Leadership and organizational structure

John Mackey: Whole Foods Leader

Leadership is often defined as having an inspirational function. "Leadership is the ability to influence a group toward the achievement of goals. A leader does not have to be someone who holds a formal position or title. They can emerge from a group and provide vision and motivation to those around them" (Schutte, Chapter 12, 2010: Slide 3). Leadership is said to be in stark contrast to management, which merely "deals with the complexity of the organization and works with planning, organizing, leading and controlling to bring about order and consistency in the organization. Even though the two roles have different areas of focus, both are necessary for organizational success" (Schutte, Chapter 12, 2010: Slide 3). Leadership defines the vision of the organization; management offers practical ways to embody that vision. Having charismatic and inspiring leadership is essential for an organization that 'breaks the mold' like Whole Foods. Whole Foods has done what was said to be impossible, organizationally speaking. It offers healthy food that is priced above the market minimum and has expanded rapidly since its beginnings in the 1970s. It has accomplished this largely due to the charismatic leadership style of its CEO.

Whole Foods CEO John Mackey is a political libertarian with a passion for organic foods that began while he was in college. He spurned 'big food' companies and wished to honor local, organic producers that offered products that were created with respect to the needs of the land. Long before organic, all-natural foods became commonplace on the shelves of Wal-Mart, back when health food stores were primarily patronized by 'hippies,' Mackey was determined to bring his vision of healthy, all-natural products to the people. His vision was not necessarily practical, but he believed passionately in the need that his company was fulfilling.

Mackey clearly sees himself as a charismatic leader, as a kind of benevolent 'father-figure' "to his fifty-four thousand employees, who are known as "team members" (Paumgarten 2010: 1). According to House's Path-Goal theory, leaders are generally categorized according to four types. "Directive: focuses on the work to be done; Supportive: focuses on the well-being of the worker; Participative: consults with employees in decision making; Achievement-Oriented: sets challenging goals" (Schutte, Chapter 12, 2010: Slide 10). Since the development of more humanistic theories of leadership like House's, organizations have been paying more and more lip service to the use of participative leadership as a way of generating new ideas and organizational growth. Whole Foods, with its directive CEO stands in sharp contrast to this approach.

Mackey is a vegan with his own home farm, he has been extremely directive and controlling in terms of how the organization has evolved. "A Whole Foods store, in some respects, is like Mackey's mind turned inside out. Certainly, the evolution of the corporation has often traced his own as a man; it has been an incarnation of his dreams and quirks, his contradictions and trespasses, and whatever he happened to be reading and eating, or not eating" (Paumgarten 2010: 1).

In an era where the majority of the public still eats meat (Whole Foods does offer its customers meat, but only very expensive, farm-raised meat), Mackey has been able to advance his business model to great success. Whole Foods began in Austin, Texas, a state that has been called the 'meat and potatoes' capital of the United States. "Mackey has been bewildered by the way some things that he has said or done have brought trouble on him and Whole Foods. Public opinion can be capricious and -- when you're a grocer, a retail brand, and a publicly traded company -- hard to ignore or override" (Paumgarten 2010: 1). From his right-wing, libertarian editorials, to his commend that even some of the 'healthy' junk food sold at Whole Foods does not meet his personal standards of health, Mackey has clearly not been carefully micro-managing his personal image for public consumption (no pun intended).

Organizational power

Mackey's leadership for many observers has been seen as paradoxical. He has insisted on high ethical standards for his suppliers, yet it was found that "for nearly eight years, he had been secretly logging onto an Internet message board devoted to Whole Foods stock" and praising his own company and disparaging competitors (Paumgarten 2010: 2). This might have been a public relations disaster for many CEOs, and caused them to be unseated, yet the loyalty to Mackey, despite his reputation as "a fruitcake" still continues (Paumgarten 2010: 2). Mackey has also been ruthless in acquiring new companies, such as Wild Oats, its main competitors, to ensure that Whole Foods dominates the specialty grocery business. Profits are razor-thin, and most general supermarkets cut costs as much as possible. Mackey has instead held true to his so-called 'hippie' vision of what food should look like and taste like, without eschewing the capitalist ideals he also embraces.

Mackey's leadership model is clearly in line with that of the traditional charismatic model. First, he articulated a vision: to create an entirely organic, sustainably-produced store. He built the business slowly, from a small grocery store in Austin, to a regional chain, and finally through acquisitions, an international chain, after Whole Foods acquired a chain of London-based natural food stores. The long-term strategy has fulfilled the original conception of Whole Foods because no matter how corporatized the organization has become, Mackey has realized that it cannot abandon its commitment to all-natural foods and still remain strong. Whole Foods cannot compete on price, but it can compete on quality. Of its core values, its first is "Selling the Highest Quality Natural and Organic Products Available" ("Our core values," Whole Foods, 2011).

Mackey developed his passion for organic food while living in a vegetarian co-op. He called himself a 'brown rice capitalist' and, in contrast to most competing health food stores, sold meat and beer alongside quinoa. Mackey created a 'scene' and people flocked to the store for many of the same reasons people shop at Whole Foods today -- its attractive ambiance, the carefully-arranged store, and the smells and sights of the beautiful natural and prepared foods. Mackey's three principles behind Whole Foods were: "Whole Foods -- Whole People -- Whole Planet" ("About Whole Foods," Whole Foods, 2011). Foods had to be healthy, wholesome, and minimally processed, the company vowed to show concern for its employees and shoppers, and it would strive to tread lightly upon the planet, in terms of sustainability efforts. These core values still remain true of the Whole Foods of today.

The second component of charismatic leadership formalizing a vision statement. "Charismatic leaders will often use this statement to reinforce the goal and purpose of the organization. This vision is communicated in a way that expresses the leader's excitement and commitment to the goal" (Schutte, Chapter 12, 2010: Slide 16). Thirdly, "the leader will use his words and actions to communicate a new set of values for the followers to imitate...the charismatic leader will try to find behaviors that demonstrate their commitment to the vision. They will choose behaviors that will help followers "catch" the emotions the leader is conveying and help achieve buy-in of the followers (Schutte, Chapter 12, 2010: Slide 16).

Finally, the charismatic leader engages in emotion-inducing and often unconventional behavior to demonstrate courage and conviction about the vision to help the followers "catch" the vision (Schutte, Chapter 12, 2010: Slide 16). Mackey's unconventional behaviors certainly 'fit' this model. For example, during a 2003 shareholder meeting, Mackey was criticized by animal-rights activists because of the treatment of Whole Foods poultry. Instead of making a canned press release, Mackey decided to shift to cruelty-free providers, even if this made the food more expensive because he was persuaded by the arguments of the protestors. "This inspired his vegan conversion, and persuaded him to overhaul the meat-procurement process" (Paumgarten 2010:1). However, Mackey is not so ideologically-focused that he loses sight of the practical needs of his organization. Despite his own personal practices, he has not made Whole Foods entirely vegan, as some shoppers have demanded. "Sure, I wish Whole Foods didn't sell animal products, but the fact of the matter is that the population of vegetarians in America is like 5%, and vegans are like 25 or 30% of the vegetarians. So if we were to become a vegan store, we'd go out of business, we'd cease to exist," he has said (Paumgarten 2010: 1)

Mackey has been able to be reasonably faithful to his vision because he came from a reasonable well-to-do family, who provided some of the financial backing needed to start Whole Foods. His father, "Bill Mackey became the C.E.O. Of a health-care company, which was sold, fifteen years later, for nearly a billion dollars" (Paumgarten 2010: 3). He was free to challenge existing models and to build his customer base. Whole Foods was Austin-based, and expanded in a kind of concentric circle, outside of its initial sphere so Mackey could exercise control over the store's evolution. The first, non-Texas store was located in New Orleans. Whole Foods, after anti-trust regulations were resolved, eventually acquired rival Wild Oats to expand across the Midwest. When Whole Foods was starting out, Mackey was told: "You know, I really think you're just selling hippie food to hippies. I gotta tell ya that I don't think it's gonna work. But if it does work, Safeway's gonna just steal it from you and you're not going to be able to exist anyway" (Paumgarten 2010: 1). As more and more standardized stores, like supermarkets and Wal-Mart sell organic foods, this fear is becoming more real than ever.

However, Whole Foods has survived. Mackey has used a combination of personal power and organizational design to achieve this (Schutte, Chapter 13, 2010: Slide 16). Despite his rather lordly manner and hyper-competitive view of the niche marketplace that his company inhabits, he understands that the personalized nature of natural foods shopping, and customer's desires for specific products tailored to local needs. Clearly, a "key contributor to Whole Foods' success, and to its reputation and self-image as a progressive business, was the company's structure. Whole Foods is divided into a dozen regions, which in some ways operate almost as separate businesses, to encourage creativity and a sense of ownership...The stores, too, have a high degree of autonomy" (Paumgarten 2010: 1).

The store's model is also heavily team-based. There are regional oddities: Venice, California, has a kombucha bar; Portland, Maine, is the only store that carries live lobster; in Dallas, you can hit "The Spa by Whole Foods Market" while a team member shops for you. The team is the fundamental Whole Foods work unit. Teams participate in selecting their bosses and their products, and are accountable for their performance. Teams are judged at Whole Foods -- and rewarded -- based upon collective performance, so it is imperative that teams self-select people with whom they work well, and who are high-quality team performers. Although libertarian Mackey famously came out against nationalized healthcare in a Wall Street Journal editorial, stating that he believed that ultimately benevolent employers should provide health insurance, he has practiced what he has preached, and ensured that all team members receive substantial benefits as well. Keeping workers happy is an essential part of attracting high-quality people to the company and ensuring that at every level, customers have a pleasant shopping experience.