Video One: John Mackey on Defining Your Purpose and Business as Citizen

The simplest way to understand Conscious Capitalism is two core principles. Principle number one is that business has the potential to have a deeper purpose than merely maximizing profits and shareholder value. It’s not that there’s anything wrong with maximizing shareholder value and making profits. In fact that’s necessary for a business to fulfill its deeper purpose and mission. So making profit is not bad, it’s good. I can’t live if I don’t eat. I will die. But, that is not the purpose of my life; to eat as much food as I possibly can. That is simply a necessary condition in order for me to exist as a biological life form. Business can’t survive without profit but that’s not why it exists, or it need not be the reason it exists.

So, the first principle of Conscious Capitalism is that a business must discover or create what its deeper purpose is. And that will prove far more energizing for the people that work for it than telling them “your job is to try to maximize shareholder value.” It’s not very inspiring and not very energizing for people. But if you talk about selling the highest quality natural organic foods in the world that improves people’s health, that is good for the environment, is good for livestock animals, is making the world a better place—that’s highly inspiring and energizing for people. If we pursue that higher purpose and take care of our customers and create value, then profits will be the result of that. But the profits themselves are not the purpose of the business—the purpose of the business is to fulfill that deeper mission. And profits are a means to the end of the deeper purpose rather than the end in itself.

The second purpose of Conscious Capitalism, or the second aspect of Conscious Capitalism, is understanding that business is not a machine. It’s not a machine where you combine—that’s the old metaphor, that’s the old 19th- and 20th-century metaphor—that if you combine the factors of production: labor, capital, land … mix them up in the right proportions like on an assembly line, you’ll spit out profit as the end result. Traditional capitalism thinks in terms of a machine or an industrial metaphor.

A 21st-century metaphor would be more of an ecosystem metaphor: understanding the interconnection that all the different constituencies have in the business. That they are all interdependent on each other and one way to express that is through an interdependent stakeholder model that customers, employees, suppliers, investors, larger communities are cooperating together voluntarily to create more value. And they are interdependent on each other so organizing the business to only create value for one of the stakeholders, the investors, you see it as a system and leadership’s job is to create value to optimize the entire system and create value for all of the stakeholders.

Paradoxically—this is the thing that most people do not understand—that philosophy will also produce more long-term shareholder value than the traditional model of putting the investors and shareholders first. Profits are best pursued indirectly as part of that deeper purpose and within the context of a larger stakeholder system. That is the single most important truth I have to communicate to people. It’s one that the skeptical world does not believe easily. Nevertheless, time will prove what I am saying is true.

Business absolutely has responsibilities to communities. Business exists within communities. Whole Foods Markets has stores all around the country. Right now we’re in Austin, Texas; we have two stores here. We are best thought of as citizens in those communities. And as citizens we have responsibilities to the community. The community doesn’t merely exist to serve this Whole Foods Market. Whole Foods cannot be separate from the community. We have to be, live, and exist within that community and we have to be responsible for that community since we’re there existing in it.

The mistake people make is they think either business has no responsibility whatsoever to communities, or it has some kind of infinite responsibility. Since an individual citizen doesn’t have infinite responsibilities, nor does it have no responsibilities, business—like individual citizens—has responsibilities in its communities. And I believe it’s not only the local communities where the business exists but also the communities in which it trades in. In other words, it extends out throughout the world, if you’re trading throughout the world as Whole Foods is.

I don’t believe governmental bureaucracies are going to solve most of the problems that we have in the world today. It’s a huge mistake to put our faith and confidence and dependence on governmental bureaucracies. They’ve had a remarkably bad track record of solving human problems. I do think individuals, not-for-profit organizations, and the private sector—corporations and businesses—have much more potential to solve most of the problems in the world than governmental bureaucracies will.

They’re capable of greater entrepreneurship in a way a bureaucracy is not capable of, so I really think that business needs to step up to the plate and begin to take it’s share of the civic load that exists in the world. There are serious problems in the world and business. If capitalism would apply its entrepreneurship and creativity to solving the world’s problems, I really believe most of them could be solved in a fairly short period of time.

My philosophy of life is very simple: people should follow their heart. And if you’re following your heart, you’re going to always be on fire. You’re always going to be living your passion, you’re going to be following your bliss, and each day will be a wonderful adventure. I really believe that’s the way to view life. People make the mistake of thinking they are going to be around forever. I mean they’re not. You’re going to be around, best-case scenario, 80, 90, 100 years. We are passing through here. And life is too short to do anything but follow our heart and follow our passion.