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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Comments

James Hodges says …

Mr. Mackey, Thank you for your educational essay and answers of clarification. Adam Smith, in his "THEORY OF MORAL SENTIMENTS" wrote that capitalism (economic freedom) and democracy (political freedom) can not exist in a country unless the people treat each other ethically and morally. We now have too much of lying, cheating and stealing by leaders at all levels of society. Smith says in absence of trust, society sinks first into anarchy and then into tyranny. George Washington, according to Jim Collins definitions, is a level 5 leader. He created a level 5 enterprise, the USA, which after over 200 years is still the freest, most prosperous, and finest country on earth. Otherwise, why would so many foreigners risk death to get here? You also exhibit the qualities of a level 5 leader. WFM sets an example of honoring our founding fathers ethical principles. If all businesses and other institutions would follow your lead , we will survive as a free nation. Otherwise our way of life so cherished by us all will die. People will act ethically if convinced it is in their best long term interest. "Visible hand" motives may be altruistic true but also are in the best selfish interest of the wealthy. For example, provide health care to the poor. If poor people get TB or some other contagious diseases they could infect the wealthy. If poor are severely undernourished, they would not be good workers. If poor get too desparate they may rise up and displace wealthy as in French Revolution. They may vote in demagogues who will tear down all private property rights. Mr. Mackey, Keep up your good work of showing others a right path to prosperity. Jim Hodges, Bellaire, Texas

Christophe Frochaux says …

Dear John, I just stumbled upon your blog and was so impressed that I read it through and through. I spent 5 years in NYC and fell in love with Whole Foods before moving to Miami, where Wild Oats is a pale substitute… During my first visit, I asked one of your associates if the chicken was free of hormones… the response was shocked and full of enthusiasm at the same time! I knew I was in the right place… Whole Foods says it all, and your holistic perspective should not come as a surprise. Still, platonic ideals are seldom mentioned in a company’s business plan. Service to others, love, care, compassion: Rockwellian words in these Orwellian times… “Search for Excellence” usually sounds like a cliché, but your sincerity shines through. A capitalist with a conscience! A rare breed, but you are indeed in the company of people like Muhammad Yunus, for example. I envy your sense of purpose. I started out as an attorney in Switzerland, quit a bank to visit political prisoners for the Red Cross, manufactured whisky in Latin America and directed a shipping registry, before becoming a Realtor in Miami. I find satisfaction in helping others achieve their dreams, but I have yet to achieve my full purpose… You are quite an inspiration! So much so that after reading your blog, I purchased 100 shares… You’ve got a new friend in Miami!

Craig Sullivan says …

I am accepting your invitation to respond to your Conscious Capitalism article. I hope you will bear with me. You have demonstrated that you are able to grow a company following the concentration of power corporate model exemplified by the likes of Microsoft and others. Is the "concentration of power corporate model" healthy for humanity though? Are people only worker/consumers? I appreciate the efforts of companies like Whole Foods but I believe humanity is better served by cooperation at the lowest level possible rather than a consuming competition striving toward concentration of identity and power in the hands of a few or ultimately one. Even a wise and benevolent dictator is still a dictator. Individual subjects of the best of dictators is still a subject. A large corporation ultimately is a dictatorship ruled by the majority stockholder(s). An association of smaller businesses on the other hand retain local identity and ownership but benefit from mutual support and exchange of insights and resources. For instance Whole Foods could have come along side at least some of the local businesses they bought out over the years and coached and helped them succeed in their own right. Power tends to corrupt; absolute power corrupts absolutely. The thrill of being the CEO of an every expanding empire is undoubtedly exhilarating but is it sustainable or desirable? As a father I don't want to raise my grandchildren even by proxy. I view success as a father to see my children become good parents and grandparents in their own right. Much less do I care to abdicate the upbringing of someone else's children. I think humanity is best served by business operating in a similar manner. In my thinking a successful business man is one who reproduces himself and encourages and allows and finds his fulfillment in seeing his business "children" succeed and reproduce. His business "children" and "grandchildren" won't be exactly like him but rather they will add their own qualities and strengths to what he imparted to them and the world will be richer for it.

Michael Garjian says …

Nice work, John. Some of your comments provide further support of ours as posted here on Jan 6, and Jan 13 , 2006. These posted comments offer a glimpse of the work we at E2M began on Jan 1, 2000. Becasue we are sharing the same beliefs, you might want to consider joining our E2M Economic Community rather than creating something similar but separate (FLOW), as happens so often in the left leaning progressive community. Until the progressives are as dedicated to supporting each other as are the right wing conservatives, our agenda will always risk being diminished due to its diffusiveness vs the concentrated inclusiveness exhibited by the right. Good luck in your work. Michael Garjian Founder, E2M.org

Sebastien Gault says …

Dear Mr. Mackey, I also applaud your vision. After 7 years as a strategy consultant for a top NY firm, I believe that the business model you laid out in your essay goes beyond anything I have come across so far. More than an economic essay, I believe that your thoughts touch upon the philosophical and even the spiritual. The sad reality is that most corporations are only thinking of their own power as a constituency in order to extract the most financial value from other constituencies (i.e. putting pressure on suppliers to reduce their costs by “threatening” to switch to their competitors). Indeed, most corporations do not see the complete picture and thus invest very little in building truly positive relationships with their various constituencies. Do you think that most CEOs would be receptive to the idea that their various constituencies could positively influence each other and thus create more wealth as a whole. Doesn’t the business world still views business as a zero-sum game: "My opponent’s loss is my gain". That philosophy seems very valid when the only motivation of a company is generating maximum profits. I have read through your blog with great interest and passion. I look forward to reading your book when it will be released. As far as feedback, here are my 2 cents: “to convince corporations that business is NOT a zero-sum game, I think you need to provide a substantial amount of practical examples on how value creation can be acheived through good corporate actions in between constituencies. For that, I would not only provide real examples of Whole Foods success stories but also I would provide examples of possible optimization of constituency configuration in other businesses or industries. I personally get the chills reading some of your business concepts because I strongly believe in these concepts, but I think you need to respond to the CEOs and entrepreneurs that believe your model won’t work in their industry. More than being a simple observer, I have very recently committed myself to start a company based on Conscious Capitalism. Thank you for inspiring me even further with your essay !!!

Robert V says …

Hello John, I would like to express my sincere appreciation for not only your truly inspiring essay "Conscious Capitalism", but also for your continued hard work and leadership with Whole Foods Market. You have made an incredible difference in the lives of millions worldwide with your positive visions and aspirations. I wish you the best for the future and, again, thank you for such wonderful contributions to our country and to our planet. I am anxiously awaiting the grand opening of WFM in Birmingham Alabama. Thank you.

Sam Clarkson says …

John, I want to thank you for the excellent insight into your current thinking on capitalism and stakeholders. It is obvious to me as a former customer and a ten year investor in WFMI that your position on some of these issues has been evolving in the last year and a half, with the virtual elimination of your salary and the new and improved annual report which I have yet to read, but which I noticed has spared the color glossy photos- both sure signs of a true investor focused company. I assume that you have been reading some writings of Warren Buffett or other investors, and have made rational changes as a result. I pared back my Shares two years ago and in the middle of 2006 when the valuation of WFMI seemed unjustifiable, but held on to what for my portfolio is a still large position because no stock I own helps me feel as optimistic about the future of capitalism than Whole Foods. As you mentioned, Business is one of the most powerful forces on earth, and I advocate investment and accumulation of capital by those who care about social and environmental justice as a potentially world-changing path. (that is an aside) As an investor, however, I would like to question the conflict between WFMI's dividend policy and its dilution policy. You mentioned last year that dilution would be kept below 10%, which is to my opinion, an astronomical figure. With a 1% dividend yield (now 1.6%) and any dilution greater than 1.6% WFMI management essentially forces me to pay taxes on a dividend while my ownership stake diminishes. with an ill-timed dividend like last year's special dividend, which you mentioned on a conference call that we could choose whether or not to reinvest, the results were horrid for investors like me who had our shares on automatic reinvest. (due to faith in the company I guess, but now I wonder what I was thinking.) That's all water under the bridge now, but for the future, let me give you my thumbnail valuation of wfmi in 2011: you have estimated 12 B in sales for 2010 and have a 4% profit margin. I'm a conservative investor, and so I'll say that if we hit a recession, it might be more like 10 B, which makes for 400 million in net profit. At a 20X multiple - fairly reasonable for a high class grocer with reasonable growth prospects, WFMI would be worth 8 billion, minimum at the end of 2010. With today's new and improved market cap of around 6.8 billion, investors can look for a gain of 17% over just under four years, or about 5% per year, which is absolutely a conservative valuation for 2011 if everything goes right, and there is NO dilution. So, WFMI as an investment today, even at a significantly lower price than early 2006 is a questionable investment if dilution is anywhere near 10% annually, in fact, if dilution is 17% or more over four years, we could be easily looking at a mid to high forties share price in 2011, or lower. As you see, the dilution and dividend policies are in conflict, essentially robbing Peter to pay Paul, and forcing Paul to pay taxes at the same time. The news of the wild oats buyout being funded with debt, not stock leads me to believe that perhaps you are thinking about this, and I hope that is the case. As for the conflict between dividends and dilution, I hope one or both activities will be curtailed as soon as possible. (I said "former" customer because I live in Santa Cruz CA, and the anti-corporate wing of our community has evidently prevented Whole Foods' entry into my community, but I expect you are working on that) As I said, I love owning a part of a fabulous company, and I applaud you in continuing to make it better. Thank you for reshaping our world and the world of business. I look forward to being able to shop at Whole Foods again soon.---Keep up the acquisitions. :)

Charles Mukuka says …

I would like to applaud John and the entire WFM leadership team for the big Strategic and bold move on Wild Oats. As you declared on 60 minutes interview with Dan Rather - we now can see how compeititive you are and it does pay to be a spirited competitor. At least one competitor is down as the WFM faces rising challenges from conventional chains with refined and proven supply chains and distrubution networks and tries to defend and retain its competitive and market position especially in the organic segment. Working on run down Wild Oats stores will be a big undertaking especially if they are to meet the WFM standards. Wall Street today is at least in favor of the move and hopefully this signals a move in the right direction. All the best and look forward to shopping in the newly acquired stores under WFM banner...

dylan says …

john- hello. i am a vegan, as are you. and i just wanted to let you know that i dumpster dive your stores on a regular basis, and have been for years and years. it is insane to me to let good food go to waste. i've used the dumpstered food to make vegan meals for the homeless every week for over 3 years, as well as fed myself. i buy food that i don't find in a dumpster, such as nutritional yeast, peanut butter, etc... anyway, it has become MUCH harder to access your dumpsters in recent years, and that makes me sad. with your recent vegan transition, i thought maybe you'd be interested in the idea of trying to make it a policy to make dumpsters easily accessable for those without the money to buy all their food and/or the ecological consciousness to not let good food go to waste. the main problem is, in one word, compactors. those machines smash the trash and hold it hostage from those who could use it. i recognize it may be somewhat cheaper than a row of dumpsters, but it makes such a huge difference in many people's lives. that is part of what i'd consider Conscious Capitalism. I hope you take these comments seriously. i'd be happy to act as a consultant on this issue for free if it meant more access to whole foods discarded food for the people who depend on it and need it. thank you for your consideration.

Cherie J. Anderson says …

Mr. Mackey, I cannot find an email address to send a general inquiry to your store, so I will put my thoughts/comments on here. I do shop at Whole Foods at the present time, and, in fact, probably spend around $5,000-plus a year at WF and other health food stores. I am bothered by a quote on one of your grocery bags, "Food in its purest form." As far as I can tell, Whole Foods still sells meat and dairy/egg items. If you consider these items pure as in non-violent and non-exploitative, you are mistaken, and I hope you do research exactly how these items, "organic," "free-range," or not, are obtained. If you consider these items to be pure in that they are food in its most natural, beautiful, and nutritionally-balanced form, let's not forget what these animals eat: plants. This comment is not asking Whole Foods to stop selling meat and dairy items; however, let's at least be upfront about what foods are pure and which cause harm to sentient beings.

Paula says …

Hi John, a couple of comments: I read the Tom Peters website regularly, and the current "Cool Friend" interview is with Rod Beckstrom, one of the authors of "The Starfish and The Spider: The Unstoppable Power of Leaderless Organizations." Read the interview (and, if possible, the book). I think it's very pertinent when you consider how Whole Foods organizes itself going forward. I live in Santa Fe, NM, where the first Wild Oats outside Colorado opened in 1991. So my feelings about W.F.'s acquisition of W.O. are mixed. I'm glad it was you and not (say) Albertson's. On the other hand, although I shop frequently at both stores, I've relied on W.O. for my staples (bread, granola, yogurt, fruit juice, etc.) because they're usually pricier at W.F. If prices go up as a result of the merger, I'll have to look elsewhere for them. We do have other options here (e.g., La Montanita Co-Op), so I hope you're aware that you can't count on picking up all the current W.O. customers.

Patricia says …

Mr. Mackey: I am following up on part of a response that you gave on November 12, 2006, to the comments of Nancy Harrison that were posted on November 11. I read through the remaining comments to "Conscious Capitalism" and did not see any follow up to this by Ms. Harrison or anyone else. You said: "What restrictions on behaviour do individuals have that corporations don't have? I'm not aware of any. Please point 3 good examples out. Thanks." 1. Individuals generally do not have the right to unilaterally modify the terms of written agreements in their own favor- with terms that apply retroactively. The obvious example is credit card agreements with upward modification of interest rates and penalty fees. The latest twist seems to be that when the companies reduce the rate after several months of on-time payments, they try to leave the penalty rate applicable to the balance with the lower rate applicable only to new purchases. So why wasn't the same reasoning applicable when the penalty interest rate was imposed on the entire existing balance? I suppose that an individual could attempt to draft contracts with the right to unilaterally modify the terms, but it would be subject to the review of a court. The restrictions on the right to sue in agreements with consumers, such as those of the banking/credit card companies, prevents consumers from challenging fairness and legality of the unilateral modifications to the agreements. 2. Restriction on the right to sue. "Tort reform" seems to be an effort directed by corporations solely against individuals. Nominally, this is an effort by companies to prevent "frivolous" law suits. There does not seem to be a comparable effort to prevent corporations from pursuing frivolous claims, such as those which stifle potential competitors, or frivolous defenses to claims from consumers. Corporations expect to be able to avail themselves of all of their legal rights and defenses in a court of law. 3. Ability to discharge debt. The changes in the bankruptcy laws were intended to make it more difficult for individuals to relieve themselves of their financial obligations. Corporations are using bankruptcy and other methods to discharge their obligations to retirees for pensions and health benefits.

ieva swanson, St. Louis says …

Dear Mr. Mackey, I have read your essay, and would like to offer my suggestions about your writing and ideas. It has been a few months since you offered your essay for consideration on your blog, and I have read the many replies to your work. I do not think that the suggestions that occurred to me have been offered yet, and if you are still interested in constructive feedback, I hope that my words will be worth your time to read. I thought you might like this quote: "Most successful business people do not start out in life thinking that this is what they want to do. Their entrepreneurial ideas spring from a deep immersion in some occupation, hobby, or other pursuit. Spurred by something missing in the world, the entrepreneur begins to think about and envision a product or a service. The entrepreneur is often the first one to spot the opening, and if things work out that person will have a successful business. "When I started out in the natural food business, I believed that if I could see the wisdom of changing my eating habits, there were sufficient numbers of people who would also figure out the advantages of natural food. My business would grow in response to that awareness and be ready to serve those needs. "People intuitively understand that a good business enhances the lives of all who work within it, and enriches the lives of all those who are touched by it. I opened my store in Boston because I needed good food-- pure and simple. That operation was a vital part of me. Likewise, the business you can succeed with is distinctly and utterly you and yours. It is unlike any other business in the world. Being in business is not about making money. It is a way to become who you are." I love this passage for its warm tone. The ideas, similar to yours, ring true. Although I've never met him, I can visualize the man who wrote it, and I feel like he would be a good person to have join my family for dinner and conversation some night. I bet that you are also someone who would make a good dinner companion, but the voice of John-the-Good-Companion was absent from this essay. Overall, when I read your essay I was troubled by the tone of your writing. This led me to wonder who the essay is primarily written for-- who are you trying to reach? Is your audience really just the few people who "may create" "future businesses"? When you have defined your audience, what should that audience do with your ideas next? Although you slip in the line "build upon the Whole Foods Market model...as part of a new paradigm" into your first section, the impact of your essay's conclusion is diluted. In the end, you share with your unspecified audience that "corporations must rethink". Do you have a plan that will apply to both brand-new entrepreneurs and experienced corporate CEO in at the apex of their careers? The author I quoted above spends most of his first chapter just on identifying his audience. Here's an abbreviated sample of how he defines his audience and his end goal in writing a book: "I want to demystify...with a book that illustrates how the successful business is an expression of a person. "I do not arbitrarily restrict my focus to small businesses... the needs of and differences among large, medium, and small businesses are less distinct than we sometimes suppose. Within the structure of every company or conglomerate there are ten, fifty, five hundred, even a thousand units in the big business that function as small businesses... There's no reason why every department in a corporation can't be a well-run small business. "This book is written for that corporate audience, too. Most of us in businesses large or small have the same problems and similar means at our disposal to solve them: energy, ingenuity, and common sense. Big businesses sometimes get bogged down in procedures, policies, and flow charts, but when the problems are solved as opposed to shuffled, I believe they are solved by people using their heads, not handbooks. "We must learn how to grow our businesses-- small, large, and small-within-large--more successfully and more humanely..." Mr. Mackey, when your writing clearly answers the questions of who you are writing for, why you are writing, and what action you require of your reader, your tone may start to improve as well. As it stands, I found it veered toward the condescending, which is hard going on any audience you might care to reach. You yourself pointed out that the essay may take "extended time and concentration" to read. For me, it didn't take concentration to read; it took the discipline of a student who reads to pass the exam. I suspect this has less to do with the complexity of your ideas than a failure to allow your natural voice to come through in your writing. (As for the time it takes to read your writing, what of it? Time is nothing to a hooked reader-- just look at any Harry Potter fan. You can hook your reader far better with your true voice, subject matter notwithstanding.) You wrote that your essay is but one chapter of what you hope to write. Depending on what else you intend to write and why, you may still want to keep this chapter, but you may want to revise your sections about a "new paradigm" and "the purpose of business". There is a great deal of overlap in your "new" ideas with ideas already written about. The passages above come from a book, published in 1986, that I think puts forward many or all of the ideas in your essay. As in your own essay, the author focuses chapters on the purpose of business, and how values steer and stimulate business. The first chapter, from which the quotes I copied are taken, is titled "Something You Live to Do". He is already into the "purpose of business" part of your essay with the chapter title alone, but with greater use of imagery. Like you, he uses his own companies as models for presenting his ideas, but then he goes on to write just as extensively about Patagonia, Ben & Jerry's, University National Bank of Palo Alto, California, Midas Muffler, and many others. He makes no claims for a "new paradigm for business", but illustrates how true-hearted ideals make it into business practice, and demonstrates how this translates into success. The fact that he found many other businesses apart from his own to illustrate the ideas in his book provides the reader with more fun anecdotes, plus the reassurance that the ideas he offers the reader are not original to him exclusively, or proven only by him. The good business ideas he shares are out there in all forms. They really work. You probably also can illustrate your ideas from your own experience and that of your friends and mentors, and summarize them for the reader's application. Showing, not telling, is often a mantra in writing because being able to see the author's experience stays with the reader so effectively. Word paintings would help mitigate the talking-down tone of much of your essay, and be far more fun to "look" at than actual corporate graphics: "To see the reward of commerce as money and the risk of commerce as failure is to see nothing at all. The bottom line is down where it belongs--at the bottom." How much work you want to put into revising this essay for publication may depend heavily on what else you intend to cover in your book. Ever heard of Paul Hawken? You may even have conducted business with the first company he founded, Erewhon, as one of your own vendors. He has written several books. I quoted from Growing a Business, which you might want to read as you think about what you would most like to accomplish with your books. It wouldn't necessarily be a problem to overlap some of the same material, since you have your own story to tell, but if he covers all you wish to and more, you may find it hard to get published. That you have a true a real voice to convey your ideas I do not doubt. I very much would like to read what you have to say, precisely because you are the CEO of Whole Foods. Your business achievement is like making the American Olympic Food Team. That I want to read your ideas well-crafted in your own voice, fresh, aware of what has come before, and a real contribution to the world is a mighty tall order. But I do want it. Like Micheal Pollan wants real reformation. If you decide to really go for it, we will all be cheering you, whether or not you bring home the gold, silver, or bronze.

Joshua Wallis says …

I'm always stuck between being a dentist and going into business, and articles like these make want to do the latter. Capitalism, is an ideal system of freedom, in which only mutual exchange takes place and your article explains it well. You are making a good to great business, environmentally conscious entreprise, and you run the business like a berkshire hathaway manager. I prophecies that Whole Foods will be one the great success stories of this decade and it's people like you who make me think there is meaning in life. If you ever need employees in Flagstaff, Arizona - please send me an e-mail.

Elad Levinson says …

Dear John and the community of readers and responders, My comments have little to do with the ideas of Conscious Capitalism (CC) and more to do with the requirements to be able to think, feel and act according to the desirable possibilities inherent in CC. 40 years of working in the domains of consciousness raising, leadership development and organizational development brings a certain bird's eye view into the difference between speaking about something abstract and being able to embody the truth of it. I love what is said here, the context of authenticity and trasparency is inspiring. I feel honored to be inside the imagination, heart and soul of a distinguished American Conscious Capitalist. But, how do you take these ides and make them real- what is it we are talking about- "conscious" and consciousness. I will advocate for three points of view in my response: 1. Central to Consciousness is skill development- in most consciousness raising disciplines there are practices that you study and repeat day after day to acheive a way of thinking, acting and being that is consistent with the philosophy and psychology of the field of study you pursue. My advocacy is for those of us who are committed to this declaration of a movement of people to bring about a revolution in capitalism that integrates consciousness into business (NPO or For Profit) we embody a tool set and competencies that we can transfer to others so that the movement is not abstract but grounded in the flesh/earth as action. 2. I assert that the tools and skills that must be developed for this movement to be sustainable are both internal and external in nature. I believe that you must be able, as HH the Dalai Lama has spoken for, Tame our destructive emotions like greed and hatred while cultivating emotions as compassion, loving kindness and generosity. To be able to embody consciousness- in- action you must have tools and skills that cause you to be an excellent listener and to speak with respect, clarity and authenticity. 3. A key principle underlying the embodiment of consciousness in capitalism is collaboration. Integrated deeply in Whole Foods success is a worldview, a skill set, an attitude of collaboration but it is invisible to those who do not collaborate as a natural competency. I want to draw attention to the foundation of true stakeholder involvement, passionate love for your company, shareholder delight in the financial results and the context for this blog- it is at heart a collaborative way of being. Collaboration takes four forms in CC- the hands of collaborative action, the heart of collaborative attitude, the mind of strategic collaboration and the soul and spirit of collaboration in people's desire to make significant positive contributions daily to the people around them, their communities and the world. I would love to engage in any conversation about what you have found are the top few skills and tools that cause consciousness to be raised, collaboration to be firm and fundamental or any other reposne you may have to my contribution.

Laureen Prophett says …

Dear Mr. Mackey, I have read your blog with great interest. I have a deep respect for Whole Foods and its vision. My family and I have been shopping at your stores for many years. I would like to echo Mr. Levinson in that I would love to engage further in this conversation. Our world and our work ethic is desperately in need of a deepening and ever expanding paradigm when it comes to consciousness, collaboration, and ethical entrepreneurial leadership. I am a new vendor for Whole Foods in Ann Arbor. I am also an artist. I have had the most remarkable experience working with the staff at that store. I also enjoy shopping there. Recently, however, I visited your store in the Palm Beach area. My family and I were so offended by the tone of the staff and the attitude of the Whole Body buyer that I felt that I must write. In general, they were uninterested, unhelpful and somewhat sarcastic. After years of shopping at your stores, we were shocked. And then we realized that this is a good thing! You and your company have developed a business model that reaches your customers by working with them, honoring them, and offering quality products that contribute to change in our world. It is entirely rare. Thank you for you efforts. We are very grateful for your stores. The Palm Beach store must have been having a very bad hair day. Sincerely, Laureen Prophett

Stan Bies says …

As a Whole Foods Customer, Shareholder and a transactional business lawyer for over 30 years I agree in principle with your approach to the topics addressed in your paper. If I were running a business I hope I would have the same attitude. Specifically, I agree that optimizing the health and value of the adaptive system is the key to long term value as opposed to a 100% "profit in this quarter" mandate which can be quite destructive. All in all I am with you but let me pass on a couple of tangential thoughts. 1. It has always seemed to me that a discussions of "corporations" sometimes is misleading because the corporate persona allows people to avoid personal responsibility for their actions. Corporations are sometimes a vehicle for great achievement and service, sometimes an excuse for unfeeling exploitation, you know, "the corporation made me do it" excuse, sometimes an excuse for employee theft and vendor fraud "who am I hurting ? Corporations don't feel." As you rightly highlight during the foundation stage the corporation is the alter ego of a person, the entrepreneur, who likely was driven by many motivations, probably following a "great" dream that included more than $$$. However once that founder moves on many times a management stage follows and that is where once again the people in charge will do what is in their best interest. Those interests may be quite different from the Founder. Can you build a corporation with a culture so overwhelming that it will survive self centered management. Not easily that is for sure. Corporations are only as good as the people involved with them. I think there is more than a growing distrust of business. There is a growing distrust of people. 2. Shareholders, as you say, from a legal perspective are entitled to profits and have some influence on management but would you agree that investors today in traded companies define their interest more in terms of the market value of their stock ? That to me leads to the pressure for short term profits (whatever "profits" means) and a Las Vegas approach to investing. I own Whole Foods because I feel I am somehow supporting a responsible organization and somehow a part of your team. However that is probably a minority approach. It would be interesting to know if more holistic investors can be targeted by more enlightened companies. Again I think the approach is a long term winner not a charity but some education is probably needed. I can't be excited about a team until I learn how we are going to play the game the right way and win. 3. I think the overall approach works with branded products but can it work with fungible goods like those found in the apparel industry ? I am somewhat familiar with the sweatshop issue and an organization like the WRC will make credible arguments that a lowest price only wins, customer driven market, has driven reputable companies to do disreputable things. Could you use a Grameen Bank type approach to develop a business paradigm for an industry that seems unable to deal with the negative impacts of globalization? Interesting huh ? Thanks for giving me the outlet to ramble. By the way my Whole Foods needs more parking :). Stan

-P says …

I appreciate the sentiment of your argument, but it is flawed. There are too many assumptions and unstated premises. Let me point out a few. First, you state that a Doctor's purpose is to heal sick people, and not maximize profits. This is a little tidy. Yes, the definition of a doctor is to practice medicine, but the unstated purpose for the practice of medicine, or law as you state as well in regards to a lawyer is to make money (profit) by practicing medicine or law. Would the doctor or lawyer practice their disciplines if it was run at a loss? Compensation is the engine of all business. The success of any businiss is defined by it's ability to profit. I am sure that the entrepreneurs that you have met and speak of all share one commonality; they desired to make money doing what they wanted to do. Also, being that you work in the grocery industry, I am sure that you are aware that food and water are necessary for life, therefore the theory of voluntary exchange does not factor in. People need to eat, which means that have to buy food. Now, the growing problem in the grocery industry is the loss of the alternative marketplace. Companies are consolidating to increase buying power to either offer lower prices to the consumer, or to maximize thier profits. The local grocery stores are being bought up by holding companies. Your company recently purchased it's primary competitor. Why did you do this? How does this fit in to your ethical vision? According to the press, this purchase was made to increase your share in a competitive marketplace. And, what are the players in this marketplace competing for? To be the most ethical company? If your customer is not satisfied, where can he or she turn to? With no alternative, there can be no voluntary exchange. Again, I appreciate the sentiment of your paper. You should be applauded for your success and how you handle your company. However, perhaps you should leave economic theory to the philosophers, or at least recognize that your actions may betray your theories.

Jonathan Baty says …

One thing I have always evaluated when looking at lifecycle costs of buying organic foods and eating healthy, is the reduction of health care costs. You are what you eat. Thanks for being sincerely interested and active in evolving concious capitalism! Cheers.

Brent Eubanks says …

Mr. Mackey, I saw your conversation with Michael Pollan a couple of days ago. Very, very interesting, and inspirational. A little background: Philosophically, I am what could best be described as a green libertarian. I am also an engineer, who switched from aerospace to renewable energy and green building design, based on my concern for the environment. Although my study of sustainability is strongly focused on technical solutions, I am interested in all the "system conditions for sustainability" (to borrow a phrase from the Natural Step), including those that apply to businesses. As a green libertarian, I am in agreement with many of the things you say, and I believe that what you call "conscious capitalism" represents a path for business that is both morally and financially relevant in an era of shrinking natural resources. However, I think that there is a very important aspect to conscious capitalism that you do not explicitly include, although you discuss it in other contexts. I am speaking of the entrepreneurial attitude, that which allows you to appreciate Pollan and your other critics because they keep you from becoming complacent and challenge you to grow, change, and improve. I say that this attitude is essential to conscious capitalism because, looking around me, many (perhaps most) of the most environmentally, legally, and socially destructive behaviors perpetuated by large, established corporations appear to be motivated by a desire to avoid change and the associated risk. Why else do well-established companies hold on so tightly to outmoded technologies, products, and business models? Why do they seek to regulations to prevent innovation, rather than embracing the change as an opportunity for growth and market advantage? It seems to me that entrepreneurial companies do, in fact, seek to maximize profit through innovation. But non-entrepreneurial companies do not seek maximum profit. They seek the path of profitable least risk. And they represent the majority, in terms of size and influence, if not in terms of number.

Bruce Cahan says …

Dear John: I am creating a bank for "Conscious Consumerism" to grow regional "sustainable resiliency™" or SR. Many elements of "Conscious Consumerism" are infused as part of my proposed Bank's mission and approach. The bottom line is that new forms of banking are required to amplify each individual's environmental and social values through commerce. Likewise, transparent accountability metrics for sustainability and resiliency are in their infancy, with innovations and standards lagging behind consumers' demands for quality assurance and responsible corporate governance. Grameen Bank is a fantastic example of banking's power to enable latent in situ capacities and economies. There are many forms of "microfinance" [including what I've called "socially-responsive debt" (SRD)] that traditional banks have yet to offer. If you or others want to talk about this further, please feel free to email me. Best regards, Bruce Cahan (A loyal Whole Foods customer in Palo Alto!)

li an says …

Dear John Mackey- I apologize to give you the following critique while having read only portions of your general thinking. You have mentioned your "considerable" debating skills. The sheer volume of books you've read (and I have not)that you cite as foundation cornerstones for your belief system or as blocks of thought you reject and suggest are parts of the Left's attempt and trendsetting outlays in its albeit anscent and young stage (much like you yourself when young were a part of it, long hair and all) . . . I cannot share nontheless with you the background you do, for I did not read what you did. I would likd to suggest that you are a layman-businessman at least as far as philosophy and economics are concerned. That is to say, as far as your understanding of 'capitalism' (e.g. as a polar opposite and enemy of 'socialism', your perspective is that of a businessman. The new verb "to brand" is a strong part of your vocabulary and is a cornerstone of the rubric of your thoughts and ideas with regard to things like the "freedom movement" (which as I guess it, is the WTO movement to expand the liberalization of trade, a matter that relates 95% to tarrifs and trade, and the rest to standards of trade relations that are intended to stabilize and assist in allowing businesses to compete freely in an open marketplace with as little control or blockage or interference from local governments or regionally sovereign entities except as established and standarized by the WTO or other FTA (regional Free Trade Agreement (negotiated, in the the US, by the Dept. of Commerce which is responsive to and exclusively lobbied by, big business). You Michael, seem in you ideas on corporations to have gained most of your thinking from a process you have undergone in your life and times which can be called "if you can't beat them, join them". You may have been "idealistic" and thought you were a leftist, but you discovered that when you tried to run a grocery store that you were a man in business (perhaps your pre-hippy culture parents and others who formed you as a child, and were examples to you, taught you about business, gave you capital, and there is more to you anyway than having worn long hair for a few years; only some 'hippies' were educated AND political or qualified thinkers on the subjct of economics; nearly none were communists! Living on a commune had nothing to do with Mao Tse Tung; you were like your compatriots in your youth, idealistic, but just kids, and then went on with your life as a regular American. The movement was idealistic, but nobody found they could retain their allegiance once making a living became paramount as they got older, and the pendulum swung back, Reagan got two terms, the USSR and Berlin Wall fell, Hippy became a reviled word, as in "dirty hippy", children of hippies grew up and rejected the nonsense and irresponsibility of that parent generation. But here is you, a businessman who knows his demographic of his generation and that there are values which were valid and which if tapped into are a consumer demand waiting to be capitalized upon. Here's the thing: You say, Michael, that you want to change the world by leading through business. All very well and fine: Jobs are created, corporate culture when enlightened provides better living conditions for employees, better quality of life through making available great stuff, consciousness raising through information, a book section a personal care section, a yoga section, all in your organically certified store, the whole store certified, not the labeled produce any more. And this is your baby; you're going like Starbucks gangbusters! By 2010 will do HOW many billions of dollars and with the best profit margin in the industry (but there is no greed here, no; recently you raised salary ranges - for your executive - to match that for executives in the business world, to be competitive so you would be able to attract and retain executive level thinkers and doers- all of whom are good at the newspeak vacabulary and can use brand as a verb with great fluidity- Whole Foods is undoubtedly a great success as a business and as a corporation. You are a millionaire. You have a large house and likely more than one house. You have a very nice car or two. They may even be hybrids, I don't know. Arnold says he had his Hummer hybridized, a great idea for those who might just feel an SUV is what they want to drive. You are not greedy, though, not among OTHERS in your line of work, CEO and successful founder of a multinational corporation. But the values of the hippy idealistic as they are/were have fewer needs; a teepee will do. A kitchen garden will do. A quiet life will do. Ambition to be big, to gain more and more, do more and more is not so rationalized as the rational thing that must be done in life, once sustenance and quaint comfort is there. If there is ambition, it is spiritual, to do GOOD in the world; there is bad there the young idealist saw. The pretty forests falling, maybe the woods where you played as a child one awful day were razed and became a parking lot for a strip mall. Polar bears are going extinct. 60% of human beings in the world do not have clean uncontaminated water to drink. There are only 5 media companies left due to monopoly happening. There are only 5 strains of grains left or varieties of wheat and corn, all the others have been eliminated by agribusinesses putting corn farmers out of business and off their ancestral farms in Mexico and elsewhere, so they can profit off their high-yield (low pest resistance) bio-engineered seeds and farm the land with combines a hundred yards wide in a swath, remove the family farms and knock down the old farmhouses, rip out the windbreak hedgerows to let the big combines in, eliminate the molds and earthworms and salamanders and funguses that used to grow in the rich soils and streambanks and woodsy section in and around the farms where cattle used to graze on green fields and not on concrete or manure mudholes be "fattened" with antibiotic drenched foodstuffs such as the sweepings off of slaughterhouse floors - for a cow to eat! These things the idealistic kid who started to think something was real darn fishy about the powers that be that would also send him to war before he could vote no matter what he might feel about that because there was a draft. And so the idealism got all lumped in together in a general rebellious time against the system because it bit a little too close to home when it came to dying like that, too. So we had the crazy 60's, because these kids were really clueless, and plus they dropped out of school and they experimented with psychedelics and mystical powers as they tried to flee from all these horrible things they saw in the real world. And ultimately they sold out, because they had no answers, or had some, but had to compromise on a lot of what they had felt when they rebelled and rejected the whole damn system lock stock and barrel. The issue of eating food that is healthy, that's pretyy personal so as far as that goes, they stuck to it and maybe they let the rest of their beefs just go by the wayside, shrug, or vote, if its ever relevant, or give to Save the Children for a few years. Now you, MIchael are a better hero, you have made a difference and have a new track going: maybe we don't have to throw out the baby (big business?) with the bath water, do not have to sell out completely. Maybe, you have a third way: Brand big free trade business as Healthy and Organic! As spiritual and transcendant! As compassionate and environmentally responsible! As socially ethical and jobs creating! Well, at least its an improvement, and its better by along shot than doing nothing, and plus, what is wrong with success? That's right, getting rich. This is still a GOOD thing, and you play the game with becoming a publicly traded corporation, now with investors who run the show (they pretty much want to see their stock go up). So its all capitalist, capitalism. And is their anything WRONG with that? Is there any idealism there, really though? Or is it all (ALL) really, Michael, about growth, money, pride (even), power (yes, soaring high on a high- a human thing to do when the wind is in your sails!) But whatever happened to the "issues" (a tiny little corner of your whole website, which is very brief to boot and then sends the surfer over to the FDA, known to be the great and honorable champion of safe drugs safe food additives, safe silicone gel breast implants, and protector of the self interests, selfish profiteering profit incentive driven driven individuals in the massive and gigantic corporate culture of executives and their wives who invest their fat figures (6, 7, even 8) in the stock market and have more than one large house in which to be, to meditate, eat, and do yoga. If you do discern some sarcasm it is only because you too cannot deny this is all merely desciptive of incidental reality. I am saddened that you seem to spend no time any more (or if you do, its a tiny percentage) directing your considerable capacity for dabate and effort, drive and determination, vision and ability to garner for yourself influentiality (now I can coin a new word, not just some other bloke in the marketing and advertizing field) on protecing the hope of success in acheiving the protection of our food supply from non-organic contamination. You allow the status quo to be the 2002 FDA ruling on labeling things organic which is a ridiculous emasculation of the cause and need for success here. What does it mean that the USDA "organic" seal is so meaningless that it is not "mandatory" (huh? it should be a point of bragging to bear this seal)and is the only seal that can be affixed whether the goods are 100%, 95% or no less than 70% made of organic ingredients. And when not 100%, the rule for organic labeling (which would read "Organic" in case of the 70-95% foods, but only a fine print seeker would ever know that this does NOT mean that its "100%" organic--what kind of Orwellian newspeak deceptive garbage nonsense is THAT?) states that the remaining percentage of the ingredients of the foodstuff mustconsist of nonagricultural substances approved on the USDA's National List, or consist of non-organically produced agricultural products that are not commercially available in organic form. Oh, but, it can all be labeled "Organic". Who decided the public should be served by doing THIS? Or, who was it who had the more sway to see to it that some interests other than the public's was what was deemed to have an importance superceding the interest of the person who wants to eat food that does not have any genetically modified anything, nor any pesticides nor herbicides nor hormones nor any thing unnatural as it was on the table for George Washington, whatsoever. Nope, that objective is not what has been achieved, and not only that, there is active deceiption: thepublic will read a label stating it has been inspected by an authorized certifying agent to be authorized to be labeled as organic, but it is not. Not organic. It has contaminated ingredients in it. And if there are 10 ingredients, is 70% seven of them, or is 70% 70 grams of 100 of the foodstuff? And are either one of these percentages really reflective of any measurement of the purity with regard to being farmed and handled without contamination from anything unnatural (as to be expressed as food the way it was before the technological "advances" brought unnatural farming practices into being--Abe Lincoln, my grandparents, even the hippies had produce at least that only cost pennies and was not genetically tampered with). And what pray tell does it really mean you are a certified store? You sell (and label, thank you) "conventionally grown" produce, so what is so "organic" about you? That you label it? But what does this label mean? ANd haven't you sold out, because you do not CARE that the original meaning of 'organic' does NOT allow or permit obfuscation and contamination by gradients, admixtures of taints and degradings. So, while you fancy yourself a great Adam Smith of the new age, methinks you've just sold out no more. YOu want to satisfy who? Your stock holders? So you and they can get richer? Pray tell, are you materially satisfied personally, or is it now still very much a thing you like to do, to see your own personal net worth grow? Are you comfortable, do you have enough to eat? Do you have a roof over your head? Can you send your children to college. Can you pay your doctor if something bad should happen? Really? All that? Can you take a trip around the world, can you sponsor a charity of your choice, too? Well, do you have enough? What is your central goal in life? Is it to protect the food supply from degradation? Is it even to protect the soils, or the food animals? To what degree is this your goal? Are there other goals that supercede and call for compromise to your customers, who will not have another organic market to choose from because you have put them out of business? Is branding, as a tool of advertising and marketing an offensive word to be the one in use by an advocate at the forefront of business as an empowerment of social change and other change (healthy food, uncontaminated and fully organic)offensive because branding is unrelated to content or quality, but rather to the perception of these by the consumer. I posit that the consumer should be seen by you to be your fellow man, not as "the consumer" and that branding should have not already replaced the mission to advance the organic movement by recognizing the power of the popularity of the desire to eat only such food among the public at large. Its a no brainer, NOBODY wants to eat or feed their children anything BUT right food, and none of that awful garbage created for profits is right food. (Even the saffron rice they like to cite as stopping starvation because though GM it produces more per acre, is a flawed argument-- because all the dangers of GM (they do not know that they change OTHER things that they do not intend to when they engineer genetically. This is clear in that they want a long shelf life, they want a tomato and a plum that they can transport and warehouse a bit more, that won't bruise or spoil, and they want that fruit to be big in size and rich in colorful appearance, and they succeeded by GM-ing it. It was not their objective to make it taste like sawdust, or be mealy, but it IS. There are effects and chages - unwholesome - they do intend and don't intend. They use the genes of bacteria and animals on plants. This is disgusting, and it tastes bad, but what is it lacking in nutrition? What is it lacking in the full God - engineered balance of micronutirents they haven't even discovered yet? THey can identify the active ingredient in a medicinal herb, but often it needs the whole herb intact to be safe and balanced non toxic at higher dosages or what have you, because of other things in the plant, the whole plant. THose other things represent what is being genetically lost or altered or destroyed, or even at waht level something else could be now appearing that is insidious, harmful, cause obesity, diabetes, autism, you have to understand the dire importance of shutting them DOWN entirely, and as you, MIchael, gain in power and wealth and success, it is my wish that you will find your power able to stand stalwart in your idealism, the righteousness of what is right, no matter how big the Goliath don't join them, be David, to the end. Work to make the whole WORLD organic once more. Prices willl come down, ways will be changed: it is not necessary to poison ourselves, our animals, our food, our environment, our ecosystems, our pollens. If I have been insulting, it is to provoke you to return and remain true, and if I have underestimated your commitment, be glad, I am on your side then, and you want the whole world to be on your side.

Ann G. Kramer says …

Dear John, As I’ve followed this thread about Conscious Capitalism/Conscious consumption, I am prompted to write. While I give support to you that if we’re going to have a consumer economy—a conscious capitalistic system certainly is preferable to the current capitalistic model—or that of any of the other ‘consumer economies’ that get bandied about—communism, socialism, fascism, etc. All of these economies are consumption economies—really the only difference between any of them is the distribution methods—capitalism distributes on a supposed ‘free-market’, communism is a centralized government etc. But what if a consumer economy—conscious or otherwise, isn’t the only option? In fact, what if we discovered it isn’t even our best option? Yes, we are all well steeped in the consumer economy—so much so that it seems as if it is the only way to be. In the early 1900’s, the idea of ‘insatiable desire’ was implanted in our culture through the intense rise of advertising—because insatiable desire was considered a cure all for an ever rising/falling economic system that depended on consumers continuing to consume. When they were erratic in consuming, depressions/recession ensued—at least in the money flow. I can’t blame our forefathers because from their perspective this looked like the best choice. Consuming led to money flow which led to more consuming and if we could keep this going on a fairly constant flow, depressions, recessions and economic chaos would be a thing of the past. And consume we did and as we consumed the money flowed. Over the last 100 years we have perfected a consumer economy, efficiently setting up a supply/demand (insatiable desire + money = demand—please note, “demand” does not necessarily mean “need”). While this option looked like the best from a 1900’s view of the world—world population 2 billion and seemingly unlimited resource availability—who could ever imagine an end in sight. But now with almost 7 billion people and resources being maxed, things will have to change. As we all can see now, this direction has come at a huge cost. We’ve created a world that is good for the production of products, services and the flow of capital—but it is not a world that is good for all humans, the earth, water, air, animals. In that efficiency of whatever makes money is good, we’ve also allowed businesses to externalizes the ‘costs’ on humans/earth/animals instead of insisting that they operate on a full cost accounting method—which had that been incorporated in the consumer economy would have surely shifted many of the business practices of the day. To that, I then ask the question—what if instead of a consumer economy, we instead created a whole life economy? It would serve a primary need of ‘life’—relationships, species diversity, health, etc. instead of the current primary need of money. Yes, there would still be businesses and products—but only so much as is necessary for real life. What I’m suggesting is that we move into a new paradigm. The following is the best encapsulation of the old to the new paradigm that I am suggesting. It comes from Barbara Brandts’ book, Whole Life Economics. ...the central assumption of the modern economic paradigm is the belief that money represents value. According to this belief, the more money one has, the more things of value one can buy, leading to greater well-being. That's why the modern economic paradigm defines economics in terms of such issues as the success of businesses in producing and selling goods and services in order to make money and the ways in which individuals make money. In the modern economic paradigm, the economy is defined by the movement and behavior of money and any activity that increase the amount of money by an individual, business or nation is considered economically successful. .....the central assumption of the post-modern economic paradigm is not on money, business, interest rates, productivity or other conventional economic concepts. Instead, [whole life economics] the post-modern economic paradigm starts from such values as our physical well-being, mental and emotional health, our social relationships, our ability to meet our needs and the needs of those we care about, our connection to the natural environment and our need for spiritual meaning. By contrast, the new paradigm recognizes that nature is not merely a collection of passive physical materials mutely waiting to be dug up or chopped down, but is a dynamic living system of plants, animals, soils, waters, weather and numerous other processes that constitute the ultimate source of all our economic activities and it assumes that an economic system that honors the Earth is also one that enhances human quality of life. The post-modern economic paradigm perceives human beings and the Earth, not as competitors but as participants in a mutually sustaining relationship. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ We already have an example of the new economic paradigm—the Grameen bank and its microlending system. Notice that these borrowers are pulling themselves out of poverty, improving their families, communities, relationships—but they are not obsessed about making more and more money. Money serves their values and the important values are those noted above: physical, mental, emotional well-being, relationships, meeting needs (vs. insatiable desires) and connection to the natural environment/need for spiritual meaning. While I do congratulate WFM—if we’re going to stay stuck in capitalism, at least being conscious is a better option than what we have now, but it’s never going to be enough. It is an old, burdened system. For instance, the discussion around your stock price—your comment that stockholders ‘own’ the company is just unsustainable. With the exception of the IPO, any stock purchased after that does nothing for WFM—it is not an investment in your company in the least. It is actually a completely disconnected group of people ‘legally gambling’ on a supposed ‘value’. But as is obvious, that value can be hyper-manipulated by people who couldn’t care less about WFM at all. Yet we give these people ‘ownership’ of the company and like a puppet on the string, WFM and actually all companies publicly traded dance to the tune of ‘share price’ by these ‘owners’. The present system enables this small group of investors (speculators really) to have more power over your company than the people who actually work in it to make it the great company it is! No matter how conscious you may be John, this system allows very unconscious people to determine policies for their short term gain. My business friends in publicly traded companies bespeak constantly of the frustration of ‘dancing to the tune’ of the quarterly stock report. It forces them in to short term planning vs. long term. It is a tough world to work in and sadly so many of those who do work for you could lose their jobs because stock/speculators would force you into decisions that serve stockholders first, customers and employees second. For example, when ATT merged with Cingular, 7000 working people who had built that company lost their jobs. This brought a rise in the stock price for stock owners—but harmed 7000 individuals and families who had put their time, energy and effort into those companies. We call this normal in a capitalistic system—the current modern economic paradigm. This would be considered insane in the post modern economic paradigm. Which ultimately leads to the elephant in the living room of a consumer economy—conscious or otherwise. The “unavoidable dilemma” when we consumers have had bought enough—but a business needs to keep selling stuff, making money and supporting the stock price. Then the business is forced to make more and more—even when its not necessary—and as is true with so many of the products and services that get created today. They’re not needed, but through advertising we have to create ‘insatiable desire’ (false need) and insist that we consume them. We are now consuming massive quantities of junk because businesses have to keep seeking more and more ways to get our dollars. In the food industry alone you can see the outcome of this junk production creation. While I love WFM, I worked in the natural foods industry in the early 80’s when we were all struggling to show people how to eat healthy foods like quinoa and whole wheat. Today however, I am amazed at how much useless food is in a health food store. Do we really need ‘natural cheese puffs’? Or are we producing them simply because people have been conditioned to want this and the business needs to find ways to increase sales? Conventional wisdom’s response is, “well, people don’t have to buy them—in a capitalistic system is it supply and demand”. And perhaps if we actually had a true system you might be right. But everyone in this world now knows that to ‘stop consuming’ is to stop the economy and that just can’t happen. So we just keep shopping—knowing full well we need to stop but can’t because the ‘economy’ must go on. (recall what President Bush said after 9/11—Don’t let the terrorists win—go out and shop!). Deep down inside, the current Fed Chairman, the past chairman Greenspan, Wall street traders, citizens know that we can’t buy ourselves out of the ‘unavoidable dilemma’. Resources are running out—and if the world population ‘buys’ itself into the chaos that Americans have indebted themselves, we’re goners. We’ve created an economy that serves products/services/money now let’s get conscious and create an economy that serves humans, families, communities, animals, earth, water and air. It is doable John, we need only change our minds and decide that the post-modern economy paradigm makes more sense—and then start consciously creating a world that supports it. Daniel Quinn…who wrote Ishmael which won Ted Turner’s book award for ‘best solutions for the future’…recently wrote a new book called “When they give you lined paper, write sideways”. It challenges us to look at what we call ‘normal’ and really examine its ‘normalcy’ in context to the fact that much of our old patterns are on a path of eco-cide. It is time to invent something else. Conscious capitalism is simply slanting the lined paper. It won’t get us where we need to be. Let’s have the guts to turn it completely sideways—and create the post-modern economic paradigm. When we do, shopping and working at WFM is going to be an experience so joyous because it will be part of an integrated whole—with the humans, family, community and the entire community of life—animals, air and water and earth being honored. It will be sustainable for us all and help us create a world that works for the community of life vs. money. Best regards…. Ann

Veronica Ciambra says …

I am a long time member, former employee and avid supporter of food coops. I now live in California where I shop at Whole Foods (because there are no coops here and because Whole Foods is a good store in many ways). I heard your presentation at Berkeley and I can't help but feel sadness for my Vermont coops. A primary basis of the coop movement was political. Of course, we wanted good and pure foods, but we were also interested in seizing control of the food supply. You have done that to a larger degree than we in the coop movement did. And that is the problem, WE are out of it. Yes, we can control you by what we buy, but there is an added level that we were trying to do away with by starting the coop movement. As I listened to what you were saying, I though that you and we could have more power and a clearer direction if we consumers were involved on a more intimate level. How about a community board in addition to the board that is involved due to finances/corporate control. A community board would go a long way in giving consumers a strong voice and in giving your voice more power. Also, I have always believed that if people knew more of the story of what a corporation deals with they would be gentler criticizers and stronger supporters. A community board could have a dual purpose working with you/stores and with the community.

Julia Roll says …

Dear John Mackey, Thank you very much for your willingness to dialogue with Michael Pollen in Berkeley. I did not have time to read all the previous comments yet, so please forgive me if this suggestion has already been mentioned. I am writing to suggest that Whole Foods open up a satellite Whole Foods store in a low income, underserved neighborhood in Oakland. The store would be considered a satellite because it would not have all the items a regular Whole Foods would have. The store would be much smaller, and a smaller selection of items would be offered. Also free classes in nutrition would be offered once a week. this satellite store could also be connected to different local groups already doing this type of education. This note is in response to the question asked at the dialogue about Whole Foods and elitism. Without consciously intending to, I beleive Whole Foods does tend to reinforce elitist standards. Your response was that a low-income person can, if they are a very careful shopper, and they are willing to cook most of their food, afford to shop at whole Foods. This is a good point, but it overlooks at least two aspects of poverty. One is access to transportation, and the other is access to information. A low income person in West Oakland who doesn't have a car and is a single parent might have a pretty long trip by public transportation to get to Whole Foods. They might also have to bring their children with them if they can't afford a sitter. They might also be tired after a long day at work. It is difficult, exhausting and time consuming for them just to get to a health food store, so they just purchase junk food because that's what's sold locally. Second, many low income people may not have the education about nutrition and smart shopping to be able to successfully navigate a Whole Foods and get out without denting their wallets too badly. That is why the satellite Whole Foods would offer free classes in nutrition and be connected to local groups doing similar work. Creating a Whole Foods satellite store in an area of Oakland that does not have health food stores addresses the issues of access and education. Many low-income people might start eating differently because they can actually get to the store conveniently. Secondly, providing free weekly classes on nutrition and smart shopping gives people the skills they need to be able to afford to start buying differently, without breaking their budget. The new satellite could also provide products that serve different ethnicities in the area that it's located in. Finally, while low-income people may not have as much money as other people, they do have money. I think it would be possible to make a profit with these Whole Foods satellite stores, though perhaps a more modest profit than a regular Whole Foods. I hope that you seriously consider this proposal. The Whole Foods satellite idea is an active way that Whole Foods can start breaking down the walls that prevent low-income people from accessing healthy food. Thank you for your attention to this note, and I look forward to hearing your response, Sincerely, Julia Roll

Michael Barcellos says …

BRAVO !! I just finished reading your paradox of profits. I must say I whole Heartedly agree with your analogy. The title of this section I think would be better titled "Profits, the underlying result". As a supervisor in one of your stores departments, profit is realized by the many things we as team members due as a result of a well developed business plan. We strive to give better service to our customers as well as a stellar product. Since we are happy team members we generate profits for OUR store through a great connection with our customers. The end result thereby meets our core values of Whole Foods Markets on a whole. I do have one question for you though. What is the overall purpose of these writings and who is your target audience? Reason for my question is that if you are targeting a broad mass of people then I would much rather see a more simpler form of wording and writing on your part in order to better get your point across. Just a thought since at WFMs simplicity, I think, is the best way to better inform people about the goodness of WFMs product.

Mark says …

Mr. Mackey, I confess - I've regularly looked through your job listings hoping that the stars would align and I'd find a gig working with you at corporate hq in Austin. After today, however, I have to say that I'll not be doing any more of that. In fact, I'll be selling all my WFMI shares in the next week or so due to this blog (this is the first time I've looked through the site since becoming a shareholder). I am taken aback at how a CEO who works for shareholders, the owners of his company, feels that it is appropriate for him to use the company's website to express his belief systems (first of all), and even more egregious - to use inflammatory language in doing so. You've read plenty of books, which is great. And you like to try all sorts of religious practices. But statements like, "a firm foundation to move past mythologically based religions into authentic 21st century spirituality", are foolish. The CEO for whom I work would not say something like that because he knows that his job is to run a company and not to opine on his company's website. Doesn't mean that he has no opinions and that he can't express them when the setting is right, it just means that he maintains a basic sense of propriety when speaking in public under our company's banner. While I don't belong to any religious group, I read this and was somewhat shocked that people were not a bit more uneasy to hear you refer to "mythologically based" religion while replying to a person who was expressing belief in the bible. Again, my decision to divest from the company has nothing to do with the specific content in your blog - though I find your tone self-righteous and your words somewhere between spurious and offensive - I just can't trust a person with my money who acts more like Mark Cuban than an individual with any business running a corporation capped at $6455M.

John Mackey says …

I've been very busy lately and have been neglecting to answer questions and comments on my blog. I hope to catch up over the next few days. To Joseph Serrano, I see you have great passion about creating an environmentally sustainable dry cleaning business. I encourage you to keep seeking ways to fulfill your vision. I'm sorry that I'm not personally interested in it. Best of luck to you. To TC, While I respect Berkshire Hathaway's approach to corporate philanthrophy I don't think it is the "right" answer for all other corporations. Don't forget that Warren Buffett owns a huge percentage of Berkshire so letting the shareholders designate their favorite charities still lets him designate a huge amount of money to his personal favorites, while doing it in a way that seems to insulate him from outside criticism. I see corporate philanthropy differently than Buffett does, however. I see it as another part of the business to be managed consciously and responsibly--just like every other part of the business. Should the shareholders designate what the retail prices of our products should be? Should they vote or designate employee compensation? Should they designate which suppliers the company does business with? Why should the community stakeholder be treated differently than all of the other stakeholders by the company? I believe that a company has responsibilities toward all of its stakeholders and should seek to optimize relationships with all of them--including the community stakeholder since the company is a "citizen" within various communities. I don't think this responsibility should be delegated out to the stockholders any more than any of the other stakeholder relationships should be delegated out. Your second point about share based compensation over the long-term in large companies is right on target. In fact, over time, share based compensation, including stock options, is necessarily diluted down by the law of large numbers. This is also true at Whole Foods. However, stock options are only one part of the company's commitment to "shared fate." Our gainsharing program, transparent salary information, and salary cap are also important programs to support "shared fate" at Whole Foods. Also, while stock options necessarily decline in importance over time with a larger company such as Whole Foods has become they are far from insignificant. While Whole Foods won't be able to grow as rapidly in the future as we have in the past, we are still very much a growth company and likely will be so for at least another decade or so. Your third point fails to understand that Team Member Happiness is far more than merely a rising stock price. Material prosperity is in fact only a relatively small part of human happiness as many psychological studies have shown. Maslow's Hierarchy of Needs, for example, shows that human fulfillment has many levels beyond the satisfaction of basic physiological needs. Whole Foods team based system of empowerment combined with the deeper purposes for which our company exists (besides maximizing profits) are actually far more important for nurturing human happiness than a rising stock price. At no time have I ever said that Wal-Mart is a "bad" company. In many ways Wal-Mart is a great company and I agree that it has done many good things. I admire many things about Wal-Mart, but not everything. However, I don't see Wal-Mart as a "Conscious Capitalist" company at this time. They seem to me to be focused primarily on 2 of their stakeholder groups--customers and stockholders. They will need to begin creating more value for their employees and their communities before I would view them as a "Conscious Business." Time will tell whether they have a sincere commitment to the environment or whether it is a PR effort to shore up their reputation.

John Mackey says …

To Nancy DeFauw, I'll modify my statement to say "Many non-profits" instead of most. Hyperbole on my part--sorry about that. Thanks for the feedback. In terms of examples: well you wouldn't have heard of many of them, since many have now failed or are small local ones. I've served on the Board of Directors of many non-profits and have watched them struggle for effectiveness for years. Not one of them has been nearly as effective in the world as any of the for-profit corporations that I've worked with. They all have wonderful intentions, but that isn't enough to make them effective. My criticisms of non-profits shouldn't be taken personally. I meant no offense. I want non-profits to be more effective in the world and am devoting a great deal of time to helping several to be more effective. Sorry you don't like my "wall metaphor." I like it myself and will keep it. If you have suggestions to improve grammar or tighten sentence structure of Conscious Capitalism please send those suggestions to Anna.Madrona@wholefoods.com. To Nick Theodosis, I submit that more progress in improving human well being has been made in the past 250 years through capitalism than in the previous 10,000 years combined. All the objective indicators support this statement--increased lifespan in the U.S. from 49 to 78 in the past 100 years alone, decreased poverty from 85% of the world population in 1820 (less than $1 a day in 2003 constant dollars) to below 20% today, the elimination of slavery for the first time in history in all advanced, capitalistic nations, the empowerment of women and the waning of patriarchy in advanced capitalistic nations, and the expansion of freedom and democracy in all advanced capitalistic nations. Perhaps there is a "better" economic system than capitalism but so far I haven't seen any evidence of it. I for one am not willing to discontinue capitalism--rather I want to expand human consciousness and create a more "Conscious Capitalism," which my article advocates. As I stated in my previous post I don't think the Gates Foundation should be condemned for investing in oil companies--even if those oil companies have done some things we don't like in Nigeria. Your ethical balance sheet on oil companies only seems to see the bad things that they sometimes do and doesn't give them any credit for the good things that they also do. Is that fair? Shouldn't your ethical accounting include both the good and the bad? Your attempt to separate the Gates Foundation from Mother Teresa by calling the Gates Foundation an "artificial entity" and Mother Teresa a "flesh and blood" person isn't logically compelling. If the Gates Foundation is merely an "artificial entity" then why should they be held responsible for anything at all? How can you hold an "artificial entity" responsible? However, you clearly do hold them responsible for their investments and their actions so please drop the "artificial entity" rhetoric. Let me be clear on where I stand on The Gates Foundation, Mother Teresa, and Nick Theodosis: I don't blame The Gates Foundation for anything bad that oil companies do and I don't give them credit for any good that those oil companies also do. I believe the oil companies should be held responsible for their own actions (despite being "artificial entities"), but not their investors, employees not directly related to any "bad" actions, nor consumers of their products. I do not hold Mother Teresa responsible for the bad things that the Catholic Church may have done while she was alive nor do I give her credit for the good things the Church may also have done. I hold her responsible only for her own direct good and bad actions in the world. I hold the Catholic Church responsible for its own direct bad actions. I also do not hold Nick Theodonis responsible for all of the bad actions that the United States government does nor do I give him credit for whatever good it also does. I hold the U.S. government responsible for its own direct good and bad actions in the world. I do not blame its citizens. I do not believe in infinite responsibility through association, which implies unlimited guilt since we are all connected to everything else. Instead, I believe we are only responsible for the direct harm (or good) that we do to others but that we are not guilty or responsible for the harm (or good) that others we are associated with may do.

John Mackey says …

To Paul Frantellizzi Here is the definition of selfish from the on-line dictionary, dictionary.com. I believe this definition is also congruent with how most people think about selfishness--"caring only for oneself, regardless of others." self·ish –adjective 1. devoted to or caring only for oneself; concerned primarily with one's own interests, benefits, welfare, etc., regardless of others. 2. characterized by or manifesting concern or care only for oneself: selfish motives. You try to redefine the meaning of the word selfishness when you say "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." Selfishness, by definition, doesn't care about relationships, giving back, mentoring, community, etc. A person who cares about other people and factors their well being into his or her decisions is not behaving selfishly. You are making the exact same mistake that Ayn Rand made when she argued for egoism and wrote a book called "The Virtue of Selfishness." You are confusing "self-interest," which can in fact concern itself with the well being of others, and "selfishness," which by definition cannot. Self-interest and selfishness mean very different things. I think we should use words the way they are defined and not try to change their meanings just to suit ourselves. To Dean Tucker, I enjoyed reading your post and see that we are pretty well aligned on many things. My goal indeed is to help American businesses evolve to the second tier level of consciousness. However, they will need to evolve past the Orange Meme through the Green Meme first to get there. My friends at FLOW (see www.flowproject.org)and at the Integral Institute (www.integralinstitute.org) and at Spiral Dynamics (www.spiraldynamics.net) are working with me to help move things along. You should contact FLOW about working with us. Maybe we will meet someday in person, but I just can't meet with all the people who want to meet with me right now. Sorry. To Craig Sullivan, I believe you are confusing the coercive power of government with the voluntary nature of business. These aren't the same things. Whole Foods has grown large and successful through voluntary exchange. We coerce no one to trade with us. Customers trade with us because they feel that they are getting a good deal through the exchange or the trade wouldn't happen. All of our customers have many other competitive alternatives where they can purchase their food. We don't have any "power" over them. They can walk out of our stores anytime they want to. Guess what, 98% of Americans don't shop at Whole Foods. Same with our Team Members--none of them are coerced to work for us, but willingly do so because of the particular combination of pay, benefits, working conditions, and unique business purpose that we provide. Each of them have many competitive alternatives in the marketplace where they can trade their labor. Team Members voluntarily leave our company for other jobs they prefer more every single day. It is exactly the same with our investors--they own their stock voluntarily--and they are free to sell their stock 5 days each week. Any different with our suppliers? Nope. They don't have to trade with us. They do so because we are able to negotiate mutually beneficial terms of trade or no exchanges would occur. They've got plenty of competitive alternatives to trade with if they don't like Whole Foods Market. Does Whole Foods have the same kind of power that governments have? No way! Everyone trades with us voluntarily for their own self-interest. Not so with the government. Don't pay your taxes and the government will come and forcibly take your money, property, and imprison you. You can always emigrate from the United States if you want to, but our government insists on taking a large chunk of your money and property in taxes when you do if they deem that you are emigrating in order to avoid paying taxes. The government has coercive power--they have policemen, armies, and guns. Whole Foods does not. Our success and growth have come directly from satisfying our customers who have voted with their pocketbooks. Should we ever cease to adequately satisfy our customers needs and desires these same customers will voluntarily stop trading with us and our company will begin to shrink and would eventually go bankrupt. This very thing happens every single day for businesses all over the United States. That is the way capitalism works--through "creative destruction." If you don't like large corporations don't trade with them. No one is forcing you to. In my own opinion, large corporations have just as much potential to do good in the world as small businesses do, and probably much more. Why wouldn't they? A corporation simply expresses the consciousness of its leadership and its culture. An enlightened business leadership, a "Conscious Capitalism," would help evolve the world we know for the good. Since corporations aren't going to disappear anytime soon (no matter how much you might wish them to) the best strategy to transform the world is to transform the consciousness of corporate leadership. That is what I'm working to do.

John Mackey says …

To Michael Garjian Your E2M project sounds interesting and I wish you the very best with it. I think what you are trying to do, however, is substantially different than what FLOW is trying to do or what my vision of Conscious Capitalism is. I am curious to know how many public corporations are participating in E2M? Any Fortune 500 companies? It seems unlikely to me that very many would be willing to give that high a percentage of their profits or equity to another entity (5% to 20%) besides the government (which takes up to 40% of net profits and much more than this when all types of taxation such as employer, property, and fees are factored in). To Sebastien Gault, I believe that we are more likely to see entrepreneurs of younger companies embrace the principles of Conscious Capitalism before executives at large corporations do so. The entrepreneurs have less to lose and are usually more open to new ideas. Conscious Capitalism will spread through conscious entrepreneurs to the rest of the business culture over time. It will spread the same way most successful ideas spread in business--it works better. The Conscious Business will prove to be more successful over the long-term because it is simply a better, more robust business model. It will win through competition in the marketplace. To Sam Clarkson, I really don't want to talk about our stock price or dividend policies on my blog. All I'll say is that Whole Foods has a well publicized financial policy that is seeking to maximize long-term EVA for our shareholders. We aren't seeking to maximize paper earnings, minimize share dilution, maximize dividends, or manipulate our stock price. Paying the special dividend increased EVA more than any other use we had for the cash--including buying back shares (since the stock was trading at over 50 times earnings). Maximizing long-term EVA is our one and only goal concerning our investor stakeholder. We believe if we are successful in doing this then our stock price will continue to trade up over the long-term. If you aren't comfortable with our commitment to maximizing long-term EVA then we might not be the best company to invest in. To Dylan, I'm sorry but we can't make it easy for people to dumpster dive for food. Unfortunately in such a litigious society we are bound to get sued by someone getting sick from eating our garbage, so we must make access as difficult as possible. Many of our stores are now beginning to compost their fresh food wastes and then selling that compost in our stores. I believe over the long-term that up to 95% of our fresh food waste will be composted and sold. Your store must not be doing it yet, but eventually it will.

John Mackey says …

To Patrica, None of the examples you gave contradict my point that corporations don't have any rights that individuals don't have. 1. Credit card companies are following the letter of the contract that people sign with them when they voluntarily sign up for use of the card. Are some of these terms onerous? Yes. I don't argue that corporations are always good or behave with the best of intentions. Many do not. Regarding credit cards. Pay them off each month and you'll avoid getting entangled in the small print in their contracts that no one ever reads (I certainly don't). Or if you don't like the ethics of the credit card companies then don't do business with them. No one forces you to. Just use a debit card for all your plastic transactions and you'll never spend money that you don't have or need to pay penalties or high interest rates to credit card companies. 2. Regarding tort reform. I certainly don't want corporations to engage in frivolous lawsuits anymore than I want individuals to. Adopting the system of "loser pays" the legal expenses of both parties (which almost the entire rest of the world has already adopted) would end almost all frivolous lawsuits, both by individuals and by corporations. That we don't adopt this simple tort reform that almost every other country uses reflects the power that Trial Lawyers exert on our political process. Did you know that Trial Lawyers are the single biggest contributor to the Democratic Party--even bigger than Labor Unions who rank #2? It's true--but not well publicized. 3. Both corporations and individuals use lax bankruptcy laws to avoid paying the financial commitments they have made and discharging their debts. To ieva swanson, Thank you for your suggestions. I'm not sure I'm capable of writing as well as Michael Pollan does. After all Michael is a professional journalist who teaches at Berkeley. I've read all of Paul Hawken's books and found value in all of them (even though Paul keeps publicly criticizing Whole Foods--I would love to debate him sometime). You will probably like the first half of my book much more than the second half. The first half is going to be a narrative with nothing but entertaining stories, anecdotes, and lots of homespun entrepreneurial advice. The rough draft of this part is now completed. The second half of the book is going to be far more abstract, however, and will likely appeal to a different kind of reader. I will do the best I can to make my ideas clear and understandable, but this part of the book won't consist of stories or anecdotes, but rather of my business philosophy. This will necessarily appeal to a far smaller audience. However, I think the ideas I'll convey in the second half of the book are important ideas and will appeal to a different kind of reader--readers like myself. I actually don't really enjoy reading books with too many stories or anecdotes--they are boring to me. I want books with more abstract ideas and principles in them--ideas that I can wrestle with, dream about, and which expand my own consciousness and which help me to grow. I just can't get that from very many books these days. I want my book (at least the second half) to be that kind of book, even if it doesn't appeal to the same readers that the narrative portion appeals to. Who am I writing my book for? I'm writing it for myself primarily. To articulate to myself what it is that we have collectively created with Whole Foods in such a way that I better understand my own heart and dreams and ideals and purpose--to feel more deeply the love that fills me and wants to extend out into the world in various creative ways. If my book helps or inspires anyone else, that will just be an extra bonus.

John Mackey says …

To Joshua Wallis, Follow your heart. Life is too short to waste time on any other life strategy. Go for it! To Elad Levinson, Great stuff Elad! I look forward to collaborating with you (full disclosure--Elad is facilitating a Conscious Capitalism gathering for FLOW in October). To Laureen Prophett, Sorry for your bad experience in West Palm Beach. I've passed your entry on to the appropriate people in Florida who need to know. Thanks for sharing. To Stan Bies, Excellent and thoughtful post Stan: I totally agree with your insights into mistrust for both people and corporations. Both are growing in our society. I believe that Conscious Capitalism is one partial solution to this greater problem, but much more will be needed. It is a growing cultural problem. Short-term profit pressures are great. I've learned to ignore them and just keep making decisions that will create long-term value. This results in a great deal of criticism when the stock price drops, but I've learned to think long-term. The people who are booing right now will be cheering in another year or so. Markets are very fickle. It takes a bit of a thick skin to deal with them, but my skin has gotten thicker over the past 15 years as a public company. I think the apparel industry has great potential for the principles of Conscious Capitalism. I would buy 100% of my clothes from manufacturers and retailers who are practicing ethical trade principles--good pay, good working conditions, right to organize, no child labor, and environmental sustainability. Unfortunately very little has yet been done in ethical trade in apparel--certainly on the marketing side. Tremendous potential here and some entrepreneurs are bound to pick up on it eventually. Could a Grameen model work in the apparel business? Don't see why not. Almost all our stores need more parking. Unfortunately landlords don't get paid any rent for their parking lots so they have no incentive to put any more parking in than the minimum that is legally required. Whole Foods fights for additional parking in each deal that we sign and in many cases have put in extra parking at our own expense--especially when we own and control the real estate.

John Mackey says …

To P., It will be necessary to deconstruct your argument paragraph by paragraph: "I appreciate the sentiment of your argument, but it is flawed. There are too many assumptions and unstated premises. Let me point out a few. First, you state that a Doctor's purpose is to heal sick people, and not maximize profits. This is a little tidy. Yes, the definition of a doctor is to practice medicine, but the unstated purpose for the practice of medicine, or law as you state as well in regards to a lawyer is to make money (profit) by practicing medicine or law. Would the doctor or lawyer practice their disciplines if it was run at a loss? Compensation is the engine of all business." The mistake you are making in your logic P. is believing that because something is necessary for survival it is therefore also the purpose behind the existence. For example, I can't live without eating. Is therefore eating the purpose for why I exist? No it isn't. Similarly I can't live without breathing oxygen or drinking water. Is the purpose of my life therefore to breathe and drink? No it isn't. The fact that doctors and lawyers need to make a profit in order to continue to practice medicine or law doesn't mean that profit is the purpose why they practice these professions--profit is necessary for their continued existence in these professions. It is no different in business--profits are necessary for any business to survive, but that survival necessity does not equate to the deeper purpose behind the business. "The success of any businiss is defined by it's ability to profit. I am sure that the entrepreneurs that you have met and speak of all share one commonality; they desired to make money doing what they wanted to do." Sure all entrepreneurs want to make money, but that isn't usually what is driving them to build their business. It didn't drive me or most of the other entrepreneurs I've known well. I'm sure Michael Pollan wants to make as much money as he can selling Omnivore's Dilemma, but I doubt that was his main purpose in writing the book. Surely his passion for the subject matter was his main purpose. Perhaps making a profit merely expresses your own motivations in life? Is it really fair to project your own life motivations onto other people? "Also, being that you work in the grocery industry, I am sure that you are aware that food and water are necessary for life, therefore the theory of voluntary exchange does not factor in. People need to eat, which means that have to buy food." Sure everyone needs to eat in order to live, but they don't have to buy food from Whole Foods in order to survive. Every American has dozens and often hundreds upon hundreds of competitive alternatives from whom they can buy food. Whole Foods has no monopoly on food and people are free to shop for food anywhere they want to. "Now, the growing problem in the grocery industry is the loss of the alternative marketplace. Companies are consolidating to increase buying power to either offer lower prices to the consumer, or to maximize thier profits. The local grocery stores are being bought up by holding companies." You couldn't be more mistaken! Competition continues to grow and grow and grow in the food retailing business. Whole Foods has never faced more competition than it is facing right now. Trader Joe's, Safeway, Kroger, Fresh Market, Earthfare, Food Co-ops, Wal-Mart, HEB, Wegmans, Farmers Markets, Community Supported Agriculture, Fresh Direct, Peapod, and Tesco is entering the United States market from the UK. Our same store sales right now are the lowest they have been in over 10 years! Why? Competition, Competition, Competition! It is everywhere. Wake up and look around! "Your company recently purchased it's primary competitor. Why did you do this? How does this fit in to your ethical vision? According to the press, this purchase was made to increase your share in a competitive marketplace. And, what are the players in this marketplace competing for? To be the most ethical company? If your customer is not satisfied, where can he or she turn to? With no alternative, there can be no voluntary exchange." We issued a press release about the Wild Oats merger which details some of the reasons why we wish to acquire them. I refer you to the press release which can be found on this website under the Investor Relations section. I'll say only 2 things about it here. Number 1--Wild Oats isn't our primary competitor as you claim. Trader Joe's is our primary competitor. It is far larger than Wild Oats is and is growing several times faster. It is a private company owned 100% by the 15th richest family in the entire world--the Albrecht family, who are worth tens of billions of dollars. Number 2--Wild Oats has lost $80 million in the past 6 years. Their company is struggling in the marketplace to be successful. Whole Foods can help them be far more successful than they have previously been and can greatly improve their stores. We believe that teaming up with Wild Oats will make us better able to successfully compete with Trader Joe's, Wal-Mart, Wegmans, HEB, Safeway, Kroger, and the hundreds of other powerful competitors that we struggle with every day in the marketplace. "Again, I appreciate the sentiment of your paper. You should be applauded for your success and how you handle your company. However, perhaps you should leave economic theory to the philosophers, or at least recognize that your actions may betray your theories." Thanks for your feedback. However, most philosophers don't actually know that much about economics or business so I can't leave it to them. I plan to keep on expressing my views and I believe my actions are congruent with my theories.

John Mackey says …

To Brent Eubanks, I agree with your perspective on entrepreneurs. I'm surprised to hear you say that I don't talk about entrepreneurs in Conscious Capitalism because I actually talk about them quite a bit. Entrepreneurs who create the business create the purpose. As an entrepreneur myself I'm a big believer in the dynamism of entrepreneurism. The motto of FLOW is "liberating the entrepreneur spirit for good" (see www.flowproject.org). That is exactly my sentiments. I believe in multiple types of entrepreneurs, not just business, but also social, educational, spiritual, and political entrepreneurs. I believe in the limitless creativity of human beings to solve our collective problems, expressed through entrepreneurism with an open heart extending love into the world. Entrepreneurial organizations eventually put the older, static businesses out of business. Just look around at Google (didn't even exist 10 years ago), Jet Blue, Starbucks, Dell, Microsoft, etc. Entrepreneurs rule! To Bruce Cahan, Good luck with your bank. Can't meet in person. Sorry. To li an, Sorry, but I found your post too difficult to read and my time is precious to me. If you resubmit it and break it down into paragraphs with your thoughts organized tightly, I'll try to take another stab at it. Best wishes to you.

John Mackey says …

To Ann Kramer, Your post is long, but I've copied it in order to deconstruct it paragraph by paragraph. My comments will be below yours. "As I’ve followed this thread about Conscious Capitalism/Conscious consumption, I am prompted to write. While I give support to you that if we’re going to have a consumer economy—a conscious capitalistic system certainly is preferable to the current capitalistic model—or that of any of the other ‘consumer economies’ that get bandied about—communism, socialism, fascism, etc. All of these economies are consumption economies—really the only difference between any of them is the distribution methods—capitalism distributes on a supposed ‘free-market’, communism is a centralized government etc." I'm quite surprised and disturbed, Ann, to read that you believe that capitalism is very similar to communism, socialism, fascism, etc. because they are all consumption economies. These other economic systems are radically different from capitalism. Capitalism is the only economic system which puts the needs and desires of the customer at the heart and soul of it. The customer is King & Queen in capitalism and producers compete to best satisfy their desires. Socialism, communism, and fascism all locate the decision making power in the hands of governmental bureaucrats. The bureaucrats decide what will be produced, how much will be produced, and how much it will cost. If they don't think something is needed or is very important then it won't be produced. Want a computer? Too bad. Want an iPod--not necessary. Need a heart transplant--get in line and we'll see if we think you are important enough to get one. The 20th century is a long nightmare on the failed attempts of these alternative economic systems to work. They failed miserably and reduced individual freedom and individual rights everywhere they existed. The communistic utopias of the Soviet Union, China, and Cambodia resulted in the murder of over 100 million of their own citizens. Think about that before you lump capitalism--the economic system which has created so much human progress-- in with these other economic systems which have created so much human misery. "But what if a consumer economy—conscious or otherwise, isn’t the only option? In fact, what if we discovered it isn’t even our best option?" "Yes, we are all well steeped in the consumer economy—so much so that it seems as if it is the only way to be. In the early 1900’s, the idea of ‘insatiable desire’ was implanted in our culture through the intense rise of advertising—because insatiable desire was considered a cure all for an ever rising/falling economic system that depended on consumers continuing to consume. When they were erratic in consuming, depressions/recession ensued—at least in the money flow. I can’t blame our forefathers because from their perspective this looked like the best choice. Consuming led to money flow which led to more consuming and if we could keep this going on a fairly constant flow, depressions, recessions and economic chaos would be a thing of the past. And consume we did and as we consumed the money flowed. Over the last 100 years we have perfected a consumer economy, efficiently setting up a supply/demand (insatiable desire + money = demand—please note, “demand” does not necessarily mean “need”)." Sorry but I don't agree with your cynical view of the stupidity of people who you believe are so easily manipulated by advertising to buy things that they don't really want. Who is going to define what people really need, Ann? Will it be you? Will you decide what everyone needs? Will some group of government bureaucrats decide in your economic system like they do in socialism and communism? Or will individuals make these choices themselves? Will people be free to make their own choices or will you or some other dictator decide what is best? "While this option looked like the best from a 1900’s view of the world—world population 2 billion and seemingly unlimited resource availability—who could ever imagine an end in sight. But now with almost 7 billion people and resources being maxed, things will have to change. As we all can see now, this direction has come at a huge cost. We’ve created a world that is good for the production of products, services and the flow of capital—but it is not a world that is good for all humans, the earth, water, air, animals." The world has never been good for all humans or all animals at any historical time. It is better for human beings right now than it ever has been based on objective indicators such as longevity, disease, freedom, democracy, prevalence of slavery, and prosperity. "In that efficiency of whatever makes money is good, we’ve also allowed businesses to externalizes the ‘costs’ on humans/earth/animals instead of insisting that they operate on a full cost accounting method—which had that been incorporated in the consumer economy would have surely shifted many of the business practices of the day." I agree with your ideas here--we do need to internalize the externalities of such things as pollution, carbon production, etc. This can be done within a capitalistic economy, however. "To that, I then ask the question—what if instead of a consumer economy, we instead created a whole life economy? It would serve a primary need of ‘life’—relationships, species diversity, health, etc. instead of the current primary need of money. Yes, there would still be businesses and products—but only so much as is necessary for real life. What I’m suggesting is that we move into a new paradigm. The following is the best encapsulation of the old to the new paradigm that I am suggesting. It comes from Barbara Brandts’ book, Whole Life Economics." Ann--who is in charge of the "Whole Life Economy?" Who decides what gets produced and what doesn't get produced? Will individuals have the freedom to decide for themselves what they want and will entrepreneurs be free to innovate and create to meet their needs? If not entrepreneurs and individual consumers--who? "...the central assumption of the modern economic paradigm is the belief that money represents value. According to this belief, the more money one has, the more things of value one can buy, leading to greater well-being. That's why the modern economic paradigm defines economics in terms of such issues as the success of businesses in producing and selling goods and services in order to make money and the ways in which individuals make money. In the modern economic paradigm, the economy is defined by the movement and behavior of money and any activity that increase the amount of money by an individual, business or nation is considered economically successful." ".....the central assumption of the post-modern economic paradigm is not on money, business, interest rates, productivity or other conventional economic concepts. Instead, [whole life economics] the post-modern economic paradigm starts from such values as our physical well-being, mental and emotional health, our social relationships, our ability to meet our needs and the needs of those we care about, our connection to the natural environment and our need for spiritual meaning." Those values already exist and are possible to embrace within a free society and a capitalistic economic system. They are exactly the values I'm freely choosing as an individual. Are you saying that these values will be forced upon other people whether they agree with them or not? How will you do this without creating some type of totalitarian state? "By contrast, the new paradigm recognizes that nature is not merely a collection of passive physical materials mutely waiting to be dug up or chopped down, but is a dynamic living system of plants, animals, soils, waters, weather and numerous other processes that constitute the ultimate source of all our economic activities and it assumes that an economic system that honors the Earth is also one that enhances human quality of life. The post-modern economic paradigm perceives human beings and the Earth, not as competitors but as participants in a mutually sustaining relationship." Sounds wonderful Ann. I'm all for it. The key question is how will it be achieved in a free society? We can evolve our society and economy this way in a free society if we want to collectively go there. However, what if most people don't want this vision? What if they want an Islamic Theocracy obeying the will of Allah? What if they want a Christian Theocracy with everyone forced to obey the Bible? What if people prefer the society that we have right now? Do they get to keep it or are you going to take it away from them for their own good? "We already have an example of the new economic paradigm—the Grameen bank and its microlending system. Notice that these borrowers are pulling themselves out of poverty, improving their families, communities, relationships—but they are not obsessed about making more and more money. Money serves their values and the important values are those noted above: physical, mental, emotional well-being, relationships, meeting needs (vs. insatiable desires) and connection to the natural environment/need for spiritual meaning." I love Grameen and our Whole Planet Foundation is working with them in Costa Rica and Guatemala right now and will add projects in Honduras, Nicaruagua, and India in 2007 and eventually around the world. "While I do congratulate WFM—if we’re going to stay stuck in capitalism, at least being conscious is a better option than what we have now, but it’s never going to be enough. It is an old, burdened system." Well the burden of proof is on you to show how your economic system is going to be achieved in the real world without massive governmental coercion creating a totalitarian state. Utopian societies always end up as dictatorships because human beings have a way of wanting to do what they want to do and not what the utopians think they should want to do. "For instance, the discussion around your stock price—your comment that stockholders ‘own’ the company is just unsustainable. With the exception of the IPO, any stock purchased after that does nothing for WFM—it is not an investment in your company in the least. It is actually a completely disconnected group of people ‘legally gambling’ on a supposed ‘value’. But as is obvious, that value can be hyper-manipulated by people who couldn’t care less about WFM at all. Yet we give these people ‘ownership’ of the company and like a puppet on the string, WFM and actually all companies publicly traded dance to the tune of ‘share price’ by these ‘owners’. The present system enables this small group of investors (speculators really) to have more power over your company than the people who actually work in it to make it the great company it is! No matter how conscious you may be John, this system allows very unconscious people to determine policies for their short term gain. My business friends in publicly traded companies bespeak constantly of the frustration of ‘dancing to the tune’ of the quarterly stock report. It forces them in to short term planning vs. long term. It is a tough world to work in and sadly so many of those who do work for you could lose their jobs because stock/speculators would force you into decisions that serve stockholders first, customers and employees second. For example, when ATT merged with Cingular, 7000 working people who had built that company lost their jobs. This brought a rise in the stock price for stock owners—but harmed 7000 individuals and families who had put their time, energy and effort into those companies. We call this normal in a capitalistic system—the current modern economic paradigm. This would be considered insane in the post modern economic paradigm." I simply don't agree with your very cynical views on stock owners. No one forced Whole Foods to sell stock to the public. We did so because we wanted to. We wanted to raise money to grow and to give our long-term investors a way to cash out on their investments. I'm glad we went public and I would do it all over again. It is true that I don't like the short-term pressures that Wall Street puts out there, but it isn't really that big a deal. Besides it could be easily reformed by creating tax incentives to hold stock longer through lower capital gains taxes for long-term holding. I am certainly no "puppet on a string" as you seem to believe. I feel much more pressure from unhappy customers, dissatisfied Team Members, and various journalistic critics such as Michael Pollan than I feel from our investors. The investors don't like the stock to drop. What a surprise! Customers don't like the price of bananas to go up a nickel a pound. The job of leadership is to satisfy all the stakeholders as well as possible--including the investors. "Which ultimately leads to the elephant in the living room of a consumer economy—conscious or otherwise. The “unavoidable dilemma” when we consumers have had bought enough—but a business needs to keep selling stuff, making money and supporting the stock price. Then the business is forced to make more and more—even when its not necessary—and as is true with so many of the products and services that get created today. They’re not needed, but through advertising we have to create ‘insatiable desire’ (false need) and insist that we consume them. We are now consuming massive quantities of junk because businesses have to keep seeking more and more ways to get our dollars." You are back to your theme about the stupid consumer being manipulated by clever diabolical businesses to buy things they don't want or need. Do you really believe this? Is it true about yourself? What are you being manipulated into buying that you don't want? If it is Whole Foods Market, we offer a money back guarantee. Just bring it back to us and we'll give your money back to you with a receipt of purchase. Heck I gave Michael Pollan $25 for organic asparagus from Argentina that he didn't like, but I didn't manipulate him into buying them. O.k.--maybe we did, we made them look as pretty and delicious as we possibly could, but we do try to do that for everything we sell. We depend upon people knowing their own best interests and if they don't like asparagus we assume they just won't buy them. "In the food industry alone you can see the outcome of this junk production creation. While I love WFM, I worked in the natural foods industry in the early 80’s when we were all struggling to show people how to eat healthy foods like quinoa and whole wheat. Today however, I am amazed at how much useless food is in a health food store. Do we really need ‘natural cheese puffs’? Or are we producing them simply because people have been conditioned to want this and the business needs to find ways to increase sales?" Anne, if you don't want to eat natural cheese puffs then don't buy them. No one is forcing you to. Other people like them, however, and want to buy them. Are you going to decide who can and cannot buy cheese puffs? What gives you the right to pass these judgments on everyone else? "Conventional wisdom’s response is, “well, people don’t have to buy them—in a capitalistic system is it supply and demand”. And perhaps if we actually had a true system you might be right. But everyone in this world now knows that to ‘stop consuming’ is to stop the economy and that just can’t happen. So we just keep shopping—knowing full well we need to stop but can’t because the ‘economy’ must go on. (recall what President Bush said after 9/11—Don’t let the terrorists win—go out and shop!). Deep down inside, the current Fed Chairman, the past chairman Greenspan, Wall street traders, citizens know that we can’t buy ourselves out of the ‘unavoidable dilemma’." Trust me on this one: the United States economy won't come crashing down if people stop buying cheese puffs from Whole Foods Market! In fact, if people change their consumption preferences to consume less the economy also won't come crashing down--it will simply shift to satisfy the new preferences. If we consumed 1/2 as much then the economy would provide 1/2 as much. After all, we produced 1/2 as much as we do today only about 15 years ago and we did just fine. "Resources are running out—and if the world population ‘buys’ itself into the chaos that Americans have indebted themselves, we’re goners. We’ve created an economy that serves products/services/money now let’s get conscious and create an economy that serves humans, families, communities, animals, earth, water and air. It is doable John, we need only change our minds and decide that the post-modern economy paradigm makes more sense—and then start consciously creating a world that supports it." The current capitalistic economy does serve the preferences of human beings, Ann. The problem is that you fundamentally don't approve of the choices that most human beings in the United States are apparently making. I'm all for creating a more humane and sustainable world and economy. I'm just not prepared to create a totalitarian government to enforce those values or any other particular set of values--no matter how good and noble they sound. I believe in human liberty and I also believe that human beings are capable of evolving their consciousness. As consciousness evolves in more humane and ecological ways, then the capitalistic economy based on human liberty will evolve right along with it. Conscious Capitalism freely chosen by conscious and free human beings. "Daniel Quinn…who wrote Ishmael which won Ted Turner’s book award for ‘best solutions for the future’…recently wrote a new book called “When they give you lined paper, write sideways”. It challenges us to look at what we call ‘normal’ and really examine its ‘normalcy’ in context to the fact that much of our old patterns are on a path of eco-cide. It is time to invent something else." I'm trying. "Conscious capitalism is simply slanting the lined paper. It won’t get us where we need to be. Let’s have the guts to turn it completely sideways—and create the post-modern economic paradigm. When we do, shopping and working at WFM is going to be an experience so joyous because it will be part of an integrated whole—with the humans, family, community and the entire community of life—animals, air and water and earth being honored. It will be sustainable for us all and help us create a world that works for the community of life vs. money." Your vision sounds wonderful, Ann. Your path to get there isn't very clear, however. I'm not prepared to get rid of human freedom or an economic system based on individual human choice to coerce people to live the way you want them to. That "ism" is well known. It is called "Totalitarianism."

John Mackey says …

To Veronica Ciambra, Don't feel too bad about food co-ops because the movement is very much alive and continuing to flourish all over the United States. Check this site out--http://www.ncga.coop/. I met with the leadership of this organization recently and was very impressed with them. We brainstormed together about ways we might be able to work together in the future such as on animal welfare issues and ethical trade. Regarding a "community board": Interesting suggestion. I hope some of our stores experiment with such an idea. How would the "community board" be selected? Who gets to vote? Who gets to decide? To Julia Roll Interesting suggestion. We are considering the idea of opening some smaller stores. However, we'll need to open the stores where they will be successful for the sake of our Team Members and investors. We aren't going to deliberately open a store that we don't think will be successful. I find it very puzzling when people accuse Whole Foods of being elitist. For most our history the only people who shopped our stores were mostly alternative culture people who were the cutting edge for healthy and organic foods. As time passed the desire for healthy natural and organic foods began to penetrate into the more mainstream middle class. Much to our surprise we found soccer moms driving SUVs shopping our stores and wanting to eat quality foods. About the time that BMWs, Lexuses, and Ford Explorers began showing up in our parking lots along side the VW Beetles, Toyota Corollas, and Honda Civics we began to hear this accusation of being "elitist." It is very puzzling to me. Whole Foods doesn't discriminate on the basis of gender, race, sexual preference, age, income, political party, car driven, or stock portfolio. Whole Foods are for everyone--even for Yuppies.

Your Friend says …

John, I hope you are finding time to spend with your family. Walking, laughing, working, fighting, hating, loving, questioning, supporting, eating and all the other beautiful things we can do together. Conscious capitalism is only part of your life; whole foods another; but those closest to us are the clearest example of how we spend our time... wishing you the best Your Friend

Reed Burkhart says …

Hi John, DISCOVERY CONTEXT Michael Strong's discovey ( http://flowidealism.blogspot.com/2005_05_01_flowidealism_archive.html ) of my first essay regarding evolving capitalism ( http://www.well.com/~rb ) -- "Reed Burkhart has created a sort of mirror-image of FLOW" -- accelerated my discovery of you. Thanks to you, Michael and Jeff Klein for encouraging open dialogue on the strategic topic of business evolution, that I consider to be of immeasurable importance for my children's future welfare. APPLAUDING YOUR INNOVATIVE RECORD AND NEW IDEAS ON EVOLUTIONARY ROLE OF ENTREPRENEURSHIP Your critique of (adolescent) capitalism's positive and negative traits and practices I consider to be insightful, objective and innovative. You are a well-established innovator in business coming to be an innovator in culture. Perhaps the greatest innovations (cultural innovations, business innovations, or "Aikido-meme" innovations that coactivate the former two) are those innovations oriented toward keeping wealth and vision together, a state of affairs persistently challenged by rogue capitalists. Innovation could be considered the key metaphor permitting the differentiation of wholly fruitful business (integral, durable, sustainable, trusteeship-embracing conscious business/capitalism) from merely profitable business (amoral, accretive without particular regard for good corporate citizenship, rogue business/capitalism). Durable life processes always have a regenerative (innovative) component -- so your focus on entrepreneurship and innovation can reference sound correlates from the life sciences (E.O. Wilson, et al.). Consequently, I applaud your proposition to reward innovation above mere capital management/investment via tiered (inverse to hold time) capital gains tax rates; and hint that among the more integral thinkers in the life sciences, there is substantial opportunity to make an even stronger case for why: "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." The Aikido metaphor that I raise in my essays "Aikido Activism" and "Integrated (Aikido) Entrepreneurship" provide vision out of the paradox of profit, because if in rethinking why corporations exist we proceed to make efforts to mobilize that we must deal with the difficult issues raised regarding the inertia of contemporary capitalist practices, which are not uniform from one industy to another -- with food being far, far more transparent than many other industries that collectively set the tone of capitalist practice and culture with Whole Foods ... and now more and more Chinese, Indian, Russian, Peruvian -- etc etc -- companies and cultures of capitalism (the global war of capitalist memes). In particular, the Aikido metaphor, combined with the notion of evolutional business -- durability, or natural selection -- answers directly criticisms such as: "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." The reason for hope of evolution beyond the more roguish, adolescent practice of capitalism is exactly BECAUSE the inertia posed by the most rogue capitalists is subject to Darwinian/Schumpeterian business evolution including through the evolutionary vehicle of the perception of power, and the coming perception of how Aikido -- when practiced successfully in business entrepreneurship (also remembering that traditional Aikido is practiced through both instruction and application, so business Aikido should have both mobilizational and educational elements) -- transforms current powers or energies, even those energetic components with great inertia in untoward direction, to be in harmony with nature. By this line of reasoning, the transition of even the most regressive, adolescent capitalist elements actually happens far earlier than otherise might be predicted, because as the power-focused adolescent capitalist mind encounters, experiences and understands the inherent power of innovating/inflecting the power vector of business practice (via Aikido as described in my essays), they naturally evolve their own understandings, objectives and trajectories. The scale and growth issues are also nicely handled in the same proposed solution context of Aikido-meme based evolution of business by winning the game while truing it. I have immense appreciation, John, for your leadership in visioning, communicating, and mobilizing what indeed is a need for evolving the practice of capitalism. Regards, Reed Burkhart Walnut Creek, CA http://www.well.com/~rb

John Mackey says …

To Michael Barcellos, My target readers are the ones willing to make the effort to understand what I'm trying to say. I try to communicate logically and clearly. I try to restrict my vocabulary to what most high school graduates should be able to understand. There is a limit, however, to my skill as a writer to communicate many of these ideas in terms so simple that anyone can understand them. In fact, most people will not be able or perhaps ready yet to understand much of what I'm saying. I don't write for those people. I write for those people who are able and ready to understand what I'm saying. If you both understand and agree with the ideas I am articulating on my blog entries then I encourage you to translate them to other people in simpler ways than I am apparently able to do. I am writing these ideas in as simple a language as I'm capable of writing without making the ideas simplistic and therefore worthless. I will leave it to other, more skilled writers than myself, to simplify some of these ideas even further. To Mark, Sorry you don't like my communication style. Fortunately many other people do. Different strokes for different folks I guess. Here is the beauty of communicating honestly and clearly: it helps select in the customers, Team Members, and investors who align well with Whole Foods values and select out those who do not. By reading my blog and disapproving of it, you have been saved from working for a company where you might not have fit in well. It also eliminates you as an investor who disapproves of the way I'm leading the company and hopefully allows your sold shares to be purchased by someone else more aligned with our investor philosophy. One leadership style doesn't fit all situations or all businesses. I am who I am. The beauty of capitalism is that each of us gets to choose where to shop, where to work (or at least where not to work), and where to invest. Each of us can express his or her beliefs and values freely in the marketplace. It was not my intention to offend you or anyone else with my writings--just to share what I'm thinking about and what is important to me. I'm very sorry that you don't approve. Best of luck to you on all your future endeavors. To Reed Burkhart, Thanks for sharing. I looked at your website. Lots of good essays there that I look forward to reading and digesting leisurely. On first glance there seem to be many similar ideas to my friend Michael Strong. Look forward to meeting you sometime in the future.

jyl says …

Thank you John, As a TM who sees the ins and outs of a living breathing WFM, sometimes i question the corporate atmosphere. in my 3 yrs i have seen many changes, though i can say for the most good. i have seen leadership change, which brought an increase in happiness for all TM's (as well as significant wage increase). I have been a part of several new store openings, and have seen the welcome communities have for our new stores. there have been new rules set in place, new HR policies, new healthcare changes, but in the end, i really believe that every TM at my store has benefited from those changes. are we more "corporate" today than 3 yrs ago- yes, but i don't believe that's necessarily bad, as you so clearly outlined. several TM's have posted what it means, and feels to live and breathe the core values... its hard to explain, maybe we really are part of a "foodie cult" where the organics have been brainwashed into us. i know it's much better than what this conventional world has to offer. which leads me to ask you this John, i believe that the younger generations feel such angst and distaste for corporations because of the greed and corruption we have seen. however, it goes deeper than that, and i only once saw even the slightest mention- government responsibility? when big business is in bed with the administration, it's hard to discern who is making the decisions. we hear that corporations are trying to get their emissions down to certain levels by 2012, but really, it won't make a difference then. we hear more and more of corporations merging, and then positions being cut, or even more-- corporations leaving the states to set up base in other countries. i think that this is what the younger generation sees when they see corporations... but they too have succumbed to it all (and they don't even really know it) how do you see us, those who support holistic living, organics, local agriculture and locally produced foods; rising up and shedding this paradigm? when mono-culture farming is getting subsidy from the govt, and gmo's are promoted by the govt, how do we break through to reach those that have never eaten an organic apple (after all, don't we all deserve to eat organic apples?) and how do we form healthy relationships with the govt to grow organic and holistic living? and this is why i am proud to work for a company that is socially responsible, and cares for the environment. i am on an active Green Team, and my store is active with recycling. we are proud to sell wind energy cards, and work hard to promote our 5% days. and so when i see a new posting, that something in the company is changing, and i begin to groan about working for a corporation-- i remind myself, that i could be someplace else, where they have no recollection of where their product came from, and don't really care who it's going to. thank you for caring for the community, the environment, the producers, the team members, the shareholders, the customers, and everyone else we care and touch. peace love and compassion.

John Mackey says …

To jyl, I urge you to read my blog entry "The Upward Flow of Human Development." It gives one possibly helpful framework for better understanding these different value systems in our society. Mainstream corporate America very much operates in the Orange Meme framework. Most of the people in the organic and natural foods movement, as well as environmentalists, operate from the perspective of the Green Meme. These two Memes interpret reality very differently and frequently struggle with each other over which framework will dominate. What I'm trying to do at Whole Foods is lead us past this Orange/Green conflict, which is causing so much angst in our society and ground our values, structures, and culture solidly in the Yellow & Turquoise Meme frameworks. These Yellow & Turquoise Meme frameworks recognize the value and contribution of each of the other Memes, while encouraging and empowering people to grow past them. My personal advice to you is to try to avoid getting caught up in the Meme power struggle between Orange and Green to dominate our cultural framework (not to mention Blue, which is also very powerful in American culture). This struggle will frustrate you and get you angry and upset. A better life strategy is to keep working to expand your own consciousness through concentrating on your personal growth, while simultaneously using your creativity and love in positive ways to make our world a better place. Don't waste your life energies in judging and attacking other Memes. Such attacks don't change anything and they cripple your own personal growth. Instead: "Criticize by Creating"--Michelangelo.

Paul Frantellizzi says …

Dear Mr. Mackey, I fully agree that definitions of concepts are crucial to a healthy debate and a healthy society. The main point of my blog entry was that I believed you were falling into the same trap that our culture has for years, regarding selfishness – assigning a fully negative connotation to suit altruistic trends or just lazy thinking. I was not trying to redefine the concept, but merely give it some context and once again develop a richer, fuller more textured vision of a selfish person. Your blog is called “Conscious Capitalism”, how is that different from “Rational Selfishness”? Below is the definition also from www.dictionary.com - cap•i•tal•ism –noun an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth. You have chosen to “re-define” capitalism because our culture has hijacked the concept and ascribed a very negative connotation to what once was a point of pride for our great country. Capitalism is merely an economic system. My point is that many people, and sometimes cultural movements hijack concepts to promote their own agenda – I believe this has happened with the concept of selfishness, (or self interest, ego, etc.) which is why I felt compelled to use the phrase “Rationally Selfish”. You say; “Selfishness, by definition, doesn't care about relationships, giving back, mentoring, community, etc.” Well, neither does capitalism by definition – yet you wrote a wonderful article describing how capitalism as a concept could be applied in today’s world. You say; “A person who cares about other people and factors their well being into his or her decisions is not behaving selfishly.” If those people are important to their life and sense of happiness, goals, or promote their own well being, it sure is selfish. Selfishness and caring, mentoring, community are not by definition mutually exclusive, unless your concept of people is that they are shallow, thin cutouts that do not live in a social environment. Is it selfish of me to want the organic farmer down the road to succeed? If I buy his produce, and I want to see my son grow up in a rural environment, or he buys my computer services, or my 3 friends work for him and need the money to pay for our private school and keep it open so my son can continue to attend, or I care about the well water my family drinks, or I just don't want to see another WalMart buy the farm, etc… as you can see, it gets complex – yet it is all based on selfishness. In general, we are complex social beings, not self centered automatons that spend our days looking in the mirror to build our ego. I love what you are doing, yet, I am concerned when terms like self interest, selfish and capitalism are spoken like dirty words.

Paul Frantellizzi says …

Dear John, I also wanted to recommend reading (if you already haven't) Ludwig von Mises, Socialism and Human Action. Both books are brilliant and challenging reading – they speak to many of the questions/ discussions raised on your blog. http://www.mises.org/books/socialism/contents.aspx http://www.mises.org/humanaction.asp Regards, Paul

John Mackey says …

To Paul Frantellizzi, I have never found it very useful to argue for very long about the meaning of words. I'll try briefly to do so, but will let it drop after this effort. If you want to give new meanings to a word such as "selfishness," that are the exact opposite of what the word means according to both the dictionary and according to common usage in our society, you are free to do so. However, don't expect most other people to agree with your re-definitions or for your attempts at re-definition to become widely accepted. My last post argued that you are confusing the word "selfishness" (which by definition does not concern itself with the well being of others) with "self-interest" (which by definition can concern itself with the well being of others). Putting the adjective "rational" in front of selfishness doesn't magically make the word mean the exact opposite thing. To achieve this goal of transforming the meaning of selfishness to the opposite thing requires us to put "un" in front--un-selfishness. Unselfishness means acting the opposite of selfishness--concerning itself with the well being of others. As to your claim that I am doing the exact same thing with "Conscious Capitalism"--I don't think that I am. The dictionary definition that you gave for "capitalism" I am entirely comfortable with: cap•i•tal•ism –noun an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth. By putting the adjective "conscious" in front of "capitalism" I do not invert the meaning of the word capitalism to its exact opposite. "Conscious Capitalism" still is an economic system where the "investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations." The word "conscious" doesn't turn capitalism into socialism where the means of production are owned and controlled by the state. A system of "Conscious Capitalism" still has the means of investment and production owned and controlled by private individuals and corporations. The meaning of the word capitalism is still the same. What has changed is that Conscious Capitalism becomes more aware (more conscious) of: 1. The deeper purposes of business besides maximizing profits. 2. The interdependent relationships between all of the various constituencies of the business--customers, employees, investors, suppliers, communities, and the environment. 3. Value for the owners of each business will be maximized over the long-term by optimizing the entire interdependent business system which the owners are part of. Paul, I also believe that "rational selfishness" is bad branding for the ideas that you are trying to promote because of the pejorative nature of the word selfishness. Rational self-interest, on the other hand, is consistent with those ideas and I urge you to use that phrase instead. You may also argue that capitalism is a word that is hopelessly pejorative. I don't think that is the case. Besides, I've never been able to think of a better word to use instead. Hayek and Mises used the word "catallaxy," as a substitute word but that word is awkward and never caught on. Have you any suggestions? By the way, I did read "Human Action," "Socialism," "Omnipotent Government,, and "The Anti-Capitalist Mentality" by Mises. Mises was a brilliant man. I like Hayek even better and his vision of "spontaneous order" and "entrepreneurship as a discovery process" are key ideas in my vision of "conscious capitalism." My major intellectual gripe isn't with Mises or Hayek, but with Ayn Rand. I love Rand the novelist, but disagree with her ethical philosophy. However, no time today to go into that disagreement. Perhaps sometime in the future. Take care.

Ann G. Kramer says …

Dear John….. My earlier post suggesting that it is time to move beyond capitalism into a ‘whole life economics’ model (and for those reading this if you go back to my post on March 7th and John’s response on March 14th)…What I’ve done is tried to simplify this posting—I put your comment first…and then the paragraph that starts with John is my response… First let me say….we agree with each other on 50% of the equation: Consciousness. We differ on Capitalism—. The comment that the King and Queen of capitalism is the consumer…. John if the King and Queen of capitalism is the consumer…then tell me, Who Killed the Electric car?....The consumers loved those cars and still GM removed, destroyed and refused to sell them. No John, …THE KING and QUEEN of capitalism is CAPITAL—MONEY. Anything that makes money is good. Money has achieved a status/myth of such high value that it drives so many of the systems we’ve created and decisions of what will or will not be produced. (read Divine Right of Capital by Marjorie Kelly). As an example, it is why oil remains the primary fuel choice. As powerful, traditional corporations have effectively ensured that green or biofuels have not gotten the foothold consumers have desired— because there’s no CAPITAL or profit in them (due in large measure to gov’t policies enacted as a result of powerful corporate interference/control). As much as entrepreneurial businesses have tried create businesses using solar, biofuels, and alternative options—the CAPITAL issue—profits (or lack thereof) have effectively strangled them for the last 30 years. Only now, as global warming has been the outcome—have alternatives gotten a toehold into the systems now that it appears it may be profitable/ My argument John—is that in a whole life economic system—where life of humans/animals/air/water/earth are the primary value—we certainly would have “chosen” these alternative fuels/industries because of the difference in the values we’re interested in. (Look at China right now—fastest growing, “successful” economy on the planet—but in Beijing, you can’t breath the air—this is however considered successful in a capitalistic system—something they seem to be adopting. In a whole life economic system it would not be considered successful) Which leads us to the issue of the unholy alliance between big business and big government (the military industrial complex that Eisenhower brilliantly warned us about 50 years ago is but one example). Subsidies for big oil, big farmers, protectionist legislation for the rich and well connected, trial lawyers, Halliburton, trillion dollar war on drugs and 2 million citizens in prisons etc. etc. none of this is freedom, capitalism or choice based. But it is CAPITAL driven. Randy "Duke" Cunningham, Richard Ney, William "Refrigerator" Jefferson (these 3 are very small examples of the way the "system" we erroneously call capitalism actually works today - it's not capitalism - fascism is the system where the state controls the means of production, aren't we moving in that direction via the corporate - governmental alliance? Big corporations—51 of which are now bigger than any government and the governments these corporations are controlling/managing--have rigged the system. The amendment to the constitution that provided limited liability to corporations is a good historical starting point as to why this happened. It has allowed the ‘anything that makes money—even if it destroys human, animal, earth, water or air—to be viewed as acceptable in a capitalistic economy. You responded that I have a cynical view that consumers are stupid…. John…I don’t have a cynical view that people are stupid…what I have is a real life experience of working with people over the last 15 years through my counseling office. I work with a holistic, self-responsibility, choice/conscious model that I created called the Life Puzzle. I created it to address my clients’ constant lament that they weren’t taught how to create healthy, whole and dynamic lives. A tool I use is called the Choosing Continuum. Simply put—0-5 is the reactive, unconscious, victim, fix it after its broke pattern of choosing….6-10 is the proactive, conscious, self-responsibility to create a whole life pattern of choosing. On the 0-5 side, people spend their lives reactive to problems, crisis—and generally see this as the way things work/the best they can do. On the 6-10 side, people understand themselves as potentially whole and choose to create a lifestyle to enhance that potential. When I ask clients (and I’ve taught this from welfare clients all the way up to corporate executives) where are you on the Choosing Continuum…0-5 or 6-10…..consistently 90-95% of people respond….0-5 reactive/unconscious. Then we look at why this is…and it’s because as children we grow up in a culture that generally teaches us to do this. We see our systems—medical, business, schools, law acting reactively and as children we grow up thinking this is normal. Reactive people create reactive systems which further creates reactive people. So, when I say that people are impacted by advertising and generally follow what’s presented—it is because I’ve had this validated for years by these very people. When I show them 6-10—they get excited about taking responsibility—but then realize that they’ve never been taught to do this—and that’s the work I do. So John, I don’t think people are stupid—I think people are unaware. And if you look at our schools—you can see how this happens. (A constant question I get from clients/groups is “Why weren’t we taught this in school [how to create a whole life]. I shrug and say—you weren’t, your children aren’t and the only option is to teach your SELF. On the issue of ‘externalizing costs”…you agreed with me but said this issue could be fixed “this can be done within a capitalistic economy, however” . John, technically perhaps…but it won’t happen in the current system because with CAPITAL being the most important value—the second we were to ‘internalize the externalities of such things as pollution, carbon productions etc”, “PROFIT/CAPITAL” will be seriously depleted—and stockholders would see losses that now are hidden. CAPITAL as the number one goal of a capitalistic system is set up to ensure this doesn’t happen (see earlier comment of the history of Limited liability of corporations) HOWEVER John…if we did do this…it would actually be a first step in the movement towards a Whole Life Economic system—which not only would allow this (absorbing externalized costs into the whole)—but would support it as a primary value. "Ann--who is in charge of the 'Whole Life Economy?' Who decides what gets produced and what doesn't get produced? Will individuals have the freedom to decide for themselves what they want and will entrepreneurs be free to innovate and create to meet their needs? If not entrepreneurs and individual consumers--who?" John…YES….it would finally be the consumers and entrepreneurs—working off the post-modern economic paradigm-- such values as our physical well-being, mental and emotional health, our social relationships, our ability to meet our needs and the needs of those we care about, our connection to the natural environment and our need for spiritual meaning." That would drive our businesses…and in this case the ‘profits’ would be defined far beyond the limited value of money. "the values of the [‘whole life economic system ] already exist and are possible to embrace within a free society and a capitalistic economic system. They are exactly the values I'm freely choosing as an individual. Are you saying that these values will be forced upon other people whether they agree with them or not? How will you do this without creating some type of totalitarian state?” John…the key word in all of this is CONSCIOUS….And I go back to my earlier comment of working with my clients—few of us are truly conscious—we are mostly reactive/following. And right now, that means we’re “doing what everyone else is doing”….our schools ensure this, our systems reward it. Capitalism profits by it—for the few not the many. [whole life economics] "Sounds wonderful Ann. I'm all for it. The key question is how will it be achieved in a free society? We can evolve our society and economy this way in a free society if we want to collectively go there. However, what if most people don't want this vision? What if they want an Islamic Theocracy obeying the will of Allah? What if they want a Christian Theocracy with everyone forced to obey the Bible? What if people prefer the society that we have right now? Do they get to keep it or are you going to take it away from them for their own good?" John…with 6.6 billion people on this planet—it sure is tricky to do anything. And yet, CAPITALISM seems to believe it is the one right way……What if most people don’t want this vision…..Right now, it doesn’t really matter does it….because NAFTA, WMF, World Bank, Federal Reserve (which is a private organization—though if you asked the average American if the Federal Reserve is a government department—they would say, Yes…of course. They would be SHOCKED to discover it is a small group of people that controls the flow of CAPITAL)—are essentially espousing that CAPITAL is the most important thing of all. I wish we had a free society—but we don’t. "I love Grameen and our Whole Planet Foundation is working with them in Costa Rica and Guatemala right now and will add projects in Honduras, Nicaruagua, and India in 2007 and eventually around the world." John…please do not think that in any of my writings I don’t have the utmost respect for Whole Foods Markets and all the wonderful things you all are doing in this world. This dialogue with you is about ‘conscious capitalism’….we are together on the ‘conscious’…it’s the Capitalism’ that I think needs further shift…. JOHN…as for your decision to go IPO…never questioned it for a moment—not many other options in the current system if you are going to get sufficient CAPITAL. I was highlighting the fact that the current system that bestows Ownership to the 2nd, 17th , 55th level of stock purchaser is akin to saying that owners get paid even if they don’t do anything! Putting our businesses in this system does little or nothing for the business because few of the stockholders care about what the business does. At this level of stock purchaser, the only thing most are interested in is whether or not the stock price keeps going up and up and up…..Not a healthy system at all…Trying to ‘satisfy’ this group of stakeholders does control every corporation….like or not. "About the ‘unavoidable dilemma’ that the requirement in a CAPITALISITIC system—that growth must constantly increase--this growth results in creation of unnecessary products in order to keep stock prices going up…" . John…you’re missing the point here—its back to Consciousness—as I mentioned before—that lack of awareness of how to keep our body healthy, how to create balanced lives is not something we’re taught. It has enabled a situation where people buy, buy, buy…..but aren’t necessarily consciously buying. Like the movie Affluenza showed—buying for Americans has become a national pastime. This fact married to the intense need by businesses to grow, grow, grow—put these together and we end up on the merry-go-round to the unavoidable dilemma—more and more growth requires more and more buying. When does it stop John? First stop—consciousness—second stop—revaluing to a post-modern economic paradigm where CAPITAL is a tool that serves the economy instead of its current status of the primary value of the economy. "Well the burden of proof is on you to show how your economic system is going to be achieved in the real world without massive governmental coercion creating a totalitarian state. Utopian societies always end up as dictatorships because human beings have a way of wanting to do what they want to do and not what the utopians think they should want to do." John…when did I say anything about a totalitarian government? That rings like the Bush comment of ‘you’re either with the War in Iraq or you’re for terrorism”…You seem to be saying “You’re either with capitalism or you’re with totalitarianism. That’s not the only option…. JOHN….As to how its going to happen…well, actually it is already happening—but it isn’t in a ‘one full swoop’ type action….Even our discussion here is part of the new changes happening—more and more folks are becoming conscious and are examining ‘capital’ as the primary value of an economic system—and questioning it as they start small businesses (like Grameen) that are not so much about money as they are about creating their lives, families and communities that work. Much like the Industrial revolution—in the middle of it, no one would’ve said, “wow, we’re in an Industrial revolution”….but only when looking back could we see the shift that had occurred. I think that is happening towards a ‘whole life economic system’. Pockets happening around the country, around the world—not because of massive governmental coercion—in fact because of the current governmental/corporation entanglement—people are creating these new models quietly and outside the current system. Things like CSA’s, local currency, cooperatives etc. Hazel Henderson, the economist and the true cost accounting parameters that her organization has worked hard on is another example of new systems beginning to emerge. As Buckminster Fuller said “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” I see lots of small communities, businesses doing this. And that’s where I’ll end this discussion…..Semantics—the words we choose are powerful. Conscious Capitalism is one term….and to me it says, “let’s be more conscious in businesses about making money”….I would prefer we use a different term….Conscious Whole Lifeism”…let’s be more conscious in businesses about making life—individual, family, community, global and earth—animals, land, water and air! Ann

satya says …

I am very much impressed with your article"small business"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,with this point i can know some details about your article small business blog

John Mackey says …

To Ann Kramer, I'm not sure we can have a constructive dialog about capitalism due to our very different perspectives on economics and the way the world works. I will point out a few things I disagree with about your perspective, but I think we will probably just need to agree to disagree. I'll work on realizing my vision of "Conscious Capitalism" and you can work on realizing your vision of "The Whole Life Economy." Here are a few things for you to consider: Ann you say: "The comment that the King and Queen of capitalism is the consumer…. John if the King and Queen of capitalism is the consumer…then tell me, Who Killed the Electric car?....The consumers loved those cars and still GM removed, destroyed and refused to sell them." Answer: My guess is that General Motors discontinued selling the electrical car because they didn't believe there was sufficient demand by consumers to justify the ongoing investment in this technology. If General Motors was wrong in reaching that conclusion they will bear the cost of making such a bad decision. General Motors is hardly omniscient or omnipotent. They have made plenty of bad decisions in the past. There is also nothing stopping other existing automobile companies from producing electrical cars and meeting this unmet consumer demand--if there is indeed sufficient consumer demand at the quality and prices that electrical cars can be produced at compared to the competitive transportation alternatives that currently exist. If the existing automobile companies also don't believe there is sufficient consumer demand to justify the investment then there is nothing stopping entrepreneurs from starting electrical car businesses. Indeed, Teslar Motors has done that. See their website: http://www.teslamotors.com However, at a base price of $92,500 they are a little bit pricey at this time!!! One other thing to realize--electrical cars competed against the internal combustion engine back in the late 19th century and lost the competition. Their price, speed, reliability, and convenience were inferior to the internal combustion engine. There wasn't a capitalistic conspiracy against the electrical car--just consumer preferences for the competitive alternative. Ann you say (or perhaps Marjorie Kelly says it): "THE KING and QUEEN of capitalism is CAPITAL—MONEY. Anything that makes money is good. Money has achieved a status/myth of such high value that it drives so many of the systems we’ve created and decisions of what will or will not be produced. (Read Divine Right of Capital by Marjorie Kelly.)" Ann despite this rhetoric the fact remains that businesses can't make money in a capitalistic economy unless people voluntarily trade with the business. No one is forced to trade with the business against their will. Whole Foods can only make a profit if customers voluntarily trade with us and Whole Foods has thousands of competitors around the country that customers can choose (and do choose) to shop with instead. In all businesses that sell directly to the public (such as Whole Foods) consumers rule because they get to cast their dollar votes toward the businesses which best meet their needs and desires. I strongly urge you to go spend some time in a socialistic or communistic country to get a first hand experience of what happens when customers no longer get to vote with their dollars. Ann you say: "As an example, it is why oil remains the primary fuel choice. As powerful, traditional corporations have effectively ensured that green or biofuels have not gotten the foothold consumers have desired— because there’s no CAPITAL or profit in them (due in large measure to gov’t policies enacted as a result of powerful corporate interference/control). As much as entrepreneurial businesses have tried create businesses using solar, biofuels, and alternative options—the CAPITAL issue—profits (or lack thereof) have effectively strangled them for the last 30 years. Only now, as global warming has been the outcome—have alternatives gotten a toehold into the systems now that it appears it may be profitable/." Ann, this is utter nonsense! Alternative fuels haven't caught on because they are more expensive than oil. It is as simple as that. There is no big, capitalistic conspiracy out there to prevent conversion to alternative fuels. As oil becomes more expensive over time and technological breakthroughs occur in alternative technologies such as solar and wind, this price gap continues to narrow. Our economy will transition to other alternative energy sources when they are cheaper than oil. Most trend lines indicate that this transition will occur during the 21st century, mostly depending upon how quickly technological breaththroughs occur in alternative energy sources. Ann you say: "My argument John—is that in a whole life economic system—where life of humans/animals/air/water/earth are the primary value—we certainly would have “chosen” these alternative fuels/industries because of the difference in the values we’re interested in. (Look at China right now—fastest growing, “successful” economy on the planet—but in Beijing, you can’t breath the air—this is however considered successful in a capitalistic system—something they seem to be adopting. In a whole life economic system it would not be considered successful)." The mistake you make in your thinking Ann is that you assume that everyone wants what you want. Because you and your friends want something you assume everyone else wants it too (or should be compelled to want it) and only some kind of "capitalistic conspiracy" is preventing it from happening. However, your values and desires are not shared by everyone or even most people!! Your values are very much minority values, and are relatively rare--perhaps representing the values of about 10% of the adult world population (see my blog entry, The Upward Flow of Human Development, especially the section on the Green Meme). People in China are poor. So are most people in India, Nepal, Burma, etc. 42% of the population on this planet live on less than $2 a day. Have you spent much time with really poor people? Poor people want a better life for themselves. They want cheap energy and cheap food and cheap housing--because that is all they can afford. They are willing to suffer higher levels of pollution, such as in Beijing, to have more money for food, housing, medical care, education, etc. Environmental purity is simply less important to them. Studies have shown that environmental concerns don't usually manifest in a society until the per capita income reaches about $8,000 per year. China isn't there yet. They aren't yet willing to make the economic/environmental tradeoffs that you and I are probably willing to make. Ann you say: "Which leads us to the issue of the unholy alliance between big business and big government (the military industrial complex that Eisenhower brilliantly warned us about 50 years ago is but one example). Subsidies for big oil, big farmers, protectionist legislation for the rich and well connected, trial lawyers, Halliburton, trillion dollar war on drugs and 2 million citizens in prisons etc. etc. none of this is freedom, capitalism or choice based. But it is CAPITAL driven. Randy "Duke" Cunningham, Richard Ney, William "Refrigerator" Jefferson (these 3 are very small examples of the way the "system" we erroneously call capitalism actually works today - it's not capitalism - fascism is the system where the state controls the means of production, aren't we moving in that direction via the corporate - governmental alliance?" Your complaints here have nothing to do with capitalism (the economic system where the means of production are privately owned by individuals, partnerships, co-ops, and corporations instead of publicly owned by the government which is socialism). Your complaints are directed to government corruptions and the inherent flaws of the American form of government. I share your concerns about our government being way too powerful and potentially corrupted by money. I think the solution, however, is not to abandon free market capitalism, but to lessen the power of our government, which meddles in our lives in countless ways and has created a military establishment which continually meddles in the affairs of other countries around the world. Ann you say: "Big corporations—51 of which are now bigger than any government and the governments these corporations are controlling/managing--have rigged the system. The amendment to the constitution that provided limited liability to corporations is a good historical starting point as to why this happened. It has allowed the ‘anything that makes money—even if it destroys human, animal, earth, water or air—to be viewed as acceptable in a capitalistic economy". Ann, your above statements are simply not true. The critics of corporations are forever trotting out false statements about the size of corporations relative to countries. However, these statistics are always rigged because they compare corporate sales against country GDPs. This is not a fair comparison because sales are not equivalent to GDP. GDP isn't based on sales but on the total economic products and services produced minus the costs of producing them. GDP equals the total value added and that most certainly doesn't equal corporate sales! The more accurate comparison isn't corporate sales to GDP but corporate profits to GDP. Viewed from this perspective the size of corporations relative to countries is far, far different. For example: Whole Foods in 2006 had $5.6 billion in sales and $5.4 billion of that went to pay for the cost of the goods we sold and various other expenses, leaving $.2 billion ($200 million) in profits. The biggest corporation in the world is Wal-Mart in terms of sales and Wal-Marts' total profits are only a small fraction of the GDP of even a small country such as Sweden (with only 5 million people) and isn't anywhere close to the size of country such as France. In addition, you made another untrue statement when you claim that a constitutional amendment occurred to allow limited liability to corporations. No such constitutional amendment exists. Please read the constitution! Ann, I like your "Choosing Continuum." I want to point out to you that our public school system, which you rightly blame for not teaching people to take more responsibility for their lives, is controlled by the government (and by teachers' unions). Our educational system is socialism in action. It is not capitalistic. A capitalistic educational system would create a huge diversity of education alternatives--including schools which taught individual responsibility. Ann you say: "CAPITALISM seems to believe it is the one right way……What if most people don’t want this vision…..Right now, it doesn’t really matter does it….because NAFTA, WMF, World Bank, Federal Reserve (which is a private organization—though if you asked the average American if the Federal Reserve is a government department—they would say, Yes…of course. They would be SHOCKED to discover it is a small group of people that controls the flow of CAPITAL)—are essentially espousing that CAPITAL is the most important thing of all. I wish we had a free society—but we don’t." Ann, capitalism doesn't believe anything. Capitalism isn't a person capable of belief. Capitalism is simply an economic system that lets people trade freely with each other and where the means of production are privately owned. You seem to have many objections to various governmental and international organizations and wrongly identify those organizations with capitalism. You are making capitalism the "scapegoat" for everything that you don't like about the modern world. I think you are assigning blame in the wrong place. Our economic system reflects the values, beliefs, and desires of most Americans. I believe your real gripe is that you simply don't approve of the choices and the values that many of your fellow Americans have chosen to make. Ann you say: ""About the ‘unavoidable dilemma’ that the requirement in a CAPITALISITIC system—that growth must constantly increase--this growth results in creation of unnecessary products in order to keep stock prices going up…" . John…you’re missing the point here—its back to Consciousness—as I mentioned before—that lack of awareness of how to keep our body healthy, how to create balanced lives is not something we’re taught. It has enabled a situation where people buy, buy, buy…..but aren’t necessarily consciously buying. Like the movie Affluenza showed—buying for Americans has become a national pastime. This fact married to the intense need by businesses to grow, grow, grow—put these together and we end up on the merry-go-round to the unavoidable dilemma—more and more growth requires more and more buying. When does it stop John? First stop—consciousness—second stop—revaluing to a post-modern economic paradigm where CAPITAL is a tool that serves the economy instead of its current status of the primary value of the economy." Ann, financial capital should in fact be merely a tool that serves the business. That is exactly the way it is with Whole Foods Market. You see investors as the MASTERS of business. I do not. Each stakeholder group has different desires and each wants more. Yes, of course, the investors want the business to make more profits. What is wrong with that? Nothing from my perspective. In a free market capitalistic economy the only way to make more profits is to create more value for the customers who freely trade with the business. Profits indicate that the business is on track toward better meeting the needs and desires of its customers. Profits are good--not evil. As my Conscious Capitalism article points out in the "Paradox of Profits" section, the best way to maximize long-term profits is to optimize the entire interdependent business system. All the stakeholders--customers, employees, investors, suppliers, communities, and the environment are interdependent upon one another. Is financial capital the primary value of our economy as you seem to believe? For some people it no doubt is. However, it isn't for me and it isn't for you and it isn't for most of my friends. The economy itself isn't a "person" at all. It doesn't have any preferences or values--only people do. Ann you say: "John…when did I say anything about a totalitarian government? That rings like the Bush comment of ‘you’re either with the War in Iraq or you’re for terrorism”…You seem to be saying “You’re either with capitalism or you’re with totalitarianism. That’s not the only option…." Actually Ann, those are the only options--some combination of freedom and totalitarianism. We either let people freely trade with each other or we don't. Capitalism is the economic system that maximizes individual freedom and totalitarianism (socialism, communism, facism, etc.) minimizes it. In so far as your "Whole Life" system is created through individual free choice in the marketplace then it is a capitalistic system. However, if you compel others to adopt your system against their will and prevent people from freely trading with each other then it is a totalitarian system. Your "Whole Life" economy seems quite wonderful to me and if people freely choose it then it is consistent with capitalism (it is in fact a form of Conscious Capitalism). However, if people don't freely choose it, but are coerced to adopt it (for their own good no doubt) then it is no longer consistent with capitalism, but has become just another variant of totalitarianism. Ann, we both seem to agree on the importance of being more "conscious." Perhaps we should focus on this important area of agreement between us. You obviously don't like the word capitalism. For you it is a very damaged word, reflecting an economic system that you obviously don't like. Here is where we part company. I have been a student of history all of my life. The capitalistic economic system that has been operating for only about 300 years has done more to promote the well being of humanity than the previous 10,000 years combined. Is it perfect? Of course not. Humanity still has many challenges. Do I want capitalism to evolve in healthy ways? Of course I do. That is why I'm promoting a vision of "Conscious Capitalism." However, make no mistake about this: I am a capitalist. I believe in human freedom. I believe human freedom is necessary for human flourishing. I believe people should be able to freely trade for whatever they desire and with whomever they desire to trade with, and that is exactly what capitalism stands for. The major problems that exist in the world today have very little to do with capitalism as an economic system (which I believe you are unfairly scapegoating) and everything to do with the flaws and limitations of human nature. Humans have always had to struggle with fear, greed, selfishness, envy, resentment, hatred, arrogance, gluttony, and a host of other vices. The things you don't like about the modern world can be traced back to those passions in human nature. These passions certainly exist within capitalism, but also within every other economic system that has ever existed--because they exist within human nature. They won't be repealed within your "Whole Life" economic system either. Each of us must choose for ourselves the life path that will best enable us to minimize our own personal fear, greed, envy, etc. and maximize our own love, joy, compassion, peace, and happiness. Here is something for you to consider Ann: You say, "A tool I use is called the Choosing Continuum. Simply put—0-5 is the reactive, unconscious, victim, fix it after its broke pattern of choosing….6-10 is the proactive, conscious, self-responsibility to create a whole life pattern of choosing." That sounds like a wonderful tool! Think about what you are doing when you blame capitalism for everything you don't like about the modern world. Are you not acting like a "reactive victim" of this evil capitalism you so despise? Isn't the self-responsible conscious alternative to understand exactly where we are today without scapegoating the economic system as the cause of all the problems that you don't like (blaming some outside cause)? Aren't you just being a "reactive victim" against capitalism? You seem to have read a few books critical of capitalism but have you read any that support it? Here are a few reading suggestions: In Defense of Global Capitalism by Johan Norberg Free to Choose by Milton Friedman How the West Grew Rich by Nathan Rosenberg The Wealth and Poverty of Nations by David Landes The Mystery of Capital by Hernado De Soto Best wishes on realizing your vision of "The Whole Life Economy." Take care.

don johnson says …

John, I thoroughly enjoyed reading Conscious Capitalism and applaud your work as what Jim Collins might say is "Level 5" type leadership. I can see from your essay and blog that you admire Ken Wilber and deeply appreciate his integral theory. So do I. My view is that Conscious Capitalism is a manifestation of conscious leaders and employees. So, it is the tangible result of attitudes and thinking that are present, but less visible. In business, then the challenge for leaders is: How to develop these type of attitudes, thinking and skills to lead and manage in the organization that wishes to embody Conscious Principles and exists in a very unconscious world? I would think this is a huge challenge for an organization as large as Whole Foods. I'm curious as to how you approach this. There is a book that I would like to recommend to you, written by a colleague of Ken, Fred Kofman. It's called, perhaps no surprise: "Conscious Business". Ken and Peter Senge wrote the forewords. Thanks and keep up the good work of bringing the spirit of consciousness into our everyday world. Don Johnson

John Mackey says …

To Don Johnson, I've been greatly influenced by Ken Wilber. I also have Fred Kofman's book but haven't gotten around to reading it yet. Your question: "How to develop these type of attitudes, thinking and skills to lead and manage in the organization that wishes to embody Conscious Principles and exists in a very unconscious world? I would think this is a huge challenge for an organization as large as Whole Foods." Answer: 1. The leader must aspire to personally learn and grow. 2. The leader must "walk the talk" and must embody the attitudes and leadership skills that he or she wants to nurture in the organization. There is no substitution for this. 3. The leader must create an organizational culture based on experimentation, innovation, and continuous improvement. This requires the removal of fear and intimidation as motivators. 4. A philosophy of empowerment is essential. People must be empowered to learn and grow and to be self-responsible. It is natural for people to want to learn, grow, and personally evolve--provided that fear doesn't short circuit the growth impulse. Remove fear from the organization as much as possible, model personal growth oneself as a leader, and encourage and empower others to grow in the organization. A chapter in the book I'm writing is on self-actualization. It will appear in a rough draft form on this blog within the next few months for feedback.

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