Whole Foods current “fix” is a massive strategic misstep. But the company’s impact on business has been a huge win for society.
Last week I came across an interesting article by The Guardian suggesting that Whole Foods’ crisis represents the failure of the larger movement the company represents: Conscious Capitalism. Yes, Whole Foods is not doing well, by Wall St. standards, and is taking measures to curry the Street’s favor. In case you don’t have the details, here’s a quick summary The Guardian’s article put together:
- Same-store sales have declined for six straight quarters. Apparently some 14 million customers have walked away during the same period.
- A hedge fund just bought 8.3% of the company, demanding a major revamp in its business operation.
- The revamp includes, among other measures, hiring big-shot executives from the traditional grocery retail world, and promoting Gabrielle Sulzberger (whose background is in private equity) as Whole Foods’ new chairwoman.
- Additionally, the company initiated a $1.25 billion share buyback program and has promised to cut costs by $300m, both measures Wall St. loves (because it drives shareholder gains).
Next, the article tries to make an argument for why Whole Food’s downfall should be seen as the failure of the whole Conscious Capitalism (CC) movement. Before we dive into this argument, let’s take a quick look at the four tenets that make up CC:
- Higher Purpose: Businesses should aim at creating larger impact in their communities and the world, and not solely pursue profit and shareholder returns. A key way to assess this is to ask “What is the impact your business wants to make in the world?” or “If your business didn’t exist, would it be missed — and why?”
- Stakeholder Integration: No business survives on its own, they depend on stakeholders to exist. That means besides shareholders, businesses should consider customers, employees, suppliers, vendors, and the government as part of their value chain. And that includes, of course, society and the planet, which are also stakeholders.
- Conscious Leadership: This is about leadership which prioritizes people over of profit. How? By focusing on building a culture of fairness and egalitarianism, trust and transparency, integrity and loyalty, love, care and personal growth.
- Conscious Management: Conscious leaders focus on decentralization, empowering others below them to take on higher accountability, and work collaboratively and with more autonomy.