John Mackey and Whole Foods: Charismatic Leadership Style

Introduction: Leadership and Vision at Whole Foods

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," as Whole Foods Market has done. Whole Foods accomplished what was said to be impossible, organizationally speaking. It offers healthy food 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 large food companies and wished to honor local, organic producers that offered products created with respect to the needs of the land. Long before organic, all-natural foods became commonplace on the shelves of Walmart — 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 increasing lip service to 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.

Organizational Power and Charismatic Leadership

Mackey is a vegan with his own home farm, and 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 meat, but only very expensive, farm-raised varieties — Mackey has been able to advance his business model to great success. Whole Foods began in Austin, Texas, a state often 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 admission that even some of the "healthy" junk food sold at Whole Foods does not meet his personal standards, Mackey has clearly not been carefully managing his personal image for public consumption.

Mackey's leadership has been seen by many observers 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 while disparaging competitors (Paumgarten 2010: 2). This might have been a public relations disaster for many CEOs and caused them to be unseated, yet loyalty to Mackey — despite his reputation as "a fruitcake" — has persisted (Paumgarten 2010: 2). Mackey has also been ruthless in acquiring new companies, such as Wild Oats, his main competitor, to ensure that Whole Foods dominates the specialty grocery business. Profits are razor-thin in the grocery sector, 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 abandoning the capitalist ideals he also embraces.

Mackey's leadership model is clearly aligned with 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 group 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 recognized that it cannot abandon its commitment to all-natural foods and remain strong. Whole Foods cannot compete on price, but it can compete on quality. Its first core value 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, carefully arranged displays, and the sights and smells of 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 on the planet through sustainability efforts. These core values still hold true at Whole Foods today.

The second component of charismatic leadership is 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). Third, "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).

Expansion, Strategy, and the Path to Growth

Finally, the charismatic leader engages in emotion-inducing and often unconventional behavior to demonstrate courage and conviction about the vision and to help followers "catch" it (Schutte, Chapter 12, 2010: Slide 16). Mackey's unconventional behaviors fit this model well. For example, during a 2003 shareholder meeting, Mackey was criticized by animal-rights activists over the treatment of Whole Foods poultry. Instead of issuing 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 protesters' arguments. "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 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 remain reasonably faithful to his vision in part because he came from a reasonably well-to-do family that 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). This freedom allowed Mackey to challenge existing models and build his customer base deliberately. Whole Foods was Austin-based and expanded in a concentric circle outward from its initial sphere, so that Mackey could exercise close control over the store's evolution. The first non-Texas store was located in New Orleans.

After anti-trust regulatory issues were resolved, Whole Foods eventually acquired rival Wild Oats to expand across the Midwest. When Whole Foods was starting out, Mackey was warned: "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 standardized retailers, like supermarkets and Walmart, have begun to sell organic foods, this fear has become more real than ever.

Nevertheless, 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 assertive manner and hyper-competitive view of the niche marketplace his company inhabits, he understands the personalized nature of natural foods shopping and customers' desires for 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).

Conclusion

Whole Foods has managed to flourish and survive. It is a seeming paradox: a corporation devoted to thinking and eating on a small, low-impact scale; a corporation led by an eccentric and uncompromising libertarian who is willing to make strategic concessions to his CEO's ideology while still holding true to his values; and a team-based environment led by a highly individualistic leader. It has survived and continued to show a profit during economic downturns because customers genuinely enjoy shopping at Whole Foods.