Fortune Magazine’s cover story on Whole Foods this week rocks. I specifically loved reading about how the company fearlessly challenged the public’s misconceptions and opened a 21,000 square foot store right in the middle of Detroit – where almost half of the population lives below the poverty line.
As the CEO of a newly-launched wealth management firm, I’ve found myself paying more attention to these kinds of corporate success stories than ever before. There’s a lesson in the Whole Foods brand that I think carries a great example for my organization and possibly yours as well: The customers are not always right and, more importantly, they sometimes wants to be told what’s best for them and to have harmful options taken away from within their grasp.
The core competency of Whole Foods is, put very simply, food. That might seem a given for a grocery store, but most often it’s not the case. Supermarkets are “wired for distribution and warehouse and logistics,” says consultant Kevin Kelley, “not customers or a vision for food.” Most chains try to carry everything anyone could possibly want, but Whole Foods has an opinion on what it should stock. “Great brands impose a view on you,” Kelley says, and Whole Foods is no exception. “One of the faults that traditional groceries have is they believe the customer is always right.”
Whole Foods has no problem telling the customer that the store knows best, and it has become skilled at using its scale to prod change. When the company started in 1980, it already had a mantra of no artificial colors, flavors, or preservatives. “That was a real change for shoppers — to go into a store that they already knew had used that as a filter,” says Margaret Wittenberg, the company’s global vice president of quality standards. Today Whole Foods has a list of 78 banned ingredients, ranging from aspartame to foie gras to high-fructose corn syrup.
I really hadn’t thought much about this concept, even though it’s something we’ve consistently practiced from the beginning. A willingness to be blunt in our opinions practically defines us. This is not to say that we have all the answers, it just means that – after all we’ve seen and researched – we believe that our answer is the best one given who our clients are and what we’re trying to accomplish for them.
As a financial advisory, there are certain things that we simply will not allow our clients to have within the bounds of our firm. These include expensive or intensive stockpicking solutions, any fund or product that exceeds an internal expense of 100 basis points, anything that includes a performance fee, offshore accounts of any kind, derivative strategies with counterparty risk, insurance products with high brokerage commissions, investment banking syndicate of any kind, etc. We just will not offer the types of investment products or services that we recognize as superfluous or dangerous or too costly to make sense. We also won’t get involved with areas outside of our own core competency or experiment with other peoples money.
But it’s not as simple as saying “no” all the time – we’re forced to make the case why what we’re doing is superior and in the clients’ best interest. This is precisely what Whole Foods does when it refuses to stock Diet Coke or Cool Ranch Doritos. It’s imposing its opinion of what is healthful and what is poisonous and this is precisely what many of the customers actually want – even when they aren’t conscious of it when they walk into the store.
I’ve savaged online brokerages like Fidelity for rolling out a Bitcoin-trading platform at the height of that mania or allowing customers to blow themselves up with leveraged currency trading. Just because something is available and possible, doesn’t mean a firm that cares about its customer base needs to grant them access to it (or encourage it).
Zealous advocacy is not fascism, and steering a customer away from something they don’t need or shouldn’t want is just as important as the actual suggestions you are making.