Patagonia does an excellent job matching its operating model to pursue its business model’s objectives. The business model focuses on growing a core consumer products business but also prioritizes impact in its branding (both social and environmental).
Business Model Overview as a Consumer Goods Business with a Focus on Impact
Patagonia’s business model is manufacturing and selling high quality outdoor clothing products both through distributors and direct to consumers. The business model also focuses on creating social and economic value through its business. Impact and environmentalism is part of the Patagonia brand identity. Patagonia’s mission is to “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
Operating Model Overview with an Emphasis on Social and Environmental Impact
Patagonia inserts initiatives for impact and social responsibility into its mandate. The following three operating initiatives support its business model highlighting social and economic impact.
- Reporting as a Benefit Corp (B-Corp): Patagonia became a B-Corp in 2012 in California, as soon as it was possible in that state. Becoming a B-Corp allows socially and environmentally committed companies to write those values into their articles of incorporation, and more generally holds companies accountable to impact metrics beyond simply financial gain.
- 1% For the Planet Initiative: Patagonia has pledged 1% of revenues to go to nonprofit charities that promote sustainability and conservation. This further emphasizes its focus on environmental impact.
- Operations Causing No Harm: The company’s facilities and resources are committed to being energy efficient. In addition, consumers can look up the manufacturing and distribution footprints for their products online.
Patagonia’s product design and branding continues to be in line with its original vision and values. The approach to its core products and brand development emphasize the values and ethics of the founding vision.
- Design Thinking through Simplicity: Patagonia has a bias for simplicity and utility as it is “founded by climbers and surfers and their minimalist style.” Products are designed with that spirit in mind through design thinking prioritizing what “climbers and surfers” value.
- Worn Wear Initiative: The initiative emphasizes the ability to repair clothing while highlighting Patagonia’s durability. A camper named Delia drove around the country to repair clothes, including non-Patagonia clothing.
- Anti-Consumerism Marketing: The business markets and advertises against buying products to promote sustainability and promote the values of Patagonia. A famous add read “Don’t Buy This Jacket.” Patagonia has pushed back against consumer trends like Black Friday as well, hoping that consumers will spend more on fewer, more durable products.
Patagonia is a real business with a manufacturing footprint, distributor and retailer relationships, a brick and mortar set of distinct retail stores, and an online presence. The brand is valuable and has grown an estimated $600 million plus in revenue. Yet the business model which emphasizes sustainability and impact in its charter is matched very well with its operating model.
In an age where consumers are more aware of and interested in the impact businesses have on the world, Patagonia’s parallel business and operating models are well positioned to continue to capture loyal, impact-driven customers.