Wharton Leadership Conference
Patagonia President and CEO Michael Crooke on Leading With Creativity and Conviction

While helping its active customers reach their own high-altitude goals, Patagonia has posted 4-to 8-percent growth each year for more than 30 years. The privately held outdoor apparel retailer remains debt-free, while making long-term investments in the sustainability of its products and its employees. Since the early 1990s, the firm has been recognized as one of the top companies to work for by Fortune, Forbes, and Working Mother magazines. In 1999, Michael Crooke took over as the first president and CEO of both Patagonia and its parent company, Lost Arrow Corporation, and has carried on the company's core values of integrity, quality, environmentalism, and unconventionality.

Patagonia is also recognized as a pioneer in sustainability and environmental activism (donating 1% of sales to environmental causes since 1983). As Crooke notes, "In a perfect world, when you are done using your totally worn out jacket, you would take it out in your garden and compost it." As important as this value is, Crooke is clear that the business succeeds or fails based on the superior quality of their products. "It doesn't matter if you are eco-groovy and socially responsible; if you don't have a great product or service that's sustainable, then it's a short-term phenomenon, and it's going down."

Crooke will be a keynote speaker at the 2nd Annual Wharton West Leadership Conference in San Francisco on February 2, 2005. In preparation for the conference, Professor Michael Useem, director of Wharton's Center for Leadership and Change Management, recently interviewed Crooke about leadership, employees, and the environment.

Useem: How would you describe your approach to decision making in the leadership role that you play?

Crooke: My career started off with the SEAL teams in the Navy when I was 19 years old, and those experiences have been the basis, or thesis, of my leadership style. In the SEALS, I learned that you get superior results from great teams of people, and I've just built on that throughout my career. When I came to Patagonia, within the first couple of years, I brought in seven new people. So roughly half of our senior staff has been here for close to 20 years, and half were bringing new skill sets to the group.

Useem: What is one of the bigger or tougher decisions that you have had to make in recent years at Patagonia?

Crooke: I would say bringing in all those new people was definitely a shake up of the organization. It had to be done, and without stifling the creative culture, because it's a wonderful culture. That was a lot of change and a lot of newness for the organization. Probably more change has occurred in the past 5 years than the organization has seen in the last 15 years. Melding the new with the old, and creating the next wave of the next 30 years of Patagonia — that's been a real challenge. We are as healthy as we've ever been as an organization by any metric that you want to use.

Useem: What are the metrics you use to evaluate success?

Crooke: For Patagonia, the metrics of success are based around the employees, the products, and the environmental aspects of the organization. Those include everything from profitability to employee turnover to the quality measures that we have for our products to our inventions and innovations. All are geared for creating competitive advantage.

Useem: Could you elaborate on the issue of employees? What aspects of the employee experience or condition do you track?

Crooke: This year, we were listed as the 14th best medium company to work for by Fortune magazine, but my goal is to be #1. I like that survey because three-quarters of the data that they collect to rank the companies comes from the employees themselves, without any input from management. To me, that is a real measure of the employees' passion for the organization. It measures their benefits and how they feel valued. It measures their training, their career potential, and the life and balance issues that the organization has. Those are metrics that are very important to me in terms of employees.

Useem: Do you think those metrics would be viable in a company that is publicly traded?

Crooke: Absolutely. You might have a different type of investor that is interested in a company that is more long-term oriented. We look at our strategic plans, and we look at what we invest in terms of the social side of our business as well as the environmental side, or the product side. We're looking 10 or 20 years ahead. If you're an investor looking for solid ROI, you'd be looking at a company like us and have a lot of confidence.

Interface, Inc. [a publicly traded carpet manufacturer], has actually reduced their cost of goods by recycling products once their useful life is over, which has given them a competitive advantage. Their founder, Ray Anderson, went through years and years of tough times on Wall Street because they didn't think he could do it, but he did it. He's a true hero in sustainability circles.

Useem: In 2001, Yvon Chouinard co-founded the non-profit 1% For The Planet, an alliance of businesses committed to donating at least one percent of their annual net revenues to environmental organizations. Can you explain Patagonia's role in creating this organization?

Crooke: It's something we have been doing since 1983. Yvon and I were talking about how we could get more people on board with the idea, and he came up with the name 1% For The Planet and the logo. Patagonia was one of two founding members, and then it just took on momentum of its own. The organization, based in Washington State, now has an executive director and is completely independent with over 70 members. We believe it's the right thing to do — it's good for sales, and it's good for business.

Learn more about leadership in business at the 2nd Annual Wharton West Leadership Conference Leading With Creativity and Conviction in San Francisco, February 2, 2005.

Other speakers include:

  • Ann Livermore, Executive Vice President, Technology Solutions Group, Hewlett Packard

  • Mark Bernstein, President, Palo Alto Research Center

  • John Barr, investment banker and President, The Poetry Foundation

  • Nancy Higgins, Executive Vice President and Chief Ethics Officer, MCI

Sponsored by the Wharton Center for Human Resources, Wharton Center for Leadership and Change Management, and Wharton Executive Education, the Wharton West Leadership Conference brings together business leaders and leadership development professionals for open dialogue and discussion. Join peers and colleagues from the following companies who have already registered: AIG, Allstate, Cisco, Genentech, Hitachi, Intel, Microsoft, Philips, Time Warner, Wells Fargo, Visa International, and others. To register, please contact a program consultant at 800.255.3932 or on the web. Group pricing available.

    

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