Whole Foods Co-CEO Calls for a Renewed Focus on Community Stakeholders at U.Va. Darden School

28/01/2014

On Wednesday 22 January, Walter Robb, co-CEO of Whole Foods Market, explained how the company focused on community stakeholders from Detroit in order to open a successful store in the city's Midtown section - despite naysayers and skeptics who thought it would never be profitable.Walter Robb 2014

His appearance kicked off the 2014 session of the University of Virginia Darden School of Business  Leadership Speaker Series addressing the theme: Leaders Who Inspire Innovation, Collaboration and Growth.

Garrett Wilson, president of Darden's Net Impact Club, which co-sponsored the talk, introduced Robb. Professor R. Edward Freeman moderated a discussion with Robb following his presentation on how Whole Foods Market lifted a once ailing Midwest community. 

The key to their success, according to Robb, was sticking to Whole Foods' core value - using business "to put something good into the world" and not to focus on profits alone. Their first step was to reach out to the people of Detroit, listen to them and learn from them.

"We had to start all over again," said Robb. "Many had a bad taste in their mouths from everything that's happened in Detroit over the last 10 to 15 years. Companies had come in, extracted, burned them and had not kept their promises. I realized that it was all about - like with any relationship - trust."

The company emerged from the listening sessions with agreements to hire 70 percent of the store's employees from within the community and use local contractors to build the new store, which opened this past summer.

"This was a 3 1/2 year journey," said Robb. "This journey of rediscovering the community stakeholder led to this result of feeling the full power of humanity. This store represents a collaboration between a community and a company," added Robb, who believes that great things are now happening for Detroit.

Participants from the listening sessions held by Whole Foods evolved into a group called Equitable Detroit, which now helps other businesses integrate into the city.

Proving the Skeptics Wrong

The decision to open a new store in Detroit was met with skepticism. The Wall Street Journal asked if the venture was "A business plan gone off the rails?"

In reality, the new store is earning two times more than what was projected.

When Whole Foods performs, Robb said, it tends to silence the critics.

In addition, Robb explained during the Q&A session that while Whole Foods did have to lower its pricing structure and look to conventional produce instead of all organic produce for its Detroit store, it did not sacrifice its high-quality standards.

"We're never going to compromise on quality," said Robb. "The whole point is we're not going to Whole Foods to do 'half foods.' The community made it very clear: 'We want who you are.' We aren't going to dumb ourselves down. That would be an insult to the community," Robb added.

A Transferable Business Model

During the moderated discussion with Freeman, Robb addressed the Whole Foods business model and how it can be applied to other businesses.

He told Freeman, "It has to start with a company's core mission."

He explained that many companies are talking about versions of Whole Foods' business model - conscious capitalism - and that the principles are transferable. They include a strong company purpose and set of core values. For Whole Foods, this means:

  • Team Member Happiness
  • Partnerships With Suppliers
  • Community And Environmental Responsiveness
  • Motivated Investors
  • Satisfied And Delighted Customers

Additional principles of conscious capitalism include:

  • Stakeholder Integration
  • Conscious Leadership
  • Conscious Culture And Management

"In its finest form it's a cathedral for the human spirit," said Robb about business. "It's a place where human beings can express themselves, can create and use their intelligence."

Robb also credited Freeman with the emergence of the company's business model, which directly attributed to stakeholder theory, a business management and ethics theory that puts forth methods to help companies equitably address the needs of all of their stakeholders - not just shareholders.

"We have to thank you for stakeholder theory, because we learned it at your knee," said Robb. "We decided to take it out for a spin."

According to Robb, Whole Foods' team members were "incredibly proud" of the store's actions to open the new Detroit location, and they developed an even deeper relationship with the company.

Rob further described Whole Foods as a $13 billion company that pushes boundaries, and in some cases, may be ahead of its time.

"There is oftentimes an ideology that big companies have to be bad. I would challenge that," said Robb in response to an audience question about Whole Foods' magnitude and intent. "It's not that big companies or small companies are bad, it's what you do that matters." He added, "Being big gives us the opportunity to do things we could have never done before."

Darden's Institute for Business in Society also supported this event.

The well-attended talk proved energizing for an MBA student body with a growing interest in mission-driven careers that create value and produce profits.

About the Darden School of Business
The University of Virginia Darden School of Business is one of the world's leading business schools, offering MBA, Ph.D. and Executive Education programs. The unique Darden experience combines the case study method, top-ranked faculty whose research advances global managerial practice and business education, and a tight-knit learning environment to develop responsible and complete leaders who are ready to make an impact.

About the Institute for Business in Society
The Darden Institute for Business in Society (IBiS) aims to be a leading, global catalyst and convener of thought, information and action at the interface of business and society; and to promote the development of leaders to positively impact society; and to promote the development of leaders to positively impact society through their roles in business.

For questions or information, contact Abena Foreman-Trice or a member of the Communication team.

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