Timberland's Jeff Swartz on Corporate Responsibility

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Jeff Swartz

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Jeff Swartz likes to tell this story. It is a somewhat strange anecdote, with an unexpected moral -- but Swartz is nothing if not unexpected. He is sitting in his New Hampshire office, wearing jeans and a baseball cap, and talking about the summer he spent as an 11-year-old sweeping floors in his father's factory. "My dad said he'd forgotten something in the shipping room, so I took off at a run," recalls Swartz, who today heads the company, shoemaker Timberland. "I didn't get very far when I heard his voice, 'What are you doing by running?' He made the point that there is a disconnect between my passion and the passion of others who do this to make a living, that by running, you slap them in the face. And I thought to myself, He's my hero, but he's wrong. He was right that you don't set a pace you can't keep, but that doesn't mean you can't set a pace."

Swartz may be the most unusual big-company CEO in corporate America today. In his early years at the helm of Timberland, he could do no wrong. Embraced by hip-hop trendsetters, his boot company grew eightfold in market capitalization from 1992 to 2005, hitting $1.6 billion. He used the bully pulpit of his position to deploy social initiatives galore, instituting some of the toughest worker-protection standards in the manufacturing industry, planting 1 million trees, and sponsoring thousands of volunteer events in dozens of countries. He won accolades from Wall Street and social activists alike.

Then something happened on the way to the awards ceremonies: Timberland stalled. The young hip-hoppers moved on, costing the company $150 million in annual sales, which Swartz says "is not coming back." The company saw its first-ever full year of revenue declines in 2007 and was forced to cut product lines and close stores. Timberland stock is down more than 50% from its high.

Yet Swartz remains as committed as ever to pursuing social change. He wants his company to be carbon neutral by 2010 and has built a solar-powered distribution center in California and a wind-powered factory in the Dominican Republic. During two lengthy conversations, at Timberland HQ and Fast Company's Manhattan office, Swartz is unguarded and freewheeling, challenging the values of both Chinese factory owners and American consumers. He can afford more independence than most chief executives, since his family effectively controls Timberland through Class B stock (his grandfather Nathan Swartz founded the company in 1952). But he also knows that he's not untouchable: "No one's performance, especially in this age, will get supported through time if it's substandard."

But will the halo of his social agenda be enough to retain shareholder support? At the same time, can it draw customers back to the yellow boot? These are complicated times for a chief executive committed to saving the planet. "We're halfway to heaven and a mile out of hell," he says. "Things aren't getting better, they're getting worse." Swartz talks about the path he's trying to walk.

We last talked on Earth Day, and you had just come from an event sponsored by Timberland. It seemed to have left you with mixed feelings.

Earth Day is an opportunity to invite people into a conversation and make social change part of our business model. We've done events all over the world where like-minded people stand up and say, "Yes, we care." One year, it was Prague; another year, it was in the shadow of the Vatican. This year, we staged a park event in the South Bronx. But the bigger question is, How do you call people to this goodness that is inside them and sustain it beyond a day?

There was this park ranger in the Bronx who said, "It's really nice you're here, but you'll be gone at the end of the day, and I still have responsibility for this neighborhood." We can get 50 volunteers on one day by creating this sense of crisis. But she needs five people every day. Crisis doesn't sustain.

Your business is going through major changes. One of the most profound is the loss of the hip-hop consumer.

I have a tremendous sense of regret. Part of it is practical. The fact that the consumer no longer desires to buy our product the way he or she once did creates real pressure -- $150 million of revenue [lost] in a company our size is consequential from a shareholder perspective.

But the second part is, we had a lack of self-awareness. We undervalued our own brand. We were making utility products: It rains; it snows; this will keep you warm and dry. The consumer says, "I appreciate those benefits, but I'm going to wear this in the summertime unlaced without socks." The consumer says, "You understood the literal benefits of waterproofing and insulation; I understood the psychic benefits of confidence and a sense of self-assurance." And we said, "Check. Wow, got it." We are not a boot company, we are a brand, and our brand is not about protection against the elements; our brand is about confidently striding through life's challenges.