The business of Patagonia.

“We’re in business to save our home planet.” This is not the rallying cry of the Sierra Club, the Environmental Protection agency or some other large scale non-profit environmental non-governmental organization. It’s the mission statement for Ventura, California based Patagonia.

Patagonia is largely an outdoor retailer, who specializes in high end clothing and technical gear aimed at outdoor enthusiasts whom enjoy climbing, surfing, paddling, biking, or running. Patagonia is a privately held B-Corporation that was founded by Yvon Chouinard in 1965, originally named Chouinard Equipment, the original product they offered was a piece of climbing equipment called a piton which would be driven into the rock surface to allow for safety equipment to be affixed. The unfortunate side effect of this practice was that the rock was forever marred by the piton thus leaving it in a degraded state from its original form. By 1970, Chouinard Equipment was the leading supplier of these pitons and other climbing equipment in the United States. Abruptly, in 1972 Chouinard decided to abandon the sale of piton’s in favor of a new invention, aluminum chocks, which could be wedged into rock cracks and leave the surface unperturbed. For perspective, this would be the equivalent of Ford saying they’ll never build a gas car again starting tomorrow because of the negative environment impact of their very own products. In other word, it was an enormous risk.  ‘Clean climbing’, is what their catalogue ultimately called it, and the industry changed overnight.

I bring this early example of Patagonia’s dedication to their values up because this concept is central to the business practice both internally and externally and sheds some light on the type of company I’ll be discussing. From an overall standpoint I’d describe the business of Patagonia and its exemplification of Human Performance Technology principles in a single word, authentic.

Patagonia’s strategic position.

Since it’s founding Patagonia has operated on four very basic principles; build the best product, cause no unnecessary harm, use business to protect nature, and to not be bound by convention (Sirtori-Cortina, 2018). As previously stated, Patagonia is privately held so financials and other such metrics are unknown to the public. From readings and known retail sales they are a major player in the mid to high end outdoor retail space, specifically with clothing. Patagonia would most likely state that they are in the strategic position to do a tremendous amount of good in line with their success as a company. According to Yvon’s book, Let My People Go Surfing, they have no intention of going public, no intention of breakneck growth. Yvon’s direct quote is “We believe the accepted model of capitalism that necessitates endless growth and deserves the blame for the destruction of the of nature must be displaced. Patagonia and its two thousand employees have the means and the will to prove to the rest of the business world that doing the right thing makes for a good and profitable business.” (Chouinard & Stanley, 2012) Just, like, the pitons.

Patagonia’s focus on outcomes.

You’ll notice throughout, that Patagonia, perhaps despite some of its clientele, is fully pro-capitalist and fully for profit (looking at you $99 organic cotton sweatpants). They do however spend considerable time and resources focusing on the outcomes and biproducts of their inherent success. The interesting thing I find, is that they are clearly focused on continuous profit but with the goal of doing the most good. They do this in a number of ways including donating 1% of all sales revenue to NGOs whom are working towards improving the environment, they meticulously document on their website for all to see the environmental impact of their products. Additionally, they support internal initiatives to reduce consumer waste in the Worn Wear Project, and actively organize environmental activism projects including written word, film, media, and protest events. Patagonia has laser focus on the outcomes they desire; to save the planet.

Patagonia’s systemic view.

Patagonia’s systemic viewpoint is actually backed up by research. The Mandala Model legitimizes many of the business practices that Patagonia identifies with.

Figure 1 – Mandela Model (Crooke, Csikszentmihalyi, & Bikel, 2015)

In the piece this model is used as a means to identify leaders whom are well suited to manage organizations or corporations in an increasingly complex world. Consequently, the findings indicate that the alignment of values with internal and external stakeholders increases overall competitive advantage. The reasoning is, if the company’s values are so engrained in the company culture than those values become systemic and each individual can make decisions on how the company would handle an individual situation confidently. This is similar to the systematic thinking concepts made popular by Peter Senge and other HPT practitioners.

How Patagonia aims to add value.

Patagonia’s actual goal is to add value to the world itself. They aim to do that by exemplifying the four basic principle that where discussed earlier. This has a double effect according to (Porter & Kramer, 2006) whom make the point that, “typically the more closely tied a social issue is to a company’s business, the greater the opportunity to leverage the firm’s resources –and benefit society.” The side effect to this is essentially a positive feedback loop that adds value to the brand as well as the environment itself, in Patagonia’s case.

How Patagonia works in partnership with clients and stakeholders.

According to Craig Wilson’s, Compass and the Nail, Patagonia doesn’t do conventional marketing (Wilson, 2015). They are more interested in understanding what their core users are looking for and needing in product offerings, building that product, and then allowing those core users to spread the word. At the same time in, both The Responsible Company and (Crooke et al., 2015) the internal stakeholders have considerable say in making sure the product aligns with the values of both the company and its cliental. The best example of this is when business demands began to put into question one of Patagonia’s core products. They lost portions of market share when a shirt material which used heavy metals had entered the market from other competitors. Internal stakeholder conflicted on how the company should go about handling this issue as the new material did feature better performance than the current internal offering, the market clearly indicated this material was acceptable to the greater client base, but the environmental impact of the product and it’s production did not meet the internal rigorous standards. In the end the choice was to innovate a new product that would meet the performance goals while aligning with the company culture both internally, and what is expected by the customers.

Does Patagonia exemplify the standards of Human Performance Technology?

Now that you know quite a bit about Patagonia’s values and business practices let’s look internally at how Patagonia used a unique approach to a specific human performance issue that fully aligns with the company’s internal values and culture. Childcare, and keeping mothers and fathers employed after having a baby.

Determine need or opportunity.

Remember, Patagonia’s central vision is to save the planet, not just improve their company, but since they are a company, they are tasked with not only improving society but doing it sustainably, in this case business sustainability.

Rose Marcario, CEO, said in a LinkedIn post that later ran as a Cleanest Line bl0g post and advertisement, that up to 35 percent of working women in the United States who give birth never return to their jobs. She proports that this statistic leads to the reality that there is an alarming lack of women in positions of leadership, boardrooms, and public office.

Determine cause.

The cause she points out is that when women return to work after birth they are often met with unsupportive environments which lack on-site child care, lactation programs, and paid medical leave.

Design solutions including implementation and evaluation.

Patagonia recognized this dilemma early on as Chris Tompkins was CEO in the 70’s and 80’s, and it’s outlined in Let my people go. She realized that when women would leave to go handle the baby it created an inherent two-tiered environment, that women would go handle the child as the man stayed at work. Patagonia by seemingly all accounts could be considered a progressive organization even in the 70’s and 80’s and decided this practice was unsustainable as the parity in sexes at Patagonia is even. In the 80’s they started a small on-site child development center and encouraged employees to bring their children to work.

Ensure solutions’ conformity and feasibility.

This implementation would need to be carried in some way to the retail stores and other locations where Patagonia workers resided. So they devised a system of evaluating the location’s resources and making a feasibility to plan to implement the child care initiative. This took the form of additional development centers, as well as stipends for childcare on top of base salary. Additionally, conditions where improved for nursing mothers and paid family leave was extended to all employees.

Implement solutions.

Patagonia has been implementing this solution ever since they started in the 80’s and as such it is a major contributor in the company being not only an ideal place for employees with young families to work but also serves as a template for how other successful business companies can retain top talent whom also want a family.

Evaluate results and impact.

At Patagonia, Rose indicates that the results of this intervention have actually led to a return on investment, and as it is the company’s goal to save the world she laid out a detailed balance sheet on the internet that any business leader could see and implement at their own companies to increase the retention of women after child birth.

Some of these results are quite staggering. Rose indicates that “At Patagonia, for the past five years, we’ve seen 100 percent of moms return to work after maternity leave.” (Chouinard, 2005). She goes on to point out that this is also a major selling point for men who are more conscientious about time spent away from their families at work. She outlines that there are specific business level benefits as well in the form of lucrative tax benefits, increased employee retention (the reduction of hiring and retraining costs), increased employee engagement, and an overall reduction in bottom line costs.

Opportunities, limitations and areas of improvement for HPT at Patagonia.

A business analyst could say this ‘Patagonia special sauce’ should not be shared as it is part of its competitive advantage, but again Patagonia’s stated goal is not to add value to its shareholders, it’s to help save the world through business, and thus in many ways this HPT implementation is both for the internal employee at Patagonia, but also for every other business as a performance support tool, or template on how to retain woman in leadership and managerial roles after child birth.

The limitation that Patagonia has in implementing this solution is that the target audience is actually other companies outside of Patagonia. They’ve already been doing this for 33 years and they see their success in this endeavor as an opportunity to improve the landscape of working America and beyond, just like they felt it was there responsibility to improve the environmental impact of climbing equipment over 50 years ago.

The future of HPT for Patagonia?

What I hope I have portrayed here is a very different take on HPT, thus far we have looked at HPT from the consultant’s viewpoint and the internal company stand point, namely to address issues or retention, or bottom line, or experience. Patagonia wants to do that as well but it is in the stance of wanting to change society not just the company. I think this is a good example because Patagonia has zero control over what people actually do, which is a common thing I here when discussing implementations, how do we control the delivery, how do we ensure the message is heard, how do we know the intervention is successful.

Patagonia answers these questions indirectly with business performance, and successful activism efforts. Recently, Patagonia has leveraged films like 180 degrees South, Jumbo Wild, and Damnation as more or less training tools that elicit action from viewers. Patagonia thus has a means of measuring the effect of these intervention by counting number of views, number of shares, number of dollars earned in donation to these causes, and yes even increased retail sales of products they offer. 

They do these types of interventions across several medium to include print catalogues, online blogs, and podcasts that all lead to the central goal of Patagonia. Like the family-business intervention mentioned above it is easy to tell from their website that they have future plans for these types of interventions. Specifically, they are approaching activism with an organization called Patagonia Action Works, which is more less a means of organizing demonstrations and community building centered around Patagonia’s vision. In this particular case, this is a direct intervention to the public, Patagonia is simply leveraging its knowledge base and technological capabilities to host a website, stage events, and market those events to the general public. Another example is their Worn Wear initiative which practices what they call, “the radical act of repair,” seemingly trying to eschew the very constant growth mentality of other businesses that Yvon discussed in his founding of the company, in favor of showing that a company can do the right thing and prove that makes good business by not only continuing to exist but to continue being profitable and thus able to do additional works to save the world.

(Yes, it is safe to say I’ve drank the Kool-aid by the way.)

References

Chouinard, Y. (2005). Let My People Go Surfing – The Education of a Reluctant Business Man. New York: Penguine Books.

Chouinard, Y., & Stanley, V. (2012). The Responsible Company. Ventura: Patagonia Books.

Crooke, M., Csikszentmihalyi, M., & Bikel, R. (2015). Leadership in a Complex World: How to Manage “The Tragedy of Choice.” Organizational Dynamics, 44(2), 146–155. https://doi.org/10.1016/j.orgdyn.2015.02.009

Porter, M. E., & Kramer, M. R. (2006). Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review, 84(12), 78–92. Retrieved from https://ezproxy.library.und.edu/login?auth=cfl&url=https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=23081414&site=ehost-live&scope=site

Sirtori-Cortina, D. (2018, April 2). From Climber To Billionaire: How Yvon Chouinard Built Patagonia Into A Powerhouse His Own Way. Forbes. Retrieved from https://www.forbes.com/sites/danielasirtori/2017/03/20/from-climber-to-billionaire-how-yvon-chouinard-built-patagonia-into-a-powerhouse-his-own-way/

Wilson, C. (2015). The Compass and the Nail. Los Angeles: Vireo/Rare Bird.