Contributor, Korn Ferry Institute
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Daniel Goleman, author of the bestseller “Emotional Intelligence,” is a regular contributor to Korn Ferry. His latest book, "Altered Traits: Science Reveals How Meditation Changes Your Mind, Brain, and Body," is available now.
The sporting clothes maker Patagonia, which opened their first retail store in 1973, has long been the poster child for purpose-driven business. From that simple start Patagonia—known for their open, progressive, surfer-friendly culture—has grown to a company of over 30 stores and close to 2,000 employees.
What keeps this retailer thriving alongside competing brands like The North Face and retailers like Amazon? The secret to this success may lie in the original mission: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
William Damon, director of the Stanford Center on Adolescence, defines purpose as “a long-term, forward-looking intention to accomplish aims that are both meaningful to the self and of consequence to the world beyond the self.”
When it comes to purpose, Patagonia has gone beyond mere “intention” to action. This self-proclaimed “activist company” commits 1% of its total sales to environmental groups through One Percent for the Planet, an organization their founder, Yvon Chouinard, helped create. In 2016, they took these donations to the next level, pledging to contribute 100% of sales from Black Friday to environmental organizations. The total was $10 million.
These altruistic efforts, while inspiring, are simply expressions of Patagonia’s purpose-driven decisions. The company states it’s “reason for being” as “We appreciate that all life on earth is under threat of extinction. We aim to use the resources we have—our business, our investments, our voice and our imaginations—to do something about it.”
In order to stay true to this purpose, Patagonia’s founder, Yvon Chouinard, has made a whole host of risky decisions that some saw as threatening the bottom line. Early in their history, Patagonia stopped making pitons, the metal spikes climbers hammered into rocks (and a mainstay of their business at the time) because they were damaging the environment. Later, Chouinard switched Patagonia’s entire clothing to organic cotton, sourcing new products, building a new supply chain, and raising costs. In order to show employees why they were being asked to put all of their effort towards this transition, Patagonia rented buses and took everybody in the company to cotton fields to show them the difference between conventional and organic farming practices, such as a stark contrast in the use of pesticides .
Business in the Community, the oldest and largest business-led membership organization dedicated to responsible business in the UK, recently piloted their Responsible Business Tracker. So far, this is the largest measure of responsible business in the UK. Of the participating companies, 86% reported having a purpose statement. While this is great news, 83% of them also reported they had yet to integrate their purpose statement into their daily operations. As Kevin Cashman, global leader of Korn Ferry’s CEO & Executive Development practice, puts it, “Purpose is not just a nice statement. It requires developmental transformation to make it happen.”
In a time when many organizations are being accused of “purpose washing”—using purpose as a PR tool rather than as principles to follow—Patagonia is one company showing follow through, adapting their products, policies, and priorities to stay true to purpose and meet the evolving needs of the environment. Patagonia’s current CEO, Rose Marcario, told Business Insider: "I don't think it's a conflict of interest to say that you can make money, and have a prosperous and successful business, and you can also do good in the world."
Like Chouinard, Marcario hasn’t allowed shareholder value to drive decision-making. During last year's midterm elections, Patagonia teamed up with Levi's to launch the nonpartisan Time to Vote initiative, persuading more than 400 companies, including Walmart, Tyson Foods, and Lyft, to sign a campaign giving employees time off to cast their ballots. More recently, Marcario announced that Patagonia will only take on new corporate clients (for customized gear) if they have a significant sustainability plan as part of their mission.
Does purpose work as a guide to strategy? Not only has Patagonia reportedly reached close to an estimated $1 billion in revenue each year, but the company also boasts a 4% turnover rate in a sector where the average is more than triple that. “We can't bring ourselves to knowingly make a mediocre product,” writes the company on their website, “And we cannot avert our eyes from the harm done, by all of us, to our one and only home.”
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