Patagonia: Profits, People and Planet
Carl Palmer, MBA1
Issue date: 11/12/01 Section: News
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So you can have it all. You can do work you believe in and bring your values to work everyday while running a company whose profitability makes competitors wince. You can deliver eye-popping financials while having a positive impact on the community in which you work and on the natural world. And you can have a hell of a lot of fun while doing it.
Well, at least Michael Crooke can. Michael Crooke, CEO of Patagonia, Inc. and its parent company, Lost Arrow, Inc., dropped by the GSB for a visit on October 22. He came with a message, an inspiring story, and a contagious enthusiasm. Since taking over as CEO of Patagonia two years ago, Crooke has taken a successful company to a new level of financial, environmental and social performance.
2000 was a banner year for Patagonia on all three bottom lines, with record sales, a 65% gross margin, record donations to environmental organizations, and a higher ranking on the 100 Best Companies for Working Mothers, among other accolades. And all of this just one year after Patagonia’s charismatic founder Yvonne Chounard handed over the reins.
During an hour at the GSB and the lunch that followed, Crooke made it clear that he is continuing the tradition of tireless commitment at Patagonia: commitment to creating the highest-quality outdoor products, to gradually eliminating the negative impacts of its operations, and to maximizing the positive ones.
Their commitment might surprise you. Each year Patagonia gives grassroots environmental organizations 1% of sales or 10% of profits, whichever is larger. And every catalog they mail dedicates nearly a third of its space to educating their customers about environmental issues and how Patagonia works to solve them.
And they are always pushing the envelope further. About a decade ago, Patagonia conducted a fiber audit with surprising results. Of all the materials they used in production, cotton had the greatest impact on the environment.
It turns out that growing cotton conventionally requires intensive use of the most toxic herbicides, pesticides, defoliants and chemical fertilizers, in addition to huge amounts of water. Over time, this practice transforms fertile lands into biological deserts and threatens community health and water supplies.
When they considered the alternatives, switching to organic cotton was the clear winner. But there were serious issues to address since there was too little organic cotton in production to meet Patagonia's needs. The switch required Patagonia to revamp all aspects of their operation, effectively going vertical and developing direct relations with farmers (and often convincing them to go organic).
Just a few short years later, despite real concerns that the decision might sink the company, Patagonia made the switch. It is now clear that the move was a good one, so good in fact that others are following.
And not just any others. Crooke’s audience that Monday was among the first to know that Nike is increasing their commitment to incorporating organic cotton in their products.
Patagonia actively pursues superior results on all three fronts-- financial, social and environmental. And they have been phenomenally successful doing it. Crooke believes that this dedication to people, planet and profits is a key reason for the company's success.
The practices apparently pay off. Patagonia has incredibly low turnover and high employee loyalty. Which is easy to understand, since Patagonia employees believe in what they do, know they have a positive impact on the world and their communities, and get to go surf or ski if the surf's up or the snow is falling.
While not surfing or skiing, Crooke is doing more than just running one of the world's preeminent outdoor companies and a leading socially and environmentally responsible business. He is pursuing a Ph.D. in the field on the side because he believes that businesses will have to integrate what he calls the three pillars—financial, environmental and social—to be successful in the future.
According to Crooke, the integration of all three is what creates value and the strength of your brand. And all of those things are only going to be more important in the future.
So can you have it all too? This year the Public Management Initiative is holding a year-long dialogue about just that subject. This year's PMI is focused on the Double Bottom Line, and it promises to prove just as intriguing and inspiring as Michael Crooke's visit to the GSB a couple of weeks ago.
Scott McGaraghan, MBA2, President of the Environmental Management Club, invited Michael Crooke to speak at the GSB because he believes that incorporating environmental and social responsibility into business is critical to success. According to McGaraghan, "Patagonia is a great example of a company that is doing it all without compromising on any front. We all have a lot to learn from Michael Crooke and other leaders like him.
Well, at least Michael Crooke can. Michael Crooke, CEO of Patagonia, Inc. and its parent company, Lost Arrow, Inc., dropped by the GSB for a visit on October 22. He came with a message, an inspiring story, and a contagious enthusiasm. Since taking over as CEO of Patagonia two years ago, Crooke has taken a successful company to a new level of financial, environmental and social performance.
2000 was a banner year for Patagonia on all three bottom lines, with record sales, a 65% gross margin, record donations to environmental organizations, and a higher ranking on the 100 Best Companies for Working Mothers, among other accolades. And all of this just one year after Patagonia’s charismatic founder Yvonne Chounard handed over the reins.
During an hour at the GSB and the lunch that followed, Crooke made it clear that he is continuing the tradition of tireless commitment at Patagonia: commitment to creating the highest-quality outdoor products, to gradually eliminating the negative impacts of its operations, and to maximizing the positive ones.
Their commitment might surprise you. Each year Patagonia gives grassroots environmental organizations 1% of sales or 10% of profits, whichever is larger. And every catalog they mail dedicates nearly a third of its space to educating their customers about environmental issues and how Patagonia works to solve them.
And they are always pushing the envelope further. About a decade ago, Patagonia conducted a fiber audit with surprising results. Of all the materials they used in production, cotton had the greatest impact on the environment.
It turns out that growing cotton conventionally requires intensive use of the most toxic herbicides, pesticides, defoliants and chemical fertilizers, in addition to huge amounts of water. Over time, this practice transforms fertile lands into biological deserts and threatens community health and water supplies.
When they considered the alternatives, switching to organic cotton was the clear winner. But there were serious issues to address since there was too little organic cotton in production to meet Patagonia's needs. The switch required Patagonia to revamp all aspects of their operation, effectively going vertical and developing direct relations with farmers (and often convincing them to go organic).
Just a few short years later, despite real concerns that the decision might sink the company, Patagonia made the switch. It is now clear that the move was a good one, so good in fact that others are following.
And not just any others. Crooke’s audience that Monday was among the first to know that Nike is increasing their commitment to incorporating organic cotton in their products.
Patagonia actively pursues superior results on all three fronts-- financial, social and environmental. And they have been phenomenally successful doing it. Crooke believes that this dedication to people, planet and profits is a key reason for the company's success.
The practices apparently pay off. Patagonia has incredibly low turnover and high employee loyalty. Which is easy to understand, since Patagonia employees believe in what they do, know they have a positive impact on the world and their communities, and get to go surf or ski if the surf's up or the snow is falling.
While not surfing or skiing, Crooke is doing more than just running one of the world's preeminent outdoor companies and a leading socially and environmentally responsible business. He is pursuing a Ph.D. in the field on the side because he believes that businesses will have to integrate what he calls the three pillars—financial, environmental and social—to be successful in the future.
According to Crooke, the integration of all three is what creates value and the strength of your brand. And all of those things are only going to be more important in the future.
So can you have it all too? This year the Public Management Initiative is holding a year-long dialogue about just that subject. This year's PMI is focused on the Double Bottom Line, and it promises to prove just as intriguing and inspiring as Michael Crooke's visit to the GSB a couple of weeks ago.
Scott McGaraghan, MBA2, President of the Environmental Management Club, invited Michael Crooke to speak at the GSB because he believes that incorporating environmental and social responsibility into business is critical to success. According to McGaraghan, "Patagonia is a great example of a company that is doing it all without compromising on any front. We all have a lot to learn from Michael Crooke and other leaders like him.
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