Aug 26, 2009
Whole Foods Markets, the world’s largest retailer of natural and organic foods, has carefully cultivated its brand image as an environmentally-conscious and socially responsible organization, through support of local farmers, health and wellness supplements, organic foods, fair trade policies, sustainability, microcredit financing and community giving. Not by accident, its target customers tend to be college educated and higher income, and more often than not, progressive and socially liberal. “Crunchy granola” might refer to either a special in aisle 4 or the political bent of many of their loyal customers.
So what are we to make of the editorial by co-founder and CEO John Mackey in the August 11 Wall Street Journal? Titled “The Whole Foods Alternative to ObamaCare,” the article criticized the current health care reform proposals being advanced by Congress and the Obama administration as “a massive new health-care entitlement” that the country could not afford. He proposed as an alternative eight reforms that be believes would greatly lower the cost of health care for everyone, including promoting the use of high-deductible health insurance plans and health savings accounts (which Whole Foods offers at no cost to all employees working 30 hours per week).
Regardless of your agreement with his position and proposals, Mr. Mackey clearly did himself no favors by including this provocative statement: “A careful reading of both the Declaration of Independence and the Constitution will not reveal any intrinsic right to health care, food or shelter. That’s because there isn’t any. This ‘right’ has never existed in America.”
To call the reaction a firestorm would be an understatement. In less than 2 weeks, a Facebook group called “Boycott Whole Foods” has 28,000 members. A Health Care Reform forum on the company’s own website has over 18,000 posts, compared to 898 total posts on all Healthy Living / Healthy Planet boards. Boycotts and protests are being organized nationwide, which could have a material financial impact: the loss of 10,000 loyal customers would result in a 1% drop in revenues.
This reaction is not hard to predict. The same customers that Whole Foods courts as its target – educated, affluent, liberal – are overwhelmingly supporters of President Obama and his position on health care reform. Speaking vocally against the President’s health care proposals is seen as a betrayal by the Whole Foods faithful; a backlash certainly to be expected by a businessman as astute as Mr. Mackey, named by Barrons as one of the 30 best CEOs in 2006 and 2007.
And yet he did it anyway. Never mind his right to say whatever he wants—that right IS in the Constitution—he must know that a company and its CEO are inextricably linked. His publicly stated views will be seen as the views of the company—just ask Tom Monaghan of Domino’s Pizza, whose outspoken views on reproductive rights earned his company a boycott campaign by the National Organization of Women in the late 80’s. While Mr. Mackey’s courage to offer intelligent and passionate dialogue on an important issue is admirable, the key question still remains: Why would he choose to put his company, its brand, and its financial health, at risk? Does he owe it to his shareholders, store associates, suppliers, and other stakeholders to stay on the sidelines? Or do CEOs have a responsibility to voice their conscience on important social and economic issues, regardless of the impact on their companies?
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