Capitalism needs its free-thinker heroes
First published in the Financial Times on the 29th January 2013.
John Mackey, Whole Foods co-founder, is an advocate of free markets with credibility
As a business owner it is easy to fall into the trap of thinking that the only thing that matters is the financial outcome. Of course profits, cash and returns are important – without them, companies go bust and cannot raise capital. But if they are the exclusive purpose of an undertaking, then it is less likely to succeed, less likely to endure – and less fun. An enterprise must be about more than just the money.
One man who believes this passionately is John Mackey, the co-chief executive and co-founder of Whole Foods. He is an unusual entrepreneur because he thinks deeply about the meaning of his work and commercial creation. Moreover, although Whole Foods is a public company, he is unafraid to articulate his views, many of which are contentious.
Very few chief executives of large companies stick their heads above the parapet – for fear of damaging their stock price or career prospects, no doubt. Now Mr Mackey has co-authored a book called Conscious Capitalism, subtitled “Liberating the Heroic Spirit of Business”, which explains his philosophy. Even though it is a flawed work, I recommend it to entrepreneurs and investors everywhere – I strongly suspect it will be one of the outstanding business books of the year.
Part of the reason I enjoyed his book is that Mr Mackey is a practitioner. He has done it – building a big business over 32 years with a market capitalisation of $18bn and a leading position in the retailing of organic and health foods in the US. He has not been a mere observer but a hugely successful participant, learning firsthand about the principles he extols.
Mr Mackey is a fascinating character study. He espouses certain views that might be considered progressive – collaboration, community spirit, environmental consciousness and so on. He writes extensively about the importance of love and beauty in business, its responsibilities and higher purposes.
Yet he is anti-union, pro-small government and a fan of free-market thinkers such as Friedrich Hayek and Ludwig von Mises. And he has an unorthodox method for dealing with scandal (he was investigated by the Securities and Exchange Commission for anonymous posting on bulletin boards) – he meditated and did “holotropic breath work”.
Capitalism desperately needs advocates such as this. Mr Mackey is willing to stand up and celebrate the achievements of free enterprise and make the case for entrepreneurs to be seen as modern heroes. He is credible because his company is cool but highly profitable. He argues convincingly against creeping government regulation and the demonisation of capitalism.
Of course, it is easier to talk of all the good capitalism does when you run a growth company in an expanding sector. I have been involved in companies in declining markets or with huge structural challenges. Then business is often a life-and-death struggle, with less time for soft values and rather more emphasis on staying solvent. While uniformly happy suppliers, staff, customers and stockholders are the ideal, there are frequently compromises that must be made.
Moreover there are plenty of booming companies that cannot really be regarded as ethical. I mean companies such as patent trolls, which buy up intellectual property and sue for a living; arms manufacturers that produce devices such as landmines; cigarette makers; or law firms engaged in industrial-scale pursuit of dubious accident claims.
Even some of the organisations that Mr Mackey cites in his book as great examples of conscious capitalism are not my idea of decent corporate citizens. For example, there is the search monopolist Google, which is a free rider on content created by others and an expert at paying negligible corporate tax in Britain.
Nevertheless, I agree with many of his broad maxims. For example: happier and better-trained staffs are more productive; a constructive corporate culture helps generate innovation and growth; a pay ratio of no more than 19 between the top and the bottom is wise.
Conscious Capitalism is full of thoughtful insights and original observations that could help organisations from start-ups to multinationals become better at creating financial and social wealth for all their stakeholders.