How Patagonia Found Opportunity In Crisis

In the midst of crisis, don't play it safe and just try to scrape by, says Vincent Stanley, Patagonia’s VP of marketing--rather, use it as an opportunity to exhibit true leadership.

In The Responsible Company, Yvon Chouinard and I argue that the exercise of responsibility in economic life is essentially a human right and deep calling. We make the case that companies, to be successful in all important ways in a time of environmental crisis and economic sea change, must enlarge their idea of responsibility, to include all that is done by a business or done on its behalf throughout the supply chain. We identify five elements or areas of responsibility, four of them familiar: to a company’s economic health, its employees, customers, and communities (broadly defined). To these we add a fifth element of responsibility to nature, which our economic activity harms in ways we do not yet know how to remedy. At minimum, we need a widely accepted, better than anecdotal “triple bottom line” cost accounting that charges business back for harm done without penalty to the natural and social commons.

Though the need for deep change is urgent, culture changes slowly except in wartime or in the face of a widely recognized threat to human health. Nevertheless, leaders own the pulpit and have the ear and eye of those whose lives their actions affect. And leaders, more than their brethren, have the wherewithal to bring people to the table, overcome resistance to new ideas, and clarify for others a worthy goal they might not yet be able to see.

Effective leaders also have the habit of recognition that every crisis, as Paul Hawken has said, is an opportunity in drag, that enlarging a company’s sense of responsibility also improves its responsiveness both to threats and opportunities, forges connections that may not otherwise have been made or recognized, makes the culture more intelligent, and occasions the opportunity for new sales or lower costs.

Greening in three steps
Daniel Goleman has come up with a useful creed every leader who recognizes the need should know by heart: Know your impacts, favor improvement, share what you learn. A leader seeking to lighten a company’s adverse social and environmental impact must understand what harms are caused both directly by the company and on its behalf within the supply chain. Engage your team, with as broad participation as possible, to find out the worst things your company does, what costs it the most in profit, what most risks its reputation, and what will be the easiest to correct.

Getting started
The easiest problems for your company to correct may seem complex to another, depending on what the culture values most, whether its bias is for innovation or safety. Address what you suspect you already know. What nags at you the most whenever you hear about it or see its consequences? What is it that your company will be good at getting done? If you cannot by fiat command a deep cultural change you can, by drawing on your company’s cultural strengths, at least accomplish a controlled drift.

Identify priorities as a team
Next, get your people together to name their own priorities for improvement. Decide what should be done first, how much time and money can be spent on it, and how many people will be involved. Define what success looks like: then boil that down to one page you can widely circulate among your team. Once you’ve figured out what improvements you want to make, where you can draw on your company’s greatest strengths, take the fewest risks (or, occasionally, the boldest), save the most money, and create the most opportunity, go for it.

Learn from others
You can take advantage of work pioneered by others. For our book, we drew on work done by B Corporation, Napa Green, and others to create our own extensive, 25-page checklist of things that can be done within each of the five elements of responsibility. (This checklist can be downloaded at no cost from Patagonia.com; search The Responsible Company). Most businesses of any size that make things, or have things made, have now undertaken some form of life-cycle assessment (LCA) of their products to help improve product quality, and thereby reduce cost and waste. More businesses each year dedicate staff to sustainability practices.

Share what you learn
Finally, share what you learn with as many people in your organization as possible. Perception may not be reality, but public acknowledgment of what your company does to improve its social and environmental practices helps make what you do real to others. Share what you learn with stakeholders: customers, suppliers, even the key competitors you call on when you need to form a united front to get something done. Take advantage of the trust you earn, and you will earn more of it, especially if you are credible and tell the truth about your mistakes and failures. Using the trust you’ve deepened and the knowledge you’ve gained, ask yourself: What does the company now know that enables you to take the next step that may have been out of reach but now lies suddenly within sight?

Where to from here
Then keep going. The company will get smarter and more people will start to care deeply about creating a better quality business through improving its social and environmental performance. In so doing your people will have to pay better attention to all the business fundamentals--and this boost in applied intelligence will result in a more fluid, less wasteful organization. You will spot money leaks you could not see before, and you will gain the confidence to recognize and go after opportunities that companies governed by a see-no-evil politesse cannot begin to address.

Related: How Patagonia Makes More Money By Trying To Make Less

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--Adapted from The Responsible Company by Yvon Chouinard and Vincent Stanley. Stanley, Patagonia’s VP of marketing, has been with the company on and off since its inception in 1973. He has helped initiate and produce the Footprint Chronicles, the company’s interactive website that outlines the social and environmental impact of its products; the Common Threads Partnership; and Patagonia Books.

[Image: Flickr user Christopher Schoenbohm]

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