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

The Affect of Mackey’s attitude can be seen in his statement to Perry Odak, of Wild Oats stating “I’m going to destroy you,” This verbal statement about his feelings is also a physiological indicator that would have been seen by a rise in his blood pressure during the argument.

The Behavioral Intentions of Mackey’s attitude can be seen by his online posts made in the Yahoo! Financial forums. These statements were made with the intention of damaging the business of his rival company, Wild Oats.

The Cognition of Mackey’s attitude can be seen by his underlying beliefs that his company, Whole Foods, is superior to Wild Oats and that any action he took to subvert his rival was justified by the survival and prosperity of Whole Foods.

The Affect of Mackey’s attitude can be seen in his statement to Perry Odak, of Wild Oats stating “I’m going to destroy you,” This verbal statement about his feelings is also a physiological indicator that would have been seen by a rise in his blood pressure during the argument.

The Behavioral Intentions of Mackey’s attitude can be seen by his online posts made in the Yahoo! Financial forums. These statements were made with the intention of damaging the business of his rival company, Wild Oats.

The Cognition of Mackey’s attitude can be seen by his underlying beliefs that his company, Whole Foods, is superior to Wild Oats and that any action he took to subvert his rival was justified by the survival and prosperity of Whole Foods.

Mackey’s statement that “Rahodeb” made statements that were not in line with his personal beliefs was a lie that was intended to deflect some of the consequences of Mackey’s behavior. Mackey allowed his emotions and greed to get the upper hand in the battle for dominance and when he was anticipating negative consequences, he exhibited the characteristics of Level I in trying to avoid suffering the consequences of his actions.

As an ethical, responsible leader, describe the cognitive moral development level that John Mackey’s behavior should fit. Please justify your answer.

If Mackey were the ethical and responsible leader that he should be, his behavior should fit into Level V, at a minimum. Business leaders of Mackey’s caliber have a moral obligation to make all decisions based on the principles of Right and Wrong and Justice above all. It is the obligation of those in power, like Mackey, to look out for the best interests of those under them, who cannot look out for themselves.

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

I don’t feel that Mackey acted in an ethical manner at all. I feel that his online posts were a precursor to his attempt to acquire Wild Oats. It is obvious, to me, that he was preparing the field, as it were, to place Wild Oats in a position that would prevent them from fighting the acquisition. Mackey was obviously trying to adversely affect Wild Oats’ stock prices and the P&L margins by his bad publicity campaign.

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