A Higher Consciousness

Winter 2013

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Whole Foods co-CEO John Mackey looks to elevate business.

By Matthew Budman

A Higher Consciousness

Matthew Budman is editor-in-chief of TCB Review. In Manhattan, he shops at Whole Foods only during off-peak hours.

“Do you know how most corporations get their mission statement?” John Mackey asks. “They hire consultants who come in and write it for them. So it’s not authentic; it didn’t come out of the essence of what that business is.” Mackey, co-founder and co-CEO of Whole Foods, is severely critical of business as traditionally practiced. Basically, he’d like every company to be run as his own is: highly collaborative, egalitarian, empowering, green, and closely integrated with the community—in other words, conscious. Businesses that are so enlightened, he insists, will not only outperform competitors that look no further than the stock ticker—they will rescue society from its various ills.

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Mackey has spent the last thirty-plus years building a company epitomizing these values and the last several evangelizing to the world in speeches and at conferences; with Conscious Capitalism: Liberating the Heroic Spirit of Business (Harvard Business Review Press), written with Raj Sisodia, he expands his thinking to book length. “We believe,” they write, “that the way forward for humankind is to liberate the heroic spirit of business and our collective entrepreneurial creativity so they can be free to solve the many daunting challenges we face.”

In pretty much every case, Mackey sees “the truth, beauty, goodness, and heroism of free-enterprise capitalism”—very much as opposed to government—as the force driving the economy and society forward. He defends business against critics and its own mismanagement and urges his fellow CEOs toward a broader perspective: “Together, business leaders can liberate the extraordinary power of business and capitalism to create a world in which all people live lives full of purpose, love, and creativity.”

Mackey spoke from his office in Austin, Texas.

Why does capitalism need to be any more conscious than it is already?

Conscious capitalism goes beyond the way people have traditionally conducted business. It’s a way to make people more conscious of why their businesses exist; if they can become more conscious of their purpose and their role in society, they’ll do a better job, and their business will be more successful. That’s why we wrote the book: We want the world to be a better place, and we think business has a heroic and important role to play in that. But it can’t fully play that role until it becomes more aware of purpose and of stakeholder interdependencies. The world is evolving; humanity is evolving. Business needs to evolve.

Being conscious is all about responsibility to stakeholders, including “society,” but you strongly oppose the CSR movement.

Conscious business is not the same as corporate social responsibility. CSR is taking a traditional, profit-centric business model and grafting onto it a social-responsibility department that usually reports up to public relations or marketing, as a way to help the reputation of the corporation. But it doesn’t necessary link to the purpose of the business, whereas the conscious business is inherently socially responsible, because creating value for stakeholders and communities is at the very essence of what they’re doing. Social responsibility is almost a moot question. Of course conscious businesses are socially responsible—that’s why they exist! They’re creating value for their stakeholders and for the communities that they’re part of.

Many businesses that lack that sense of purpose migrate to CSR as a way to deflect criticism coming their way for not being more socially responsible. But if it doesn’t tie back to purpose and mission, then it’s always going to be off-kilter.

As long as the purpose of the business is simply to make money, to maximize shareholder value, you’ll have a tradeoff mentality.

CSR efforts may be grafted on or done mainly for PR purposes, but for existing companies that are profit-driven and not conscious, aren’t CSR efforts better than, well, no CSR efforts?

Sure. I’m not going to argue that’s not the case. But hopefully it’s an interim step to becoming more conscious and getting social responsibility into the core of why the business exists in the first place. As long as the purpose of the business is simply to make money, to maximize shareholder value, you’ll have a tradeoff mentality: How much will it cost us to do the socially responsible thing? Is that going to cut down shareholder wealth? How much goodwill will it create? That kind of thinking doesn’t really exist in conscious businesses because they’re seeking strategies that are win-win-win, that are creating value for all the stakeholders. If you have a business strategy that’s not creating value for your customers and your employees and your suppliers and your investors and your community, then it’s not a good business strategy.

Now, obviously your libertarian principles are no secret, but are people ever taken aback by the melding of a community-based, socially responsible philosophy with antipathy toward government?

Why should anyone be surprised? The connection seems self-evident to me.

But not to everyone else. The typical Whole Foods customer isn’t exactly a libertarian.

The thing is, capitalism and business have created great value in the world, but today, they have bad reputations. The dominant narrative is that business is selfish, greedy, and exploitative; it cares only about money and has a very low degree of trust. What I believe is that business is fundamentally good but that as it becomes more conscious it can become great, even heroic. It can do wonderful things in this world.

We want to change the narrative of the way people think about business and capitalism, but in order to do that, the practitioners have to raise their consciousness and begin to operate in the realm of purpose and stakeholder care, with a different type of leadership. And then it will be easy to change that narrative of business.

How much of that narrative is justified or, at the least, self-inflicted?

Some of it, sure. But business has not done a good job of defending itself. It hasn’t had a good narrative about who it is and why it exists. If you’re at a cocktail party and you ask what the purpose of business is, people will look at you funny: What do you mean? Everyone knows the purpose of business is to make money. But if you ask the question, “What’s the purpose of a doctor?” no one says that it’s to make money. Of course not—it’s to heal sick people. The purpose of a teacher isn’t to make money—it’s to educate people. Same thing with lawyers and engineers. Every profession refers back to a purpose that creates value for other people that serves the greater good of society.

Well, business does too—only it’s bought into the narrative that critics have given to it: that it’s fundamentally greedy, that it’s fundamentally all about money. And it’s not. I’ve known dozens if not hundreds of entrepreneurs, and almost every one of them started their business not to make money but because they had some kind of dream that they want to have realized, or some kind of passion that they just couldn’t help themselves—they were on fire about it. And that’s the story that’s not being told. So the narrative of business has to change, because it’s been largely written by the critics.

So yes, guess what: There are companies like Enron and WorldCom out there, and Bernie Madoff. There are bad businesses out there, just like there are bad doctors and bad lawyers and bad teachers and bad architects. That’s the reality: Humanity’s not perfect, and neither is business. But most businesses are good. Most businesses are ethical, and they create value for their customers and jobs for their employees. They’re trading with suppliers in an ethical way. They’re making money for investors. And they’re helping to support government and nonprofit organizations.

But most companies aren’t Enron or WorldCom, just like they’re not conscious businesses such as Costco and Patagonia and the Container Store. They’re somewhere in the middle, concerned primarily with shareholder returns. They may be potentially great companies, but they’re far from great now.

Well, that’s true. But for every bad company you can name, I can name a dozen that are doing good things in this world. Southwest Airlines has democratized the skies and made it affordable to fly; Google is organizing the world’s information and making it readily accessible; REI is reconnecting people to nature; Whole Foods Market is trying to sell healthy food to overcome the diseases of obesity and heart disease and cancer, and to change the agricultural system to make it more sustainable. There are so many businesses out there that are transforming our world and making it a better place. And yet people aren’t aware of it.

Business has done such a bad job of telling its story that the critics define it. So when bad things happen, that gets written up, and people think that’s what business is like. That dominates the narrative about business. I want to change that. I really think that business has the potential to be heroic in this world if it can become more conscious of its purpose—its higher purpose, beyond making money. It can begin to consciously create value for stakeholders. You’ll get a different kind of leader and a different kind of business culture.

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