Sunday, March 18, 2007

Transparency + Long Term Focus = Effective Communicator

John Mackey, chairman, co-founder, and CEO of Whole Foods Market—the world's leading retailer of natural and organic foods, #5 on Fortune 100’s best companies to work for, and one of the leaders of corporate social responsibility—proves effective at managing one of John Hamm’s five messages leaders must manage: financial results. First, Mackey demonstrates Hamm’s point that quarterly results have more leverage as a metric for long term improvement than in only worrying about the gains or losses in the short term. Rather than focusing on the fact that growth in their first quarter for fiscal year 2007 was low compared to other quarters, Mackey communicated these lower results in terms of long term improvement through the following comment within the company’s quarterly report:

“We are pleased with our 7% comparable store sales growth in the first quarter, which was in line with our expectations and against a tough 13% comparison in the prior year… We are producing higher sales growth, comps and sales per square foot than our public competitors. Given our record store development pipeline, continued anticipated acceleration in store openings, and now the announcement of our pending merger with Wild Oats Markets, we believe we are even better positioned to achieve our goal of $12 billion in sales in fiscal year 2010. Over the longer term, however, we believe our sales potential is much greater as the market continues to grow and as our company continues to improve.” (

As mentioned in his comments, Mackey not only communicated these results through words, but also through action; he communicated that current results would improve through an action that everyone would participate in: merging with Wild Oats Markets. At the same time these quarterly financial results were released (February 21, 2007), Mackey announced this merger and asserted:

“Our companies have similar missions and core values, and we believe the synergies gained from this combination will create long-term value for our customers, vendors and shareholders as well as exciting opportunities for our new and existing team members…Whole Foods Market expects to recognize significant synergies through G&A cost reductions, greater purchasing power, increased utilization of support facilities and new team member talent.” (

By taking this action right away, Mackey communicated that Whole Foods Market is willing to commit to the future and that employees and shareholders can contribute through supporting the merger. While employees are often most worried about the security of their jobs in relation to financial results, Mackey effectively combated this fear by including the new opportunities for “existing” team members and also acknowledging later in this report that this merger would not result in the elimination of Whole Foods Markets positions, but rather creation of new positions through “immediate access into a significant number of new markets.”

Mackey also illustrates Hamm’s assertion that effective leaders must communicate financial results broadly and focus on the truth. It is obvious that financial results are broadly communicated through the extensive “Investor Relations” section on the company’s website, including direct access to all quarterly reports, press releases, and the 10-K. This direct access communicates to all stakeholders that Whole Foods Market has nothing to hide. More specifically, in his press release on 2006’s fourth quarter results, after announcing lowered expected store sales growth for fiscal year 2007 (6% to 8%), Mackey combines the brutal (expected) truth about the future with his continuing theme of focusing on the long term:

“After producing such strong growth over the last three years, we believe fiscal 2007 will be a transition year for us. As we revert back to our historical comparable store sales growth range, without yet producing a fully offsetting increase in sales from new stores, we believe our total sales growth will be impacted,” said Mr. Mackey. “However, having opened six new stores over the last two months, we believe we are just beginning to execute on delivering an acceleration in store openings that will be a driver of strong sales and comps in the not-so-distant future. We remain confident in our ability to achieve our goal of reaching $12 billion in sales in fiscal 2010.” (

Mackey also accompanied the previous statement with an announcement the same day (Nov. 2) that he was reducing his salary to $1 for the year and forgoing any future stock option awards. In solely relying on his current stock options and benefits, this action clearly communicated to stakeholders that Mackey expected improvement in financial results for the future. While the announcement of the expected lowered sales inevitably dominated as Whole Food Market’s stock price plummeted the following day, Mackey’s action demonstrated the trade-off that often occurs with honesty: short term losses. However, the long term gains are looking good as shares have soared after the announcement of the merger with Wild Oats. (

While it will be interesting to follow the anticipated merger (in particular, how Mackey will communicate operational key metrics to new employees as I could not find any information on communication of these metrics to current employees besides supporting the merger), Mackey effectively communicates results through combining thorough transparency and honesty with a focus on long term improvement.

Wednesday, February 21, 2007

What Matters Most? Being a Level 5 Leader

As CSR is becoming quite the catch phrase lately, many people and companies claim to be leaders in this movement. However, Jeffrey Hollender, CEO and President of Seventh Generation (the nation's leading brand of non-toxic and environmentally safe household products), does not make this claim—others simply make it for him. On Hollender’s blog, one can find numerous postings such as:

Dear Jeffrey and the Seventh Generation Team -
Thank you for your vision and leadership in catalyzing the social values driven economy. There is no question that Seventh Generation, and businesses that are evolving to embody a balance of life, planet and profit are the future. It takes courage to lead, and you are true leaders (as opposed to the self-proclaimed variety more common to the conventional business world).
Congratulations! George A. Polisner-Founder,

So, what makes Hollender such a great leader in CSR? Anyone who has read Jim Collins’ Good to Great could probably guess. Hollender is a level 5 leader: “he builds enduring greatness through a paradoxical blend of personal humility and professional will.” But, this is not just my opinion, nor those of many others like George Polisner. Here, I will try to let the evidence speak for itself:

First, Hollender has somehow perfected the mix of humility and professional will. As previously alluded to, Hollender does not brag about himself in his blog or his books (What Matters Most and How to Make the World a Better Place). In fact, to find out more about his great leadership, I often had to read others bragging about him (like Polisner, above). Like most level 5 leaders, I rarely found articles about Hollender; instead, the articles were about Seventh Generation. Rather than focusing on his ego needs, Hollender’s focus and ambition are first and foremost for the company. He constantly displays this modesty and commitment to Seventh Generation through utilizing the words “we” and “our” rather than “I” and “my,” even when asked about something he has accomplished. For example, as a “Fast 50” winner in 2004, an award given by Fast Company to people doing “extraordinary things,” Hollender only used one personal pronoun in all of his answers to Fast Company’s questions.

In combination with this humility, Hollender demonstrates his professional will through his incredible resolve to produce sustained results. As Fast Company points out, from 1988 to 2003 alone, consumer purchases of Seventh Generation products saved 240,220 trees; 1,054,050 gallons of petroleum; 92,004,020 gallons of water; and 229,759 pounds of greenhouse gasses! Moreover, Hollender constantly strives to improve the sustainability of his company and the world through CSR efforts; however, he sets a high standard for building an enduring great company through his unwavering dedication not to compromise the company’s vision and mission. For example, Hollender recently could have made a lot of money for himself and his company by agreeing to partner with Wal-Mart. Below is a section of his explanation to customers why he did not make this move:

“If we care about the business practices and values of our manufacturers, shouldn’t we apply the same criteria to our distributors? The answer has to be yes. We might sell a lot more products in giant mass market outlets, but we’re not living up to our own values and really helping the world get to a better place if we sell our soul to do it. When we looked at the big picture, it was clear that we needed to find a mass merchant that would not only be a good business partner, but had a reasonable amount of alignment with our principles.” (

Lastly, Hollender embodies a level 5 leader through attributing success to factors other than himself but taking full responsibility for poor results. In What Matters Most, Hollender provides details about Seventh Generation’s failure to meet one of its goals of complete transparency by not disclosing that their baby wipes contained a small amount of chlorine in them. After fully describing the extreme dangers of chlorine, Hollender takes full responsibility by stating:

“I confess, I suffered something of a leadership lag. There were always plenty of good reasons why it made sense not to tackle the problem…I preferred to find a solution before transmitting to the world the message that we had a problem without a solution. This, I have subsequently learned, is not only wrong, but a fundamental part of the reason so many people don’t trust business.”

Yet, when he discusses how his company successfully combated this problem, Hollender does not take the credit; rather, he focuses on “we” rather than “I” through statements like “We spent quite a bit of time and effort and money formulating this new product.”

If you are still with me after this long post (sorry—but I’m blaming Collins, so you can too!!), the question is not if Hollender is a level 5 leader. He clearly exemplifies level 5 leadership through his humility, ambition first and foremost for his company, professional will, resolve to produce sustained results and build an enduring company, and habit of crediting others for success while taking responsibilities for poor results. The question is: now that we know these characteristics, can we find more level 5 leaders for the realm of CSR, or possibly, can we become them?

Monday, February 5, 2007

My Ideal CEO

“CSR just doesn’t work.”
“What are you crazy?”
“I don’t think we can do this.”

My ideal CEO in the realm of CSR will hear the aforementioned statements throughout her entire career. Thus, within the integral framework for leadership, she embodies the world-centric stage of the line of development of managing fear and anxiety. To manage this fear and anxiety and maintain motivation, she does not ethnocentrically talk about how the organization compares to competitors, but rather constantly reminds her employees how they are helping to change the world. Similarly, she is extremely proactive in developing both her employees and the organization. She supports specific lines of development within employees such as creative innovation, the ability to adapt to new methods, team building, and creating a need through extensive training and providing incentives like promotions from within. Through talking with her employees about five key lines of personal development—efficiency, happiness, cultural pressure, balance, and proactiveness—she has an accurate perception of what her employees need and seeks to meet these needs.

On a personal level, my ideal CEO has thoroughly developed the ability to listen and understand; she listens because she genuinely cares about me as an individual. Through active listening, she recognizes my many different identities—which range from an only daughter to an ESTJ—and is excellent at understanding, mediating, and managing my different identities in relation to her own identities and those of my fellow employees. Recognizing my conflicting identities of a family member and dedicated employee, she encourages finding a balance between these identities, instead of promoting overachieving at work to the detriment of my family.

My ideal CEO is patient—with me, my fellow employees, and the world. Rather than succumbing to the cultural pressure of defining success through your bottom line, she manages the cultural pressure by defining success differently: through three bottom lines instead of one. By focusing on environmental sustainability and social responsibility in addition to profits, she continues to lead the way in improving the world, even if no on realizes it yet. With her extreme dedication and previously mentioned abilities, any organization would be successful under her, because she creates relevance through leading by example and empowers others to change the world.

Sunday, January 21, 2007

By purchasing these Nike sneakers, am I aiding in the cycle of poverty that entraps most of the world? Now that Unilever owns Ben and Jerry’s, is my extra money for novelty ice cream still going towards making the world a better place, or am I just contributing money that the workers at the bottom of the supply chain will never even receive? Should I buy these groceries at Super-Wal-Mart to save a few dollars, despite Wal-Mart’s human resource policies? Not many people ask themselves these questions. Moreover, not many people think about how the answers are affecting our world presently, not to mention their effects on the future. Thus, the first reason I chose Corporate Social Responsibility (CSR) as the subject of my blog is to expose others to something I am very passionate about: how and why corporations should focus on the triple bottom line of profits, environmental sustainability, and social responsibility. Secondly, I believe that the greater the public knowledge and support of CSR, the greater the possibility that responsible business practices become the standard to which all corporations are held.

One of the major questions within the realm of CSR is that of motivation. Is it enough for businesses to incorporate CSR solely based on the desire for a solid reputation, in an attempt to avoid public distrust and tarnishing of their brand image? A large number of CSR supporters—or fanatics, if you will—would say “Yes. As long as they are incorporating CSR, motivation does not matter.” In fact, in Jeffrey Hollender’s What Matters Most, he devotes an entire chapter to reputation, where he utilizes Royal Dutch Shell’s conflict with Greenpeace and Intel’s conflict with SWOP as two major examples of reputation’s influence on encouraging CSR and never discredits their motivation for doing so. While I highly suggest reading Hollender’s book if you are new to the world of CSR, I have to disagree with his suggestion that concern for reputation is enough to encourage CSR effectively. As CSR represents a particular line of development within organizational leadership, focusing solely on reputation reflects stagnation in the egocentric or ethnocentric state, preventing development within the world centric state. In other words, if organizations are solely incorporating CSR for their own progress or competition with others, that’s just it: they are merely incorporating CSR. They are trying to squeeze this idea of CSR in their framework that revolves around their corporation, rather than developing into the world centric state of CSR through building their framework around wanting to change the world for the better. Furthermore, consumers can tell the difference—they want to support making the world better, not making some corporation richer than it already is.

For example, in “The Myth of CSR,” Deborah Doane supports her view that CSR will not work with the statement that “less than five percent of consumers in the UK show consistent ethical and green purchasing behaviors” despite the high level of eco-marketing in northern Europe. Rather than demonstrating why CSR will not work, however, this statistic simply suggests the need for change in order for CSR to be more effective. These leaders in green marketing— including companies from Toyota to McDonalds—are simply stuck in the ethnocentric state of CSR development: they are trying to show customers their competitive advantage through marketing green products. They are focusing on the products, and in effect, attempting to sneak green products into mainstream. This product marketing is simply remaining in the economic archetype of leadership, thereby focusing on purchasing power and markets. Instead, these “green leaders” should move into the religious archetype of leadership and focus on moving people through meaning. In this way, they could progress into a world centric state of development within CSR and focus on educating about the importance of green products, not just marketing the products themselves. Education of the importance of certain behaviors fosters much more commitment than education about a product. In focusing on how to make the world a better place, these companies could exemplify the religious archetype of leadership and world centric state of development through simply marketing differently: marketing issues that inform and inspire changing buying habits and help customers understand how and why they should do so.

Ultimately, it is time to stop and think: do the corporations you support market issues or products? Do they care about environmental sustainability and social responsibility or solely profits? By purchasing from these corporations, are you helping to make the world a better place?