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Even if you have never shopped at a Whole Foods Market and observed its cornucopia of organic offerings, you have undoubtedly seen its influence upon the food industry. The world’s largest organic and natural-foods grocer has grown to include more than 270 stores and counting, with more than 53,000 employees. Its success has inspired other grocery chains to carry organic lines and even identify the locations from which foods are harvested.
Co-founder and CEO John Mackey, 55, will be the first to tell you he never had a master plan to introduce organic food to the masses. The philosophy-educated college dropout says he didn’t think in terms of risk in those days but in terms of feeling good about his job. With $45,000 borrowed from friends and family, Mackey and then-girlfriend Renee Lawson Hardy opened a tiny natural-food store in a three-story house in Austin, Texas. At the time (the late ’70s), natural and organic foods had a very small cult following.
“As the media liked to say in the early days, we were a bunch of hippies selling food to hippies. It was never taken very seriously by the mainstream,” Mackey says.
The young couple was excited about doing something they loved and were utterly unaware of the market’s potential. To make ends meet, they lived in the third-floor office of their store, SaferWay, and bathed with the dishwasher hose in the vegetarian café on the second floor because there was no shower.
They eventually partnered with Craig Weller and Mark Skiles of Clarksville Natural Grocery and relocated to a 10,500-square-foot space to open the original Whole Foods Market in 1980. They were content with the one store, but a Memorial Day flood in 1981 caused extensive damage throughout Austin and devastated Whole Foods Market. The incident compelled them to rebuild and open a second store. “We didn’t want to have all of our organic eggs in one storefront, so to speak,” Mackey says.
Expansion was slow in the beginning—building on the success of each new store. By 1988, they had just five stores. During that slow growth, Mackey and his co-founders were able to figure out which business systems worked the old-fashioned way—by trial and error. What they discovered was that being open to constant change and new ideas (no matter who they came from) was the system that worked.
“I like to say that Whole Foods reinvented the wheel many times because we weren’t stuck in a legacy way of thinking,” Mackey says. “We were very free to innovate and do things differently. We didn’t know what we weren’t allowed to do, so we brought fresh thinking and fresh eyes.”
"Whole Foods reinvented the wheel many times because we weren't stuck in a legacy way of thinking."
Fresh thinking led to the creation of an idealistic workplace that allows employees to basically run their own stores and teams almost independently from corporate. As long as employees meet Whole Foods’ overall mission to sell the highest-quality organic food and improve people’s well-being, there is no need for interference. And since stores are staffed by individuals who are downright obsessed with everything from hormone-free milk to homeopathic remedies, that mission is deeply rooted in the company culture.
“Having a strong purpose and mission attracted a lot of idealistic people who probably wouldn’t have worked for a traditional grocery store,” Mackey says.
After Whole Foods went public in 1992 and raised $23 million with the initial public offering, it purchased the Boston-based chain Bread & Circus. Mackey says combining the intellectual capital from both companies formed a rock-solid foundation that prepared them for the explosive expansion that followed for the next 16 years.
The company has yet to stop growing. As of November 2008, there were 66 leases signed for new stores. In fiscal year 2008, Whole Foods earned an impressive $8 billion in sales, and it raked in $1.8 billion in the fourth quarter of 2008 alone. Its list of initiatives hasn’t stopped growing, either. Recently, the major emphasis has been on developing plans to make Whole Foods a leader in environmentally friendly and animal-friendly practices.
Its current green initiatives include eliminating the use of disposable plastic bags and, eventually, Styrofoam packing materials, using renewable energy sources like solar and wind power and creating local green task forces to make decisions for their individual stores.
Mackey’s biggest project is a new rating system that will be designed to ensure all animal products sold at Whole Foods meet a minimum standard. Even the lowest rating of 1 includes cage- and crate-free livestock. A rating of 5 means the animal has been raised in an enhanced outdoor system without any physical mutilations. Mackey says the system will revolutionize industrial-food processes.
Like so many ideas that have made Whole Foods such a respected company, it has evolved, well, organically, with collective input from the individuals who work there. Mackey credits the entire Whole Foods team for its continued success. He says letting go of some of his psychological ownership of the business has allowed it to flourish in unusual but desirable ways.
“Like a good parent I’ve helped guide it, but I haven’t tried to control it,” Mackey says. “I think a lot of entrepreneurs limit their company’s potential because they so closely identify it with their own ego that they won’t let it evolve in a direction that it wants to evolve.”