Patagonia: A Mission Greater Than Itself
- Forward Thinking
- Mar 11, 2020
- 6 min read
A few weeks ago, I went to the Patagonia store to purchase a gift for a friend. After browsing for the perfect gift for about 30 minutes, I went to ring-up the purchase; while doing so, I inquired about Patagonia's return policy. I learned that, in addition to the refund policy, Patagonia has an extremely flexible warranty and repair policy. The reasoning that the store representative gave me is that having a flexible warranty and repair policy aligns with Patagonia's mission to reduce the environmental impact of the organization. The store representative then pointed out Patagonia's Environmental & Social Initiatives Book (Found here), and he suggested that I take a look to learn more about the company's values. So I decided to grab a copy.
On the walk home, I mulled over the concept of environmental and social responsibility and the interactions it has with and within a company. It reminded me of a class I took while at business school under Wes Longhofer: Business and Society. In the class, students discuss the importance and merits of corporate social responsibility (CSR).
As a result of the mulling and the reminder of my business school education, I decided to analyze the role of corporate social responsibility in a company's strategy (With the case being Patagonia).
Having read Patagonia's Environmental and Social Initiatives Book, one thing truly stood out to me: Patagonia has purposefully incorporated CSR into its mission to benefit an ecosystem greater than itself. The company truly has made its mission to improve the ecosystem it operates in and not focus on improving its position within the ecosystem; it understands that the latter will eventually come as a result of the former. And in focusing on the greater ecosystem, Patagonia has a new frame and mindset that has adapted to profound shifts.
"Ecosystems are dynamic and co-evolving communities of diverse actors who create and capture new value through increasingly sophisticated models of both collaboration and competition." - Deloitte, Business ecosystems come of age
Before explaining Patagonia's actions, it is important to understand the fundamentals of what ecosystems do:
Address human needs and desires in new ways.
Drive new collaborations to address social and environmental challenges.
Create and serve communities by gathering their creativity and intelligence.
Exist on powerful business platforms.
Accelerate learning and innovation.
Patagonia's recreation of its mission statement is driven by the fact that the company and its leadership both understand how to navigate ecosystem, which it has done in many ways.
"[The earth] could very well end up uninhabitable in 80 years, at least for humankind and wild animals. That's why we recently changed the company's mission statement to 'We're in the business to save our home planet.'" - Yvon Chouinard, Founder and Owner of Patagonia
Patagonia recognizes, understands, and bolsters the right of humans to live a healthy and valued life (A human need), and it has decided to do so by making it Patagonia's mission.
Patagonia has driven new collaborations by creating new farming standards through regenerative agriculture and supporting the Regenerative Organic Certification (REC) to create more sustainable and carbon positive methods of farming. It has done so by bringing farmers and scientists to the table.
The company has also gathered creativity and intelligence in preserving nature by supporting conventions that bring different minds together to brainstorm new methods of supporting the fight against climate change.
The ecosystem has also been supported by Patagonia through the use of the company's business platform: local organizations dedicated to climate change and/or preservation have partnered with retail stores to promote their agenda in-store.
Last, Patagonia has supported its ecosystem by accelerating learning: the company created the film Blue Heart and had showings all around Europe to make citizens aware of the harmful effects of dams on Europe's last wild river. This led to the European Union halting the construction of damns all across continent.
It is evident that Patagonia has been purposeful in implementing CSR into its strategy, by making its mission something greater than itself, and has executed CSR through its actions in the ecosystem. The effects of this? Growth.
The obvious effect is that it has a positive impact on the planet. Realistically, how doesn't its dedication to supporting grassroots organizations rather than larger ones or its dedication to creating higher quality products that reduce plastic microfibers in the ocean or its dedication to Fair Trade production or even having a "4-fold" approach (Ethical sourcing, product quality, social responsibility, and environmental compliance) have a positive impact?
But the best effect has been the growth Patagonia has experienced on the business side. By linking its business goals with environmental goals (Such as ones discussed in the book is), Patagonia is in a beneficial position as it is able to draw new customers by taking a stance that millions of consumers resonate with and by taking a stance that attracts talent that further ingrains this approach.
Basically, Patagonia is able to link its CSR in supporting the greater ecosystem (From labor rights to climate change to promoting democracy) to its strategy to put it in a better position to grow. This has allowed Patagonia to indirectly serve its own interests and even quadruple revenues over the past 10 years.
So, through the analysis of Patagonia, it is clear that CSR can be a significant part of a company's strategy, thus contributing to a company's virtuous cycle and competitive advantage to create growth.
The question then is how does any company engage in strategy-based CSR?
For companies that see CSR as an opportunity to strengthen the business, the big challenge is execution. Smart partnering can provide a practical way forward. - McKinsey, Making the most of corporate social responsibility
The key is to make CSR as a central part of a company's strategy. Through using CSR to bolster the greater ecosystem, from collaborating to innovating, company's are able to use CSR to tackle key areas of impact between businesses and society.
The first step to doing so is to have a smart partnership between businesses and society that create high amounts of value between both parties. Through this, society must improve key performance indicators (KPIs) while businesses improve their ability to utilize their core value creation to address major strategic issues. During this period, business leaders and societal leaders must collaborate to guide their focusing of CSR initiatives by using different principles:
Concentrate CSR efforts in areas that the business has significant interactions with and thus the greatest impact on society. The deep understanding of mutual dependencies allows for a lot of potential.
Find balance between both parties and be open-minded in understanding both parties' perspectives.
Find the right societal partners that benefit from your core business competencies and that the business can benefit from too. Allow for long-term relationships and great motivation to engage with each other.
"What are the one or two critical areas in our business where we interface with and have an impact on society and where significant opportunities exist for both sides if we can creatively adjust the relationship? What are the core long-term needs for us and for society that can be addressed as a result? What resources or capabilities do we need, and what do we have to offer in realizing the opportunities?" - McKinsey, Making the most of corporate social responsibility
The next step is to make a business case and story for the CSR by assessing the value-creation potential for both parties with the same rigor as a normal business-related investment. Consider time frame, nature of the benefits, and the splitting of said benefits.
The last step to making CSR a part of a company's strategy is also the most difficult: implementation. Make sure to go in with a long-term commitment and engage the entire workforce and lead by example (Patagonia engaged the workforce by having retail stores lead funds, composed of employees, that invest in local organizations and the leadership led by example by donating $10 million from tax cuts to organizations that fight climate change). And no matter how far the goal is in the future, keep the momentum going and always take action.
As the end of these blogs, it's time to think about the so what?
Integrating CSR into a company's strategy should be a priority. Doing so allows the company to benefit an ecosystem greater than the itself, thus benefiting both society and the business.
There needs to be a game plan for engaging in CSR: finding a smart partner, creating a business case, and implementing it (With this part perhaps needing the most assistance).
In strategizing with leadership, include CSR directors in the process and show the benefits of CSR in practice.
Stretch strategic CSR ambitions and go beyond common practice. Be audacious.
Live out a companies core values both internally and externally, especially in smart partnerships.
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