Internet Postings about Whole Foods and Wild Oats From its beginnings as one sma

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Internet Postings about Whole Foods and Wild Oats

From its beginnings as one small store in Austin, Texas, Whole Foods Market has grown into the world’s leading retailer of natural and organic foods, with hundreds of locations in North America and the United Kingdom. Whole Foods was founded by Craig Weller, Mark Skiles, and John Mackey, the current CEO. Whole Foods has expanded through the acquisition of numerous companies, including but not limited to Wellspring Grocery, Fresh Fields, Bread of Life, Merchant of Vino, Allegro Coffee, Nature’s Heartland, and Harry’s Farmers Market, among others. The most recent acquisition was Wild Oats Markets. However, the acquisition of Wild Oats was not without its problems. The Federal Trade Commission (FTC) filed suit in June 2007 to block Whole Foods’ acquisition of Wild Oats out of antitrust concerns. Then in August 2007, a federal appeals court turned down the FTC’s request to overturn a federal district court ruling allowing Whole Foods to complete its purchase of its rival. Interestingly, while conducting its antitrust review, the FTC discovered that, over a period of several years, John Mackey had posted comments about Whole Foods and its competitors in the online stock forums of Yahoo! Finance. Mackey used the screen name “Rahodeb”—an anagram of Deborah, the name of Mackey’s wife—to conceal his true identity. At least 240 of Rahodeb’s 1,300 or so posts mentioned Wild Oats, a company with which Mackey had a bitter rivalry. The acrimony between Mackey and Perry Odak, CEO of Wild Oats, can be traced to the first time the two men met at a retailing conference in Manhattan in 2001. “I’m going to destroy you,” Mackey shouted at Odak. Whole Foods’ officials tell a different version of the story—with milder language—but the confrontation has persisted as a food-industry legend. For nearly eight years, John Mackey wrote his pseudonymous posts, some lauding Whole Foods’ financial results, and others castigating its rival Wild Oats. In January 2005, Rahodeb posted this opinion: “No company would want to buy Wild Oats Markets Inc.” Rahodeb continued, “Would Whole Foods buy OATS? Almost surely not at current prices. What would they gain? OATS locations are too small. [Wild Oats management] clearly doesn’t know what it is doing OATS has no value and no future.” Other comments that Mackey posted under the Rahodeb alias included the following: “While I’m not a Mackey groupie I do admire what the man has accomplished.” “I love the company and I’m in it for the long haul. I shop at whole foods. I own a great deal of its stock. I’m aligned with the mission and the values of the company are there something wrong with this?” Mackey asserts that his online comments were personal, not professional. However, Mackey’s friends and colleagues say there is little distinction between his personal and professional sides, and that he is straightforward and transparent. Mackey’s defenders also say, “his anonymous comments—though boastful, provocative and impulsive—were no different from his public ones, and were never intended to disclose insider information or move stock prices.” In a statement published in mid-July 2007 on the Whole Foods’ Web site, Mackey “said his anonymous statements didn’t reflect his or the company’s policies or beliefs. Some of the views Rahodeb expressed, Mr. Mackey said, didn’t match his own beliefs.” Mackey further stated that he made the anonymous comments on Yahoo Finance because he “had fun doing it.” Mackey’s online activities were investigated by the Securities and Exchange Commission (SEC) and the FTC. As the legal wrangling unfolded, charges and countercharges were slung—not just by the direct participants, but by interested observers as well—and utterly delicious twists and turns kept emerging. FTC lawyers were shocked that their “‘gotcha’ haul of off-color statements by Mackey wasn’t enough to block his merger with Wild Oats in the absence of serious antitrust evidence.” However, Mackey asserted that the FTC was “running ‘a rigged game’ that handcuffs retailers and other companies under its jurisdiction.” Some commentators castigated Mackey. For instance, John Hollon, editor of the Business of Management blog characterizes Mackey as “a delusional apologist for his own bad behavior.” Others, however, were less critical. The blogger Andres Acosta, disagrees with Hollon, saying, “I look at it differently. I appreciate his transparency and willingness to admit to making a mistake. It’s the sign of a great leader who can pick himself up after taking a hard fall and keep moving forward.” Chiming in with a nuanced argument that could be interpreted as supporting either a positive or negative view of Mackey is Adam Sarner, an analyst at Gartner Inc., who says, “[t]he need for executive online transparency depends on the context of the post.” Has John Mackey been vindicated in Whole Foods’ acquisition of Wild Oats? Hallie Mummert, writing in Target Marketing, says, “[w]hat some chalked up to a bizarre display of self-aggrandizement, others pegged as unethical and possibly illegal behavior.” And business blogger, Laurie Ruettimann, writes, “Great companies operate on the right side of the ethical spectrum and have little tolerance for ‘spin.’” Mackey himself, quoted in The Wall Street Journal, says, “If I could get the money back, I’d take it. We would be better off today if we hadn’t done this deal—taking on all this debt right before the economy collapsed.” Even though Mackey has been described as “an opinionated iconoclast,” he “succeeded in buying out his largest competitor, Wild Oats Markets, and has expanded overseas to London, the next stop on his quest for global dominance.” In your paper answer the following questions:

1.Using the ABC model of an attitude, discuss what you think John Mackey’s online comments about Wild Oats reveal about his attitudes.

2.In your opinion, did John Mackey act in an ethical or unethical manner? Why or why not?

3.As an ethical, responsible leader, discuss the cognitive moral development level that John Mackey’s behavior should fit.

4.According to Mr. Mackey, some of the statements attributed to Rahodeb did not match his personal beliefs. Why do you think there is this conflict between attitude and behavior?

Explanation / Answer

1. The ABC model of an attitude is an easier way of understanding attitude of a person. John Mackey’s online comments clearly portray his attitude. The three aspects of attitude; Affect, behavior, and cognition can be seen throughout his comments. Mr. Mackey doesn’t like Wild Oats Markets because it poses a great threat to his company. On the other hand, his behavioural intentions aspect is seen when he posts negative comments about Wild Oats. His goal is to ruin the Wild Oats reputation in order to move the stock prices. Furthermore, there is also a cognitive aspect through his online comments. Mr. Mackey believes that Wild Oats have no value and future therefore no company would want to buy Wild Oats Markets. He also believes that his company would be in a better position even without the deal with Wild Oats Markets. The three components of attitude make it easy to understand the reasons behind John Mackey actions.

2.An excellent and accountable leader is one who works on the right side of the principled ground. Mr. Mackey’s action of posting online comments on an alias is unethical for a couple of reasons. It is unethical for the head of a company to speak ill of other rival companies aimed at tarnishing their name to increase market share of his or her own company. Mr. Mackey comments were biased to one side. He praised Whole Food Company whereas he continued to post negative comments about Wild Oats Markets. Using Rahodeb alias he commented that Wild Oats was under poor management and that it had no future. His comments on the online stock forum were to boost popularity of his company and push its stock prices. This in return would diminish the reputation of his competitors such as Wild Oats and decrease their stock prices. This in return would make it easier and cheaper to buy Wild Oats markets.

3.Ethical behaviour is exclusively based on moral reasoning of a person. John Mackey’s behaviour fits perfectly in the pre-convectional level of moral reasoning. He is trying to avoid punishment and at the same time benefit from his actions. Mr. Mackey’s behaviour to post comments praising Whole Food and ruining the reputation of Wild Oats is self-interest driven. He has no interest in the needs of other competitor companies. His actions are only meant to move the stock prices of Whole Foods and bring down the stock prices of his competitors. Mr. Mackey knows that it is wrong as a leader to post negative comments about other companies on online stock forum for this might influence interested investors to move from these companies as well as lead to a reduction in stock prices. This is the reason why he uses an alias, Rahodeb to post his comments and avoid a lawsuit.

4. The conflict between Mr. Mackey’s attitude and behaviour is clearly exposed in his online comments under his alias. It is obvious that Mr. Mackey has a great interest in Wild Oats but he comments that no company would want to buy Wild Oats. He can see that Wild Oats Markets has a potential to grow therefore he is willing to do anything to own it. His attitude towards Wild Oats was driven by ambition therefore making him to take actions that were both unethical and perhaps illegal. Furthermore, lack of distinction between his personal and professional sides is another reason causing a conflict between his attitude and behaviour.

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