Mackey: Marriage to Amazon has been challenging as cultures mesh

AUTHOR

Kate Patrick@katepatrick_

PUBLISHED

Oct. 16, 2017

Dive Brief:

• Whole Foods CEO John Mackey said the “marriage” to Amazon has been challenging in a keynote speech at the American Production and Inventory Control Society 2017 conference in San Antonio Sunday. And his words aren’t all that surprising — back in June, Fortune Magazine published an article suggesting that the big merger could result in serious culture clash.
• Mackey also said that he and other top Whole Foods executives are planning a retreat “to figure out how to reconcile our purpose with Amazon’s higher purpose.”
• Since the merger’s announcement back in June, Mackey has been mostly positive about the move, even saying that Amazon rescued Whole Foods from the “trap” of its “whole paycheck” image. At the APICS conference, Mackey also said Amazon plans to slash Whole Foods’ prices again.

Dive Insight:

Amazon’s company culture is often described as productivity-driven, aggressive and extremely internally competitive, but also innovative, tough and hardworking. Whole Foods, on the other hand, is the idealist company: it’s consumed with a “higher purpose” to provide good, high-quality products, and takes great pride in caring for communities — inside and outside the company. As an example, one of Whole Foods’ core values is, “Support team member happiness and excellence.”

No wonder Mackey calls the merger of cultures a nightmare — by cultural measures, the companies appear to be complete opposites.

But Mackey wasn’t entirely pessimistic in his keynote. He did say that Whole Foods is “happy to create a shared identity” with Amazon, then added, “I do think Amazon and Whole Foods are going to do major stuff together.”

Not only that, but it seems that Amazon isn’t quite done paring down Whole Foods’ “whole paycheck” image: “Amazon’s thinking long term, they’re going to do another round of price reductions,” Mackey said.

Amazon’s ability to streamline Whole Foods’ operations and supply chain doesn’t negate the fact that clashing company values are breeding some internal resentment, enough to prompt the Whole Foods execs to plan a retreat to think things over.

That’s a warning to other established companies seeking to merge: even if a merger makes smart business sense, it’s another thing entirely to deal with conflicting company cultures, and if those kinds of issues aren’t resolved quickly, they can impede operations and efficiency. The Wal-Mart and Jet.com merger is just one recent example of clashing cultures that actually decreased employee morale.

Until now, the Whole Foods-Amazon merger has been interpreted as a boon to both parties — Whole Foods’ supply chain is now better, Amazon can now have an easier time dipping into the grocery business. But conflicting values will ruin any marriage. If their union is going to succeed, it’s likely that both companies will have to give a little.