John Mackey co-founded Whole Foods Market’s (WFM) predecessor, Safer Way Natural Foods, in Austin, TX in 1978. From the time it was called Whole Foods in 1980 to now, the company has grown from 19 employees to over 72,000. It has 344 stores in the U.S., Canada & UK with $11.7 billion in revenues as of FY 2012. The company’s stock has soared more than 23% in the last year and is up nearly 140% in the last five.
Mackey, co-CEO of Whole Foods with Walter Robb, argues it’s the company's business philosophy, not just organic food, that's behind the company's success. This philosophy prioritizes not just profits but a higher purpose and aims to serve the interests of all the major “stakeholders” involved (including customers, employees, suppliers, environment, and the government).
Mackey urges other businesses to follow suit in his new book Conscious Capitalism (with co-author Raj Sisodia), which is the name given to the type of business model he espouses. Some other companies involved in this movement include Patagonia, The Container Store and Zappos.
Mackey tells The Daily Ticker his philosophy is far from the norm in the U.S.
“What we have in the U.S. today has moved far away from free enterprise capitalism,” Mackey argues. “It’s really a type of crony capitalism, where you have the government and big business frequently collaborating together in ways that may not result in the greatest common good.”
The book cites the government bailouts of “too big to fail” members of the financial sector during the meltdown of 2008 as prime examples of "crony capitalism".
Mackey says conscious capitalism, on the other hand, “is a type of free enterprise capitalism that is...a very different model than what we’re seeing happen in the U.S. today.”
Whole Food's pay structure is a perfect example. The maximum ratio of executive pay to workers is 19:1, which is far less than many other U.S. companies.
Mackey also tells The Daily Ticker that the company’s higher purpose is “healing America” and educating the public about health, which he says helps unite team members, suppliers and investors behind this goal.
In terms of how to encourage more companies and Wall Street investors to embrace his philosophy in a world of quarterly earnings, Mackey cites his own company’s financial success as proof that this model works.