When Rick Ridgeway, VP of Public Engagement of Patagonia, speaks at an event you can hear a pin drop. Despite being called The Real Indiana Jones by Rolling Stone magazine, he is a quietly spoken man and audiences have to strain their ears. But what comes out is pure inspiration.
He told us a story on Monday evening at the Crowd Forum that perfectly illustrates how most people misunderstand the value of purpose. He shared the background story of Patagonia taking out a full-page ad in the New York Times on Black Friday in 2011. Their advert has a picture of its best-selling R2 jacket, with the arresting line ‘Don’t buy this jacket’.
Rick ran the ad to make people to think before they joined in the consumption frenzy that Black Friday has become. It explained the environmental harm associated with the manufacture of the jacket, and asked people to get the most out of their existing clothing through repair. It pledged to join the Common Threads Initiative ‘to reimagine a world where we take only what nature can replace’.
What happened next? Patagonia sold a lot of R2 jackets. The company was criticised by some for being hypocritical. The most telling response came from Advertising Age, the premier US advertising magazine, who called it “the most brilliant use of reverse psychology in the history of advertising”. As Rick explained, ‘they didn’t believe us. They didn’t believe we were serious about the message under that headline’.
A quick google will show you there is now a category in marketing called “Reverse Marketing”, which cites Patagonia as the pioneer. An industry that largely doesn’t understand purpose has turned it into a dark art.
OK, you’re thinking, but they’re still selling a lot of stuff - Patagonia’s revenues are growing fast, reportedly around $800m. How should a sustainability purist feel about that? Well, probably pretty good. Patagonia is constantly developing environmental innovations, which it shares with its competitors. It donates 1% of its revenues to environmental causes. As the company grows, the environment benefits, or as Rick put it ‘We want to use our company as an agent for environmental protection. That's why we're in business.’
The business case for purpose
Sacha Romanovitch, CEO of Grant Thornton UK, told our audience that Grant Thornton is becoming selective in how it works with clients on tax. ‘If the client’s whole goal is not to pay tax, we don’t work with them’, consistent with its purpose of building a vibrant economy. If purpose is revenue limiting, or incurring higher innovation costs, where is the business case?
For both Rick and Sacha, the return comes through a myriad of different and often intangible areas. It’s the intangible element that may be the stumbling block for many people who like to see hard numbers. They agree that the main return lies in the ability to hire and retain staff. Patagonia is able to pick the best people coming out of business schools, whilst Grant Thornton is hiring people who want to bring their ‘whole selves’ to work.
They gave use some numbers. Since Grant Thornton launched its purpose-led change management programme, its unplanned employee turnover has fallen from 20% to 14%. Patagonia gets 300-1200 applicants for every job they create. And it seems our audience shares these views – our Twitter poll saw 56% select “more engaged employees” as the biggest return on purpose.
We covered a number of other areas of the return on purpose – the ability to innovate, cost savings, brand reward, risk management and more. If you want a deeper dive, watch the discussion online starting at minute 19.
The impression they left us with was that when you get purpose into the heart of your business, it keeps giving.
Patagonia may be the global poster child of a purpose-led business, and many big companies will struggle with the chasm between their business and Patagonia. For those, Sacha is one to watch. ‘No company is whiter than snow’ she says, ‘but not being perfect is the reason to start the journey’. We’ll be following Grant Thornton’s purpose-led change management programme closely.
Jim Woods is CEO at The Crowd.