Purpose Driven: A Q&A with Whole Foods CEO Walter Robb
"Burning the world to live in it is wrong..."
-Wendell Berry, A Speech To The Garden Club Of America
Walter Robb believes that entrepreneurship is an integral part of America's DNA. He argues that business, when done correctly, can find and help to solve the world's most pressing problems.
"Government has a role but we've seen its limits these last few years," says the co-president and co-CEO of Whole Foods
. "Non-profits are good but they don't have the funding to enact the kinds of change that are needed. Business can and has to be the innovator in the world -- there's no more powerful agent of change."
Robb believes in purpose-driven entrepreneurship, a philosophy that espouses mission first, strategy second. It's a message he enthusiastically delivers to a hall full of business students at the University of Michigan's Ross School Of Business
. And much of the young crowd seems receptive to his way of thinking.
As Robb encourages the students to 'break bread' with him by eating apples (locally grown) placed on their seats, he talks about how once upon a time there were nearly 12,000 varieties of apples. Today there are roughly 600. It's a fact that has impact, and becomes a good launching point for the CEO's promotion of ethical entrepreneurship and conscious capitalism.
Reminiscing about the small natural foods store he started in the '70s, gently suggesting that the Ross School might want to revise its mission statement to be more leadership and community focused, and quoting from the writers, poets and thinkers who influenced him most (Albert Schweitzer
, E.F. Schumacher, Frances Moore Lappé
and Wendell Berry
), Robb entreats his audience to expose themselves to social issues and look for entrepreneurial solutions. He talks of developing a plan that produces economic value through social benefit.
"Why are you doing this? How are you making a difference? What is your reason for being, beside making money?" he asks. "There is no engine or vehicle like business to make a difference."
Robb challenges the traditional views of a corporation's role in society by embracing a stakeholder rather than an exclusively shareholder focus. It is a view that aligns employees, customers, suppliers, and business leadership toward a deeper purpose than just profit.
"The traditional stuff is covered but there are plenty of places that need help. That is your entrepreneurial opportunity," he offers. "Where your talents and the needs of the world intersect -- there lies your purpose."
Thirty years ago Whole Foods was a 10,000-square-foot store in Austin, Texas, dedicated to healthy and natural foods. Today, it is 306 stores (in the U.S., Canada, and U.K.) generating nearly $9 billion in annual sales. To give you a perspective on the company's size, Safeway has sales of $40.5 billion per year with 1,521 stores, and has been around since 1915.
With five Whole Foods stores in Southeast Michigan, Robb says he's committed to opening another in Detroit but states the decision has to "make both a value and a business case to his board to make it happen". That the company is actively seeking an answer to how to do that demonstrates what sets them apart from the other national grocery chains.
Named to Fortune's
list of the best companies to work for in each of the nine years the list has existed, Whole Foods has an open book on all salaries, has never brought in an executive from the outside, uses a team approach to leadership, and maintains a salary cap for all its executives (19 times the average employee).
"Who really believes that the CEO needs to make 500 times the average worker?" asks Robb. "I'm sure [Frank] Blake is a terrific CEO, but that's what's going on at Home Depot."
And Whole Foods has extended its purpose-driven philosophies beyond corporate structure and internal policies. Robb claims 30 percent of its produce is local, points to the $10 million in loans the company provides to help local growers process, distribute, and expand their products, talks of micro-credit programs, and boasts that they were the first company to go transparent on seafood sustainability standards. In the works? A new meat processing standard that took six years to develop.
But Robb makes clear that these programs and efforts are not acts of charity but rather a part of what has made Whole Foods successful, that its customers choose to support the company because of its practices.
"Making money should be the by-product of your passion, it shouldn't be your passion," Robb says.
After his lecture, Robb sat down with Concentrate's
Jeff Meyers to discuss purpose-driven capitalism and the next generation of American entrepreneurship. The interview was edited and condensed.The notion of conscious capitalism isn't a new idea but it's pretty rare in a corporation your size. How do you make that case to your shareholders?
We don't only aim to maximize shareholder value. I don't accept that as the premise of business. Yes, there are trade-offs but we adhere to a stakeholder philosophy. There is a wider circle of concerns than maximizing profit.
But somehow people have this view that because you're big you have to be bad. Where did that come from? We need to create big companies that behave differently, that can bring their scale to bear on these problems. There's nothing wrong with being a bigger company, it's about the conduct of the company. You must decide whether you will profit at the expense of the community or profit while benefiting the community.
Yes, you've often said "It's business that creates jobs, energy, and enterprise, and change." But that can be a double-edged sword. For every Whole Foods there are a dozen B.P.'s. How does society get the most positive bang for its buck from entrepreneurship?
Yeah: "I want to get my life back." Famous quote.
The fact is, there are a lot of companies coming around to viewing things in a different way. Look at Costco
. Jim Sinegal is one of my favorite business leaders. He's been a mentor to me. There's a guy Wall Street tries to push around and he sticks to what he believes. They wanted him to cut wages, he won't do it. Take Howard Schultz at Starbucks, or Southwest Airlines, they're focused on the customer
and employees as much as the share price.
You've got great entrepreneurs like Bill Gates and Richard Branson talking about new ideas about the role of business in society. The answer isn't collectivism but rather capitalism and collaboration. The only way we can move forward is understanding that stakeholders include more than just shareholders. This is how we will lift the world up and solve problems. But it has to be a more enlightened, creative, humane, and kinder form of capitalism.That message seems to be better received by younger entrepreneurs. Is there a generational divide?
Definitely. We had a generation of leaders raised in a particular way -- the followers of Milton Friedman and Calvin Coolidge -- and they had a role to play, right? Their role after the World Wars was to be incredibly productive in terms of the reach and scale of business. And now they're larger than anything we've ever seen in the history of humanity.
But I think that generation is coming to a close. The next generation has a different set of problems and challenges -- some created by the previous generation. This Millennial generation is going to demand a different set of behaviors from companies, they're going to go where it lines up with their values. Over time if you're not offering something more you're going to tend to lose talent.
The problem of the past generation is that they had so much success they view things from the perspective of: Why change until you have to? I say that we're entering a time where, yes, you have to change.
Look at the decisions made from companies in the downturn. Look at the companies that decided simply to start whacking people 1, 2, 3 and 4 times. We didn't make that decision. We used it as a challenge to find dollars in different ways. And that's made us a stronger company. When things are on the line you have to be careful about the decisions you make, and not just choose the easiest route. Your message seemed to really hit home with many of the students here.
The thing I like about this group of MBAs, who typically tend to focus on international opportunities, is that they're really thinking about their home community. I think we're seeing a new generation of students who might actually re-prioritize what they do with their business school education.
But how do you encourage a young entrepreneur or early start-up to maintain that patience of vision when the realities of the marketplace begin to pressure them to compromise mission for profitability?
They need to remember three things: (1) When the entrepreneurship is based on a deeper purpose it makes it easier to stick to it when hard times come. (2) You have to be honest about what that path will look like. It's not the easiest path. It's not even the most lucrative path necessarily... especially initially. Get real about what's in front of you. It's going to be difficult. (3) Exhibit determination. Look, nobody's going to do it for you. If you want someone else to do it for you, go get a job somewhere else. If you want to live a life where you're living your own choices then you've got to keep going and stay true to the mission of your efforts. So, where do you see opportunities for new entrepreneurship in your industry?
I got a call from Michael Pollan
the other day and he said, 'There are these guys who have money and they want to know where to invest, where would you suggest?' I said that they should invest in infrastructure. There's very interesting things happening out there -- like produce aggregators, like Red Tomato
in New York. It's a small enterprise that aggregates smaller farmers and gives them a point and distributes for them so that it provides a service at an appropriate scale.
As E.F. Schumacher
teaches: "Small is beautiful. In economics, people matter. Appropriate technology, appropriate infrastructure."
Jeff Meyers is the managing editor
of Metromode and Concentrate. He is also an
award-winning film critic for Detroit's Metro Times.
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Walter Robb at the Ross School of Business by Jeff Meyers
Apples at the lecture by Jeff Meyers
Walter Robb lecturing at the Ross School of Business by Jeff Meyers
Cre Fuller working at the Ann Arbor Whole Foods on Washtenaw by Doug Coombe
Whole Foods on Washtenaw in Ann Arbor by Doug Coombe
Walter Robb at the Ross School of Business by Jeff Meyers