Today we're going to be talking about stakeholder strategy, or what is commonly referred to as managing for stakeholders. And I want to introduce this idea by talking about an example. I want to use the example of Whole Foods Market. You might have heard of Whole Foods Market. They're a grocery store, a retailer. They're on the Fortune 500 list. They do about 14 billion U.S. dollars in sales annually, translating into about $1.3 billion of earnings. They operate in 400 stores and, I think, 42 out of the 50 United States and three countries around the world. So what began as a small, local, natural foods grocery store in Austin, Texas, has now become this large multi-national enterprise with operations all around the world. And what's fascinating about Whole Foods Market is that they sort of explicitly embrace what is a key idea in strategy. And that key idea is this, that the purpose of a business is not simply to generate financial returns for its capital investors, but rather, the purpose of a business is to create value for a variety of parties, including its employees and its customers, for example. And so while this seems like an intuitively obvious idea, what's interesting about Whole Foods is that they project a great deal of clarity around this particular idea. So, in other words, Whole Foods' customers and Whole Foods' employees are very clear about how that company is creating value for them. And so, you know, it's clear that this has paid off for Whole Foods. They've received a number of awards and honors over the years. They've, I think for 18 years in a row they've been on the Fortune list of 100 best companies to work for. So, you know, there's a long list of accolades that demonstrate that Whole Foods certainly does create value for some of these other parties like employees and customers and suppliers and the like. But what's interesting is, it's also clear that this strategy is working, and it is indeed creating financial returns for Whole Foods capital investors as well. So I put this chart together just demonstrating, you know, the performance of a hypothetical $100 invested in Whole Foods Market over the course of a number of years. And you can see that over the course of this time period, for example, Whole Foods outperforms a number of other indices, you know, whether it's the Fortune 500 or the NASDAQ Composite or even the industry sector that they're competing in. So it's clear that Whole Foods must be occupying a valuable, competitive position. And remember, this is the key strategists challenge. You know, how can we find and occupy and protect a valuable competitive position? And remember, a valuable competitive position occurs at this sort of intersection of a number of things. First of all, we need to be filling some sort of a market opportunity. There needs to be a customer base, a client base, for our product or service. In other words, there needs to be a market need, but that also needs to intersect with what it is we know how to do as an organization. What is our set of capabilities? And is there an intersection between the capabilities we have, what it is that we know how to do well, and the market opportunity that exists? That's a great combination, but it also needs to coincide with the values. This speaks to the mission and the purpose of an organization. And, again, here, Whole Foods is very clear about its purpose and mission. And so I think it exemplifies exactly what we're talking about here, where a valuable, competitive position is something that exists at this intersection of organizational values and organizational capabilities and market opportunities. So that's the thing to remember and keep in mind, that the key objective in strategy is to find and occupy that valuable, competitive position that allows us to create value for a number of different parties.
