REV: OCTOBER 19, 2010
FOREST REINHARDT RAMON CASADESUS-MASANELL HYUN JIN KIM
[Patagonia] is business conducted upside down and inside-out. Everything about it flies i the face of in ical. consultants’ recommendations about How to Maximize Profits and Cut Costs. Simply put, it’s radi — Fortun Magazine1 ne ou It’s okay to be eccentric, as long as yo are rich; otherwise you’re just crazy. — Yvon Chouinard, Founder of Pat tagonia, Inc.2 In the spring of 2010, Casey She eahan, CEO of Patagonia, and senior executives wer in intense re discussions about the future of the co ompany. They were wrestling with the challenge of im mplementing a new, radical environmental initiativ that was at the forefront of their agenda. ve At the time, Patagonia was known as a worldwide leader of environmentally responsib business. n ble Forbes magazine named it “the d do-no-evil” outdoor-apparel company,3 and Fortun Magazine ne described how founder Yvon Chou uinard turned “his passion for the outdoors…into an amazing business.”4 While maintaining an average annual growth of 6% in net sales, Patagonia do onated 1% of its revenues to environmental caus ses, provided in-kind donations to environmental groups, and invested thousands of dollars into reducing the environmental impact of its product tion process. ing rs. Meanwhile, the company was targeti a 10% annual growth in sales for the next five year 5 Sheahan and executives worried that this new initiative could threaten their delicate b balancing act between committing to sustainabilit while achieving 10% revenue growth. The “Produ Lifecycle ty uct Initiative” would expand existing p practices such as repairing and recycling old garm ments, while establishing a swap market of used products for its customers. Most radically, the initi iative would ess include telling its customers to buy le and think twice before they purchased a garment. From very early on, Chouinard h had been “tormented by the realization” that his ow company wn might be responsible for overconsum mption, and called out to customers to reduce their con nsumption in a reflection in 19956 and again in a 2004 catalog essay.7 He worried that Patagonia coul “never be ld completely socially responsible,” a and this anxiety motivated Chouinard to push Sheahan to implement this new initiative.8 mpted to carry out Chouinard’s vision, Patagonia face challenges ed As Sheahan and executives attem from consolidating retailers and fa ast-growing competitors in the outdoor apparel ind dustry. Still, Chouinard asserted, “I’m kind of lik a Samurai. They say if you want to be a samurai, you can’t be ke afraid of dying, and as soon as you flinch, you get your head cut off. I’m not afraid o losing this u of business.”9 _________________________________________ ____________________________________________________________ _____________ Professors Forest Reinhardt and Ramon Casadesus-M Masanell and Research Associate Hyun Jin Kim prepared this case. HBS cas are developed ses solely as the basis for class discussion. Cases are no intended to serve as endorsements, sources of primary data, or illustratio of effective or ot ons ineffective management. d all Copyright © 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, ca 1-800-545-7685, write Harvard Business School Publishing, Boston, M 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, MA y photocopied, or otherwise reproduced, posted, or tra ansmitted, without the permission of Harvard Business School.
Purchased by Lisa Amans (firstname.lastname@example.org) on August 12, 2012
Patagonia’s History: a “dirtbag” business
The Beginnings of a Businessman
A world-class mountaineer known for several impressive ascents, Chouinard described himself not as a businessman, but a “dirtbag,” his term for someone who wandered through “temp jobs and long summers,” pursuing a...