Whole Foods CEO John Mackey Describes "Conscious Capitalism" in Gordon Grand Lecture
Given the global downturn, some may feel that now is not the best time to be a capitalist. As John Mackey, the chairman, CEO and cofounder of Whole Foods, put it, "capitalism is not loved, not trusted." He added, "The recession is blamed on greedy corporations, as if greed was somehow only recently invented."
Mackey spoke at SOM on February 10 in a talk sponsored by the Gordon Grand Fellowship, which brings prominent business leaders to campus for one- to three-day visits to deliver one public lecture, meet informally with faculty and students, and participate in classes. The theme of the presentation was that with corporations becoming more and more unpopular as the current recession deepens, a new form of capitalism needs to be created. "Corporations and capitalism have a serious branding problem," he said. To that end, he proposed "conscious capitalism," a system that combines the best parts of capitalism with a sense of mission and responsibility often lacking from corporations. "Conscious capitalism" is defined by three major components: Having a deeper purpose beyond maximizing profits; optimizing value for all stakeholders, not just shareholders; and a dedication to servant-leadership. "When we started Whole Foods thirty years ago, we had these fuzzy concepts," he said. "We wanted to sell healthy food, earn a living, and help people eat better. The purpose deepened over time."
Mackey pointed to a number of Whole Foods initiatives as ways to "conscious capitalism." Top executives can earn only 19 times the average salary, a number far below many other companies. Stock options are available to all employees, as well as a fully-funded health plan. In March, the company plans to unveil a new rating system to help customers understand how the animals they eat were raised and treated. "One of the dark secrets in this country is what weíre doing to livestock," he said.
Mackey sought to differentiate "conscious capitalism" from the corporate social responsibility movement (CSR), where companies such as Starbucks, GE, and Merck aim to be better stewards of the environment, help improve the lives of suppliers in developing countries, and provide research to alleviate disease. While some corporations put CSR at the center of their missions, Mackey said it is often just "a PR tactic." "CSR is a good thing, but itís not nearly enough," he said. "They take the old paradigm of the corporation and graft it on."
He said that "conscious capitalism" aims to go much further. "'Conscious capitalism' is a whole new way to think about enterprise, business, and capitalism," he said. "Traditional capitalism evolved in an era of industrialization and it reflected the consciousness of the era it was a part of. Our consciousness is going to a higher level and capitalism is stuck. It needs to move upwards or itís going to go back."
Watch or listen to John Mackey's talk. (45:34)