I confess, I drank the Kool-Aid.
I’ve wilfully chosen to review a book written by Yvon
Chouinard, the founder and leader of the outdoor clothing company Patagonia,
and I’m wary of the fact that I may be about to write a free piece of promotion
for the company, having read a disguised piece of propaganda. However, I hope what actually follows is a sober
investigation of a truly modern and sustainable company; a company that I
believe can provide a blueprint for others.
Buy their clothes, don’t buy their clothes; I don’t
care. But I do care that Patagonia has a
point to make about how to run a conscientious and positive company. It’s a company that has a point to make about
how to embrace responsibility and about how the private sector can be an
environmental champion.
History
Yvon Chouinard explains his reluctance to become a
businessman without regard to convention.
The fact that his story may sound like a pastiche of the ‘hippy
entrepreneur’ or the ‘champagne socialist’ is not indicative of a
caricature. Chouinard’s story is as original
and authentic as they come, and may only now be met by cynicism due to the
number of phoney replicas that have attempted to mimic his ethos in the
subsequent decades.
For it was in the 1960s, when Chouinard was climbing the
mountains of North America as a young man, that he made his first foray into
business. At twenty-something he was
hiding out in Yosemite National Park, USA, evading park rangers who sought to
enforce the two-week camping limit. He
took special pride in the fact that climbing had no economic value and viewed
himself and his friends as rebels from the consumer culture. Characteristic of a 1960s idealist, Chouinard
viewed politicians and businessmen as “greaseballs” and corporations were the
source of all evil. The natural world
was his home and he idolised the European climbers: Gaston Rebuffat, Riccardo
Cassin and Hermann Buhl.
However, it was the European attitude to climbing that gave
him his first business idea. The
European attitude to climbing mountains was to “conquer them”. All the gear was left in place to make it
easier for others to follow. If you
tried to take out and reuse the iron pitons, the head would often break
off. However, American climbers were
brought up reading the transcendental writers: Ralph Emerson and Henry Thoreau. You climb the mountains or visit the wilderness
but leave no trace of having been there.
It was this sense of appreciation and preservation that led Chouinard
Equipment Ltd to begin manufacturing the world’s first reusable climbing piton.
In 1966, Chouinard moved from Burbank to Ventura (both in California)
to be closer to the point of the surf breaks of Ventura and Santa Barbara. He set up shop in a rented tin boiler room of
an abandoned packing company slaughterhouse and set about manufacturing climbing
equipment for his dirtbag friends.
The guiding principle of his design stemmed from Antoine de
Saint-Exupery, the French aviator, ”In
anything at all, perfection is finally attained not when there is no longer
anything to add, but when there is no longer anything to take away, when a body
has been stripped down to it nakedness.”
This minimalist attitude, striving always for quality and durability,
has been the Northern Star of Patagonia design ever since.
By 1970, Chouinard Equipment had become the largest supplier
of climbing hardware in the United States.
However, it had also started down the path to becoming an environmental
villain.
The popularity of climbing, though growing steadily,
remained concentrated on the same well-tried routes in areas such as El Dorado
Canyon near Boulder, the Shawangunks in New York and Yosemite Valley. The repeated hammering of hard steel pitons,
during both placement and removal in the same fragile cracks, was severely
disfiguring the rock. After an ascent of
the nose on El Capitan in California, which had been pristine a few summers
earlier, Chouinard came home disgusted with the degradation he had seen. In a radical and cannibalising decision, he
decided Chouinard Equipment would phase out of the piton business. Pitons were the mainstay of his business, but
he could not avoid the realisation that they were destroying the areas he
loved.
A transition to climbing gear and clothing saw the birth and
growth of Patagonia. The business grew
throughout the 1970s and 1980s using traditional practices: increasing the
number of products, finding new dealers, opening new stores and developing new
foreign markets. However, it was this very
success that taught Chouinard the value of sustainability. The danger of outgrowing itself posed
difficult philosophical questions for the company. Can a company that wants to make the best
quality outdoor clothing in the world be the size of Nike? Can a ten-table, three-star French restaurant
retain its third star when it adds fifty tables? Can you have it all? The problem haunted Chouinard as Patagonia
evolved. Simultaneously, another problem
came to haunt Chouinard more: the deterioration of the natural world.
Consequently, when the business overextended itself in the early
1990s, Chouinard and his colleagues went back to drawing board. Just as they had done when they reinvented
themselves without pitons, Patagonia set about drafting a completely new raison
d’etre to capture a love for quality products, respect for the environment,
empowerment of employees and engagement with customers.
Patagonia Values
The following statement of values was drafted in 1991. I struggle to think of company in the last 26
years that has more perfectly captured the essence of what it is to love what
you do, to do it well and to address problems bigger than yourself. To the modern eye, these values may be
considered self-evident or uncontroversial.
However, as one of the first holistic expressions of sustainability in
private practice, I believe it was ahead of its time.
- “All decisions of the company are made in the context of the environmental crisis. We must strive to do no harm. Wherever possible, our acts should serve to decrease the problem. Our activities in this area will be under constant evaluation and reassessment as we seek constant improvement.
- Maximum attention is given to product quality, as defined by durability, minimum use of resources (including materials, raw energy and transport), multifunctionalism, nonobsolescence and the kind of beauty that emerges from absolute suitability to task. Concern over transitory fashion trends is specifically not a corporate value.
- The board and management recognise that successful communities are part of a sustainable environment. We consider ourselves to be an integral part of communities that also include our employees, the communities in which we live, our suppliers and customers. We recognise our responsibilities to all these relationships and make our decisions with their general benefit in mind. It is our policy to employ people who share the fundamental values of this corporation while representing cultural and ethnic diversity.
- Without giving its achievements primacy, we seek profit on our activities. However, growth and expansion are values not basic to this corporation.
- To help mitigate any negative environmental consequences of our business activity, we impose on ourselves an annual tax of 1 percent of our gross sales, or 10 percent of profits, whichever is greater. All proceeds of this tax are granted to local community and environmental activism.
- At all levels of operation – board, management and staff – Patagonia encourages proactive stances that reflect our values. These include activities that influence the larger corporate community to also adjust its values and behaviour, and that support, through activism and financially, grassroots and national campaigners who work to solve the current environmental and social crisis.
- In our internal operations, top management will work as a group and with maximum transparency. This includes an “open book” policy that enables employees’ easy access to decisions, within the normal boundaries of personal privacy and “trade secrecy”. At all levels of corporate activity, we encourage open communication, a collaborative atmosphere and maximum simplicity, while we simultaneously seek dynamism and innovation.”
I want to spend the rest of this review examining how these
carefully crafted values inform the product, marketing, financial, management
and environmental philosophies of the company.
Product Philosophy
One of the first things Patagonia did after its struggles in
1991 – and as part of the sober task of rebuilding the company by doing the
right thing – was to commission an independent assessment of the environmental
impacts of the fibres most commonly used in clothes: hemp, linen, rayon,
cotton, polyester, nylon and wool.
Let’s look at wool, for example. Wool can be very damaging or benign, depending on whether the sheep are grazing in
fragile desert environments or in areas with frequent rain, plenty of natural
grass, and no predators. Wool also
relies on chemicals at every stage. The
sheep are dipped in pesticides to kill parasites; the fleece is scoured with
petroleum-based detergents; the yarn is bleached with chlorine and then dyed
with heavy, metal-based dyes. Evidently,
understanding your supply chain is crucial to being a conscientious producer.
Consequently, Patagonia created an alliance with the Nature
Conservancy and Ovis 21, an Argentine company that manages and develops a
network of wool producers to reverse more than one hundred years of overgrazing
on fifteen million acres of Patagonia (the region, not the company)
grassland. The result was a more
sustainable grazing protocol involving the movement of herds that helped build
the soil, transport the seeds, and deepen the roots of plants to reverse the
desertification of the grasslands.
Additionally, it further cleaned up the processing of the wool to
eliminate the use of chlorine, dioxins and other harsh chemicals.
One of the first ingredients Patagonia identified as needing
to be phased out was polyvinyl chloride (PVC), which is a toxic, carcinogenic
plastic used everywhere in our society.
It’s in the coating on durable vinyl luggage and it’s a plasticiser for
printing on T-shirts. Next, Patagonia
sought to change neoprene production, the most environmentally harmful part of
making a wetsuit. By partnering with
Yulex, they were able to develop a biodegradable wetsuit material that used
guayule, a desert shrub native to the southwestern United States. This plant-based biorubber reduced the environmental
footprint of wetsuits, with no loss of warmth, stretch or durability.
In doing so, Patagonia was one of the first clothing
companies to think about product life cycles in a holistic and sustainable
way. Going one step further, Patagonia
was also the first to apply industrial design principles to clothing
design. Just as Chouinard had followed
the teachings of Saint-Exupery in designing his first pitons, he was now
invoking the precept of industrial design: that the function of an object
should determine its design and materials.
In a throw-away culture, he recognised that the overall durability of a
product is only as good as its weakest element.
Therefore, the ultimate goal should be a product whose parts wear out at
roughly the same time and only after a long life.
To get all the components of a product to be roughly equal
in durability, researchers would continually test in both the lab and the
field. They tested until something failed,
strengthened that part, then saw what failed next, strengthened that, and so on
until confident that the product is durable as a whole. Patagonia is so serious about its promise to
deliver a durable product that it has set up a repair centre in Reno, Nevada
that is free to its customers. It is the
largest garment repair facility in North America and it employs more than fifty
people who complete more than forty thousand repairs per year.
And since function comes first, a refusal to compare
themselves to competitors’ most popular styles and to replicate popular items
or chase fashion trends is paramount. When
the clothing line gets too big, and the differences between products become too
small, that’s when the company knows it is not living up to its own philosophy.
Marketing Philosophy
Chouinard’s distain for conventional forms of marketing is
summed up perfectly by the following excerpt from the book:
“When I die and go to hell, the devil is going to make me the marketing director for a cola company. I’ll be in charge of trying to sell a product that no one needs, is identical to its competitor and can’t be sold on its merits.”
In attempting to build an authentic brand that never strays
too far from its roots as a company for the offbeat climbers, campers, rafters,
skiers and general dirtbags of the world, it’s obvious that Chouinard views the
hyperbole of most modern advertising campaigns as the antithesis of
authenticity. Chouinard proudly crows that
others are wasting their money; to him advertising rates dead last as a
credible source of information. Instead,
what has worked best has been paid announcements for new store openings or
helping create environmental awareness on specific issues in which the company
is involved. Having a genuine link to a
cause is a much stronger identifier and reason for customer loyalty than
memorable logos or commercials.
The basic tenets of the Patagonia philosophy are:
“a deep appreciation for the environment and a strong motivation to help
solve the environmental crisis; a passion for the natural world; a healthy
scepticism toward authority; a love for difficult, human-powered sports that
require practice and mastery; a distain for motorised sports like snowmobiling
or jet skiing; a bias for wacko often self-deprecating humour; a respect and
taste for a real adventure (defined best as a journey from which you may not
come back alive – and certainly not as the same person); and a belief that less
is more (in design and in consumption).”
Well said, but is this just careful marketing of their
own? Obviously the answer is yes, and I’m
well aware that I’m the target market for just such a statement, but does that
prevent it from being genuine? As is
becoming a common thread in this review, it’s possible that I’m a sucker for an
ingenious branding campaign. But, what
is also evident from the company’s actions is that it can walk the walk.
If it weren’t for the financial, management and
environmental philosophies that follow, I would be the first to point the
finger of hypocrisy. As it is, taking a
principled and often stymieing stance,
gives the company an authenticity that feels distinctly different to most
companies’ posturing.
Financial Philosophy
Chouinard begs the question, who are businesses really
responsible to? Their customers? Shareholders?
Employees? Patagonia’s financial
philosophy argues that it’s none of the above.
Fundamentally, businesses are responsible to their resource base. Without a healthy environment there are no
shareholders, no employees, no customers and no business.
The crucial element of the business that allows Patagonia to
take this slightly philosophical and altruistic stance is its ownership
structure. Patagonia remains a private
company held by a select few, likeminded shareholders (Chouinard remains the
majority shareholder). As Chouinard
quips, “It’s okay to be eccentric, as long as you are rich; otherwise you are
crazy.”
Chouinard reports getting approached by prospective buyers
almost weekly, and their intent is always the same. They see an undervalued company that they can
rapidly grow and take public. But being
a publicly held corporation would put shackles on how the company operates,
restrict what it does with its profits and put it on a growth track that is
counter to its values. Patagonia’s
intent is to remain a closely held private company so that it can continue to
focus on its bottom line: doing good.
In many companies, the tail (finance) wags the dog (corporate
decisions), but by remaining a private company, decision making is not governed
by short-term stock price and a long-term approach can be administered in a relatively
calm fashion.
Staying private and relatively debt-free is a luxury of the
lucky, brave or mature, and there are a thousand good reasons for a company to
leverage its equity to attract new investment and grow the business. But underlying Patagonia’s eccentricity is a
forgotten truth: modern businesses are too obsessed with listing themselves on
the stock exchange and having the largest growth figures. By retaining private control and developing a
consensus around sustainable growth, the tyranny of the shareholder and the
profit motive can be curtailed and more impactful objectives for being in
business can take precedence.
The sooner a company tries to be what it is not, the sooner
it tries to have it all, the sooner it dies.
Patagonia will never be the size of Apple. But perhaps that’s the point. I know I’d rather have 1,000 Patagonias than
one Apple.
Management Philosophy
When you actively employ a bunch of surfers, the office is
going to want to be pretty quiet when the perfect wave rolls in. The fact that Chouinard is usually the first
one out the door indicates that, to Patagonia, “flex time” and “work-life
balance” aren’t just platitudes.
In fact, Patagonia may have been one of the first companies
to introduce the idea of flex time. Your
work needs to get done, but Chouinard doesn’t strictly enforce working hours
and openly encourages his employees to take advantage of any weather that lends
itself to being outdoors; whether that’s fresh snow, big waves or just warm
sunshine.
This outlook is all about maintaining employees’ passion for
the sports that underlie the company’s success, but also it’s about creating a
community in which employees feel respected, empowered and valued.
It’s this same outlook that led Patagonia to create a free,
on-site childcare centre for each and every one of its offices. Employees are encouraged to bring their kids
to work with them, drop them off at the childcare centre and stop in to see
them whenever they want during the day.
Chouinard argues that the childcare centres make financial sense too. Considering that mothers can return to work
earlier, breastfeed whenever they need to throughout the day and be on hand to
deal with any issues, it is no surprise that employee retention is well above
industry average and the company rarely encounters any issues to do with
employee absenteeism.
Additionally, Chouinard is big proponent of smaller offices
that foster this sense of community and reduce the often impersonal way that
companies sometimes work:
“I believe that for the best communication and to avoid bureaucracy, you
should ideally have no more than a hundred people working in one location. This is an extension of the fact that
democracy seems to work best in small societies, where people have a sense of
personal responsibility. In a small Sherpa
or Inuit village there’s no need to hire trash collectors or firemen; everyone
takes care of community problems. And
there’s no need for police; evil has a hard time hiding from peer pressure.”
I have no doubt that, were I to talk to Patagonia employees,
I could still find plenty of people who would have stories of nightmare
projects, horrible bosses and workplace grievances. However, in creating an environment that
reduces stress, increases autonomy and respects the many dimensions that make up
a full and challenging life, I think Patagonia is at the vanguard of modern
working practices.
Environmental
Philosophy
You could say that all of the philosophies discussed so far have
an environmental element, but what separates Patagonia from a lot of “green”
businesses is that it’s committed to putting its money where its mouth is.
In 1986, the company promised to donate ten percent of
profits each year to grassroots environmental movements. The company later upped the ante to one
percent of sales, or ten percent of pre-tax profits, whichever was greater. Small groups and activists working on
specific problems are given preference over large NGOs with big staffs,
overheads, corporate connections and broad remits. What is more, employees are free to nominate
groups and to donate their time to the cause.
Chouinard had a vision that Patagonia’s commerce could be
used to create a groundswell of environmental change and now he’s trying to get
as many other companies as possible to share in his vision.
In 2001, Craig Mathews (the founder of Blue Ribbon Flies, a
US fly fishing outfitter) and Chouinard decided to start an organisation called
1% for the Planet,
an alliance of businesses pledging to donate at least one percent of sales
toward active efforts to protect and restore the natural environment. Each 1% member disperses its own
contributions directly, which simplifies the decision making process, minimises
bureaucracy and encourages member companies to develop independent
relationships with the groups they support.
In return, member companies then use the 1% for the Planet logo to
communicate their environmental commitment to their customers.
The company has taken this commitment one step further with
the creation of Tin Shed Ventures,
the company’s venture capital fund for environmental start-up businesses that
has recently helped to start a clean textiles business and food waste
collection business.
There is no delusion that large public corporations will
suddenly become responsible for their own sake before being forced to by the
law or until it is proved to be more profitable for the shareholders. But what can be advanced is a form of
capitalism that is conscientious and sustainable. Just as we would hope to behave as
individuals, companies can discipline themselves to lead an examined life,
clean up their own act, support civil democracy and influence their peers by
example.
Conclusion
As I tried to allude to at the beginning of this review, I’m
aware that I could be charged with naivety in the extreme for swallowing this
one-sided account of a business’s persona.
I understand that supporting environmental regeneration is a sound
business decision for an outdoor clothing company for two primary reasons:
customers are likely to feel a kinship with the brand for supporting a cause
they care about, and the preservation of mountains, rivers and grasslands is
likely to sustain the very activities that create the demand for their
products.
Nevertheless, I believe that Chouinard has harnessed the
free-thinking rebellion of the 1960s in corporate form. He’s subverted the norms of capitalism by
turning what may have become a driver of private wealth into a tool for the
redistribution of wealth into environmental causes.
As Chouinard neatly summarises:
“It seems to me if there is an answer, it lies in these words:
restraint, quality and simplicity. We
have to get away from thinking that all growth is good. There’s a big difference between growing
fatter and growing stronger.”
I, for one, think there is room for a lot more businesses
like Patagonia.
