Conscious Leadership - Business Matters 2021
john mackey the co-founder and ceo of whole foods market has built the natural and organic grocer from a single store in austin texas in 1978 into a fortune 500 company which went public in 1992 and was purchased by amazon in 2017. today whole foods market is a top u.s supermarket with more than 500 stores and 95 000 team members across the united states canada and the uk mackie has been recognized as one of fortune's world's 50 greatest leaders best ceo by numerous financial journals and most inspiring ceo by esquire magazine he's the author of the book's conscious capitalism and conscious leadership father robert sirico is the president and co-founder of acton institute and the pastor of the sacred heart of jesus parish in grand rapids michigan father cirico has spent 40 years as an international public intellectual making the case for the honorable and even potentially holy vocation of enterprise his first major book defending the free market the moral case for a free economy has been reprinted multiple times and now translated into half a dozen languages his next book to be published later this year is on the economics of the parables now enjoy the conversation and don't forget our fourth audience question posted below it's a delight to welcome john mackey to business matters you may know mr mackey as the founder a ceo of whole foods markets or the author of conscious capitalism but now you'll know him as the author of conscious leadership and that's what we want to talk about today john it's i'm delighted to be with you again especially in light of the possibility for opening a place here in grand rapids michigan thanks for having me on father robert what does conscious leadership mean you this is more than just one of these typical business books it's chock full of uh economic and uh philosophical insight so tell us what conscious leadership is what is a conscious leader of course there's a 250 page book that explains in detail what a conscious leader is and each chapter the nine chapters in each chapter represents a different aspect of conscious leadership from putting purpose first to leading with love to always acting with integrity defining win-woman solutions etc but if i was just giving the simplest version of it it's it's just like it sounds it's leadership done with more awareness leadership done more consciously most of the time particularly in business business people tend to be doers people of action they have to get a lot done and they have to-do lists and checklists and they every day they go in and they check them off and they have a lot of meeting and appointments as a result frequently leaders are so busy they don't do any they don't have that much self-awareness and when socrates said know thyself many many leaders don't know themselves very well they don't know what their purpose is they don't understand their emotions they don't understand what's motivating them they are acting in a non-conscious way so a conscious leader is one who's become more conscious of their purpose more conscious of their emotions more conscious of what motivates and and drives them forward well what you're arguing here is that there that you're offering a rejection of the split between purpose and profit is there a necessary contradiction between purpose and profit or do you think that they are mutually reinforcing mutually reinforcing it's been the enemies of business that have criticized business as being only about money only about profit and it's it's very odd because if you were to if you were at a party and you asked people um what's the purpose of business most people would look at you quizzically and say what do you mean what's the purpose of business everybody knows the purpose of business purpose of business is to make money right that's a that's a very odd answer because if you ask what the purpose of a doctor is doctors make a lot of money but their purpose isn't to make money at least for most doctors it's to heal people teachers educate architects design buildings engineers construct things priests they help the spiritual needs of their of their people in their church and each one of these professions refers back to some type of value creation that they're doing for other people right only business is put in this very narrow box that it's just about the money and it really isn't because business people create the most value in the world business creates more value than all the governments and all the non-profits combined exponentially more value we create value for our customers for our employees for our suppliers for our investors for the communities that we're part of so there is no contradiction between purpose and profit um they belong together and i'll say one more thing about it it's like my friend ed freeman likes to use this in a metaphor and i think it's a good one he says look my body has to produce red blood cells or it will die it doesn't therefore logically follow that just because i have to produce red blood cells to survive that my purpose of my life is to produce red blood cells exactly similarly business must make profits or it will die but it doesn't mean that's why it exists right it needs profits but that's it's about the value creation that it's doing for others that's really it really works purpose lies and it's also true that if they don't make a profit in business you're failed at the goal of going into business in the first place so you're planning you have and you're not creating value for anybody you're not you're you're you're you've not that failing in business is any great um sin because sometimes mar ideas don't take with the market or you don't execute well right but um it in and of itself business is about creating profits because profits are how they get recycled into the economy and that's really how humans make progress we make pro we make progress through innovation and profits being attracted to innovations and then those profits get recycled and reinvested and we have an upward spiral of our economy so profits are essential they're they're good they're just how do you think we ought to view in 2021 the the relation between capitalism and profits especially in this what we hope will be a post-pandemic world i have to say if we if we look at the name capitalism um you know karl marx named it capitalism right and it and it's pejorative it's a criticism it and it it goes back to that thesis that intellectuals have that business is just about the money and business people are particularly selfish and greedy and exploitative i like deidre mccloskey's um name for it which is innovationism or she says innovism but i think innovationism catches it a little bit better and i'll credit her for that so it's about innovations and we make progress in humanity through innovations that change our lives for the better for the most part so the relations between capitalism and profit then we can change that to relationship between innovationism and profit innovations are how firms take the ideas of science and operationalize them into the real world and profits will follow from successful innovations that create value for other people so they're they're one they're together people like us are often accused of defending um markets and business and capitalism and i agree with you by the way fully on the the narrowness of the word capitalism um but what critiques would you offer to a market society what limitations are there to capitalism it's it's an economic system it's the way to organize society to create prosperity progress and growth but it's not a substitution for having an ethical system it's not a substitution for having uh spiritual values it's not a substitution for government or the nonprofit sector or all the other aspects of humanity it's it's important and it's necessary but it's not the answer to every challenge and problem the world has and business is wrongly and innovationism is wrongly condemned for not solving all the problems it can't solve all the problems there are other problems that business can't solve that doesn't mean that what business does isn't good it is good it's just not complete all by itself right milton friedman uh said to me when we were beginning the acton institute he said capitalism is necessary but not sufficient and i think that's what you you're basically saying that's exactly milton was a brilliant man and he's absolutely right on that i totally agree you talk about purpose in the book and and uh that purpose is important not just for businesses but for people within the company could you elaborate that a bit i'll go further than that um i mean people want their work they want to make their work it's more than just earning a living it's it's like maslow's hierarchy of needs if you're just trying to survive then just earning a living's good enough but initially people get that and then they want to move up maslow's hierarchy to higher need levels and purpose is people want to feel like their work is making a contribution to other people it's in work should be an act of service it produces a living it produces income but it's also producing value for other people and so one way i can put it let's say people come to work at whole foods market and what i i do the orientation the first thing i say when they come to work is well thanks for working for whole foods while you're here your job is to maximize profits for our shareholders that is that is not going to inspire that many people i mean it's it's if you come in and you say thank you for working at whole foods our higher purpose is to nourish people on the planet and then we go into some detail about how we try to do that then then they're rightly going to feel like well you know my working hair is actually helping other people it's a good thing so purpose i i believe that if you want people to work for a company for a long time if you're a leader in a business or any organization actually this is not just business this is organizations in general there's if you do these two things you will probably keep people for many many years if not for their entire lives the first one is people want purpose and if you can give them purpose then you are fulfilling a deep human need and secondly people want love people want to be cared about they want they feel like their life is that somebody cares about them and so one we try to do both those things at whole foods we try to give people a sense of purpose and meaning in their work and we also want them to know that we care about them and that there's a community of people that care about them and that they can care for as well so those two things together purpose and love that's what humans are looking for and if we provide it then people are going to be deeply much more fulfilled in their work what's your personal uh sense of purpose uh is it the same or different from it's the same that's not unusual for the founding entrepreneurs higher purpose in life to be similar to the higher purpose of the organization they create that is my own higher purpose in life whole foods is the major manifestation of that higher purpose but there are other things that i'm doing that are outside of whole foods that what else what else brings you fulfillment buckminster fuller once said i'm paraphrasing this i he he didn't say it quite this simply but it's the essence of what he said uh because he when he was young he was very depressed and he he almost committed suicide when he was at age 30 and he had sort of a spiritual awakening and in that awakening he saw he asked himself a question how much good could one human being do in a lifetime that resonates with me how much good can i do in a lifetime and so to nourish people on the planet is a form of creating the good if you talk about in philosophy terms the good the true and the beautiful all three are important i'm about optimizing good to the greatest extent i possibly can and yet your stores are are beautiful when i go in them i mean it's like go i i don't mean to trivialize this but it's almost like an art gallery i'm glad you s i'm glad you noticed that and one of the things that we hear all the time is at least pre-covered and hopefully post covet is i love being in your stores they just feel good yeah now part of what feel makes that feel good is the team members have a lot of love that's circulating in the store but also the stores are beautiful and and beauty is like a vitamin just like we need vitamins we need to get enough zinc and enough b12 and enough iron in our bodies or we'll be deficient well our souls need beauty beauty nourishes our souls whether it be beautiful music beautiful that's why art is so important and then beauty is something human beings need and if we're deprived of it right we're diminished it's like uh we're less happy it reminds us of our transcendence that we go beyond just our material world you know the the beautiful material beauty gives us a hint beauty gives us a glimpse of a more transcendent reality it it expresses it when we hear beautiful music we can feel sometimes our souls being transported to this higher realm of potentiality that's what beauty does yes exactly exactly you have a phrase in the book that kind of i hadn't seen it before i mean i i've seen win-win all over the place but you've come up with a a new rendition the win-win-win could you uh expand on that and and tell us uh what the difference between that and just the win-win is nice i like that the trinitarian metaphor here though yeah [Laughter] win-win-win means good for me good for you and good for the larger community so for example i'll give you a exaggerated uh analogy to get my point let's say that you hire a contract killer a hundred thousand dollars to kill somebody you don't like okay that might be a win for you might be a win for the contract killer it is not a win for the greater society and it's not it's it's certainly not a win for the person who just got killed or murdered so when when is good but not good enough we need that third win win win win good for you good for me good for the larger community and you know what i think one of the things i realized as i was writing that chapter um is that win-win-win is actually i could argue it's almost a complete ethical system we don't naturally think win win win we met we're we are taught to think win lose that is the way we grow up we have metaphors of sports so somebody wins everybody else loses metaphors of darwinian survival of the fittest kill or be killed only the paranoid survive war metaphors um we don't have win-win-win metaphors they're they're extremely rare but if you take on what i've discovered is if you take on the framework of win-win-win in every interaction that you have it's a complete ethical system in every situation win-win-win is appropriate if you begin if you begin to think that way so that every circumstance you're in you start asking what's the win-win-win here what's the win-win-win solution it will completely transform your life it is amazing i highly highly recommend practicing that yeah you know in moral theology when we deal with the question of social ethics what what the goal of it is is the common good and it sounds very much like uh what you're alluding to here that's the third win what's the common good right and if it's a win for you and a win for me but it's a loss for the rest of the larger society then it's really not a good solution it's not a good ethical stance it can't be enough just for you and me to gain it must be for the common good as well and that's more difficult but think about it if every situation you're thinking about how can you win how can i win and how can the larger society when how can the common good be enhanced here a lot of times that will change the way you think about the circumstance and you'll come up with a better solution another phrase that's often or a word that's used pejoratively is competition as though you have the lose-lose or the win-lose situation whereas um i mean i i see i'm informed by hayak in this regard i see competition as planning over the whole of society rather than just monopolistic or licensing planning that sounds like it it dovetails with this win-win win competition i mean there's you can reframe competition and uh competition doesn't have to be pejorative or negative uh about once every couple of weeks i have a game night with some friends and we dearly love each other and but we're competing and yet we the we get we enjoy the competition because it challenges us to be to be more than we were to become a better player and i think that's the way to think about competition your competitors help keep you from being complacent they help you strive for higher degrees of excellence it's i i'll use an analogy here that i find particularly interesting arguably the three greatest tennis players who've ever lived have played at the same exact time they are the three all-time winners of majors and that's roger federer raphael nadal and novik djokovic those guys have won more of the grand slam championships than anybody else and they are ex played exactly the same era they've pushed each other to get better and better and better and so they even though they're now getting into their late 30s they keep winning time and time again they keep winning these grand slams if they hadn't had each other pushing each other to get to a higher level would they would they have been as great and the answer is almost surely they would not have been you know as you say that it occurs to me that competition is a form of tutoring uh if you're open enough to be tutored by by the person you're competing against competitors sometimes force us to become good students because one of the things that can happen in business and i think maybe in life in general is success can breed hubris and arrogance you begin to believe your press clippings you begin to think that maybe you are better and smarter than other people competition knocks you back it forces you to go back to becoming a student again to learning new tricks to learning new skills in order to continue to learn and grow that's the last chapter in our book conscious leadership is continuously learn and grow i do see that's a good metaphor for life that we are we our entire life should be learning and growing from the day we're born until the day we die and i think that's a good way to live so now a whole foods market has merged with amazon and the news is that you've adopted a 15 an hour minimum wage for employees could you kind of walk us through that decision uh how it's affected the company and whether you think this is um what every business should do well there's a lot to unpack there so i'll give you time to do it i'm sure there's going to be of interest to our viewers this is something amazon wanted to do and when they talked to us about it we did some calculations and that decision so we didn't have that many people that made less than fifteen dollars an hour at whole foods when that announcement was made most people were making more than 15 an hour but um if somebody had worked for the company for say they were making twelve dollars an hour or thirteen dollars now it's what they started at and then now they're starting they get an automatic raise to 15 an hour or somebody else been working for the company for two years and had gotten up to fifteen dollars an hour well if you raise that new person up to fifteen dollars an hour the other person's gonna feel like wow that's not fair i put in two years here and he's making the same amount of money i am so the result is we had to increase the pay of about 90 000 people in the company got pay increases about 90 000 people and we we did the math that cost us 215 million dollars and because of all the raises that we had to give not that 90 000 people got raised in 90 but some people were making 20 and they got a raise to twenty two dollars or they were making twenty five dollars and they got a raise of twenty seven or twenty eight dollars so everybody got a raise because when you raise the bottom it pushes everything up so we talked to amazon about that so this is going to be expensive but one of the things that we like about i like about amazon is amazon thinks long term and they said a lot of good things will happen if we make this pay increase first of all turnover rates will go down fewer team members are going to quit because we're going to be paying better than they're going to get from a competitor so we'll have lower turnover less money we have to invest in training and and and for new people coming in and also it generated a lot of positive publicity for amazon and for whole foods so that those were the two gains um so that's why it made sense for amazon to do that for whole foods they were willing to take the hit of that and if you add it up to amazon it was far more than 250 million it was probably well over a billion dollars a year uh in additional wages that were being paid now your final you asked if i think that's a good idea for the whole society yeah should should the government be mandating that so so let's let's make a distinction between let's be very clear here i have my personal opinion whole foods has a position and amazon has a position so i'm going to make a differentiation between all three of those in my own personal opinion wages should be set by the market place their their government should not determine what wages are that that that is that when you raise wages above the level of productivity that people produce you just it's just it's a simple economic fact you just increase unemployment some people lose their jobs because they're not worth 15 an hour they're they're doing let's say i give an example tom is making ten dollars an hour at some place let's say a restaurant and uh the restaurant feels like tom's producing ten dollars worth of value for the restaurant and then they raise it to 15 tom isn't worth 15 to the restaurant so tom loses his job and they bring in they automate in some way or they cut back in service in some way because they're in a competitive situation and other restaurants are having to adapt to it if that wasn't true that's so obvious to me but it's not necessarily always obvious to people when i'm talking like in this type of event and i say well if we raise the minimum wage to 15 that's a good thing why not raise it to 100 an hour yeah what would happen why stop there maybe a thousand dollars an hour if everybody paid a thousand dollars an hour just think how good it would all be everybody would you know we'd have a living wage for everyone and it when you exaggerate it you can see that what would happen if we paid everybody a thousand dollars an hour is we just have massive unemployment because or everything inflation would go up astronomically because you'd have more money chasing after the same amounts of goods and everything would get bid up so i and i made this argument uh internally so there are different parts of this of the country that are not all equal so let's say um 15 an hour is no big deal in seattle or new york city or los angeles or san francisco or practically any of the urban you know uh coastal cities they that's probably most people are making over 15 or more in those in those cities but if you go to other places in the united states say jackson mississippi or mobile mobile alabama or a small town in georgia or some some small towns in west texas or the midwest those those pay rates the market wages there might be you know ten dollars might be or eight or nine to ten dollars might be the going wage rate with a lower cost of living going along with that in those markets so raising those wages in those particular areas makes it when we had to increase our pay in say the cities in the south part of the united states it was hard on the profitability of those stores because we were now paying far above the average pay and that did help our lowered our turnover but it made us a lot less competitive it made it more difficult for those stores to be profitable so did you have to raise prices then we just uh we just lost money or we made less money that's what we did because we we did not raise prices you took the hit we took the hit and uh i mean whole foods is a big corporation amazon's even one of the biggest corporations in the world and first or second largest corporation in the world depending on how you think about it they can afford to do it but your little local diner may not be able to afford to do that or the small hardware store that's just the owners themselves might be struggling to make that much money let alone being able to pay their help that much so government mandating that stuff in my opinion i don't think i don't think it's sound economics i don't agree with it now whole foods has no just be clear that's my own opinion right i'm not speaking for whole foods right certainly not speaking for amazon speaking for john mackey that's my opinion whole foods has no we don't take political stances we just don't do that amazon can do what it wants and if you should talk to amazon about that because i don't make policy in amazon sure you know what's interesting is you said if a person is making ten dollars an hour they're not worth ten dollars an hour when you put that in the middle of the rest of your philosophy on this the philosophy of innovation and maybe we'll talk a little about uh imitation in a bit uh you almost have to qualify and say this person's not worth ten dollars an hour now but with the innovation they will be worth 15 an hour and maybe worth is a wrong word because people misinterpret what that means everybody has intrinsic worth and every human being is worth a lot more than fifteen dollars an hour in terms of their value that they are as a human being i mean in terms of the economic contribution they're making through their work that that is determined through market processes through really through market competition wages when you force them up artificially beyond what the productivity rates justify i mean the economic laws are pretty clear it results in unemployment and some people keep getting ra raising pay and other people lose their jobs yeah let's talk about this uh connection between innovation as imitation uh and some of the practical ways businesses can encourage this kind of creativity and uh innovation you speak about this in in the book about innovation you alluded to professor mikowski's preference for the word innovation yes innovation is uh is one of the most important things that that's how progress occurs in society innovation is um if i think back in my own let's just i get asked um um father robert i get asked from time to time you know what's the future going to hold and i always say you know nobody knows what the future is going to hold because if you go back 20 years ago which isn't very long right now almost everybody in advanced societies has a very serious addiction to their smartphones right everybody walks around staring at their phone all the time and they feel do i have my phone is it with me and very insecure without it they didn't exist 20 years ago there were no smartphones 20 years ago and now we're completely addicted to it 20 years ago google was a relatively new company facebook didn't exist uh twitter didn't exist uber didn't exist airbnb didn't exist tesla didn't exist these companies that have had these major impacts in the world didn't even exist 20 years ago right and so who knows what the world's going to be like 20 years from now because new innovations are going to occur that you and i actually possibly can't even imagine so that's how humanity makes progress we have innovations that occur and then they get it they get iterated on i mean whole foods was innovation very innovative in our in our early days we we kind of invented the natural food supermarket an idea that there'd be a food store that was of scale that would sell just natural organic and healthy foods that had never existed before now it's been widely copied so the innovation has moved into the mainstream you have to keep innovating or you get people copy you and pass you up in in the third part of your book you discuss people and culture and you give some advice on hr matters so we're in the middle of a real market volatility right now most companies have struggled with the question of laying off employees so what advice do you have for business people seeing a decrease in revenue and then the current challenges that we're facing that's a good question and and there's not one answer that fits all circumstances right i mean it depends upon the business it depends upon the circumstances it finds itself in to say what's the right thing to do i can only talk about what whole foods does because that's what i know best and from time to time in our history we've had to we've had to do layoffs when business has turned downward and we store we've had a few stores in our history that weren't successful and they've had to be closed and some people lost their jobs now whole foods is at a scale where we we may we may make a new move we may make a decision and we may have to restructure in some way and some people will lose their jobs we try to always do that in a very caring and compassionate way so the one thing we will do is we generally try to make people a job offer but we may not be able to keep the same job that they had at the rate of pay they had but we'll still make them an offer to do something else in the company it might be something they don't want to do it might be a pay rate a pace rate that they're not willing to take in which case they'll have a package that they can take as a severance package and then they can go look for job elsewhere so we always and we try to give people we try to be fair about it we try to give opportunities we always try to give other offers but a business has to be able to change as as markets change as circumstances change when you go into a pandemic like this i mean whole foods has been adding employment on this entire time because our business has gone up sure but but we're in a unique circumstance uh particularly with all the food deliveries uh that we've been doing but other toilet paper stock you know that's that's it's pretty good right now but uh uh i i i saw this really funny uh cartoon that kind of summed it up for me do you remember that movie series called back to the future yes yes did you ever see that so you've got this guy and and uh he goes into the you go first he goes into the past and then the second one he goes into the future and he's got this flying car right that's the right the right that and and and so in this little cartoon i saw the the doc the crazy doc the professor comes back and he says marty you'll never want i you never know what i found in 2030 they're they're they're still using all the toilet paper they stored from 2020.
but you know what happened uh actually the toilet paper is particularly interesting because uh there was still plenty of toilet paper but studies showed that americans use about 50 of their toilet paper away from the home when they go to work when they go to an office or they go to a restaurant or they go to a gym or they that so there's institutional toilet paper in these big rolls that's not adapted to consumer use at home so almost all of that toilet paper started being used at home and it took a while for the supply chain to adapt to that so we had a we had a run on toilet paper when this hit in our parish and we had to close the school for a period of time it occurred to me that we had all this toilet paper in the school and everybody was frantic about toilet paper so we just called all our parishioners and said if you need toilet paper we have the toilet paper from the school which is not being used presently we only had about two or three takers on this but you're making my point you were long in toilet paper while the people at home were short in it and that but what's interesting is the supply chain it took a few months but it just shows you the how dynamic um capitalism innovationism is because supply chain reset itself and it only lasted two or three months and then toilet paper supplies adapted to the marketplace john you you are uh refreshing as a leader in business because your your curiosity your wanting to learn things is very evident what advice do you have and i suspect this is going to be part of it to young people who are entering leadership entering business how do you become a better leader read my book well yes and we've got the book right here i'm showing it on camera we'll make sure that we the first thing you have to so the first thing is you have to want to become a better leader you'd be surprised most people don't human egos being what they are many people have trouble learning because they can't admit they don't know everything and they don't have a beginner's mind they don't they they think admitting they have to learn something means they that maybe it threatens their self-esteem so if you want to become an effective leader you have to be curious you have to want to keep learning and you have to you have to have self-awareness you have to realize i think one of the things that i'm pretty good at is i have a great deal of self-awareness and i figured out pretty early on what i was good at and what i wasn't good at and the things that i'm not good at i don't i just i brought people in who had strengths that i didn't have and i built a team around me that supported my weaknesses because i have so many weaknesses and but i i've got a lot of great people that that solve for those weaknesses so we have to we have to have that we have to be that self-awareness and we have to have the earnest desire to improve yes you know i think it's aquinas gives us a definition of humility i put it in my own words that it is the love of truth above all things and that sounds like what you're saying just to pursue the truth what's what's reality here you know am i strong in this am i weak in that uh and that helps in the last two minutes that we have together what advice do you have for business leaders as we're facing 2021 i mean we're coming out of a dreadful year what what words of hope do you have what words of insight do you have uh i'll answer that question a little differently than you probably hope that i was gonna answer but i think it's most important to deliver this message business people are disliked by intellectuals and that's not new that's been the case throughout all history the the the intellectuals have looked down upon businesses mere trades people they've they've been if you're an ethnic minority like the jews or the chinese you were persecuted and uh uh treated poorly business is is seen as sort of this kind of grubbing for money type of thing and that's one reason intellectuals don't like capitalism as a general rule not all intellectuals but the academy in general is pretty hostile towards business and business people are the great value creators in the world we just don't get credit for it we're the ones i mean if you go back 200 years ago and that's just a drop of time in the in the human journey 200 years ago 94 of every human being alive 94 of the people on the planet lived on less than two dollars a day ninety four percent only six percent had two dollars a day in today's dollars that's down now to about eight percent of the population in the world how did that happen it happened through innovationism it happened through business it happened because the genie got out of the bottle with the industrial revolution and humanity began to pile innovation upon innovation upon innovation and business drove it all we're the heroes of the tale we're just not giving credit for it so i want to tell people that are in business to recognize that you're doing very important work in the world it's through the work that we do that the world makes progress poverty lessons prosperity grows and to have the courage and the self-esteem to stand up for the goodness of what you're doing to realize that you have a higher purpose besides just making money that you're creating value for other people and to do it with love to do it to lead with love to to do it caring about people and service to their to the common good of all to look for that win-win-win solution and if we do that you'll have a deeply fulfilling and happy life that's that's been my experience john mackey it's great to be with you together again and i just want to remind our viewers uh conscious leadership i'll bet you you can find it on amazon thank you very much whole foods and you can get it whole foods great thank you
2021-03-18 20:44
