I wanted you to know that recently we were approached by Wal-Mart to sell our product to a significant number of their stores and we found ourselves faced with a making a major business decision. It was a 'moment of truth' so to speak for us and we had to pause and ask ourselves again what kind of company we wanted to be. We swallowed-hard and made the decision that we would not become a company that was in business just to make a buck. We felt good knowing that what we worked hard at all day stands for more than just economic prosperity and if we agreed to do business with Wal-Mart, we would be nothing more than sell-outs. We have adopted our own corporate causes, the biggest being, "Donate Life America" - due to someone in our own family being touched by the need for an organ transplant. After reading your essay, I am again excited and motivated about how even a small company like ours can use our business platform to give-back to our community in countless ways and educate consumers about important social issues. I applaud and thank you for this inspiration! I find your company and the people who work for it truly enthusiastic, gracious and a pleasure to work with. Every single person we have come in contact with on your team has been a true joy to work with and this is solid proof of the corporate culture of values you have created within Whole Foods. I wish you nothing but continued success and I genuniely hope that one day when I am demo-ing our product in your store you walk by so I can shake your hand. God's blessings to you and yours in 2007. Jennifer Davidson

Reuben Furly says …

Again you make statements about animal welfare as one of your driving forces and yet your corporation continues to stock POM "Wonderful" despite that company's insistence on cruel and unnecessary animal testing, and despite the ready availability of alternative pomegranite drinks. How does this fit in with your stated animal welfare policies? I believe that WFM is actually POM's largest distributor, which means that you are directly responsible for the unnecessary suffering of untold lab animals. How on earth does this square with your drive toward "unlimited love for all people and even for other sentient creatures" - in short, to the paradigm of Conscious Capitalism that you claim to be exemplifying. To me, this is pure hypocracy; you need to either take this product off of your shelves immediately or stop the self-serving philosophical ramblings.

John Mackey says …

To Tony Manasseri, Your comments about change pretty accurately reflect Whole Foods' own approach to implementing change and integrating any acquisitions we make into our company culture. Some of the ideas you share seem very similar to Robert Fritz's ideas in "The Path of Least Resistance." Thanks for sharing. To Ranjit, Thank you for your comments. Regarding Milton Friedman, I consider him one of the greatest economists of the 20th Century and a true champion of both freedom and prosperity. I met him a few times and had very interesting conversations with him. I admire him greatly. However, I do differ with his ideas regarding the social responsibility of business. I refer you to my first blog entry, "Rethinking the Social Responsibility of Business" where I engage in a debate with Milton and T.J. Rogers regarding the social responsibility of business. To Charles Mukuka, Whole Foods doesn't yet have any policies on cloned animals. However, we are discussing and debating it internally and will likely have an "official policy" to announce in the near future. I would also be very surprised if the Organic Standards Board allows cloned animals in their "official" definition of organic. To Michael Antczak, I don't pretend to know what the purpose of the human species is. I'm far from sure that our species actually has any transcendental purpose. I believe that purpose is determined from "within" not from "without," and that each individual must discover or create for him or herself what their own individual purpose is. Regarding who determines the purpose of a business I vigorously argue in my blog posting that it is the entrepreneur(s) who create a business not the owner(s) who invest capital that determine the original purpose of the business. Frequently these overlap, but not always. In the case of a publicly owned corporation such as Whole Foods where tens of thousands of people have invested capital (millions of people when the individual owners of mutual funds are included) it is impossible to know what each individual owner desires the purpose of the business to be. I won't repeat all the same arguments here again. In my opinion and in my own personal experience at Whole Foods it is the entrepreneurs who create the meaning and purpose of a business--not the investors of capital. To Jennifer Davidson, Thank you for producing quality organic products and thanks for your loyalty to Whole Foods. Our company is definitely interested in doing more business with local vendors and farmers such as you who don't want to sell their products to Wal-Mart and other mass market retailers. I hope your business flourishes. To Rueben Furly, I'm sorry you feel so angry and judgmental toward both Whole Foods and myself. 1. Whole Foods has had several discussions with POM regarding animal testing. In fact POM itself does not actually do any testing on animals, but they do fund animal testing on pomegranate juice since that is required by the federal government in order for them to make nutritional claims regarding the product. Such animal testing is usually intellectually justified as being a tradeoff between the good of people and the good of animals, with people being more important. I don't personally agree with this argument but that is currently the government's position on the matter. 2. Is Whole Foods POM's largest retail distributor? I don't know. Possibly. We are the largest retail outlet for most of the products that we sell. 3. Our company has no official policy at this time regarding animal testing of grocery products, dietary supplements, and most other products that we sell. We are having internal discussions and debates about whether to implement such a policy. No decisions have yet been reached internally to change company policies. Here is our official answer at this time to complaints such as yours: When determining whether a product meets our Quality Standards, we evaluate only the product being considered for sale within our stores. We look solely at the individual product in question and its ingredients. We do not include in our review any operational or management decisions of the company outside of the direct manufacture of the product in question. Most food ingredients have long since been proven safe for human consumption, and fortunately do not currently require animal testing. However, dietary supplements, and certain foods that are marketed for their nutrition and health benefits, do occasionally use the results of animal research to substantiate claims or support the safety of a new ingredient. While we do not encourage unnecessary animal research, we cannot guarantee that it has not been used by our supplement and food manufacturers. Household cleaning products and personal care products sold in our stores have been proven safe without the use of animal testing. We recognize that customers may have their own personal criteria for buying or not buying a product. Whole Foods Market provides the basic screen for ensuring our products are free of artificial ingredients: flavors, color, preservatives, sweeteners, as well as no hydrogenated fats. From there, we encourage each individual to make their own personal decisions incorporating any additional criteria that remains important to them when purchasing a product. For more information about a manufacturer’s policies, or to express your opinions directly to them, we suggest you contact them directly. 4. Whole Foods does sell hundreds, perhaps thousands, of products that result in significant harm to animals, including the death of the animal. All of our beef, pork, lamb, chicken, seafood, etc. result in the death of these animals. The great majority of the eggs and dairy products also involve considerable exploitation of the animals. These facts are true not only for Whole Foods Market but also for every food retailer of any size and scale in the entire world. Whole Foods is doing many things to lessen the pain and suffering of animals and to create viable commercial alternatives to animal factory farms that currently dominate almost all animal food production in the world today. I know of no other retail food company that is doing as much as Whole Foods is doing to try to lessen the suffering of animals. I challenge you to name even one other retail food company who has done as much as Whole Foods has done to try to help lessen animal pain and suffering. Can we do more? Sure. And we will. Wait and see. 5. It is important to make the intellectual distinction between "John Mackey" and "Whole Foods Market." They aren't the same thing. They are independent entities that have their own individual interests, identities, and destinies apart from one another. If you ever create an organization or a company that exists for many years you will perhaps discover this truth for yourself. I personally disagree with many of Whole Foods policies in terms of my own personal values. Whole Foods is an empowered community where many opinions, views, and values are expressed by many, many people (we have millions of customers, 43,000 team members, tens of thousands of suppliers, and millions of investors). We make the most important policy decisions of the company through a company leadership group of 24 leaders from around the company. I vigorously argue my viewpoints, but at the end of the day I am only 1 of 24 votes and I don't always win. As the C.E.O. can I "overrule" the decisions of our leadership team? Legally I can overrule them, but in reality I never do because to do so would be to undermine the empowerment culture that is primarily responsible for our success. No one of real intelligence or talent wants to work for a "dictator," no matter how well intentioned the dictator might be. I therefore support the decisions our leadership group collectively makes even when I disagree with them. Whole Foods will continue to follow its mission statement and to serve its multiple stakeholders into the future. Since the stakeholders have multiple interests and multiple desires it is quite simply impossible to satisfy everyone 100% of the time. We will always have some angry customers, team members, investors, suppliers, and communities who disagree with some of the actions and policies of the company. All the company can ultimately do is try to satisfy as many people as possible as frequently as possible--to seek win, win, win, win scenarios. If we do this well enough then the company will continue to flourish. 6. I follow a (near) vegan diet myself, eating only eggs from my own chickens because this dietary philosophy is consistent with my own personal values. These are not Whole Foods company values, however, and likely never will be. At this time about 7% of our customers define themselves as vegetarians and 3% as vegans (and these are much higher percentages than the United States population as a whole, where vegans number less than 1%). That is too small a population to build a successful food retailing business around. If you disagree, then go create your own food store and find out the hard way. I opened a vegetarian food store back in 1978 called Safer Way before I opened Whole Foods Market. It was just 3,000 sq. ft. and it wasn't financially successful. Whole Foods was/is successful because we built the business around what our customers wanted--the highest quality natural and organic foods available, including animal products--instead of my personal dietary philosophy. On my own life path I've concluded that life is full of compromises and tradeoffs as we move through a world of infinite possibilities and infinite complexity. It is easy enough to be "pure" if you are willing to create nothing of substantive value. Real progress (both individual and societal) does happen, but it happens over time and it tends to move in an upward spiral instead of in a straight line. 7. Ultimately if you disagree with Whole Foods or don't like us then you have the free choice about whether to trade with us. Many, many people in fact don't like us for a multiplicity of reasons and don't trade with us. You are free to do this as well. If you don't like POM then don't buy their products. If you don't like Whole Foods then don't shop there (or work there or buy the stock or read my blog). 8. It is the easiest thing in the world to criticize and judge other people. What is much harder to do is to actually create something that makes a real difference. I admit to being far more impressed and influenced by people who go out into the world and actually create something that helps people (and animals) instead of merely criticizing other people for not doing enough. I personally admire entrepreneurs much more than I admire activists. Entrepreneurs actually create things while activists usually just critize others and try to "bully" and "threaten" people to try to force the world to conform to their personal values. I love Michelangelo's wonderful quote and will end this posting with it: "Criticize by Creating."

Jessica Bogart says …

In recent weeks there have been several articles written in business publications and the like regarding Wal-Mart's interest in jumping on the organic bandwagon. I find it ironic that at the same time you recently posted a blog about headhunters wooing your executives, and staff to competitor's businesses. All I have to say is this - Don't let them John! Like a bucking bronco, you hang on to that saddle horn and ride it out! Anyone who has seen that Wal-Mart documentary knows that company certainly has no concept of "conscious capitalism". One other side note -I purchased Whole Foods stock 3 days after 9-11. Why? Because I realized in that moment that I too needed to have a bigger reason, than just making money. So thank you for giving the public an opportunity to invest in something meaningful...John, your company is helping to make this country better.

Ashley Hodge says …

John Mackey, Thanks for your contributions. I found your ideas clear and your vision admirable. I wholeheartedly agree with your ideas. I have two questions: 1. Are you aware of some of the material that has been written by Gary Moore on Ethical Investing? Gary has written about John Templeton at length and how he became the most succesful mutual fund manager from 1954-1992. Templeton adhered to a philosophy of only buying companies that produced products beneficial for mankind and avoiding companies that preyed on human weakness. He outperformed the S&P 500 by 3% per year during that 38 year period after fees. 2. How much of your philosophy was shaped by your religious beliefs? You mentioned that you were a practicing Christian at one time. I am curious if your understanding of stewardship of resources came out of that or was developed later? To expand on that, my understanding of biblical revelation is that God gave Adam in the Garden of Eden a stewardship mandate in Genesis 1:28 to cultivate, grow, take dominion of the earth. The biblical story moves from God taking man from a Garden- Genesis- to a City- Revelation. I believe the point is that to the believer in biblical revelation, we are not to seek repristination- a return to the Garden. But rather progressive reformation- using the resources that God has entrusted to us to grow, cultivate and improve nature through conscious capitalism, technological innovation, etc... Did this understanding of stewardship shape your life philosophy? I really enjoy your thoughts because I believe they are entirely consistent with a biblical view of the world. I respect that you are a voracious reader as well. You have a lot of great things to share and it obviously comes from a mind and heart searching for wisdom. Best Regards, Ashley Hodge

Jeffrey Reel says …

In reading your blog, I think of the adage: "sorry for the long letter, but I didn't have time to write a short one." I admit to only going a few pages into your blog because I found it overly simplistic and flat-out wrong. You write: "In a capitalistic market economy business is ultimately based on voluntary exchange; all the main constituencies of a business (such as customers, employees, suppliers, and investors) voluntarily exchange with the business to create value for themselves and for others. No constituency is coerced to exchange against their will. This voluntary exchange for mutual benefit is the ethical foundation of business (and capitalism). For example, if customers are unhappy with the prices, the services, or the selection of my business, Whole Foods Market, they are free to shop at another competitor... All the constituents therefore exchange voluntarily for mutual benefit, and they are free to exit the relationship whenever they wish." What is "voluntary" about the need for sustenance, electricity, energy to heat the home, health care? If I find my health care provider to be too expensive, I am free to go to another competitor? When was the last time you comparison shopped for health care for yourself? How about for the typical "consumer"? Way overly simplistic, and you use it to form the foundation of your written piece. I take nothing away from your achievement with Whole Foods, but cannot take this as serious economic theory.

Peter Chung says …

I'd like to thank John for opening up an important issue facing our society. I wish you can build a strong global network. We can find many companies which agree with your vision and philosophy. We need a conscious, conscientious capitalism(CCC) movement to secure individual health and world peace. Thank you very much again. From Pusan, Korea.

gizelle says …

Can Conscious Capitalism be used to stop Whole Foods from promoting a product that funds animal testing? POMs has been funding testing on animals and this cruelty is being supported by whole Foods by carrying this product. I thought I could trust Whole Foods with their Animal Compassionate Standards but I suppose it is just a gimmick to get away with supporting companies that are cruel to animals. Now I know I cannot trust the products that are sold at Whole Foods.

Nick Theodosis says …

Mr. Mackey, You have been quoted asking this rhetorical question: “who has done more good for the planet, Mother Teresa or Bill Gates?” In light of the following article (provided below) recently posted by the LA Times, I would be curious to know how you can remain steadfast in your promotion of the inherent contradictions which are deeply seeded and undeniably obvious in the modern capitalist system, regardless of “conscious” considerations on the part of board members and CEO’s. Sincerely, Nick Theodosis http://www.latimes.com/news/nationworld/nation/la-na-gatesx07jan07,0,4205044,full.story?coll=la-home-headlines A TIMES INVESTIGATION January 7, 2007 Dark cloud over good works of Gates Foundation By Charles Piller, Edmund Sanders and Robyn Dixon, Times Staff Writers

John Mackey says …

To Ashley Hodge, I am not familiar with Gary Moore, but I'm very familiar with John Templeton who I consider to be a "great man" who has done much good in the world. I admire him greatly. I also admire the Templeton Foundation, which is doing wonderful work. I think the Templeton Prizes are a great idea. I no longer think of myself as a "Christian" in the biblical sense although I'm a long time student of "A Course of Miracles" which is a form of mystical Christianity. However, I'm quite eclectic in my spiritual studies--Buddhism, Hinduism (Yoga primarily), Judaism, and Islam (Sufism primarily). I have also read quite widely in world ethical philosophy and that has influenced me a great deal. I have also found meditation, affirmations, visualization, holotropic breathwork, and prayer invaluable as spiritual disciplines for training the mind and opening the heart. To Jeffrey Reel, It is hard to respond in much detail to you since you only bothered to read a few pages of my writing before dismissing it as "overly simplistic and flat-out wrong." Both of these criticisms may or may not be true, but you certainly present no good ideas, evidence, or logic to support your viewpoint. The fact that you may need or want something doesn't give you any legal or ethical "right" to have it. No one owes you "sustenance, electricity, energy to heat the home, or health care." The world doesn't exist to take care of you. You will have to offer sufficient value to others in order to trade for those goods and services that you need to support your own life. Capitalism is ethical because you are not coerced to exchange against your will with any particular business alternative (except for governmental monopolies) and in a competitive capitalistic market system there are always alternatives to choose from. Your complaint would be valid only in the case where a monopoly existed and you had no competitive alternatives to choose from. Your example of health care is fallacious, partly because we are very, very far from having a competitive free market in health care, which is incredibly regulated and subsidized in numerous ways by various governments and bureaucracies, and partly because despite all these market interventions you still have a variety of health care choices, including many types of alternative health care. To Gizelle, I answered the POM criticisms a couple of days ago. Scroll back up to see my answer. To Nick Theodosis, It is beyond my scope or interest to defend Bill Gates, The Gates Foundation, or capitalism in general in my blog. I have read the critics such as Paul Hawken that the article refers to and I don't find their critiques very convincing. Capitalism isn't perfect (what is?), but on balance it has overall improved the state of humanity tremendously. In a previous posting here I recommended a few books to read to back up my claims as to the overall value that capitalism has had. Here they are again: Max Singer, "Passage to a Human World: The Dynamics of Creating Global Wealth"; Stephen Moore, "It's Getting Better All the Time: 100 Greatest Trends of the Last 100 Years"; David Landes, "The Wealth and Poverty of Nations: Why Some are so Rich and Some so Poor"; Nathan Rosenberg, "How the West Grew Rich: The Economic Transformation of the Industrial World." Of course many, many problems remain, but overall human progress is a historical fact which I believe a dispassionate study of long-term history makes very clear. None of the environmental problems in the world are intractable problems, but all are capable of being solved through entrepreneurial creativity and collective human resolve. The fact is that the environment has greatly improved in the United States over the past 100 years--the air and water are both much cleaner than they were 100 years ago, and total forests have grown by millions of acres. This is all well documented by Bjorn Lomborg in his book "The Skeptical Environmentalist." Of course many serious environmental problems remain to be solved (such as Global Warming), but we are capable of solving them and I believe we will do so. I will also say that I wasn't impressed with the article which engages in systematic misdirection and guilt by association. It is a hatchet job, plain and simple. Here is their argument in a nutshell: 1. The Gates Foundation invests its assets in corporations all over the world. 2. Some of these corporations are oil companies which produce oil in Nigeria and there are negative environmental and negative health impacts from that production. Therefore The Gates Foundation is responsible for these impacts. 3. Some of these corporations are pharmaceutical companies and they charge high prices for their drugs in poor countries. Therefore the Gates Foundation is responsible for this. The logic of this article is that the Gates Foundation is responsible for every negative thing that happens in every company that they invest in. Since corporations (and capitalism) are inherently evil, and the Gates Foundation invests in corporations, the Gates Foundation is also evil. If the Gates Foundation is responsible for all the "bad" things that the corporations they invest in do, then do they also get to take credit for all the "good" things that those corporations also do? After all the oil companies that the Gates Foundation invest in supply oil to the entire world and our entire modern civilization is today based on an oil economy. You might think our entire modern civilization is terrible, but I don't. Overall I think it is a very, very good thing and I shudder to think how much more poverty and suffering would exist in the world without oil or the oil companies to efficiently produce it. Since the Gates Foundation invests in pharmaceutical companies and those companies are developing cures for many of the diseases that plague us, then does the Gates Foundation get credit for those cures? IMO corporations, on balance, do far more good in the world than they do evil. Therefore on balance the Gates Foundation, by investing in those corporations, is slso doing far more good than evil. The article doesn't point this out. Why not? Because the article is neither balanced nor fair. As always the issues the article discusses are very complex and don't lend themselves to simple "morality plays" of "good guys" and "bad guys" or "good versus evil" thinking. A very good book to read which has a chapter dealing with ENI and Shell in Nigeria is "Empires of Profit" by Daniel Litvin. It portrays the complexities and difficulties of doing business in Nigeria. It is very balanced IMO. By the way, if Bill Gates and the Gates Foundation are guilty by association through their investments in various corporations who sometimes do negative things, then I must point out that by this logic Mother Theresa was also guilty of heinous crimes. After all, Mother Theresa was a nun in the Catholic Church. Is she therefore responsible for the Spanish Inquisition, various Catholic wars and assasinations, or more recently sexual child abuse by various priests. Is there a "Dark Cloud Over Mother Theresa" too? If not, then why not? The Catholic Church is guilty of numerous crimes and horrible human rights abuses and she was a nun with sacred vows to the Church. Isn't she therefore guilty? Doesn't this massive guilt far outweigh any good she did? (disclaimer here--I love and admire Mother Theresa who was clearly a wonderfully kind and loving person. The above comments about her and the Catholic Church are used as a form of satire only for rhetorical purposes. No direct criticism of her or the Catholic Church is intended). For that matter, aren't you a citizen of the United States? Do you pay taxes to the United States government? Does that therefore make you responsible for many thousands of deaths in Iraq? Is there also a "Dark Cloud Over Nick Theodosis?" My argument for "Conscious Capitalism" is that capitalism can be improved. Quite honestly there is no viable alternative to capitalism that doesn't involve some type of totalitarian government with massive losses of both human freedom and prosperity. The question isn't whether we'll have capitalism in the world or not, because we will. The question is whether we can evolve it or not to a higher level of consciousness. I think we can and I'm working to do exactly that. Let me finish by recommending Peter Barnes recent book, "Capitalism 3.0: The Next Stage of Capitalism (The Commons)." Barnes has a number of very interesting ideas here about ways we can evolve capitalism for the 21st century. I don't agree with all of his ideas, but some of them are flat out brilliant and deserve a wide audience and much discussion.

Bob Jacklin says …

Mr. Mackey: Thank you for the reading recommendations. My 2007 reading list includes three of your suggestions. Perhaps a better understanding of your frame of reference will increase my understanding of your writings. Please consider an additional principle when writing Conscious Capitalism (cc): "An enlightened consumer is the cornerstone of successfully transitioning towards conscious capitalism." Rationale: As long as consumers see their purchases in the framework of lowest price or best personal economic value, the transition towards cc will be delayed, minimized, or never occur. The ability to undercut pricing by shortchanging various stakeholders (suppliers, employees, the community, etc) will allow others to successful compete and destroy (economically) those that would attempt to implement cc. Therefore an elightened consumer is necessary. Purchasing decisions made on a daily basis must be seen in a much broader framework that includes the goals envisioned by cc. Until buying is seen as a reflection of one's values, goals, and aspirations for the world this will not happen. This is a major challenge and successful transition might happen more rapidly in niche markets that serve customers that already share a strong value or belief. An enlightened consumer must have a broad view that desires fairness towards all stakeholders. This is diametrically opposed to out current economic model that spends untold millions on advertising that seeks to make the buying decision all about meeting the need of the individual. Best regards, Bob Jacklin

Dan Maffei says …

I am a Team Member in the Meat Department of Whole Foods Market in San Rafael. I have been a Team Member for ten years there, as well as a stockholder due to Whole Foods Market granting me stock options. This is the best company I have ever worked for. The company atmosphere is very respectful, and this flows from the executives of the company on down. I am proud to work for a company where the chief executive officer regards conscious capitalism as an important aspect of running the business. I am also very proud to work for a company that is listed as among the ten best places to work in the United States in terms of how they treat their employees. I concur with the results of that poll, and think Whole Foods should actually be number one, instead of, I believe, number three.

Kajal Nanaiah says …

Hi John, Thanks for taking the time to respond to my posting. Yes I agree with you, I should go back to India and live on less than a dollar a day and donate the extra. Unfortunately I have not found the courage to make such sweeping change and also enlightenent came a little late. It took coming to America to realize the problems of over consumption. To go back I would have to get divorced (my husband is american) and my child would grow up without a father. Every day I wake up and battle with this. But on the other hand I have made tremendous changes to my lifestyle and diet. Also I could live on less if whole foods would reduce its prices :) Best of luck.

John Mackey says …

To Bob Jacklin, I think your insight about "enlightened consumers" is very valuable and important. Thanks for sharing and I will "upgrade" my chapter with this idea. However, I think for Conscious Capitalism to reach its highest potential it will also require "enlightened employees", "enlightened investors", "enlightened leadership and management", "enlightened suppliers", "enlightened media", "enlightened governments" and "enlightened communities", as well as "enlightened consumers". All are important. I agree with you that "enlightened consumers" are very, very important because "enlightened consumers" will create the demand for more "Conscious Businesses" and the growth of "Conscious Capitalism". To Dan Maffei, Thanks for your 10 years of service to our customers at San Rafael. I love your store too, which is one of my favorites. FYI--Whole Foods was ranked #5 by Fortune in its most recent list of "The 100 Best Companies to Work For", behind Google, Genentech, Wegman's, and the Container Store (all great companies). See you in the store. Take care. John

John Maxwell says …

HI John, I would like to first thank you for responding to all the various individuals who post here. I know you are a very busy man, and just reading your responses (and their length) shows me that you truly do care very much about what you believe in! I think that shows so much about what kind of person you are. Thank You. John, I am currently reading a book that you recently recommended entitled "The Way We Eat: Why our Food Choices Matter" by Peter Singer and Jim Mason. I must say, this book has really opened my eyes and why I have even more respect for your Animal Compassion Foundation. Some of the ways that the animals are treated at the factory farms, really, really made me think. I was very saddened by what I read...it all so very unnecessary. Am I a vegan? No, not at this time. Will I stop and think before I eat or purchase meat, poultry or fish again? Yes. Will I continue to eat meat/poultry/fish for the forseeable future, yes, probably, but I must admit, after having read excerpts from John Robbin's book entitled "Healthy at 100" I musy say, I am becoming more and more a believer in less of a meat-based diet and more of a plant-based diet. I am very anxious to get my hands on a copy of John Robbins's "Healthy at 100", which by the way, I did notice on the back cover, that you have endorsed. I am truly amazed at these 4 groups of people Mr. Robbins writes about: the Abkhasians, the Vilcabambans, the Hunzans and the Okinawans and how they stay so healthy (body and mind) all the way to the century mark. I love to read and study about what makes for healthy bodies and minds, and I know it is not all based on what they eat. I know we cannot all live exactly like they do, but I sometmes wonder what would happen if people truly ate healthy for a week or two and got outside and enjoyed nature. I think many would be amazed and switch their dietary/persoanl habits....well, maybe one day. I really think people in the food/health industry underestimate what WFM and You have done to better the lives of many people now, and many people in the future, who do not even recognize or realize it. Without WFM and You, I seriously doubt it if Organics would be in the mainstream media or on the shelfs of retailers such as Walmart, HEB, etc.. Ok, they would probably be out there, but not in the way they currently are. Again, Thank You and WFM. I have come to realize that we all have a purpose while on this great planet, and I really think we all share an ultimate goal and responsibility to leave this Earth a better place than when we came here. Well, I did not mean to bounce from subject to subject in this posting John, so I guess I just want to say "thank you" for the Animal Compassion Foundation that WFM has started. Hopefully more people will become aware of what is going on out there, and other retailers will institute something similar. And oh yes, Congratulations on the #5 spot on Fortunes "100 Best Companies to Work For" list. Ya know John, as much as I like what WFM and what WFM stands for, I might very well be applying there for a job in the near future! Ya know, I think I will! Best Wishes! John M.

Greg Ford says …

Dear John: Without question you and the Whole Foods team have built a dynamic, evolving organization most people, including economists, could only dream of. And from what I can tell it wasn't successfully built from an open text-book or a traditional mainstream business model. This upcoming weekend I look forward to reading your essay, "Conscious Capitalism: Creating a New Paradigm for Business" cover-to-cover. Fifty -plus pages will require a few hours. The first few pages have intrigued me so far. Having read the first four or five pages, an editorial in today's Wall Street Journal, "The Hardest Price in Capitalism," by James Grant, reminded me a little of what I have read so far. Mr. Grant writes: "You will scan the Forbes 400 in vain for the names of the captains of the interest-rate forecasting industry. The omission speaks volumes. Just answering correctly the simple question "up" or "down" over a couple of moderately volatile years in the financial-futures markets would put a successful forecaster in the way of untold wealth. Yet, try as they might, the economists can't seem to get fabulously rich" (James Grant, "The Hardest Price in Capitalism," The Wall Street Journal, Thursday, January 11, 2007). All the best, Greg Ford Houston, Texas

bob says …

thanks for being so honest and posting not only positive blogs but also some that challenge us.

Robert says …

Mr. Mackey, Great article, very interesting. In regards to those who criticize: Drop that jealousy BS. You are adults. Mr. Mackey made his money and his empire by putting the grey matter to work, not crying and complaining when a roadblock surfaced. As an end result he has gained financial independence. Chances are if you were as productive as he is, you would not be bothered by his success. But then again this is the real world and nothing is fair. We have a word for people who criticize others success but do nothing to enhance thier own: A**holes. Humans are hunter gatherers.If you hunt and gather more, you survive.We are also adaptive. If you adapt, you survive. So hopefully if the adaptation/evolution theory is correct maybe all the overly educated Moss Licking Anti-Capitalists will evolve themselves out of existance. Rock on John, thanks again for the article.

Dawn Mueller says …

Very beautifully said John Mackey. I am a student in business and have been thinking deeply about things such as this myself. Up until I studied your organization I wasn't sure if there was a possible way to achieve what you are doing in corporate America. You have gotten yourself added to the short list of people I admire (right up there with Ani Difranco). I hope to meet you some day, and talk business. Peace and luv, dawn

Atul says …

John I have been reading your blog "religiously" and agree with most of your thoughts on Conscious Capitalism. I am a senior executive of a healthcare company and your blog has answered many of my questions regarding the success of stakeholder businesses versus traditional stockholder businesses in the long run. I have also read with keen interest your thoughts on executive compensation. The key question I would love your insights on is regarding the ethics of creating personal wealth as a CEO while creating wealth for the investors in the company in a "conscious" fashion. It is hard to become wealthy on pure compensation, particularly if salary caps are applied. For instance, I just finished reading Mohammad Yunnus's wonderful book, banker to the poor, and the thought that I had was that would it have been appropriate for Mr. Yunnus to have become personally wealthy through options and stock grants in different Grammeen companies while doing all the good he has done. In short, I am interested in your thoughts on CEOs and senior executives creating personal wealth, not at the expense of others, while meeting the needs of all stakeholders within conscious capitalism. Also what are the best mechanism to do that within the framework of Conscious Capitalism Atul,Houston

Katy Levit says …

Mr. Mackey, I am very interested in the idea of Conscious Capitalism. I opened a business (art school/community art space) about 3 years ago with the idea that if I provided a good product, worked hard, was fair to my customers, employees and suppliers and ran my business with integrity that profits would naturally follow. I have been very disheartened to find that this has not been the case (at least not yet). I see how a business the size of Whole Foods can have a conscience and still make money. But what advice do you have for a small, start-up business (assuming that the idea is good, the customer base is there, etc) that wants to be good to it's employees (fair wages, health insurance), good to it's customers (a fair price, a quality product) and still profitable. If real change requires (or at least is energized by) a grassroots movement, how can the small start-up entepreneur implement your ideas from the beginning?

Jennifer Bouani says …

Firstly, I feasted on your blog post - just as I do whenever I stroll through the aisles of Whole Foods grabbing up free samples! It's always wonderful to find someone in the world as passionate as I am about capitalism. I completely agree with your argument about what makes an entrepreneur start a business, and that it's NOT to maximize profits. As I read and related to the thoughts in your blog post, the hairs on my arms stood up. I recently blogged about a related topic -- the move of GE's executive, Dave Calhoun, to become CEO of a private firm in the face of this hostile environment for public CEOs. I believe that companies who strive to achieve the higher ideals you mention "The Good", "The True", "The Beautiful", & "The Heroic" will naturally have a competitive advantage. If that's true, then by natural selection (in a Darwin-sense), these will be the companies who survive the times, while the others will fall behind. Where you are trying to shape the minds of the movers & shakers of the world, my focus is to encourage parents and teachers to teach kids about the basics & empowerment (and pure beauty) of entrepreneurship and capitalism. It's not as sophisticated as what you are doing, but our core convictions are the same. You asked for feedback. Here's my 2 cents: I recommend you add some language to invoke fire & emotion in the reader. Tell them WHY they should care and why they can't afford not to believe in your theory. For example, in the conclusion, you say "Corporations must rethink why they exist...then I believe that we would begin to see the hostility towards capitalism and business disappear around the world." That may not motivate all your readers, however, mentioning that America's economy and our way of life (or standard of living) is at stake in the face of a rising China, may wake up some people and earn you new supporters. I'd do this in the first paragraph, to envoke people to read it who might not otherwise. Congratulations to you for a lifetime of business success and thank you for sharing your insights on your blog. Jennifer Bouani Author of "Tyler and His Solve-a-Matic Machine"

Ian says …

Hi John, On November 12 2006, in response to Don Schaffer, you said: "Regarding large businesses acquiring all the small businesses, the facts don't support your viewpoint. The Fortune 500 companies represent a much smaller percentage of the total United States economy in 2006 than they did in 1956." However I just came across a CNN article here - http://money.cnn.com/2006/03/31/news/companies/intro_f500_fortune/index.htm - in which it is stated that "Revenue from FORTUNE 500 companies as a proportion of GDP has risen from 39 percent in 1955 to 73.4 percent this year." This appears to be a direct contradiction of your statement. In the same vein, here is a quote from a speech by Bill Moyers on Friday in Memphis at the third National Conference on Media Reform: 'Nobel laureate economist, Robert Solow, not known for extreme political statements, characterizes what is happening as “nothing less than elite plunder,” the redistribution of wealth in favor of the wealthy, and the power in favor of the powerful. In fact, nearly all the wealth America created over the past 25 years has been captured by the top 20% of households, and most of the gains went to the wealthiest. The top 1% of households captured more than 50% of all the gains in financial wealth, and these households now hold more than twice the share their predecessors held on the eve of the American revolution.' (Full text here of the speech here: http://www.democracynow.org/article.pl?sid=07/01/16/159222) Ken Wilber's evolutionary metaphysics (a sort of curly elaboration of the ancient idea of the Great Chain of Being as far as I can see) might be applicable to purveyors of health food, cruelty-free cosmetics, boutique gardening equipment and so on, but I can't see oilmen, auto manufacturers, bankers, defense industry contractors, senior government officials, media moguls, - i.e. the power mongers and the money grubbers who have always ruled the world (be they American, British, Chinese, Japanese, Saudi, Swiss etc.), adopting these principles any time soon. For them, as myself and several other contributors to this forum have pointed out, the usual Darwinian evolutionary principles apply. (Whether or not they are aware of it.) Best wishes, Ian

Joseph R. Serrano says …

Hello Mr. Mackey, I am 'criticizing by creating'... Earlier in this blog I provided a post regarding my attempt to fundamentally reinvent my awful industry of dry cleaning, and the desire to find investors with a leaning toward Conscious Capitalism as a case study for your theories. Please let me first expand on what I feel is this vital element to the movement, and then propose an admittedly self-serving argument for a way to catalyze the growth of CC (Conscious Capilalism) companies. First, the CC founder or entrepreneur will require capital to create their company. Just because they are 'good', 'true', heroic', or are attempting to create something beautiful does not mean they are independently wealthy or can relegate themselves to baths in their dishwasher (like you did in the beginning-- right?), or forgo a paycheck for three years (like myself) to make the vision happen. If you do not have the resources to develop and communicate your idea, you are finished and the CC movement is one company short of reaching it's potential. So investors, or enlightened investors are absolutely required to make the impact CC should have. Further, as you commented on Mr. Jacklin's last post, for CC to reach it's fullest potential, holistic enlightment from leaders to consumers will be required. I say leadership is the most important consideration to evangelize the movement faster. Educating, or enlightening, all of these elements will not be easy. Whole Foods has thousands and thousands of customers who resonate with the CC movement. So do other great CC companies. These pioneers should apprentice, or help develop other companies with similar philosophies. Whole Foods has certainly done this with many of it's vendors, but perhaps another medium is required for unassociated products and services. I know Rand's "Atlas Shrugged" has been mentioned earlier. Here the "creators" of the world removed themselves from society to prove a point. Rand contradicts her objectivist philosophy of the "self" here because it meant that the creators had to work together or their point was lost or less severe. The CC movement would do well not to remove themselves, but to act together. This means instead of giving philanthropically to non-sustainable not for profits they should create private equity funds for companies like mine that are trying to change an industry for the better with CC philosophies. OR, make a point to partner with companies like mine. If I had a LOI to roll out my concept in Whole Foods or Starbucks, I could attract the right capital and management team to catalyze growth and the CC movement. In fact, Mr. Mackey, if you believe my thoughts are founded, let me be the bold, heroic entrepreneur who is trying to create something beautiful and challenge you to create a chapter in your CC book on how pioneers of the CC movement (Whole Foods) wield the power to help others with similar aspirations get there faster. Whole Foods has several locations in Minnesota (new one in downtwon MSP soon), with a large overlapping target market as my industry. Instead of wasting valuable resources that can go toward product development or paying livable wages and benefits trying to enlighten more consumers to why my company is good for them and the planet, why don't you let Whole Foods speak for us and include my concept inside your stores to help us grow. This may sound self-serving, but after all, the company I am trying to create is a CC company and can potentially add thousands of new stakeholders waiting for the 'progress of humanity'. Why should the enlightenment wait for enlightened investors when together we can create them ourselves? Incidentally, I have done some research and found some sources for "do-good" capital: www.goodcap.net www.xigi.net

John Mackey says …

To John Maxwell, Both Singer and Robbin's books are excellent, so I'm glad you are reading both. Singer and Mason's book gives some great insights into several of the current food issues such as organic, local, animal welfare, and fair trade and is definitely worth reading. Robbins' book demonstrates that the longest lived people tend to eat very few animal products (although all of them eat some). Their diets are built around fresh fruits and vegetables, whole grains and beans, and supplemented with small quantities of animal products such as goat cheese, eggs, fish, and meat. Robbins himself eats wild caught fish a couple of times a week, so he isn’t advocating a pure vegan diet in this particular book. There are no known historical or current examples of any tribes or cultures that were purely vegans—some animal products have always been eaten. However, the longest-lived peoples use animal products as secondary foods, not as the primary foods they consume. To Atul, There is no magical formula I can give you regarding creating wealth or how to create wealth while simultaneously having a "conscious business." You'll need to work through those issues on your own and achieve the balance that feels right to you personally. I will say that it is very difficult to get rich strictly through compensation without your pay coming at the expense of other people, however. If you pay yourself exorbitant amounts of money in compensation it is very likely to create envy throughout your top team and throughout your organization which may harm the business. IMO the best way to create wealth is through ownership--not through compensation. Save your money and invest it in your own business or in other growing businesses. Over time ownership in growing businesses produces increasing wealth (check out the book "The Richest Man in Babylon). Regarding Muhammed Yunus getting wealthy through Grameen: I don't think you understand what motivates this remarkable man. He doesn't really care very much about personal wealth--he has enough to support his life and his family--what more does he need? Yunus has dedicated his life to Service and to ending poverty on our planet. He is donating his entire Nobel Peace Prize proceeds to the Grameen cause. Yunus has embraced a Higher Calling within his own soul. He becomes more "Gandhi-like" with each passing year and our world certainly needs more people like him. He inspires me in many different ways. To Katy Levit, It is a common myth that if we are "good, work hard, and do the right thing" that we will ultimately be rewarded with material success. Often we are rewarded with business success for these virtues, but the reward isn't automatic (except for "virtue being its own reward"). No person or business is ever automatically entitled to be successful. No business ever "owns" their customers--at best the successful business merely "rents" them for a little while. Ultimately it is the customers who determine which businesses will succeed in the marketplace and which will fail and they vote every day where they choose to spend their money. My only advice to you is to redouble your efforts to give greater value to your customers--higher quality, better service, better customer experience, lower prices. Center your business around your customers at all times. In my life experience there are actually very few businesses out there who really genuinely care about their customers and exceed their expectations on a routine basis. What more can you do to create value for your customers? That thought should be at the center of your thinking each day because your customers will ultimately decide whether your business flourishes or not. To Jennifer Bouani, Excellent suggestion. I'll try to make the chapter more inspiring when I rework it. Thank you. To Ian, I read that CNN article and it does appear to possibly contradict what I said previously. It is puzzling and I'm not sure I have the answer to it. More research on this topic is necessary. I will say, however, that sales to GDP may not be the best measurement of true large company concentration. A better measurement I think is to see whether the largest companies have a growing or shrinking share of the total United States stock market. Here are some quotes from a couple of the books that I based my opinions on: This quote is from Jeremy Siegel's classic study of the stock market "Stocks for the Long Run", p.61-62 (Siegel is a renowned professor at Wharton). "As of May 1997, the value of S&P 500 companies was over $6 trillion, but this constituted about three-quarters of the value of all stocks traded in the United States, significantly less than the 90 percent from 40 years ago...Despite the perception that large companies are, through mergers and acquisitions, becoming ever more dominant in corporate America, the truth is quite the opposite. There is a clear tendency for the largest companies to represent a smaller fraction of the market value of all stocks. The top five firms constituted more than 28% of the market value of the index in 1964, but that had declined to less than 13 percent in 1997." From Johan Norberg's "In Defense of Global Capitalism"--a really wonderful book IMO: pages 215-216 "Freer, more efficient financial markets, which allow capital to spread to new entrepreneurs with fresh ideas, have made it progressively easier for small firms to compete with the big corporations. And things have been made easier still by advances in information technology. Between 1980 and 1993, the 500 biggest American firms saw their share of the country's total employment diminish from 16 to 11.3%. Even if we use the problematic measure of globalization's critics to determine the relative size of the 500 biggest firms--sales in relation to aggregate GDP--the myth is refuted, because that figure fell dramatically, from 59.3% to 36.1%. That's a drop of almost half in just 13 years...Half of the firms operating internationally in the world have fewer than 250 employees. Many of the biggest are being knocked out by their competitors. Of the companies on the 1980 list of the 500 biggest enterprises in the United States, one-third had disappeared by 1990 and another 40 percent had gone five years later." Regarding your comments about the concentration of wealth from the Bill Moyer's speech--that doesn't relate to anything I said in "Conscious Capitalism" or in my comments in this section so I feel no compunction to discuss it in much detaiI. For the record, I do not favor increased concentration of wealth because it usually creates envy and tends to lessen societal harmony. That being said I also don't favor coercive government laws, regulations, and taxes which punish the successful and lessen individual liberties. When liberty and equality are in tension my personal preferences are generally towards more liberty. However, I also favor individuals using their liberties voluntarily to express the virtues of generosity, responsibility, compassion, care, and love towards other people, animals, and the environment. I discuss some of these ideas in more detail in my previous blog posting "Winning the Battle for Freedom and Prosperity." Here is a quote by Milton Friedman that I really like: "A society that puts equality ahead of freedom...will end up with neither equality nor freedom." Thanks for sharing your ideas on this blog, Ian. I've enjoyed our exchanges. To Joseph Serrano, I wish you the best of luck with your "conscious dry-cleaning business." It sounds very worthwhile. However, I'm not personally interested in investing because I don't want to use my very limited time thinking about investments or other businesses. Regarding Whole Foods working with you to open these type of dry cleaning businesses within our stores--I think that it is probably too far away from our core concept. That being said, each of our 11 Regional Presidents is empowered to try various experiments that they believe will enhance our company. You are free to approach them with your idea. However, my intuition is that dry cleaning is unlikely to get them excited as a very synergistic business. I hope you and this business have much success.

Carol Birkes says …

Mr. Mackey, I've only read the beginning of your blog about 'conscious capitalism' and I must say THANK YOU. I firmly believe we must change the way 'we do business' for our country to survive. It seems we have lost all sense of purpose (other than making more and more money) regarding why we are in business. Today it seems decisions are based solely on the effect on the bottom line, not giving any consideration to the implications on quality, customer service, or employees. I believe that businesses need to look for win/win resolutions. That they must find a balance between doing what is best for the customer, environment, employee and share holder. I believe with all my heart that when we focus on what is best for the whole, (not just on profits) that we will indeed be profitable. I question how much is enough? Where will it ever stop? I think when the large companies finally crash. We must find a balance. I appreciate the work you are doing not only with your company, but especially with writing your book. Awareness is the first step to change. God Bless you. Carol

Joseph Serrano says …

Mr. Mackey, Thank you for your kind words. However, my point is not to get you to invest in my company, it is to acknowledge a problem with Conscious Capitalism (lack of enlightened investors and partners) and describe a possible solution. My company aside, the comment about lack of synergism in your reply is troubling. You are a personal hero of mine, but if you as the icon for Conscious Capitalism cannot draw the connections between your company and mine I have serious concerns for the Conscious Capitalism paradigm. In your chapter you explain: "..business is fundamentally a community of people working together to create value for other people, their customers, employees, investors, and the greater society." In essence you are trying to create a movement. If I am incorrect and you are merely espousing an academic theory, please let me know. Perhaps I have been remiss in describing my industry and how it affects the world. Dry cleaning is an over $30B dollar industry worldwide and includes over 100,000 establishments. Close to 98% of these establishments use a solvent that is considered a probable carcinogen by the EPA. Other studies show that it causes birth defects and nervous disorders, amongst other things. The solvent permeates through concrete and is present in over 75% of Superfund sights. It is a voracious ground water contaminant whose final destination is fish and wildlife in rivers, lakes, and the ocean. There are millions of tons of this bad stuff being used every year around the world and it needs to stop. Socially, working in a dry cleaning establishment is as close to sweatshop, worker-exploited conditions that you will find in our country. According to the DEA many proprietors are also notorious money laundering fronts for organized crime, and the cash nature of the business makes it perfect for under reported revenues. Users of dry cleaning are grossly misinformed about the dangers, and believe the government is on top of the situation. Wrong. Worse, the industry is a low-interest commodity, and cleaners have very little incentive to change as customers are definitely considered a means to an end. My company considers the customer an end in themselves. We will soon be using cosmetic grade solvents that are used in many body lotions, shampoos, and beach sand. The machines for the sustainable, renewable solvent I would like to use are still in development and cost as much as a Ferrari. I have grown over 100% in each of the last three years, but this is still not fast enough to to integrate more Conscious Capitalism principles. We require channel partnerships to do this.I am on my way to reinventing this industry, but the message is still very small and quiet. In your comments you said there was no synergy between our concepts. I strongly disagree. Let me elaborate: WF Core Value 1) Selling the Highest Quality Natural and Organic Products Available- Since my industry pollutes the water supply, this makes it more difficult for you and your vendors and ultimately all of your stakeholders. WF endorsement of an operation that does not do this would be in sync with this value. WF Core Value 2) Satisfying and delighting customers - Since many of my current customers recycle their hangers in Whole Foods shopping bags, I am sure they would be delighted to know their errands to Whole Foods included a dry cleaner that cared about them, their clothes, AND the world they live in. Moreover, there is precedence for dry cleaners inside grocery stores across the world. Thousands of them in fact—even a franchise devoted to it. WF Core Value 3) Supporting Team Member Excellence and Happiness- Many companies have onsite dry cleaning pick-up and drop off and consider it an employee benefit. Little do these employees know how much harm most of these cleaners cause. WF Core Value 4) Creating Wealth, Profits, and Growth- More profits per square foot with your share of dry cleaning sales or rent. CWF Core Value 5) Caring About Our Communities & Our Environment- You say: “The silent stakeholder that can never speak for itself is the environment.” I agree. The environment is now shouting. Your core values go well beyond what customers ingest as much as mine go beyond what they wear. It is about convenience, making a chore fun and inviting, quality--all WHILE protecting the health of stakeholders and the planet. Why let your customers wear carcinogens on their clothing when you can encourage them to use another safe alternative? Why let more fish die in the oceans when you can create demand for a service that vehemently against these pollutants? Dry cleaning is not going away, and most people use dry cleaners because they are convenient for them. What a high price to pay for convenience. I am sure the same goes for groceries and many Whole Foods customers. The difference is the Whole Foods customer who is not concerned with the environment does not contribute to polluting our planet and their bodies. John, you conclude the Conscious Capitalism chapter stating: “Let us each realize our potential for deeper love and extend it out into the world—let us together create this new business paradigm of Conscious Capitalism.” If you don’t see the synergy between my core concept and yours, what exactly do you mean by banding together to create the new paradigm? Please do not get me wrong. No one walks the talk more than you do. You mentioned your admiration for entrepreneurs over activists. The synergy of our two concepts is where the rubber meets the road. All great companies need partnerships, and unless I am missing a key premise, our concepts are united in mission. Is Conscious Capitalism a real movement or a theory to debate about amongst academics and activists?

Jarvis says …

Mackey, I find it amazing that you have answered every comment with the same eloquence seen in your essay. A simple thank you,

TC says …

John I am an avid reader of your blog as well as a shareholder of Whole Foods. Your thoughts always prove insightful and are often inspiring. Your essay raised a few questions: 1) Should the allocation of corporate philanthropy be determined primarily by shareholders? Warren Buffett and Charlie Munger offer well thought views on this question. In addition to their obvious intelligence and business success, they are also remarkably virtuous and sensible men. On this basis, I find their views always worth at least considering. In 1981, Berkshire Hathaway implemented a corporate philanthropy policy that seems very logical/fair. In short, Berkshire Hathaway’s corporate philanthropy reflects a fundamental principle of capitalism – stockholders, as legal owners of the business own the residual profits of the business. On this basis, Berkshire Hathaway developed a policy that ensures “contributions should reflect the charitable preferences of owners (i.e., stockholders) rather than those of officers and directors.” Each Berkshire shareholder can designate recipients of charitable contributions by the company (on a basis proportional to the number of shares of that he/she owns – Berkshire establishes a dollar amount per share that can be allocated to charity). Berkshire has had great success with this program as the percentage of participating shares always exceeds 95% and usually exceeds 97%. Berkshire officers and directors do retain responsibility for a portion of the annual donations considered to benefit the company directly in an amount roughly equal to the cost of the donation. In the case of Whole Foods, officers and directors could retain responsibility for donations that are important to the company’s broader mission and values. 2) Will stock based compensation prove effective over the long term? For a young/small company, stock options are often a highly effective incentive compensation tool as the success of a small company can lead to enormous percentage increases in the value of a business. However, the percentage gains in stock price will surely slow at some point in the future, owing to the law of large numbers. As the company matures, how effective will stock based compensation prove? How do you prevent the psychological tendencies of material self interest and envy from taking hold -- in a mature Whole Foods, could subconscious tension arise between long tenured employees (who are “rich” from previous stock price gains) and newer employees unlikely to realize similar wealth accumulation from a rising stock price? Do long tenured and skilled Whole Foods employees lose incentive to work when it becomes obvious that no matter how well they perform, the stock price will not go up as much as it did in the past? If a new employee emerges as a remarkable store manager or regional manager, shouldn’t they be rewarded proportionately? Without a consistent and meaningful rise in the stock price, does a stock based incentive compensation plan result in compensation not being commensurate with effort and ability, with star performers under-compensated and average performers effectively overcompensated? I think Buffett and Munger have thoughtful and logical views on this issue. Whole Foods is still far from maturing but it would appear important to at least consider how effective a shared fate compensation plan will be at mature company when the underlying incentive currency is stock options. 3) Are “happy” employees a driver or a consequence of a rising stock price? In your essay, you cite statistics showing the stock price outperformance of companies on Fortune’s "best place to work" list as evidence that happy employees have direct benefits for shareholders. I have no doubt that happy employees are good for everyone – society, shareholders, management, customers etc... But I wonder about the conclusion you derive from the data. The human psychological tendency of association would seem to be a powerful influence in this situation: stock price appreciation is associated with “successful” companies...which means they have good/successful employees...which means I am good/successful, which makes me feel good about myself and my job. Further, if stock price appreciation has meaningfully increased the wealth/financial security of employees, the rise in the stock price would seem likely to have a direct, positive impact on employee happiness. What happens when the pace of stock price appreciation slows or remains stagnant over a sustained period (years) through no fault of the company’s operating performance? Is it possible that your experience at Whole Foods has led you to underestimate the impact of a rising stock price on employee happiness? 4) Is Wal-Mart truly a “bad” company? While I view Whole Foods as a much better company than Wal-Mart, it seems hard to condemn Wal-Mart as a “bad” company. Sam Walton founded Wal-Mart with the goal of providing the best value proposition to consumers. Walton certainly represents an entrepreneur for which exclusively maximizing profits was NOT the primary reason he founded the company. Walton didn’t build Wal-Mart to profit at the expense of society. In fact, based on everything I’ve read, Sam Walton remained true to his values of hard work and a modest lifestyle despite becoming the richest man in the world. It would seem that Wal-Mart continues to operate according to the values outlined by its founder many years ago as consumer prices and company profit margins remain very low. What is so bad about a company that continually drives efficiency into its supply chain and passes along the subsequent gains to the consumer? Doesn’t this strategy reduce the cost of living for millions of consumers? Is Dell also a bad company because its business model is based primarily on offering the lowest prices? By leveraging its scale, hasn’t Dell played a major role in making personal computing more affordable, with the consequent growth in PCs having very positive benefits for society? Further, I don’t see how Wal-Mart can be viewed as bad for “small town” America and its employees. The “ideal” of small town America gets overplayed by the media and Hollywood – Andy Griffith’s Mayberry doesn’t exist. Wal-Mart invigorates many of the communities in which it operates, especially by providing employment, compensation, benefits, training, and upward mobility that would not otherwise be available. According to this month's Kiplinger Personal Finance magazine, 25,000 people applied for just 325 job openings at a newly opened Wal-Mart in the Chicago area. Sure Wal-Mart has its shortcomings (as with most companies) but how can the net effect of the company’s efforts (or similar companies focused on offering the most affordable prices to consumers) be viewed as anything but positive. In the May 1, 2006 issue of Business Week, Jack Welch writes a very compelling case about “What’s Right About Wal-Mart?” in response to a question about whether Wal-Mart is a force for good or evil in the world. With that said, one would hope that Wal-Mart (and all companies for that matter) would continually improve employee benefits/relations as much as possible within the framework of the company’s values and mission and without compromising long established responsibility to other stakeholders. Lastly, you cite Wal-Mart’s tepid same store sales growth as evidence that the flaws in its business model are becoming exposed. As Whole Foods may also now be experiencing, the law of large numbers will inevitably result in slowing growth for all companies. The sheer size of Wal-Mart is the primary impediment to faster growth. The merit of the Wal-Mart value proposition would appear to be supported by the fact that 110 million shoppers browse Wal-Mart's aisles every week.

Ian says …

Hi John, May I respond to TC's question about whether Walmart is a 'truly a "bad" company'? According to the latest newletter from the Organic Consumers Association, they have 'announced a boycott against Wal-mart for refusing to respond to formal complaints that many of its stores are placing "organic" signs next to products that are not organic. The Cornucopia Institute filed a complaint more than 60 days ago, and neither the USDA nor Wal-Mart have taken any action to fix these problems. Six months ago, the OCA called on Wal-Mart to stop selling cheap factory-farmed organic milk from Horizon and Aurora, and to increase the amount of domestically grown organic products on its shelves.' http://www.organicconsumers.org/articles/article_3809.cfm That Walmart has so far failed to respond to this criticism will probably come as no surprise to anyone. However if Whole Foods behaved like this, there would be hell to pay. When it comes to food labelling, consumers will always hold Whole Foods to much higher standards of accountability. So in this respect at least, Walmart is a "bad" company, and Whole Foods is a "good" company. Regards, Ian

Ian says …

Hi John, Some good news for all of us, particularly our friend in the dry-cleaning business, Joseph Serrano: http://www.msnbc.msn.com/id/16816627/ "California regulators on Thursday enacted the nation’s first statewide ban on the most common chemical used by dry cleaners, pleasing environmentalists but worrying some small businesses. By 2023, no more dry-cleaning machines that use the toxic solvent perchloroethylene, a potential carcinogen, will be permitted in the state. The regulation by the California Air Resources Board will phase out the fluid next year, banning dry cleaners from buying machines that rely on the solvent. The state’s 3,400 dry cleaners who now use it must get rid of machines that are 15 years or older by July 2010." Hooray for government regulations! Ian

Nancy DeFauw says …

John, I am a loyal customer both because of the product and the mission of Whole Foods. Bravo on a great brand. I read Conscious Capitalism with great interest and in general, think you are articulating what many great business persons know in their gut and heart but have not put to paper. Well done there. In particular, I think your focus on the Paradox of Profits is spot-on. It is the difference between being driven by profit and creating value. I must express strong disappointment, however, regarding your statement: "In my opinion, most modern American non-profit organizations operate with a mentality that creates inefficiences...; most nonprofits are ineffective in fulfiling their mission". First, I would challenge you to critique your own work the way you do your bloggers - where are your examples? This statement must represent your observations but provides zero analysis. I would like to add that I think "most" nonprofits is a gross over-statement. Having worked with many closely, and the foundations who fund them, there is much great work being done. And, there are many nonprofit organizations for whom earned income is a significant part of their operating budget. Don't get me wrong, however - I agree with your premise that philanthropy as it has existed is a poor incarnation of the possibilities. You might wish to check out philanthromedia.org - a blog dedicated to the "end of philanthropy as usual." There are many others who agree that "businesses and nonprofits are potentially much more alike than they are different." They exist today, along the unifying theme of your "great purpose" concept. You may also wish to check out Jim Collins recent monograph "Good to Great for the Social Sector". You also need to lose that graphic of the "wall". It's so childish as to be a hairsbreadth from offensive. Also, you need a proofreader to edit this. There are a number of places where a sentence/concept is repeated several times in one paragraph. Such is the nature of drafts. I can point them out to you if you wish. Looking forward to more chapters. Best regards, Nancy DeFauw

Nick Theodosis says …

Dear Mr. Mackey, I appreciate your response to my post several weeks ago regarding the Bill Gates Foundation. Although this forum may not necessarily be the most appropriate to discuss some of the issues related to our brief dialogue, I’d like to offer a few comments regarding some specific points you make in your response. 1. “Capitalism isn't perfect (what is?), but on balance it has overall improved the state of humanity tremendously… Of course many, many problems remain, but overall human progress is a historical fact which I believe a dispassionate study of long-term history makes very clear…Quite honestly there is no viable alternative to capitalism that doesn't involve some type of totalitarian government with massive losses of both human freedom and prosperity. The question isn't whether we'll have capitalism in the world or not, because we will.” To be clear, Capitalism is a relatively recent economic system, one that may or may not have been an inevitable step in our evolutionary social progress. However, there are numerous reasons for human progress, to which an economic system is but one component. I’m sure feudal farmers were pleased that animal domestication had relieved them of the duty to hunt and gather, and therefore, most would have agreed that feudalism “improved the state of humanity.” Of course, we now understand that feudalism was not the most compatible system for human progress. Capitalism is certainly responsible for numerous human advancements, but of course, this is a truism, not an argument for its continued existence. There are many possibilities for social organization which lie outside the frameworks of capitalism or totalitarianism. Limiting ourselves to such a narrow dichotomy suggests no need for creativity or freedom, just blind acceptance. It would have been quite naïve for feudal farmers to have believed in the permanence of their way of life; likewise, it would be silly to make predictions about the possibilities of our future social organization. 2. “The logic of this article is that the Gates Foundation is responsible for every negative thing that happens in every company that they invest in. Since corporations (and capitalism) are inherently evil, and the Gates Foundation invests in corporations, the Gates Foundation is also evil. If the Gates Foundation is responsible for all the "bad" things that the corporations they invest in do, then do they also get to take credit for all the "good" things that those corporations also do?" As you well know, a financial investment involves a choice to support a particular person, organization, etc. where there is the expectation of a profitable return. Where there is a choice involved, there is always some measure of responsibility. The greater influence a person or organization has, the greater the responsibility. It would be absurd to say that an oil or any other corporation is inherently evil and I don’t recall the article uses such terminology. Obviously, oil companies in particular, provide a natural resource that fuels the world. However, in this particular case,they are also destroying the lives of many people in Africa. Therefore, by investing in an oil corporation that is directly harming people the Gates Foundation is trying to help, the apparent contradiction warrants consideration and should be addressed by those responsible. 3. “By the way, if Bill Gates and the Gates Foundation are guilty by association through their investments in various corporations who sometimes do negative things, then I must point out that by this logic Mother Theresa was also guilty of heinous crimes. After all, Mother Theresa was a nun in the Catholic Church. Is she therefore responsible for the Spanish Inquisition, various Catholic wars and assasinations, or more recently sexual child abuse by various priests.” “For that matter, aren't you a citizen of the United States? Do you pay taxes to the United States government? Does that therefore make you responsible for many thousands of deaths in Iraq? Is there also a "Dark Cloud Over Nick Theodosis?" There is not a logical connection between an artificial entity like the Gates Foundation and a flesh and blood person like Mother Theresa, especially when discussing ethical commitments. Also, neither one can be held responsible for events such as the Spanish Inquisition, which occurred before their existence. I do think that if one belongs to a specific organization (religious, political, etc.) there is a certain level of responsibility for the actions of the group. Again, the more influence one has, the more responsibility involved. As an influential figure in the Catholic Church, I would have expected Mother Theresa to have condemned wars, assassinations, and sexual abuses conducted by or in the name of the Catholic Church, or any of its members. Similarly, as a tax payer and citizen of the United States, I assume a level of responsibility for the actions of my government.

Paul Frantellizzi says …

Dear Mr. Mackey, Thank you for a insightful essay on Conscious Capitalism. I have for many years believed in the business values you discuss in your essay - my passion to do well, effect positive change, offer impeccable customer service, create partnerships and give back to my community has garnered my businesses positive cash flow and over time, great profits. I would like to offer one insight to the use of the word 'selfishness" in the context of your discussion as well as the broader world view. The most commonly assumed definition includes; "Excessively interested in oneself to the exclusion of others" - I would go on to say that a "Rationally Selfish" individual (one that has a balanced view of himself/ herself in the world, holds a strong sense of self confidence, and who's ideas and thoughts are congruent with reality), does care about relationships, giving back, mentoring, renewable resources, community, environment and....yes, profits. It is smart business to care, but it also ensures that the wonderful world we have experienced in our lives will be here for our children and loved ones - that is very selfish. Keep up the good work. Paul Frantellizzi

Mark Palmer says …

John it has been great to watch your journey and I applaud your honesty and willingness to constantly challenge conventional thinking. Your decision to forego compensation speaks volumes about walking the talk and sets a great example of valuing work for the good we can do rather than simply by how much money we can pile up. Profit need not equal greed on a personal or a corporate level. The points in your essay are well taken, particularly regarding the unfortunate ineffectiveness of many NGO's despite the best intentions of their founders and operators. Whole Foods is continuing to set a great model for how to do good while doing well. You are great - continued success! regards Mark

LA says …

When the CEO goes, does the culture go as well?

Amber Alkofer says …

I thankful that you and your associates and everyone that upholds the Core Values of the Whole Philosophy has enabled myself and many like me to create a career and or involvement in the betterment of our earth and society. I breathe of your passion and of your values that mirror my own. Good for you Mr. Mackey. You have created a opportunity for myself to relish that my values and beliefs can be mirrored through my career. Through a well thought detailed intelligent approach to ethical business and beholding our environment, to say the least, what I give in my workday will not stop at the time clock it will continue to be a guiding force in the betterment (and sustainment) of a consensus of people for a: healthy, happy, and compassionate society. Best regards, Amber Alkofer

PhilanthroMedia says …

I wouldn’t go as far as John Mackey, CEO of Whole Foods Market, Inc. who said in his essay “Conscious Capitalism”: "In my opinion, most modern American non-profit organizations operate with a mentality that creates inefficiencies...; most nonprofits are ineffective in fulfilling their mission" (check out his blog for the essay and a heap of commentary.) In fact, I challenged Mr. Mackey to put some examples out there. It’s a pretty flat statement, isn’t it? And it made me mad. No reply from him yet but I will point out that he is devoted to responding to those who comment…. Check out the complete entry at PhilanthroMedia.org, promoting dialog for discerning donors...

Dean Tucker says …

Dear Mr. Mackey, In addition to reading your article “Conscious Capitalism” I also read the articles “The Upward Flow of Human Development” and “Declaration of Interdependence” from the Whole Foods web site. I have also read the book you recommended. Purpose, The starting point of great companies and I have the book “Firms of Endearment: the Pursuit of Purpose and Profit” on order. Also, I am a customer and stockholder of Whole Foods Market. First, let me say that words can not express how exciting I found your article Conscious Capitalism to be. I will explain my excitement later, but first I want to comment on several items in your article. Item 1.You posed the questions: “Do we need a new way to think about business? Do we need to create a new business paradigm?” With respect to those two questions, the answer is obviously a giant YES! Item 2.You posed the question “Have you ever asked yourself what is the purpose of a business?” Yes, I have asked that question, and I think that I have discovered an answer and here it is. Some companies have always known or discovered what Jim Collins terms their “Core Purpose” (Reference Jim’s book, Built to Last). However, for those companies who have not discovered their core purpose, the default purpose becomes the pursuit of profit. As a result of this, there are basically two types of companies in industry today. There are the companies who have not discovered their core purpose (the majority of companies), and they are profit driven. Then there are those few companies who know what their purpose is, and they are purpose driven. Item 3. The section titled “Great Companies Have Great Purposes” You are absolutely 100% correct in your conclusions regarding this segment, however I find Mr. Mourkogiannis’s model to be more complex then necessary to capture and communicate the concept of “management by purpose” which is really what he and you are talking about. At least that is my analysis. I also question some of his examples and conclusions. For example, he uses IBM and Tom Watson as an example of the “Discovery” category of purpose. Having worked for and retired from IBM, I have difficulty in accepting his analysis. For example, if Tom Watson did consciously know what the “purpose” of IBM was, why didn’t he codify it when he codified the company’s three basic beliefs? Item 4. Section titled “The Paradox of Profits” Kudos, 100% correct again!! I am impressed. However, I believe there are other books that substantiate the difference in financial performance besides Firms of Endearment. For example, all of the companies in the book Built to Last by Jim Collins are purpose driven companies. As Jim points out in the book, over the long term, the stock of these visionary companies as he calls them, out performed their peers by a factor of six to one. Additional data is out there, but you have to recognize it when you see it. For example, some authors call purpose by other names. It might be called “single big objective” or a “big hairy audacious goal” but in reality, those are just other descriptions for a company purpose that is something other than profit. Item 5. Section titled “The Whole Foods Business Model: Conscious Capitalism” The business model is a start, but I don’t think it will achieve the objective you are after. I must explain the last comment. After reading your blog, I have come to the conclusion that your reason for writing a book is to, in another term, assist businesses in moving from the Orange “Scientific Modernism” vMEME to the Yellow “Autonomous/Integrative” vMEME. If I am correct in my assessment, then we are both pursuing the same goal. To that end, I am in the process of writing a book in order to facilitate the migration. The key is to educate the management of America and the book is a tool to do that. The excitement that I alluded to earlier was because I was excited to find out that I was not the ONLY person who has this goal. Item 6. There are other items that I would like to comment on such as the relationship between leadership and purpose, but I will not do that at this time. I want to keep this short enough to be read. Item 7. You asked the question “Would you be willing to spend a few hours with me while reading and critiquing the following?” My answer is that I would be delighted to join you for a few hours to discuss your article. My daughter is a customer of Whole Foods Market in Austin and she has been raving about your new market at Sixth and Lamar. “Daddy, you just have to go there when you come to Austin…its amazing!” My daughter Kristen is an electrical engineer at the IBM plant there in Austin. I live in Houston so I can get to Austin quite easily. I would be happy to meet with you during the week or on a weekend. I think it would be very beneficial for both of us. I applaud your efforts and look forward to hearing from you. Respectfully yours, Dean E. Tucker

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