Patagonia

Business Week has a great article on Patagonia, the sports clothing and equipment company based in Ventura County, CA. Patagonia is a Triple Bottom Line company, and quite profitable. The article gives a good peek inside the culture of the company. Nine hundred résumés per job opening! Why don't more companies embrace the Triple Bottom Line? Here is a not-so-small company doing well, while paying attention to more than the bottom line:

Patagonia aims to produce top-quality products while doing the least possible harm to the environment. It's a mission that attracts and holds top-notch talent.

... Patagonia enjoys an unrivaled reputation among outdoor aficionados, and its green philosophy is gaining broader appeal as more Americans embrace sustainable consumption. Chouinard's goal for Patagonia's own sustainability: "I look at this company as an experiment to see if we can run it so it's here 100 years from now and always makes the best-quality stuff," he says. That means keeping growth relatively slow but steady, at about 5% per year. Revenues were up a healthy 7% last year, to $260 million. Operating margins typically come in at the high end of the 12% to 15% industry average, according to people who have seen the numbers, and that's after it donates 1% of revenues to environmental groups. Patagonia, which declined to comment on its financials, is owned by a Chouinard family trust.

Chouinard calls himself a reluctant businessman. He disdains cell phones and laptops as much as he does quarterly-earnings-obsessed executives. (As you might imagine, he's as likely to take the company public as he is to club baby seals.) Yet he finds that concern for quality and sustainability doesn't pose a conflict with running a highly successful business. "Every time we do the right thing, our profits go up," he says.

Odd as it may sound, Chouinard gets a lot of business done standing waist-deep in water. He has coined a term -- MBA, or managing by absence -- that sums up his leadership philosophy. At the office, he's totally plugged in. But he spends much of his time traveling around the world doing outdoor things and talking to outdoor people about their likes and dislikes. Sometimes the best way for new CEO Casey Sheahan to get face time with Chouinard is to meet him on the water. Last year, the two were fishing for steelhead in British Columbia when they noticed that their feet were cold. Clearly their Patagonia waders weren't up to the job. They decided to launch a series of quality meetings to review and improve the company's products.

Chouinard and Sheahan are hardly the only Patagonia employees to enjoy "Eureka!" moments in the great outdoors. Getting away from the office regularly is a job requirement -- considered essential for dreaming up the next generation of products. Whenever employees play outdoors, they're testing the newest gear or coming up with improvements. Regularly, teams of 20 to 30 people, including outdoor professionals Patagonia calls its ambassadors, go on excursions where they climb, fish, ski, or surf.

... Few Patagonians are in it just for the money. The company recently raised salaries to adjust for the cost of living, and everybody gets an annual bonus based on profits, but, overall, Patagonia pays at, or just slightly above, the market rate. However, the most significant rewards aren't monetary. One popular perk is a program that allows employees to take off up to two months at full pay and work for environmental groups. Lisa Myers, who works on the company's giving programs, tracked wolves in Yellowstone National Park during her sabbatical. The company also pays 50% of her college expenses as she pursues a wildlife biology degree. "It's easy to go to work when you get paid to do what you love to do," she says.

Patagonia's culture makes it a magnet for talented people. The company receives an average of 900 résumés for every job opening, so it can afford to be picky. Top outdoor industry executives want to work there, too. Sheahan just lured Damien Huang from much larger rival North Face to run Patagonia's product development group.

Can others capture some of Patagonia's magic? Most companies -- especially ones with demanding public shareholders -- simply can't let employees take a surfing break. They can, however, foster creativity and provide a sense of purpose. Perhaps the most valuable and easily applied lesson from Patagonia's experience is this: To think outside the box, sometimes you need to get out of the cubicle.