4 Mission-Based Lessons Entrepreneurs Can Learn from Patagonia

4 Mission-Based Lessons Entrepreneurs Can Learn from Patagonia

Doing good and being successful aren’t mutually exclusive. For many companies, putting people and planet before profit (or at least alongside it) is the key to their success.

Patagonia founder Yvon Chouinard recently made headlines when he announced that he had placed ownership of his nearly 50-year-old company in a trust and would spend all future profits on environmental causes. 

Since its inception, Patagonia has valued protecting our planet. Its new ownership structure allows the company to further its impact in this effort. In September, the Chouinard family transferred all ownership of Patagonia to two new entities: Patagonia Purpose Trust and the Holdfast Collective. 

The Patagonia Purpose Trust will help facilitate Patagonia’s demonstration that a for-profit business can work for the planet and ensure that Patagonia stays committed to running a socially responsible business and giving away its profits.

The Holdfast Collective will use Patagonia’s profits that are not reinvested back into the business to protect nature and biodiversity, help communities thrive and fight the environmental crisis. Patagonia has donated $50 million already to its Holdfast Collective and expects to contribute another $100 million in 2022.

“Instead of ‘going public,’ you could say we’re ‘going purpose,’” Chouinard said in a letter to the public on Patagonia’s website.

Entrepreneurs can learn a lot from this brand and its leader as they strive to build a brand that doesn’t just do well but also does good. Here are four cues to take from Patagonia.

1. Identify your passion/problem

Patagonia has a crystal-clear purpose: help outfit people for the outdoors, then use the profits from those sales to protect the outdoors. The company never strays from its commitment to doing good because it’s baked into the brand. 

If you’re still in the ideating phase of entrepreneurship, build your brand around whatever issue you are particularly passionate about. What inspired you to start this company? Chances are there will be an intuitive connection between the products or services you provide and the problems you want to solve. For instance, your financial services company might help support aging with dignity. 

Whatever it is, it’s essential that you bake it into your business model instead of trying to shoehorn something in. Customers can always sniff out virtue signaling, and investors and shareholders might also become frustrated if their return on investment looks different than you originally promised. So when you’re raising capital or awareness for your business, communicate your purpose from the outset. That way you can bring along people who believe in the power of your vision and are willing to financially support it.

2. Outline your ideal ownership structure

Patagonia had the highest-profile ownership change in recent memory—but the brand isn’t unique in this approach. 

S. Dale High and his family transferred their shares of High Industries, a group of affiliated companies that serve the construction and manufacturing markets, to the High Foundation in March 2022. The foundation will now receive more than $5 million annually for programs that address poverty and build up communities. 

“This allows our coworkers the satisfaction of knowing that the profits they help generate will go back into the community,” High said in a video that played at a news conference to announce the new ownership structure. “So, every day when they are building value, they are building it for the community.”

According to a Harvard Business Review article, “a quarter of the largest 100 firms [in Denmark] are foundation-owned, including the three largest firms in the country: Carlsberg, Maersk and Novo Nordisk.” These initiatives often came from entrepreneurs, the article explains, who gave ownership to these newly created foundations instead of selling their companies or passing them down to heirs in order to help “ensure the long-term stability of both business and philanthropic activities.”

What does your ideal ownership structure look like that helps you further live out the values at the heart of the company? 

3. Make it count

In a 2019 Global Human Capital Trends survey, Deloitte found that 34% of CEOs had begun to focus on social impact as their top measure of success. According to Deloitte, the value these companies have derived from focusing on social impact has related to areas including:

  • Products and services:53% of CXOs said they had successfully generated new revenue streams from new socially conscious offerings.”
  • Brand:66% of global consumers and 73% of millennials are willing to pay a price premium for sustainable goods.”
  • Talent:A 2019 survey of 1,000 employees at large US companies found that nearly half of all respondents and three-quarters of millennial workers would take a pay cut to work at an environmentally responsible company. More than 10% of respondents said they would be willing to take as much as a $5,000–10,000 pay cut.” Employees are drawn to working for companies who take corporate social responsibility (CSR) seriously. 

In addition to these findings, the 2016 Cone Communications Millennial Employee Engagement Study found that “83% [of millennials] would be more loyal to a company that helps them contribute to social and environmental issues,” and “64% [of millennials] won’t take a job if [the] company doesn’t have strong corporate social responsibility (CSR) values.”

These statistics demonstrate that profit and ethics don’t have to be mutually exclusive and that values-based companies are attractive to investors and employees.

4. Remember consistency is key

Jim Collins, author of From Good to Great: Why Some Companies Make the Leap… and Others Don’t, told Fast Company that the story of Patagonia is a five-decade one. “Compounding consistently over time, while retaining control, gives you the freedom to make decisions that align with what your company’s about,” he said. 

According to a 2018 Fast Company article, Patagonia believes that “the more it invests in its beliefs and its products, the better Patagonia performs, develops creative solutions and maps out a blueprint for other businesses, big and small, to follow.”

“Doing good work for the planet,” then-CEO Rose Marcario told Fast Company, “creates new markets and makes [us] more money.”

So its recent structural change was in line with everything consumers know about Patagonia. But the reverse is also true: Purpose or values that are seen as merely performative can turn people off and away.

That’s why it’s critical to regularly review and share your purpose and values among key stakeholders and be accountable to how you’re tracking against them.

Photo by Sander van der Werf/Shutterstock

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Jill McDonnell is a Chicago-based content writer and communications professional. She has a bachelor's degree in magazine journalism from the University of Missouri-Columbia and a master's degree in public relations and advertising from DePaul University. She is currently at work on a psychological thriller novel.

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