John Mackey is certain that Whole Foods must continue to innovate to stay ahead of its competition. Though he has sworn off talking about his competitors either under his own name or as "Rahodeb", he did tell me that his competitors "are playing catch up". With no useful patents in retail, Whole Foods' conscious culture is its only competitive advantage, and innovation must be a big part of that. As Whole Foods adds stores, he insists on "No me-too new stores". He holds his division presidents accountable for innovation. "We value it and encourage it."
One of Mackey's tenets is to "decentralize as much as possible". This goes well beyond region, well beyond store-level, to the teams within the stores. He pushes experimentation, knowing full well that "most fail". He's fine with that because the "successful ones spread".
He uses loose innovation guidelines, if any at all. Suggesting instead that if people go too far his leadership can always "tug" them back in. He's convinced it's easier to do this than to get people to innovate in the first place.
He told the story of walking a new store in San Antonio 22 years ago. His wife pointed out that the few people in the store were not likely to buy Whole Foods' value proposition over the long term. She was right. The store closed. But then, 22 years later, Whole Foods opened a new store in almost the identical spot. When Mackey and his wife walked this new, booming store, he told her "You know all those people that were never going to shop here. They're all dead. These are their children." Some ideas are right, just not at the time.
The holy grail of innovation is the Eureka moment – the sudden breakthrough. Those moments don't happen in vacuums. They have preludes and second acts. So prepare in advance, focus on solving problems, and follow through. Follow this link to read the overview article on Forbes.com.