Not so long ago, it was almost unheard of for a business to put its social and environmental mission ahead of making a profit. One of the first entrepreneurs to challenge the status quo was Yvon Chouinard, who founded Patagonia in 1972. These days, the company, which makes outdoor apparel and gear, has annual sales of $575 million and about 1,500 employees. And more than 1,200 companies have joined Chouinard's initiative to donate 1 percent of sales (not profits) to environmental causes. Here's how he developed his 100-year plan for Patagonia, as told to Inc. editor-at-large Bo Burlingham.
Our first mission statement was just to make the best product, period. But in the late 1980s, we got into bad financial problems, because we were growing 50 percent every year. There was a recession, and the banks were in trouble. They wouldn't lend me any money. We had to lay off a bunch of people. That was a wake-up call. I realized I'd become a victim of the recession by doing business the way everybody else does--by growing our business as fast as we could, by adding more retail stores, adding more dealers, adding more styles. When you do things like everybody else and things go bad, it's like being in the middle of a pack of lemmings. You go over the cliff with the others. That was when we decided to control our growth and act as if the company was going to be here 100 years from now. It really changed the way we made decisions.
Our focus on becoming a greener company and cleaning up our supply chain came later. The event that got us thinking was the opening of a Patagonia store in Boston. We took an old building and retrofitted it. Within a couple of days of opening, the employees were getting headaches. So we shut the store down and brought in an environmental engineer. He said, "Oh, here's the problem. Your ventilation system is recycling the same air, and you're poisoning your employees."
I asked, "What is this poison?" He said, "It's formaldehyde. It's in cotton clothes, like stay-pressed pants, no-wrinkle cotton. It's toxic." I had no idea. I just ordered fabric that didn't wrinkle. That's when we started asking questions. That led to the next part of our mission: Cause no unnecessary harm. Most of the damage companies cause to the environment is unintentional. It's caused by not asking enough questions. We asked, "OK, how can we have good-quality shirts without formaldehyde or other chemicals?" Each question leads to another. "How about dyes? Are dyes toxic?" By asking questions, we changed the way we do business.
We also told other people what we were doing and tried to influence other companies to look at their supply chains differently and make responsible decisions. I think we've begun to do that, and we'll keep trying to do it. That's our mission now and for the next 100 years: Build the best product, cause no unnecessary harm, and use our business to inspire and implement solutions to the environmental crisis.
Previously in Inc.: Yvon Chouinard was featured in March 1988 ("The Anti-Marketers") and in August 1992 ("Lost in Patagonia"). Inc. also documented his management style in March 2013 (The Way I Work).