The Limits of John Mackey’s Brand of Enlightened Capitalism

Can Amazon-owned Whole Foods ever live up to its founder’s ideals?

Illustration: Franziska Barczyk

If ever there were a moment in which the leaders of corporate America have been exploring a more enlightened form of capitalism — debating it, promising it, testing it, debunking it, retracting it, reviving it, promising it again — that moment is surely now. John Mackey, a member of that class as the co-founder of Whole Foods and its CEO for the past 40 years, is perhaps one of the earliest proselytizers of a strain he calls “conscious capitalism.”

A free-market enthusiast and now Amazon employee, Mackey, early on in his latest book, Conscious Leadership, reminds us of the ethos that he has long championed. “One of the foundational tenets of Conscious Capitalism,” he writes, name-checking his 2013 book of that title, “is stakeholder integration.” For the uninitiated, he explains, a stakeholder is “any person, company or other entity that interacts with the business.” Old-fashioned shareholders — investors with stock ownership — are stakeholders. But so, too, under this more humane theory of business, are a company’s customers and employees (and arguably other groups or entities like suppliers and the environment), who ought to be served by a company’s efforts.

Mackey’s new book builds on his last one by offering readers a manual that might help them “operationalize” the belief in the essential goodness of capitalism espoused in Conscious Capitalism. Co-authored with Steve McIntosh and Carter Phipps, founders of something called the Institute for Cultural Evolution — whose website evokes a kind of Esalen in the Rockies — the book embraces a harmonious consonance between spirit and profit. It zigs from Pierre Teilhard de Chardin to Sam Walton, then zags from Steve Jobs to Mother Teresa.

Organized around what the authors call the “nine distinguishing characteristics and behaviors” of leaders who are “striving to be more conscious,” Conscious Leadership urges leaders to put purpose first, lead with love, act with integrity, find win-win-win solutions, and five other characteristics and behaviors that each get a chapter of their own, imparting lessons through a mix of anecdotes and advice.

The chapter “Always Act With Integrity,” for instance, opens with a portrait of a saintly Costa Rican beverage company CEO who pegged his executives’ compensation to key performance indicators around the company’s environmental impact. From there, Mackey moves us through subsections on integrity-adjacent topics, like truth-telling, authenticity, and courage. We learn how a culture of breezy spin among executives at Ford had to be effortfully undone so its former CEO could learn the dire truth of his business. We learn, too, how a young MIT graduate named Jeff Wilke followed his instinct to decline a job offer in finance and instead work in a Virginia nylon plant. Wilke eventually rose to become CEO of Amazon’s consumer business.

Released at this particular moment, though, a book on leadership from a titan of the grocery business invites questions that go beyond the merits of Mackey’s ideas and prose. The pandemic has presented a unique challenge for every CEO, particularly those who, like Mackey, are presiding over an army of frontline workers. Given that the business he runs is now wholly owned by an e-commerce giant that’s faced criticism for its handling of the pandemic while continuing to expand its grip over entire swaths of the economy, it’s worth asking if Mackey has managed to steer his ship according to his own philosophy. How “conscious” has his leadership appeared to be in these times?

From the perspective of the old-fashioned shareholder, there’s little to complain about in the improbable marriage of Whole Foods and Amazon. Odds are that you are now a part owner of Whole Foods Market since its parent company’s shares are a staple of the major mutual funds. The story of how exactly your favorite purveyor of organic kale got swallowed up by the “everything store” in 2017 is one Mackey recounts in his book — one in which shareholders, in fact, played a leading role.

Whole Foods’ rank-and-file workers only make brief cameos in Conscious Leadership; they appear once as “smiling team members” who buck up Mackey’s spirit during a mid-’90s leadership crisis, then again as grateful beneficiaries of a pay raise.

In late 2013, Whole Foods’ stock price was at an all-time high of $65.24. But by 2015, beset by various challenging trends in the grocery business — Walmart had entered the grocery business, and more mainstream supermarkets were commodifying organics — the stock had dipped to around $30 per share. “Conventional grocers were finally waking up to the tremendous opportunity created in the marketplace by people who wanted to eat healthier,” writes Mackey. Indeed, in 2016, Kroger outsold Whole Foods in the natural and organic category; Walmart, Safeway, and Costco all rolled out organic offerings as well. “From the perspective of our higher purpose — to nourish people and the planet — I was proud of the influence we’d had on the market,” he writes. But investors had concerns other than the company’s higher purpose.

In March 2017, the hedge fund Jana Partners snapped up 8.8% of Whole Foods’ stock, enough to give it significant voting power. (Mackey does not have anything nice to say about Jana Partners in his book, but his most vivid pronouncements about them came in a 2017 Texas Monthly profile: “greedy bastards” and “a bunch of Ringwraiths.”) Mackey sought quickly to shelter his creation with an owner he would get along with. Warren Buffett passed, but Jeff Bezos turned out to be game. “That initial discussion took place at Jeff’s boathouse,” Mackey recounts in the book, calling the meeting of his and Bezos’ leadership teams “love at first sight.”

That love culminated in a sweet deal: Amazon paid $42 per share for Whole Foods, essentially adding “an additional $4 billion in value in the pockets of our shareholders,” writes Mackey. And since the acquisition, Amazon’s stock price has tripled, hovering around $3,000 a share today. Mackey thinks Whole Foods can take at least some credit for Amazon’s financial health. “Our third quarter this year tripled over the previous year,” he tells Marker about Whole Foods’ recent performance. “Overall, sales are up.”

If the shareholder can be happy, what of two other crucial stakeholders — the Whole Foods customer and the Whole Foods employee?

One chapter of Conscious Leadership urges future leaders to “put purpose first.” One technique, Mackey says, is to “create conscious reminders,” including physical symbols that evoke the company’s mission for its leaders. He illustrates this point by citing the example of his new boss and friend, Bezos, who, in the early days of Amazon, would supposedly leave one chair empty at his meetings to represent the customer, reminding everyone in the room of Amazon’s mission to be “Earth’s most customer-centric company.”

Mackey would argue that Amazon’s self-declared “customer obsession” has made its way to the Whole Foods customer — our second crucial stakeholder. Indeed, customer data from 2019 shows that customer satisfaction dipped after the Amazon acquisition, but almost negligibly. The in-store experience became more uniform, less regionally quirky. Quality at the stores remains high, and most people continue to think of Whole Foods wares as premium products, even as they have felt the “Amazon creep” — Prime signage and Amazon delivery lockers punctuating its stores. Sure, the constant reminder to customers that they’re buying from an internet behemoth doesn’t boost the brand’s aspirational farmers market vibe, but it’s a trade-off that appears to be working.

Convenience, too, has risen. During the early days of the pandemic, online grocery ordering surged, and Whole Foods customers were no exception. This abrupt digital transition was not without hiccups — in mid-April, Amazon decided it had to waitlist new users of Whole Foods’ delivery service. But after a hiring spree, Amazon seems to have stemmed the initial complaints that graced some headlines. Just last month, Whole Foods opened its first “dark store” in Brooklyn, functioning more as a distribution hub to fulfill online orders.

And on price? Whole Foods is striving to shed its reputation as “Whole Paycheck,” a nickname bestowed upon it by customers for its premium prices. Mackey has touted three rounds of price reductions since the Amazon acquisition, saying a fourth is on the way. And that’s not counting the 10% discount that Amazon Prime members get at checkout.

So if the investor and customer are happy, each holding their stake contentedly, what of a third major stakeholder, Whole Foods’ workers — all 100,000 of them? Here, accounts diverge.

When it comes to descriptions of Whole Foods’ labor force, the reader of Mackey’s new book might wonder how reliable or thorough a narrator we have. Whole Foods’ rank-and-file workers only make brief cameos in Conscious Leadership; they appear once as “smiling team members” who buck up Mackey’s spirit during a mid-’90s leadership crisis, then again as grateful beneficiaries of a pay raise. This relative omission of workers in a book promoting stakeholder capitalism is noteworthy, especially in a year in which a global pandemic turned grocery workers into unlikely heroes. One section of the book advocates “servant leadership,” the notion that devoted leaders mentally “place themselves at the bottom of the hierarchy.” Could Mackey and his co-authors not have found an anecdote or two that explored the reverse, praising leader-like qualities — bravery, for one — of its lowest-paid workers?

Over the last three years, there has been no shortage of adverse Whole Foods labor-related headlines. Soon after the 2017 acquisition, the press was running stories about the “Amazonification” of Whole Foods stores. “They want us to be robots,” said one worker complaining of a grueling new stocking system; “seeing someone cry at work is becoming normal,” said another.

“One hundred thousand people work for our company, which is more than most cities have. Do you know of any city where everyone is happy all the time?”

Whole Foods was not known to be supportive of unions even prior to the Amazon acquisition, but in the early years of the company’s growth, workers were mostly happy, according to Ty Robertson, a former Whole Foods employee turned organizer who was interviewed for this story. Robertson particularly admired a profit-sharing system and the fact that even part-time workers got health insurance. But things changed after the Amazon acquisition, according to Robertson. Seeing a friend laid off amid Amazon-pushed centralization and cost-cutting in the spring of 2018 was the proverbial final straw. Robertson quit that June, sending out a union-minded mass email to the company’s tier of middle managers — the lowest-ranking employees to have Whole Foods email addresses Robertson could access through Outlook. He and collaborators began leaking material to the press, including an Amazon union-busting training video. Soon thereafter, Amazon raised its minimum wage to $15 per hour, a wage increase that also applied to Whole Foods workers. In his book, Mackey describes this wage increase as a unilateral act of Amazonian goodness and employee-retaining wisdom, making no mention of Robertson or the pressure they faced from workers or the media.

Covid-19 might have presented an opportunity for Whole Foods to reset its relationship with workers. Although Whole Foods and Amazon eventually granted workers with what would become the standard precautions — masks, plexiglass, more flexible unpaid sick leave, a $2 an hour bump for hazard pay — many workers did not feel adequately supported, especially in the early days of the pandemic. A March 13 email from Mackey reminding workers they were “allowed” to donate vacation days to cover other employees’ emergency medical leave was viewed as tone-deaf by some, cruel by others. Soon, some workers — Robertson estimates over 200 — took to the streets to demand more hazard pay, more paid sick leave, and the closure of stores with coronavirus cases among workers. (Meanwhile, regional stores like Texas’ H-E-B received glowing coverage for its foresight in emergency preparedness.) Whole Worker, Robertson’s movement, issued a set of Covid-19-specific demands, including the reinstatement of health insurance for part-time workers and double hazard pay (these have not been met).

I asked Mackey if employees may be an underserved stakeholder at the moment. “No, not at all,” he says. “I’m glad you’re asking that question because it gives me a chance to correct the narrative.” He disputes the recent journalistic coverage as distortedly one-sided. “One hundred thousand people work for our company, which is more than most cities have. Do you know of any city where everyone is happy all the time?” He says that an internal satisfaction survey called the Culture Compass confirms the upbeat mood of his employees right now. “Morale is high, satisfaction is high — maybe slightly lower than a year ago but far higher than what you would expect given what we’re going through.”

A service worker at a Whole Foods in Chicago who asked not to be named, fearing repercussions, offers a different perspective. “I can’t think of anybody below the rank of store manager who actually feels good about the direction of Whole Foods,” says the worker, who has been with the company for four years and organizing with Whole Worker for two and a half years. The Culture Compass scores, he says, are distorted: “There has been such a breakdown of trust at this company that people are afraid to tell the truth about work.” He believes most workers on the lower end of Whole Foods’ hierarchy are unhappy, even if relatively few may currently think unionization is the solution. (Mackey could not be reached for comment on Whole Worker or the alleged distortions of the Culture Compass scores.) Robertson says that the Whole Worker group he runs on the encrypted messaging service Telegram has about 600 members nationally, of whom about 60 are regularly active. “We’re still small, but this is a long game,” Robertson tells Marker. “Those 60 or so people — those are all leaders.”

In the introduction to Conscious Leadership, Mackey takes credit for championing a better approach to capitalism that has reverberated throughout the business community. “I’m proud,” writes Mackey, that conscious capitalism has become “cultural shorthand for an elevated way of doing business and inspired leaders and entrepreneurs all over the world to uplift their companies, communities, and countries.”

“In fact,” he continues, “in 2019, Business Roundtable — a collective of CEOs from America’s largest companies, responsible for more than 15 million team members and more than $7 trillion in annual revenues — issued a formal statement that would have been unimaginable even a decade earlier.” That group’s seemingly radical statement, signed by more than 200 chief executives, including Bezos, Marc Benioff, Tim Cook, and Satya Nadella, is a commitment from business leaders to — in addition to generating “long-term value for shareholders” — deliver for customers, invest in and fairly compensate employees, deal ethically with suppliers, and support communities.

But since signing the statement, executives who committed to stakeholder capitalism have largely failed to follow through, according to a recently released study financed by the Ford Foundation and conducted by KKS advisors, an environmental policy consultancy. The study’s authors say that signatories of the Business Roundtable pledge have not outperformed nonsignatories on measures of Covid-19 response and inequality issues. Even former presidential candidate Sen. Elizabeth Warren called it an “empty publicity stunt.”

Mackey has now been arguing for over a decade that profit and purpose are symbiotic. But as we’ve seen over and over, whether it’s the failed promises of the Business Roundtable or Coinbase’s recent commitment to ignore all but its core mission or Whole Foods’ seeming unwillingness to prioritize its workers’ needs at the moment they need it most, conscious capitalism is little more than an ideal. Unless Mackey is going to be an example of what happens when you make real sacrifices that favor all of your stakeholders at the expense of your bottom line, his playbook isn’t all that different from business as usual.

David is a writer, researcher, and consultant in Brooklyn.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store