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.
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Recent Comments | 6 Total
October 9, 2008 at 7:26am by Lee Mitchem
Utilizing Timberland's production demand to force positive change in an industry and countries is an important leverage tool. While it is admirable that Swartz attempts to convince his current business partners to use greener production methods, perhaps his entrenched conversion battles cause him to miss new opportunities with potential start-up businesses that already want and plan to incorporate those practices? How much entrepreneurial investing is Timberland contributing?
October 11, 2008 at 9:52pm by davinder singh
There is part of information or fact missing.There is difference between Made or assembled with country name.
The explanation is fine from Timberland but if they can add this information then it can be analysed.
The information about source of product components is important.
October 13, 2008 at 8:02pm by Kyleigh Helfrich
There seems to be a disconnect between the corporate responsibility initiatives at Timberland, goals/ethics of Jeff Swartz and the brand itself. Perhaps more customers would buy the product if the brand marketed these values? Swartz says that he wants his brand to embody "confidently striding through life's challenges" but does the consumer get that? Does the brand say that? And if so, what does that even mean? Today there is a huge segment of the population who want to support brands that directly assist causes. Whether it is alleviating aids in Africa - i.e. Red Campaign, or helping to build wells in 3rd world countries - Starbucks and Ethos Water...it is all in the marketing. If the consumer doesn't get the message everyone loses out.
October 14, 2008 at 12:29am by Jonathan Fry
The values and goals Swartz has set out for Timberland should be applauded. He's asking the right questions, "Can I be a change agent? How can I continue to be committed to pursuing social change while navigating rough waters?" Too many CEOs are afraid to ask and even more afraid to answer those types of questions. But the market has shifted and it’s time for Timberland to reexamine its business model. Today’s companies need to be more adaptive than ever to survive. While it's very hard to retool a business once its in progress, Timberland has an incredible opportunity to reposition and rebrand itself. If the hip-hop customers aren’t coming back, why not start connecting with a group of consumers that share the same values and goals of Timberland? Today’s consumer is willing to pay somewhat of a premium on products produced by companies touting and living social change. The sad thing is, this is the first time I've ever heard about the incredible efforts going on at Timberland. The park ranger in the article was right when he said, "A crisis doesn't sustain..." I just hope Timberland can find its way out its current crisis, because we need a lot more CEOs like Jeff Swartz in the world.
October 14, 2008 at 8:56pm by Jim Murray
Mr. Swartz
I only buy American made sneakers & boots and let my co-workers know it and now they are starting to buy only USA made products. Please let the American people know how you are helping the planet. Please also give me feed back on this plan.
Mr. Pickens has been working on a plan to help break us of our dependence on foreign oil. I for one believes he is on the right track but I believe he also needs the American consumer to do there part.
I have an idea to get the public in touch with these products and that is by building or using one of the buildings that have become available because of the economic climate we are in. The building would be an Expo center that would bring the top solar, wind & geothermal systems under one roof. The only way a product could be shown is that the alterative energy company would have to supply a power point presentation telling about their product and have a engineer come once a year to give a class to the public.
At the expo center there would be all the info available for federal & state programs to help with the expense of purchasing an alterative energy product.
Energy Palace
Mission statement
To bring the public in touch with the latest advances in energy products and educate them so they will be informed when they are ready to purchase an energy product.
How we at Energy Palace plan on achieving this goal.
1. Pull together the top enervator in the energy market and have them bring a rep out once a year to teach the public about their products.
2. Organize class trips from local high school and colleges, so they may gain insight into the progress the energy market is headed.
3. Set up a working relationship with local fully insured & bonded if need be contractors.
4. Work with Federal, State and local governments in ensuring the consumer gets all the benefits available to them.
5. Oversee that the consumer is not getting gouged by companies or contractors that adjust their price based on the amount the government gives in subsidies
Please read over and give me you thoughts
Thanks
Signed
James Murray
James Murray
Home E mail JJMJR27@msn.com
Work E mail James_Murray2@ML.com
November 12, 2008 at 8:51pm by Kyleigh Helfrich
I agree that there should be a central "clearing house" if you will of information on companies that are going out of there way to not only be environmentally friendly but create sustainability. I think its hard to find out about the good things that companies are doing unless they spend hundreds of millions of dollars on marketing and branding like a company like GE does on their Econimagination products. It is sad that many times there is such a disconnect between doing "good" and profiting from it. When the urban community embraced Timberland's the company made a fortune. I wonder if they could reach out to that community again to get their support with some of the eco/people friend initiatives that they want to do. As we saw in the last election it is the young people who are a major motivating force in our country.