Never one to say or do the expected, Yvon Chouinard, the founder of Patagonia that company known for it’s love affair with the outdoors, takes an uncommon approach to business. I found a recent interview of Chouinard at treehugger.com where he was asked if growth is central to Patagonia’s philosophy. Growth’s an important issue for companies, but I found Chouinard’s take on it interesting:
Growth isn’t central at all, because I’m trying to run this company as if it’s going to be here a hundred years from now. And if you take where we are today and add 15% growth, like public companies need to have for their stock to stay up in value, I’d be a multi-trillion-dollar company in 40 years. Which is impossible, of course.
So all of these companies that are going for the big growth, if it continues for any length of time, will outlast their resources and outlast their customers and go belly-up. And that’s why these huge companies have massive layoffs all the time.
Since I’m trying to run this company like it’s going to be around a hundred years from now, we have to limit our growth and keep it to what we call “natural growth.” In other words, I don’t advertise on billboards in inner cities so that kids buy our black down jackets instead of The North Face’s. In fact, we hardly advertise at all.
Growth Isn’t Central
If 99% of the world’s CEOs stood before their shareholders and said the same thing, how many would have jobs the next day? Patagonia does have the benefit of remaining a private company and not beholden to making the stock market happy with seemingly perpetual growth. However, I do think Chouinard’s hit on something we aren’t willing to address—growth as we’ve defined it over the last decade is unsustainable because we ultimately are finite beings.
We each have so many minutes, hours, days, and weeks in a year. There’s only so many things that any one person can do, buy, or experience. Some people are more efficient than others, but that still leaves a set amount of time. Then there’s the question of how many of any one thing does a person require. How many pairs of shoes, coats, televisions, computers, cars, etc., can any one person use at one time?
One of the questions that pops up in the tech world, but doesn’t seem to be solved yet, is how to power the innovation. It takes power to run the servers at Google. It take power to run the computers in the homes doing a Google search. It takes power to produce the stuff we buy online and to ship it. In the near future, I suspect the question won’t be whether a company can continue to grow but whether it will even have the power to operate.
Chouinard has been ahead of many other companies in addressing issues like environmental impact. In this instance, I think he’s ahead of other companies when discussing the value of growth in a company. I’m optimistic that we can find a solution to this particular issue, but the focus will have to shift from limitless growth to long-term survival, which will require a new vocabulary for CEOs, shareholders, and the stock market.