Retail Memo: Whole Foods' CEO John Mackey Speaks Out On 'Conscious Capitalism,' the Integration of Wild Oats, Competitors and Giving 'Appreciations'

As we've been writing about on Natural~Specialty Foods Memo for a few weeks now, Whole Foods Market, Inc. CEO John Mackey is back to his seemingly liberated self after recently receiving a clean bill of behavior from the U.S. Securities and Exchange Commission (SEC) regarding the postings it was discovered last year he had been making on 'Yahoo Finance' financial message boards about Whole Foods (positive) and Wild Oats (negative), under the screename "Rahodeb" during the run up to Whole Foods' friendly acquisition-merger last year of Wild Oats Markets, Inc.

As we wrote about here, Mackey devoted the first post in nearly a year in his blog on the Whole Foods Market, Inc. website to the issue, offering an explanation and discussing how he was going forward.

We also recently wrote about the May commencement speech the not so public for the last year John Mackey made to the 2008 graduating class of Bentley College.

Last night, the increasingly public John Mackey stepped back on stage at St. David's Episcopal Church in Austin, Texas to give a speech and participate in an audience question and answer session for an event sponsored by FLOW, an organization co-founded by Mackey that "is dedicated to liberating the entrepreneurial spirit for good and directing it towards creating sustainable peace, prosperity, and happiness for all in our lifetime."

The focus of Mackey's talk at the Austin Episcopal church last night was "Conscious Capitalism." The Whole Foods' CEO also touched on a variety of other topics at the $30 per-person, sold-out fundraising event for FLOW, including: the integration of Wild Oats Markets, Inc. into Whole Foods' operations and culture; his experience with the SEC and Whole Foods' board of directors over the online message board affair; the grocer's competitors; and the little known Whole Foods Market company practice of asking team members to deliver "appreciations" to each other at the end of every team meeting, according to a Natural~Specialty Foods Memo correspondent (who we appreciate much) who attended the event.

"Corporations have become the most influential institutions in the world today," Mackey told his audience last night. "But they are widely perceived as greedy, selfish and exploitive."

He said unlike other professions like medicine, in which doctors take an oath to heal the sick, or education, where teachers make a commitment to help students to learn, businesses have for too long focused mostly on maximizing profits as their reason for being.

"The current business thinking lacks a new kind of awareness of a deeper business purpose," Mackey said in his speech last night. "They need to make a deeper responsibility to stakeholders, which include customers, employees, suppliers, the community and investors."

Mackey said when he founded Whole Foods, then called "Saferway," in 1978, he didn't have a clear vision or purpose beyond wanting to sell healthier food than most supermarkets did at the time.

However, Whole Foods' purpose and mission has evolved over time since those early beginnings, he told the audience. For example, Whole Foods just added a sixth "core value," which is to now include its suppliers at part of the supernatural foods retailer's mission statement because they wanted to know why they weren't previously included in the company's core values, Mackey said.

"Great companies have great purposes,” Mackey told the audience. "This includes, the good, the true, the beautiful and the heroic," he said by way of explaining "Conscious Capitalism."

The Whole Foods CEO even offered a brief list of company's he said have a larger purpose and that he admires. These include Apple Computer, Southwest Airlines, Google, Wikipedia and retailer the Container Store.

He also said he recently has lunch with Indra Nooyi, the first female CEO of food and beverage giant PepsiCo, and is adding the company to his admired list because he was impressed with her plans to create greater purpose for PepsiCo, including making a major effort in corporate philanthropy, a value and purpose Mackey told the crown is major to him and Whole Foods Market, Inc.

Mackey told the audience he isn't a hick in an organic oat field however when it comes to stockholder ownership of Whole Foods and making a profit. He said investors must ultimately control the business. "Customers are the most important stakeholders of Whole Foods, with employees coming second," he said. Investors are right up there, he added.

"The investors need to own and control the corporation, they get paid last," Mackey said. "If they don’t have the ultimate control they are going to be exploited by management and other stakeholder groups. I have never argued or never will argue for anything that weakens the property rights of investors."

Commenting briefly on the fact Whole Foods' stock share price is nearly 30% less than it was in June of 2007, Mackey attributed it to investors being cautious while the grocer completes its integration of Wild Oats into its operations and culture, and the resulting concerns over same-store sales because of this process.

Following his speech last night, which according to the Natural~Specialty Foods Memo correspondent attending the event was received warmly by the audience, Mackey then sat down for an audience question and answer session, which was moderated by a woman named Tami Simon, who runs a spiritual-based organization called Sounds True.

One audience member asked Mackey about the U.S. Federal Trade Commission's (FTC) ongoing court challenge against the Whole Foods-Wild Oats merger/acquisition, in which the FTC continues to claim Whole Foods is a natural foods retailing monopoly, an issue we've written extensively about (we disagree with the FTC) regularly since last year.

Mackey's answer: "Although the FTC thinks we are a monopoly, everybody in Austin knows we’re not," he said. "If Whole Foods doesn't satisfy your needs, you are not going to shop there."

Another audience member's question was about Mackey's well-known competitive nature.

My competitiveness gets me in trouble now and then and got me in a lot of trouble in the last year,” Mackey said, referring to the 'Yahoo Finance' message board posting issue.

He elaborated though: "When you meet a really formidable competitor, you become afraid. This fear "can be harnessed to make your heart open wider," he said, adding that formidable retail competitors also serve to make Whole Foods Market better and stronger.

Another audience member asked Mackey how the integration of Wild Oats was going. "It has surprisingly been not that difficult," Mackey answered, going on to add that one problem has been making "that kind of culture switch" without a store team leader in place that comes from Whole Foods.

The Whole Foods' CEO then made a bit of news when he said Whole Foods is in the process of putting experienced Whole Foods Market store team leaders in each of the former Wild Oats stores, which means the existing Wild Oats, now Whole Foods, store managers will be losing their positions running those stores.

Towards the end of the question and answer session, Mackey also talked about a practice at Whole Foods which most non-insiders aren't aware of. That's the practice of encouraging Whole Foods' team members to give each other what Mackey calls "appreciations" at the end of every meeting. Team members will tell one another after a meeting why they appreciate another meeting attendee and so on. Some Whole Foods team members like to joke the "appreciations" come right out of Scientology.

Mackey said last night the "appreciations" help to dismantle preconceived notions and judgements team members might have about one another, along with dismantling any lingering hostility that might have been present at the meeting.

The Whole Foods chief also offered an interesting news tidbit about the company's board of directors and the giving of the "appreciations" practice, saying the board was the last holdout in the company in terms of giving the after meeting "appreciations" to one another. However, Mackey added the board members are now doing them after each meeting and all seems to be going well.

Winding up the question and answer session, Ms. Simon thanked the audience for its participation, turned to Mackey and said: "John, I appreciate you." Perhaps that giving of "appreciations" practice is contagious?

To paraphrase the line from that famous song 'Mack The Knife,' written by Bobby Darin, it appears (John) "Mackey's Back in Town." And, by all indications, he's back with a renewed vigor.

Retail Memo: Whole Foods Market, Inc. Launches New and Improved Company Blog; Leadership 2.0 and Increased Transparency on the Move in Food Retailing

On Thursday, May 22, Natural~Specialty Foods Memo wrote this piece about Whole Foods Market, Inc. CEO John Mackey's return to blogging, reactivating his blog after putting a temporary hold on his blogging activity on July 17 when a special committee of the retailer's board of directors launched an investigation into his postings on Yahoo Finance message boards using an assumed screen name.

The board of directors committee cleared Mackey of any wrongdoing regarding the online message board postings, but did put in place some rules prohibiting Whole Foods' senior corporate executives--including CEO Mackey--from making such posts in the future.

The U.S. Securities and Exchange Commission (SEC) also launched an investigation into CEO Mackey's postings under the screen name "Rahodeb," in which he posted in favor of Whole Foods Market, Inc.'s acquisition of Wild Oats Markets, Inc., along with pointing out in his posts the shortcomings of Wild Oats senior executive team and the performance of the supermarket chain in numerous online postings.

Whole Foods acquired Wild Oats in an all-stock transaction which was supported by Wild Oats and its shareholders.

Last month, the SEC cleared Mackey of any wrongdoing regarding his Yahoo Finance board online postings under the screen name "Rahoded."

As we reported on May 22, on May 21 John Mackey returned to his blog with this post.

It now appears CEO Mackey's return to blogging has Whole Foods in a blogging state of mind. The supernatural foods retailer has created a new and improve corporate blog called "Whole Story: The New and Improved Whole Foods Market Blog," as pictured at the top of this piece.

The blog will feature various Whole Foods employees, writing about topics ranging from organics, supporting local growers and green issues, to social responsibility, micro-lending, and a host of food-related topics.

Current postings on the blog, written by Whole Foods Market, Inc. staffers, include a couple pieces on the organic foods from China issue, a piece about the recent salmonella in tomatoes issue, a plug for John Mackey's blog, and a couple other posts thus far.

Here's the story on the Whole Foods "Whole Story" blog from a June 2 post by Whole Foods' Paige Brady:

The Story on Whole Story
by Paige Brady, June 2, 2008 Permalink

Thanks for checking out our new and improved blog. We’re really excited to have this space and wanted to give you a quick heads up about what we plan to do with it.

Many passionate people work here and they know the inside scoop about what’s happening in their area of expertise — organics, local growers, body care, green practices, social responsibility, micro-lending and all kinds of food-related stuff. Since we share this info with each other all the time, we figured you’d be interested too! We are lining up quite a few different writers to blog about what’s going on around here.

Paige Brady's description of the new and improved Whole Foods Market blog is an example of what we call here at Natural~Specialty Foods Memo leadership 2.0 in the food and grocery retailing industry. That's when food retailing executives figure out since we live in an interactive, digital world rather than the analog world of old, that means food retailers and other businesses need to communicate with their stakeholders using the tools of interactivity, along with ore conventional means.

It's also an example of another aspect of Leadership 2.0: increased transparency. This sentence is key: "Since we share this info with each other all the time, we figured you'd be interested too." That's transparent, Leadership 2.0 thinking.

Analog thinkers and corporate cultures keep that "expert" opinion and information to themselves. After all, how can they remain "the experts" if they share it with customers and readers. Digital-oriented, transparent Leadership 2.0 thinkers and cultures know information sharing means power rather than a loss of status in expert land. That power is the power of many interacting, sharing information, rather than the stove-piping the information within a small group.

Successful 21rst century food retailers will be those who figure out and implement Leadership 2.0 thinking and practices. After all, today's 18-30 year-olds demand it--as well as a few of us over 40--and they are the majority consumers of the near future.

The new blog already has lots of reader comments on a number of the posts, even though its brand new.

Whole Foods is touting the blog prominently on its website at present; its the first thing you see when you log on to the food retailer's website homepage.

The new and improved blog also will be used to feature recipes, including offering them in audio and video as well as in text. Whole Foods already had a blog. But "Whole Story" is a vastly expanded and improved version of that former corporate blog.

For example, as you can see here (scroll to the bottom) there's a video recipe for bacon-wrapped shrimp and one for Cornish Game Hens. All the blog's readers have to do is click and watch.

In fact, it might just be Cornish Game Hens for dinner tonight here at Natural~Specialty Foods Memo. That video is pretty enticing. Plus, its been a while since we've tasted the succulent little hens. We aren't telling where we will buy them though. Not everything has to be transparent, even for us Leadership 2.0 types.

Natural~Specialty Foods Memo will be watching Whole Foods' "Whole Story" blog closely and writing about it when we feel it's warranted.

Meanwhile, time for the Cornish Game Hens.

Retail Memo: More On John Mackey's Return to Blogging...United Kingdom's Waitrose Chief Exec Mark Price Goes His Own Way in His 'The Grocer's Blog'

On Thursday, May 22, we wrote this piece about Whole Foods Market, Inc. CEO John Mackey's return to corporate blogging in his Whole Foods Market blog on the retailer's website. Our piece has thus far received a number of comments on it, which you can read here, and we've received a few email notes about it as well here at Natural~Specialty Foods Memo.

The commentors and writers (via email) all thus far seem to be in agreement that Mackey's return to blogging under his own name is either a good thing or if not good is at least pretty much just fine with them, thank you.

However, the opinions regarding his past posting of comments about pre-merger Wild Oats Markets' management and operations and about Whole Foods' then impending acquisition of the rival grocery chain, are receiving mixed reviews--some think its no big thing, others say it might have been an ethical breach but certainly nothing illegal.

Others are expressing the view that perhaps the Whole Foods CEO got away with something because neither Whole Foods' board or the U.S. Securities and Exchange Commission (SEC) punished the CEO in any way for posting on the Yahoo Finance message boards under an assumed screename.

The fact is, the SEC cleared Mackey, so there no longer is an investigation. Further, the Whole Foods' board has cleared Mackey as well. The board did put a new policy in place which prohibits corporate executives from posting on message boards like Yahoo Finance using an assumed screename.

Other writers out in the blogosphere are posting about Mackey's return to blogging, as well the pieces and posts we've offered here at Natural~Specialty Foods Memo (NSFM).

Here's today's take on the issue from Peter Katfka, who writes the "Silicon Alley Insider" blog about all things digital, such as blogs and related technology. Click here to read the piece the "Silicon Alley Insider" posted today about John Mackey's return to blogging.

Additionally, Paul Glazowski who writes for the online publication Mashable, Inc., has a post in the blog about John Mackey's return to blogging today as well. You can read that piece here.

The United Kingdom's 'Lord of the Blog'

Lastly, as Natural~Specialty Foods Memo (NSFM) has written about before, John Mackey isn't the only food retailing chain CEO who publishes a blog on a company website. No sir indeed.

Mark Price, who is the Managing Director (British business speak essentially for CEO) of the upscale United Kingdom-based supermarket chain Waitrose, also has his own blog on the company website, called "The Grocer's Blog." (Mackey is the only food retailing chain CEO in the U.S. though we are aware of who writes a blog. And Price the only one we are aware of who does so in the UK.)

Waitrose Managing Director (MD) Price, who named himself the "Chubby Grocer" because of his ample girth, originally started "The Grocers Blog" as a way to communicate the daily ins-and-outs of a weight loss program he started last year. In the blog, Price has provided readers with the most personal details of his weight-loss regime; everything from how hard it is to avoid donuts, to his walking and swimming attempts, successes and failures.

Price couldn't be expected to merely limit himself on the blog to discussing his diet and exercise regimes however.

The Waitrose MD, who also goes by the nickname "The Golly Grocer" (part because of his girth, part because of his good sense of humor), is a man of many opinions, and jokes, both in general and about his rivals in the UK supermarket industry, such as Sir Terry Leahy, the CEO of Tesco PLC. and Sir Richard Rose, the Chairman and CEO of British food, hard and soft goods retailer Marks & Spencer, who Price calls the "King of Pants" in honor of M&S's private label slacks being named "the best" in the UK last year. Price loves offering his rivals a good dig in the blog.

In his "The Grocer's Blog," Price writes short posts about his weight loss efforts, trips to Waitrose stores, personal vacations, business conferences, and offers frequent friendly digs at UK supermarket leaders like Sir Terry of Tesco, Sir Richard Rose of M&S and others.

In fact, Price seems to be one of the few British food retail chain CEO's who has yet to be knighted by the Queen. After all, there's even a 'British Lord' in the bunch, Lord Sainsbury, scion of Sainsbury's, the UK's number three supermarket chain after Tesco (number one) and number two Asda, which is owned by Wal-Mart, Inc.

Asda's CEO isn't a Sir either...yet. We almost forgot, billionaire Sir Ken Morrison, the recently-retired former Chairman and CEO of the UK's fourth-largest supermarket chain, Morrisons, also was granted the title some years ago by order of the Queen.

You can read Waitrose chief Mark Price's latest 'The Grocer's Blog" blog post here, along with his past posts and comments on them from readers.

Since Whole Foods Market, Inc., which already has one store in London, UK and is making a major push to open more in the nation, and Waitrose are now rivals and will increasingly be so as Whole Foods opens more stores in the UK, perhaps we will eventually see a "blog off" between rival CEO's Price and Mackey?

Being the UK's most upscale, premium and natural foods' merchandising-oriented grocery chain, Waitrose is arguably the grocer which has the most to lose sales-wise from Whole Foods' expansion in the UK. Therefore, Will John Mackey soon or eventually join the cast of Price's rival CEO's, many of whom are the Waitrose chief's friends like Sir Richard of M&S, as good natured fodder for the "jolly grocer" on his "The Grocer's Blog?" Stay tuned. We will be.

NSFM Editor's Note: Read more about Waitrose Managing Director Mark Price's corporate blogging, including a report on his self-proclaimed Easter Sunday, 2008 weight loss goal challenge, here in two pieces we wrote on the topic in March, 2008. Also read this piece about Whole Foods Market, Inc.'s expansion plans in the United Kingdom.

Retail Memo: Whole Foods Market CEO John Mackey is 'Back to Blogging'; As Well as Being 'Back in Town.'

Yesterday, we posted this interview with Whole Foods Market, Inc. CEO John Mackey conducted by a Boston Globe reporter and published in the Wednesday, May 21 edition of the newspaper, in a short piece with some commentary.

Mackey was recently cleared 100% of any wrongdoing by the U.S. Securities and Exchange Commission (SEC) for making comments and posts on 'Yahoo Finance' message boards about Wild Oats Markets, Inc. and Whole Foods Market, Inc. He used the screename "Rahodeb" when making the online posts.

One of the things Mackey stopped doing last year once it was discovered he was making these online comments using the screename "Rahodbed"--and the SEC decided to investigate the matter to determine if his doing so broke any laws since the online communications included posts about the at the time impending Whole Foods/Wild Oats acquisition-merger--was to stop publishing his "The CEO's Blog" on Whole Foods' website.

Well, heee's back. Now that the SEC has cleared Mackey of any wrongdoing regarding the online posts, the Whole Foods Market CEO has returned to writing his "The CEO's Blog."

John Mackey's very first post is appropriately titled, "Back to Blogging." In the posting, Mackey talks about his online posting, why he chose the screename "Rahodeb" and other topics surrounding the postings and the SEC investigation. You can almost feel the relief in his words that he's been cleared of any wrongdoing by the SEC.

Read John Mackey's, "Back to Blogging" piece in his "The CEO's Blog" here

Additionally, you can read Mackey's last blog post note, the day he stopped posting to his blog, here. There's also a couple links on this post (below it), which link to his apology statement, a report on Whole Foods' board of directors' investigation of the online posting issue, and the initial July 17, 2007 contacting of Whole Foods Market, Inc. by the SEC that the regulatory agency was launching its investigation.

Lastly, in our post yesterday of the Q&A interview with Mackey in the Boston Globe, we mentioned Globe reporter Jenn Abelson interviewed the Whole Foods' CEO shortly before he gave the commencement speech to the Bentley College 2008 graduating class on the school's campus in Waltham, Massachusetts. You can read the text of Mackey's commencement speech at Bentley College here.

Not All Welcome John Mackey Back to Blogging

John Mackey's return to blogging isn't being met in some media quarters with open arms.

For example, Felix Salmon, who writes the "Market Movers" finance blog for Conde Naste Portfolio online, has a piece today titled: "Annals of Hypocrisy, John Mackey Edition." The title to the posting pretty much says all that's needed in terms of an introduction to what the writer says. So rather than elaborating, you can read Felix Salmon's commentary here.

Others Welcome Mackey Back

On the other hand, there are already a few comments on Mackey's blog piece, welcoming him back to blogging and encouraging him on. We expect once news of his blog post, and more links to it get out there, there will be more comments on his post.

Natural~Specialty Foods Memo Analysis

Do we think John Mackey is going to suffer any long-term damage from the online posting incident. No we don't. We aren't offering a position that he was right or wrong about it. Merely providing our analysis.

There are six key reasons why he won't suffer any long-term damage from it, in our analysis:

1. He came out and admitted it as soon as he was caught. No spin, no B.S.
2. He posted it on his blog, and stopped writing his blog during the investigation. This showed respect for the process.
3. He didn't shoot off his mouth--although he probably wanted to--while the SEC was conducting the investigation. The SEC likes this kind of behavior from those it investigates. It also was good PR for Mackey and Whole Foods.
4. He isn't running off at the mouth about how the SEC is an instrument of the "police state" as many others under similar circumstances have when being investigated.
5. He's been cleared by the SEC, so there are no longer any clouds hanging over the issue from a legal standpoint. There are ethical clouds perhaps. But how many reading this haven't made ethical lapses in their lifetimes? The key is to recognize them and go forward as a better person.
6. Lastly, John Mackey is hanging a lantern on the issue instead of now once he's been cleared by the SEC, just saying its over. Agree or disagree with his blog piece, Mackey is opening himself up, offering his explanation and defense, and allowing readers to comment on his words.

There will be a few more pieces like Felix Salmon's posting today in Conde Naste in the next couple weeks. But beyond that, the issue will fade away.

That's do in part to the short shelf life of such issues in American life. It's also due to the fact the SEC has cleared Mackey 100%. Lastly, as we describe in our six points above, it's due to how Mackey and Whole Foods has handled the matter basically since the launch by the SEC of the investigation in July, 2007, to today. It appears, like in the phrase in the famous song 'Mack The Knife' by Bobbie Darin, that "Mackey's Back in Town."