Profile of a Great Company: What Makes Whole Foods Great?

Posted by Chuck Kocher
On May 21, 2012

Often when we think about great companies we immediately think about their products or services. After all, what is a company without products and services? And yet, if you take a look at Whole Foods, the secret to their success isn’t just what you’ll find on their shelves.

Whole Foods had rather humble (or at least modest) beginnings. The first store opened in 1980 and 11 years later there were still barely a dozen stores in three states. Today, however, there are 43 stores in 10 states that generate revenues of $500 million and their net profits are double the industry average.

Whole Foods Market, Inc. is currently the largest natural-foods grocer in the United States—and one of the most radical business experiments in democratic capitalism. They take the ideas of empowerment, autonomy, and teamwork very seriously—and have turned them into a highly profitable business model.

The chain doesn’t stock products that use artificial colors, flavors, or preservatives. On top of that, they offer as much organic produce as possible. The meat and seafood they sell is free of chemicals and hormones.

But the Whole Food difference extends beyond what’s in their display cases. Their  “Declaration of Interdependence” embraces an unwavering commitment to diversity, community, and environmentalism. And their difference extends to financial matters as well, with a salary cap that limits executive pay to no more than eight times the average employee wage.

As you might suspect, the culture at Whole Foods is different, too. The team defines what happens—rather than some hierarchical system. The company allows each store to operate as an independent profit center. But it’s not some “loosey-goosey” free-for-all. Each store has designated leaders and clear performance targets.

At the same time, Whole Foods supports the team approach with a wide-open financial system—making sensitive financial information about store sales, team sales, profit margins, even salaries available to every person in every location. In fact, the company shares so much information so widely that the SEC has designated all 6,500 employees “insiders” for stock-trading purposes!

It’s no surprise that Whole Food has been named one of FORTUNE® magazine’s “100 Best Companies to Work For” every year since 1998.

Is the Whole Foods model right for your company?  That’s for you to determine. But one thing is for sure: There’s more to success and greatness than just the product you put out for the public!