Conscious Capitalism

Whole Foods' John Mackey: Self-awareness on Aisle 5?

March 8, 2013: 5:00 AM ET

John Mackey's belief in the business benefits of strenuous self-analysis is so mystical it verges on The Secret-territory - and yet it is compelling.

By Megan Hustad

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FORTUNE -- The founder and co-CEO of supermarket chain Whole Foods, John Mackey, is a staunch libertarian and a vegan. As his public profile rises, he becomes harder to pin down. He seems to embody competing philosophies in one affable, "aw-shucks," yet entirely controversial package.

Mackey began his career among the co-op counterculture of the 1960s and 1970s, and now helms a company so adept at wrangling share of wallet that many consumers have dubbed it "Whole Paycheck." Mackey says he wrote his new book, Conscious Capitalism: Liberating the Heroic Spirit of Business, because he felt that capitalism needed defending in the wake of the financial crisis. Read it, however, and you'll see he has wound up close to where he started his work journey: an idealistic hippie who thinks that being highly self-aware is good for business.

"The right actions undertaken for the right reasons generally lead to good outcomes over time," Mackey writes. When a company becomes too focused on meeting its financial targets, he and co-author Raj Sisodia argue, the right actions are rarely undertaken -- and rarely for the right reasons. Why? As Mackey elaborated over email, an obsessive focus on metrics tends to obscure the sense of higher purpose that animated the company in happier times. Losing connection to a higher purpose then corrupts the decision-making process.

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Pressure to meet earnings targets can alienate us from our better angels? It almost sounds Marxist. I asked Mackey what corrective step he'd recommend for a company that found itself in such a position. His answer was business-school standard:

"The first step for such a company is to clearly define its higher purpose beyond maximizing profits. It should then start to design everything it does around creating value for its stakeholders. It should get rid of all metrics that are not connected to value creation for stakeholders. It should then create new metrics that are leading indicators of future performance, measures such as employee passion and customer advocacy."

(N.B. Conscious Capitalism defines stakeholders broadly -- not only investors and management but also hourly employees, suppliers, and the community in which the business operates.)

WHITE BOOKMackey allows that good outcomes from acting in line with one's higher purpose may not always be the expected, or even hoped-for, results. "Depending on the quality of our actions and external factors, they could be different but far better."

Different and better, how? Mackey pointed me to a story in his book of how Whole Foods (WFM) team members at its Hartford, Conn. store gave away free groceries as a snowstorm loomed and cash registers stopped functioning. "It resulted in an outpouring of positive media coverage and resultant goodwill that far exceeded anything they had expected," Mackey added.

It's not too cynical, I hope, to imagine someone on the ground there had correctly guessed that giving away groceries would generate positive word-of-mouth, and that that might ultimately maximize profits. But Mackey is intent on insisting that the growth of Whole Foods depended on his personal willingness to experiment. From the book: "More than once in the history of Whole Foods Market, the company was unable to collectively evolve until I myself was able to evolve -- in other words, I was holding the company back. My personal growth enabled the company to evolve."

Mackey maintains that a leader who is psychologically or spiritually stuck can hinder a company's growth prospects and ability to adapt to shifting market circumstances. But to look outward with a clear eye, business leaders need to look inward first.

Conscious Capitalism ¬†recommends several practices that Mackey and Sisodia claim will heighten a person's leadership ability, with suggestions like: "Enhance … self-awareness so we know when we are truly following our hearts," and "Use the energy that fear creates to focus the mind more intently on the present moment --where fear doesn't exist." If you're not emotionally intelligent, try harder. Easier said than done.

The co-authors launch into a spirited defense of Victorian-era self-help and its emphasis on the deliberate cultivation of character -- and suggest that if you don't know anyone personally whose behavior you want to emulate, look "to fictional characters who vividly express admirable virtues, such as Atticus Finch in Harper Lee's To Kill a Mockingbird or Albus Dumbledore in J. K Rowling's series of Harry Potter novels."

"It's useful to ask," the book continues, "'Why does this make me angry?' 'Why am I excited about that?' 'Why am I envious of that person?' 'Why do I feel joyful about this?' 'Why am I experiencing love?'"

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One final word of advice: If you wouldn't want to read about you having done it, maybe don't do it. "Examine our every action through the lens of how we would feel if it were to become front page news."

Mackey's final justification for this strenuous self-analysis, which concluded his email, is so mystical it verges on The Secret-territory -- but it's compelling coming from someone whose company has a $15.95 billion market cap. Why go to all this trouble? In Mackey's view, it makes you more attractive.

"The key point is that when you do something good with the right motives, you make a lot of new and unanticipated connections. You become an 'attractor,' pulling people toward you who are doing similar things. This multiplies and extends what you set out to do in synergistic and serendipitous ways."

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