Editor's note: This tour of small businesses across the country highlights the imagination, diversity, and resilience of American enterprise.

Bozeman, Montana, is a quality-of-life destination for entrepreneurs. Ringed by snow-streaked mountains, this outdoorsman's paradise is the ideal place to launch a fishing-tackle shop or adventure-travel business. Conventional manufacturing seems out of place here. But West Paw Design is not a conventional manufacturer.

The banana boxes are the first clue. They are everywhere at West Paw Design, thousands of them collecting fabric strips on the factory floor, stacked 12 high in storage, and sitting shrink-wrapped on pallets. "It's how we move our inventory," says Spencer Williams, West Paw's founder and CEO. "The supermarket just crushes them, and they go right into recycling. But if you can use them again before you recycle, that's much better for the environment."

West Paw Design, with 80 employees and roughly $9 million in sales, makes green pet products, like kitty toys stuffed with organic catnip. The pet industry is both booming and heavily outsourced: West Paw makes all its products in Bozeman using domestically produced, eco-friendly materials, some of which the company invented itself. Among the most notable is Zogoflex, an infinitely recyclable plastic blend. West Paw's Join the Loop program urges customers to send back tooth-mangled chew toys so they can be sanitized, ground up, and transformed into fresh playthings--over and over again.

In April, B Corp--the organization that certifies companies for meeting high social-responsibility standards--named West Paw to its Best for the World list, an honor West Paw shares with such iconic names as New Belgium Brewing and Seventh Generation. "They are pretty exceptional in how they integrate their entire employee base into their mission," says Elizabeth Freeburg, a digital content manager at B Lab, the nonprofit behind B Corp. "Environmental impact is something every single person in the organization has an eye out for."

For manufacturers to flourish in conservation-obsessed Montana, it helps to operate like West Paw. The company has around 3,600 accounts, most of them independent retailers in the U.S. and Canada. "The experts have told Spencer to import a bunch of stuff or make it cheaper so he can open up big accounts at big-box stores," says Alan Deibert, a former consultant at the Montana Manufacturing Extension Center, who has known the company since its inception. "Spencer's products are more expensive. But he's always believed there are enough people who care about the planet and care about their pets to make it work. And he's been right."

Buying a business and an education

Dogs are reputed to look like their owners, so perhaps it's no surprise that a business that makes dog products looks a lot like its founder. Williams grew up on a ranch just north of Montana's Beartooth Mountains, where as children he and his brother tended Columbia sheep. He also learned to repair tools and spent years building an elaborate fort in the woods, which he says "is what a child does if he has no neighbors nearby." Those experiences made Williams a lifelong environmentalist. They also revealed his future path: He would work with animals and make stuff.

Williams majored in German at Middlebury College in Vermont and after graduating took a job selling institutional research to money managers on Wall Street. It was a lucrative position, but left him feeling hollow. In Livingston, Montana, his brother was launching a woodworking business. Williams moved back to help him build a customer database.

In Livingston, Williams heard about a local woman interested in selling her company, a business called Pet Pals that made simple pet toys from fabric. Pet Pals booked $461,000 in revenue in 1995; Williams acquired it for $450,000 a year later. For that he got some designs, a list of vendors, and several hundred accounts: mostly mom-and-pop retailers, their information printed neatly on individual recipe cards. "Probably I wasn't buying a lot of value," says Williams. "But it was my start to figure out how to run a business." Intent on self-education, he vowed to change nothing for six months. "It was painful, because some of the processes were so antiquated," he says.

When the six months had elapsed, Williams struck out on his own by attending a trade show, something the previous owner warned him was a waste of time. In addition to the toys, he displayed his first new product: a synthetic sheepskin mat for crates and kennels that--unlike similar products on the market--came in a variety of sizes. That show was a success. By 1998, Pet Pals had doubled in revenue and employed 15 people. (Williams changed the name to West Paw Design in 1999. A play on "south paw," the name also "reminds people of our location," he says.)

Green from the get-go

Williams showed his environmentalist colors right away by stuffing his products with organic catnip. "We paid and still pay a very high premium for that," he says. "But our catnip must be clean for that cat." For a few years the company even grew its own organic catnip in Montana to provide jobs for local mint farmers hurt by Chinese competition.

Equally concerned for dogs, Williams in 2000 decided to create an alternative to tennis balls, which are held together by toxic glues and have a nylon coating that wears down teeth. A material used in hot tub headrests filled the bill. Initially West Paw contracted with a Canadian manufacturer and started turning out squishy balls and disks. A few years later, that vendor picked up a new customer--a startup called Crocs. "They had a hard time supplying us while trying to keep the world in those newfangled shoes," says Williams.

Williams also wanted more control over environmental impact than working with a contract manufacturer allowed. "The only way to do it was to innovate the material ourselves," he says. The company collaborated with a small, family-owned plastics company to create a soft, bouncy thermal plastic that was fully recyclable. Products made from that material, Zogoflex, now account for half of West Paw's revenue.

Since Zogoflex's debut in 2004, West Paw has introduced several other green materials to the industry, including soft fiberfill made from recycled soda bottles that goes into pet beds and toys. "That came out of seeing a pair of Birkenstock socks in a shoe store here in Bozeman and wondering, how do they do that?" says Spencer. "We followed the rabbit trail to find the supplier," a process that involved consulting Patagonia, a company Williams tries to emulate, which used similar material in its own products.

West Paw's green ethos is evident even in its architecture. In 2001, the company built a new plant designed to allow for repeated expansion by lifting and pivoting existing walls, rather than knocking them down. West Paw more than doubled in square footage in 2009, "and we were able to reuse our entire south wall," says Williams. "That's 175 tons of concrete that did not go into a landfill."

Floor workers get the floor

West Paw had already expanded once before building its reconfigurable plant. Williams's decisions at that time speak to his other abiding concern: his people.

In 1998, needing more capacity, the company moved over a mountain pass to Bozeman, which boasted a larger employee pool and better services and internet access than Livingston. Williams wanted a facility close to downtown. Instead though, he chose a building out in the countryside and as far to the east as possible to ease the change for his existing employees. "That building was not ideal," he says. "But it's the sacrifice you make to keep what matters most, which is the people." 

That philosophy colors everything at West Paw. The company is open book; everyone participates in strategic planning; and work is self-directed, with systems that let people make their own on-the-spot decisions. Employees enjoy profit-sharing, flexible schedules, and other benefits not typical of small manufacturers in remote areas. Most new ideas emerge from the work force, which is encouraged to innovate. A former dairy worker leads the injection molding team, which recently came up with a way to make Zogoflex softer and squishier.

In low-population Montana, "you need to have a reputation as a good employer to get through the ups and downs," says Deibert. "No one has done it like Spencer."