Whole Foods: Beware the Corporate Raider
Back in 2010, when social business pioneer Terry Hallman was interviewed about his work in Ukraine, he made these points about doing business for social purpose with too great an emphasis on financial returns:
“When we get into divvying up financial profits it’s too easy to get sidetracked by a myriad of possibilities along those lines,” Hallman tells Axiom News.
“In that case there is distraction from the primary objective of any given project, the social concerns for people at risk of exclusion, or already excluded, from the opportunity to have a decent, safe, secure life.”
Hallman adds that if “a lot of emphasis is placed on financial returns, the usual suspects can and will get in, figure out to how strip out the social aspects of social businesses and keep all profits to themselves.”
“Think of the corporate raiders on the loose in the U.S. in the 1980s. Same thing. That mindset is the driving force that has created such need for social businesses to begin with.”
As we learned this week from Nicole Aschoff in The Guardian, following a decline in sales over 6 quarters that seems to be what has happened at Whole Foods.
“Last month activist hedge fund Jana Partners swooped in, buying up 8.3% of the company’s shares and demanding an overhaul. Whole Foods responded by reshuffling its board, bringing in a handful of big box retail stars and promoting Gabrielle Sulzberger, who hails from private equity, to chairwoman. “
She goes on to say:
“The point of this dour appraisal is not to crow over Whole Foods’ misfortune. It’s to take a hard look at models that claim to solve the ills of capitalism without challenging the in-built drives of our for-profit system.”
Concluding that:
“All stakeholders are not equal in our global economy, and even the best intentioned businesses run up against the implacable foes of profit and competition. Ultimately, the thorny problem of sustaining both decent livelihoods and a livable planet won’t be solved by buying better things. It’ll be solved through political struggle and demands that put people before profit.”
In my article for Linkedin, titled People over Profit I described how Terry Halman began in 1996 with a position paper for business which puts community benefit ahead of shareholder value, challenging Milton Friedman’s assertion of shareholder primacy.
Writing this month of an economy that puts people over shareholder returns, I describe how this argument is now supported by the Vatican, UN General Assembly, Blueprint for Better Business, Coops Europe and Fair Trade international. Oxfam has recently joined this list.
It began more than 20 years ago, when Hallman’s position paper argued:
“Modifying the output of capitalism is the only method available to resolving the problem of capitalism where numbers trumped people — at the hands of people trained toward profit represented only by numbers and currencies rather than human beings. Profit rules, people are expendable commodities represented by numbers. The solution, and only solution, is to modify that output, measuring profit in terms of real human beings instead of numbers.”
It was delivered again in 2010 to the opening plenary of the International Economics for Ecology conference at Sumy. He died in Ukraine a year later leaving the task of childcare reform to be continued by others.
