Why Patagonia is ruling Corporate America
1. So far, so bad (a little bit of good is finally happening)
The current industrial model, 200 years old, can no longer be sustained ecologically, socially or financially. Businesses can be blamed for unjustified waste of natural resources, for most of the toxic chemicals polluting the planet and, ultimately, for being the main cause of several chronic diseases. Furthermore, the wealth they have created has been distributed in a very shortsighted manner, at least during the past 25 years. As incomes started to flat for the middle class, only the top 10% of the population took real advantage of the growth while, for the remaining 90%, two workers families became the norm, giving rise to a heavy threat to social stability.
Fortunately, the diabolic wheel of natural resources consuming and wasting, which has rotated extremely fast during the last 40 years, is now slowing down. Unfortunately, this is happening at a very slow pace.
Businesses are finally realizing that the advantages they can get from sustainable practices are valuable and clear: from enhancing their reputation to reducing costs, from scouting opportunities to opening new markets. Moreover, responsible investments are recording increasing performances in the equity market.
Big corporations are becoming more sensitive to the environment while Governments and NGOs are sitting down with experts and CEOs in order to define sustainable policies.
The World Bank too is demonstrating commitment to the environmental cause: as president Robert Zoellick stated: “The Nature wealth of nations should be a capital asset, valued in combination with its financial capital, manufactured capital and human capital”.
1.1 A quick look at social changes
We are seeing important changes in society: teenagers are more environmentally conscious than the previous generations and what they consider cool is extremely important to businesses; vegetarians used to be seen as a small bunch of food ascetics, while lately the army of organic food and goods consumers has grown at a very significant rate. These changes are being amplified by the social media, which are playing a tremendously effective role in spreading the message due to their “viral” effect and the possibility to target the web users on the basis of their behavior.
In addition to this, the Wall Street way of business, which can be easily explained with the 365 workdays/year theory, has clearly shown its limits: the increased work hours, led by growth at any cost, have resulted in divorces, health problems and corporate extra-costs due to absenteeism. After 30 years of workhaholism, people are finally learning how to simplify their life and enjoy time with family and friends.
2. Patagonia: a company to look up to
Patagonia has been building environmental consciousness during its whole existence. Yvon Chouinard, who 50 years ago was concerned about harming the rock with its climbing gear, has kept this attitude throughout the entire course of his entrepreneurial career. However, there were several “ah ha” moments in Patagonia’s history, when the Company either realized that it was actually threatening the environment or wanted to make a big step up in reducing the impact and persuading other businesses to do the same.
Just a few of these moments:
- the “Climbing Clean” essay included in the 1972 Chouinard Equipment’s catalog and the concurrent replacement of pitons with chocks;
- the early 70s Mark Capelli’s presentation in front of Ventura’s City Council about the harm done by the Matilija dam to the Ventura River’s ecosystem (and the lesson that a degraded habitat can be restored, with some effort);
- the 1% for the Planet initiative – a “cost of doing business, not charity”, anticipated by long years of giving either 1% of sales or 10% of profit;
- the long battle for organic cotton, which has created a new industry and allowed other companies to cross over;
- the more recent initiatives, like the Common Threads Initiative (and its amazing message “Reduce, Repair, Reuse, Recycle”), the Footprint Chronicles and the Sustainable Apparel Coalition.
The Company is not only admired for being the state-of-the-art environmentally friendly business, but also for producing and selling clothing of extremely high quality.
The pursuit of quality at any cost has always come with an incredible level of innovation (stand-up shorts, Synchilla, Capilene, etc…) and has been the result of the significant investments in Research and Development that Patagonia has made throughout its whole existence.
Not only are the Company’s products the benchmark in the outdoor apparel industry, but also every form of communication to the public turns out to be excellent, from the website to the blog, from advertisement on magazines to photos and videos. It’s very difficult to find organizations where a sense of perfection permeates every single expression. Patagonia’s perfection is neither Hermès’, nor Nike’s. It’s the “dirtbag” perfection, the one that allowed the Company to create a whole outdoor lifestyle where “dangerous” goes together with “cool” and “wild” rhymes with “fashion”.
Patagonia is also regarded for its taking-it-easy attitude about growth. After a massive lay off in the early 90s, the Company adopted a wiser approach, targeting a 3% to 5% annual growth with the aim of being a “Michelin’s three star restaurant” that only serves few tables in order
to guarantee the best quality. This is made possible by the fact that, being a family business, Patagonia does not depend on the perverse dynamics of the stock market. Furthermore, the management is allowed to think twice before making a decision in order to better evaluate whether the proposed solution is good for the planet or not, which is the Company’s biggest concern.
The amazing work done by the Founder and the past and present Employees has allowed the
Company to gain the capability of influencing others. Wal-Mart, a corporation with totally different figures, culture and values is now working with Patagonia to reduce its impact on the Environment. Yvon Chouinard, during a speech at Google, said that his life had changed in the past months because the efforts he has always devoted to increasing Patagonia’s reputation are now producing effects on a much larger scale. Furthermore, the Value Chain Index, analyzed and explained by Yvon Chouinard, Rick Ridgeway (Patagonia) and Jib Ellison (Blu Skye) on the October 2011 edition of Harvard Business Review, is going to provide the consumer with a critical eye on potentially every B2C company and its whole supply chain. Categories such as waste, water, toxics, energy, etc… together with the product’s life cycle will soon become the object of consumers’ accurate analyses.
3. What can be done
“Is your product worth its social and environmental cost?” Customers will start asking this exact question to manufacturers, while investors will be wondering if the answer is yes or no when valuating a company. Soon in the future, extremely accurate metrics will be elaborated in order to analyze the whole supply chain of finished goods. Meantime, consumers will be provided with tools (probably smartphone and tablet applications) that will allow them to know the impact on the environment of what they are considering buying.
This is probably the best incentive for businesses to switch to sustainable practices and to become themselves the most critical clients of their own suppliers.
In the meantime, there is a lot we can do both as manufacturers and customers.
The “Vote with your wallet” is one of these. Buying only from those producers that are adopting socially and environmentally friendly business practices is crucial to establish preferences that the market must take into consideration. The social and environmental indexes, which are being developed within the Sustainable Apparel Coalition, will be crucial in order to vote with the walled in a knowledgeable way.
Entrepreneurs and employees should give a meaning to their work that goes far beyond the bottom line and analszes the measures they have actually taken in order to give back to the planet. If an entrepreneur or an employee likes writing or speaking, she should share ideas and initiatives and create the opportunities to demonstrate that a better quality business through the improvement of social and environmental performances is not only possible, but also necessary.
Wal-Mart is an example to many big corporations and the snowball effect that it is going to create will change – for the better – the destiny of the planet. There are many other excellent examples: e.g. Nike, after the terrible scandal of child labor in Vietnam, has been working hard to become more sustainable, so has Levi’s, which has increased the use of organically grown cotton in its manufacturing process.
The environment needs help also from those who have been blamed for pursuing merely economic interests: investors. Forward-looking venture capitalists are needed to support responsible businesses. Investment banks should start valuating companies’ whole range of new assets and not only the scalability of their business models.
We can be angry about how our planet has been treated by corporations but we must keep an optimistic attitude. If Patagonia, thanks to the creativity and the determination of its owners and managers, has been able to lead Wal-Mart, a business 1000 times bigger, towards the adoption of sustainable business practices, we must think that something – a lot – will be done in the near future and that each of us will play a very important role in determining the change.
4. Where my passion comes from
I might say that, as a mountain sports freak, I’ve always been in touch with the Brand but this explanation would not fully justify my passion for Patagonia. In fact, my interest increased exponentially the day I saw this advertisement:
I wondered why Patagonia was coming out with such an odd message. Was it something the Company really believed in or just a smart way to advertise a product?
From that moment, I started doing some research and I suddenly discovered a whole new world: a world of sports I loved, of respect for the planet, of values I couldn’t feel more connected with.
I read articles, watched videos, bought “Let my people go surfing” and consumed it, received as a gift “The Responsible Company” and studied it over a weekend. I was really impressed by what Patagonia stands for in the business community. Being true to itself has probably been the main reason for the Company’s success but there are some other motivations for my being so attracted to it:
- very high quality in everything branded “Patagonia”, from clothing to stores, from the official website to the Youtube Channel;
- environmental and social consciousness, supported by concrete initiatives and a heavy production of knowledge about sustainability (books, essays, etc…);
- a contagious attitude towards creating awareness of the fact that achieving business results and reducing the impact on the environment are strictly linked to each other;
- outstanding communication: Patagonia’s blog, “The Cleanest Line”, and Tumblr page are among my everyday must-visit internet sites;
- cool attitude in approaching extremely important issues, from love for Nature to respect for each other. Artists, sports people and environmentalists like biologist Matt Stoecker, photographer and surfer Jeff Johnson and comedian and climber Timmy O’Neill are the perfect testimonials for the wild-is-cool (then the environment MUST be preserved) message conveyed by the Brand.
5. How I see Patagonia in the next years
Patagonia will definitely play a very important role in defining the tools for the evaluation of businesses from a sustainability point of view. The Company’s reputation is going to grow as well as the effect generated by the early adoption of sustainable practices. In fact, these are now being shared with corporations infinitely bigger and much more conservative.
Patagonia will always be the company that assumed the risks of implementing those practices before anybody else. For example, organic cotton was 50% to 100% more expensive than traditionally grown cotton. Such an increase in raw material’s costs would have represented a big discouragement for every entrepreneur but Yvon Chouinard, strongly believing that organic cotton was the only possible choice, not only succeeded at business, but created a whole new industry.
Furthermore, Patagonia will always have the credibility to tell the others what to do and how to do it. Many other companies, especially professional services providers, will take advantage of the flourishing market of social and environmental sustainability consulting, but they will always be second bests.
Besides the influence on other companies, there is much that can be done for the Company’s customers and fans: the goal should be engaging everybody and not only those at the top of organizations.
Youngsters should be a Company’s main target in all the communication campaigns. According to the Harvard Business School Case, which dates back to 2003, the average age of the Patagonia’s customer is 44.
In the recent years, from what I’ve noticed, the Company has been working hard towards the engagement of younger people: the Tumblr page, the blog and the massive production of photos and videos speak for themselves. Once again, hat off to Patagonia’s communication.
Here is one of my favorite pictures from Patagonia’s Tumblr page and a little story:
This photo is probably one of the best images to attract young people to the message Patagonia wants to convey.
The 20something guy would probably think: “Practicing dangerous sport in a cool city context, being pictured on my skateboard showing that I’m a surfer… I like that”. The next step would be to make the guy tell his friends: “I bought this surfboard and I spent a bit more than what I thought, but this one is more resistant, less harmful to the environment and is made in Ventura, California, by the coolest company on Earth”.
Thank you very much for reading this essay,
Pier Francesco Verlato