Thursday, April 16, 2009

Patagonia: Yvon Chouinard

What I have liked about Patagonia is that they have been really consistency in their products, messages and marketing in general.

While most other action sports brand battle to stay on top of the style for the fickle teenagers, Patagonia have found a niche on his own and has certainly been more conservative with their business model.

I went at couple of events in their store in Cardiff where I met and spoke with Gerry Lopez, Malloy brothers and Rob Machado even showed up on his bicycle as he lives right behind the store.

Instead of me rephrasing an article I read from my small business , I prefered to paste the important part of the article and the explanation of founder Yvon Chouinard regarding his view on the recession and how it has affected the industry as well as our goal to reduce environmental impact.

The Patagonia founder says his formula for success has not changed since it evolved on the walkabout almost two decades ago.

"We'd write down our values, and the number one value was to make the best product. We were coming from a company that had made the best climbing equipment and we wanted to do the same thing in clothing," he says. Nothing remarkable there.

The other values were more novel. The group wanted a company that struck the right balance between work and family and was determined to, at the very least, minimise the harm its activities did to the environment.

The biggest revelation was the need to apply the values that determined Chouinard's approach to climbing - and not go over the edge.

That meant a far more conservative fiscal strategy and bucking the conventional track for successful companies. It also meant opting for more modest growth and investing less than competitors in marketing.

As he explains: "Most businessmen want to grow their business as fast as they possibly can, and then at a certain point they go public and they sell a bunch of this worthless stock to a bunch of suckers at 40 times earnings or whatever."

It is an approach that, according to Chouinard, explains why so many big players have come a cropper in the past year.

"All of these public companies have just grown to the maximum for so many years that they've just hit the wall, and it's all been dependent on consumers just buying and discarding, buying and discarding.

"You know, your average product bought in a mall is discarded within 90 days, and we just can't keep going on like that. We need a different economy."

The new approach also resulted in a very flexible approach to working hours.

"A surfer knows that you go surfing when there is surf. You don't go next Tuesday at 2 o'clock. So people come and go and they work when they can and a lot of people work from home. As long as the job gets done, I don't care."

Finally, the approach necessitated a stronger commitment to sustainability, in the form of a commitment to devote 1 per cent of sales - or about $3 million a year - to environmental causes.

"We started this organisation called '1 per cent for the planet' and we now have about 1070 members in 30-odd countries, and each company makes out their own cheques to their own organisations," he says.

There is also a pledge to make all its products from recycled or recyclable fibres by 2010. "We're 80 per cent there," he says.

"We're constantly having to push the limits and then prove to other companies that what we have done is not so radical, that they can take small steps because we've taken big steps. That's the fun part.

"The message that Patagonia is trying to get across is that if you do the right thing for the environment, you'll be even more profitable. And if you don't, you're going to go down."

It is a message that has already struck a chord with the giant American retailer, Wal-Mart, which Chouinard describes as the 11th-biggest economy in the world.

The two companies are co-writing a manual on how to make sustainable clothing, a relationship he describes as "David and Goliath".

Wal-Mart, according to Chouinard, is now leading the way on sustainability. He says the company has made it plain to suppliers that it will not do business with those unwilling to embrace best environmental practice.

He is also encouraged by the approach Barack Obama has taken since becoming US President. "He's convinced that the old style of doing business is finished and, while I've been the biggest critic of government, this may be the start of something."

You'd think all of this would temper the ingrained pessimism of the man described as one of the leading climbers of the Golden Age of Yosemite climbing. Not so.

"I'm a doom bat," he insists. "But, you know what? I'm a happy doom bat. Because as long as I feel I'm part of the process of doing something, I'm not part of the problem. I'm part of the solution, and I feel fine about it."

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