Opaque Messages from John Mackey

August 17, 2009

Let us consider in more detail the actions of Whole Foods CEO John Mackey’s use of the name “rahodeb” for online postings.  Mackey used the name for a number of years while posting online including posts to a Yahoo financial forum.  In that forum, “rahodeb” was critical of Wild Oats and other Whole Foods competitors while being very positive about Whole Foods.  Here is a sample from one post:

“2. Has OATS gotten its act together? Maybe, but I don’t think so. One freak quarter before the CEO dumps 1/2 his stock proves nothing. If OATS produces solid comps and produces good profits for the remainder of 2006, then I’ll change my opinion. Haven’t seen it yet though.

3. OATS didn’t make any money for the next 2 Quarters after I wrote that posting. Again, they made money in their Q4, but it isn’t clear to me that it is sustainable.” http://messages.finance.yahoo.com/Business_&_Finance/Investments/Stocks_(A_to_Z)/Stocks_W/threadview?bn=19842&tid=42698&mid=42957
Most would agree this is rather mild trash talking about a competitor.  However, when your company is looking to buy that competitor, are the comments designed to drive down the stock price to your advantage.  Federal authorities did investigate but did not press charges.  Online postings related to stock prices is a legitimate concern.  Other individuals have been punished for using online financial forums to manipulate stock prices.  Although Mackey apologized (see the Whole Foods+ CEO + Healthcare Debate = Boycott entry), he said the incident was result of his competitive spirit and part of his right to free expression.  He also said on his blog:

“My mistake here was one of judgment—not ethics. I didn’t realize posting under a screen name in an online community such as Yahoo! would be so controversial and would cause so many people to be upset. That was a mistake in judgment on my part and one that I deeply regret because it caused so much negative media attention about me and Whole Foods Market.” http://www2.wholefoodsmarket.com/blogs/jmackey/2008/05/21/back-to-blogging/#more-26

Ultimately, Mackey’s postings under an assumed name hurt Whole Foods’ reputation.  The Board disciplined Mackey and there was Federal investigation along with the negative publicity in the tradition and online media.  One example ion CNBC’s story “Whole Foods CEO Panned Wild Oats in Web Postings.” http://www.cnbc.com/id/19700361.  This was not the light matter that Mackey seemed to think it was at the time and the potential to haunt Whole Foods and Mackey well into the future.

 

Questions to Consider:

  1.  What is your reaction to Mackey saying this situation is not about ethics but judgment?
  2. Why would the tradition media be interested in this story (Chapter 6)?
  3. Why would the online environment be interested in this story (Chapter 7)?
  4. How does this case illustrate the need for and value of transparency?
  5. What advice and rational for that advice would you have given Mackey if he told you in advance he was going to engage in such postings?
  6. Why is it so important to identify biases/interests when posting information online?
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Whole Foods+ CEO + Healthcare Debate = Boycott

August 15, 2009

Whole Foods has built a reputation around natural and organic foods.  Of course that quality does come at a price but their customers  are willing to pay the higher prices.  You could argue that Whole Foods is a cult brand with a core of devoted customers who sing its praises.  John Mackey is the CEO and does make life interesting for the public relations people at Whole Foods.  In 2007, it was revealed that Mackey, using the alias Rahodeb, was posting favorable comments and about Whole Foods and critical comments about rival Wild Oats (who Whole Foods was trying to buy) on blogs and other online postings sites. (http://www.mpdailyfix.com/2007/07/busted.html)   The Securities and Exchange Commission launched an investigation while whole Food banned him from blogging for a period of time.  He returned with this statement:

“I can’t tell you how good it feels to be able to write in my blog again. Even though I wanted to respond openly and truthfully when confronted by the various accusations of wrongdoing last year, our attorneys and Board of Directors both thought it best for me to hold off while they conducted their Special Investigation and the SEC handled its inquiry. Those matters now are completed with the board affirming their complete support for me and the SEC recommending that no enforcement action be made against Whole Foods Market or me. Now that I’m free to post again, I am going to attempt to set the record straight about my internet postings in the past under the screen name “rahodeb.” I promise I’ll be moving on to other topics, but indulge me while I finally get to share my point of view on this particular topic.” http://www2.wholefoodsmarket.com/blogs/jmackey/

The post was a defense of his actions but ended with:

“I wish to apologize to all the stakeholders of Whole Foods Market—customers, Team Members, investors, suppliers, and our communities. I am truly sorry that all this has happened and put a negative spotlight on our company. If I could get a “do over” on this one, I certainly would choose not to have ever participated in the Yahoo! online financial communities. Unfortunately, I cannot undo the past. I can only learn the many valuable lessons that are here for me to learn and try to do better in the future. Thanks to all of you who have continued to support me and Whole Foods Market. I’m excited about what the next few years will bring as we fully integrate the Wild Oats stores and Team Members into Whole Foods Market, and expand our stores and our mission into additional communities while continuing to satisfy and delight our current customers.”

Flash forward of August of 2009.  John Mackey writes an op-ed piece for the Wall Street Journal about healthcare reform entitled “The Whole Foods Alternative to Obamacare.” You can see the entire op-ed at http://online.wsj.com/article/SB20001424052970204251404574342170072865070.html. Mackey identifies himself as co-founder and CEO of Whole Foods and uses the company’s name in the title of the op-ed.  The op-ed is a logical presentation of his ideas on how healthcare should be reformed and his concerns with the proposed changes. 

The response to Mackey’s op-ed has been mixed.  Many support his position.  Others take great exception to his words.  Those against Mackey have proposed a boycott of Whole Foods.  Their Facebook site quickly reached over 6,000 followers (http://www.facebook.com/group.php?gid=119099537379).  The liberal web site Daily Kos helped to promote the boycott as well  (http://allspinzone.com/wp/2009/08/14/whole-foods-boycott-picks-up-steam/).   The marketplace of ideas was in full swing over the op-ed with both sides expressing their views on the issue. 

Whole Foods found itself sucked into the vortex of healthcare reform.  Not exactly the best place to be when you are not a company strongly affiliated with healthcare such as insurance or pharmaceuticals.  The following message appeared on the company’s Facebook page:

“We would like to thank our customers and shareholders who have let us know their thoughts regarding John Mackey’s op/ed in the Wall Street Journal. Many people, including John, feel passionately about this important issue.

First off, whether you agree with John or not, our 50,000+ Team Members who live and work in your communities will continue to work hard every day to bring you the best natural and organic products available. We hope you will continue to give us the opportunity to serve you.

While there are differing points of view on this issue, John believes certain aspects of the current proposals before Congress would jeopardize our company’s ability to continue providing our sustainable health insurance plan. Whole Foods Market pays 100 percent of the premiums for our full-time (over 30-hours) Team Members, about 89% of our workforce. Additionally, those Team Members get to vote for their new plan options every three years. John does not want to see that changed.

Finally, John absolutely does care about his fellow citizens who do not have health insurance, and he is in favor of health care reform. He believes that the proposals he put forth will provide access to sustainable health insurance for more people.

We recognize that there are many opinions on this issue, including inside our own company. As we all sort through this together, we thank you for sharing your opinions with us.”

http://www.facebook.com/search/?q=whole+foods&init=quick#/note.php?note_id=120455171970&ref=mf

Because of the op-ed, Whole Foods as a company is affected by the issue and issues management efforts.  As with his blogging, Mackey is creating reputational concerns that the public relations department will have to address.  The CEO is making like interesting for the public relations people.

Questions to Consider

  1.  Why did the op-ed create a reputational concern for Whole Foods?  Be sure to consider the characteristics of typical Whole Food consumers.
  2. Would you classify the situation as an incident or crisis and how would you justify that classification (Chapter )?
  3. If Mackey had suggested the op-ed at a meeting, what advice would you have given him and why?
  4. Would if have made any difference if Mackey had not identified himself so strongly with Whole Foods in the op-ed?
  5. After reviewing his op-ed, who would you evaluate it in terms of ethical advocacy?
  6. How might Mackey’s past lack of transparency have an impact on this situation?
  7. What messages might Whole Food create to address the situation?
  8. What was the utility in using Facebook for the response?
  9. What response might you anticipate from angry consumers to the Whole Foods message on Facebook?  Why would you anticipate that response?

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