Patagonia CEO talks of transformation, retail and salmon jerky

For Casey Sheahan, CEO of Patagonia, the goal for companies to become more sustainable and socially responsible starts at the individual level.

“For this, the leader is critical. If there isn’t an individual transportation, there can’t be a corporate transformation,” Sheahan told an audience of about 250 in Boulder, Colo. Wednesday evening. “If you have a happy CEO you will have happy employees.”

The advice particularly addressed the crowd’s large contingent of probable future corporate leaders — students attending the University of Colorado Leeds School of Business, which co-sponsored the event with the Outdoor Industry Association.

Sheahan’s talk, “Conscious Leadership is an Inside Job,” in large part described Patagonia’s efforts and vision for a new type of company – one that’s conscious not only of its environmental impact, but also of its human impact in the health and wellbeing of its employees and customers.

Sheahan said his biggest personal transformation to date came at the start of the economic crisis in 2007/2008, when he faced the real possibility of having to lay off employees, something Patagonia hadn’t done since 1991. His wife, Tara, whom he described as his top supporter and mentor, asked a simple question: “Are you making this decision in fear or in love?” It was a wake-up call, he said, spurring him to work closely with his employees to think creatively and avoid any layoffs.

Patagonia will report more than $500 million in revenue for 2011, he said, meaning it has nearly doubled its sales — from $270 million in 2007 — despite the rough economic environment.

“The business is no longer an experiment,” Sheahan said. “We’re not growing for growth’s sake, we’re growing to try an convince others to emulate us.”

Patagonia will attempt to prove it can replicate its success, no matter the product. The company is working to support sustainable fishing operations in Canada by selling its own branded salmon jerky, Sheahan said. It’s looking into grains and food bars too.

Patagonia recently signed up to become the first Benefit Corporation and is spurring others to follow suit. “It means we can make a decision that is deterrent to our shareholders if we need to,” Sheahan said. “And if anyone buys us, they are bound to run the company the same way.”

One could say Patagonia made such a decision this holiday season when it took out a full-page ad in the New York Times with text reading, “Don’t buy this jacket” above one of its own products. The campaign urged its consumers not to buy Patgonia’s new products. Instead, it wanted people to reuse, recycle or repurpose the outdoor gear they already owned. Success of the campaign depends on your point of view, Sheahan said — Patagonia’s holiday sales were up more than 20 percent.

On the retail front, Patagonia will continue to open storefronts worldwide to help spread its message — 14 new stores were opened in 2011 for total of 88. And it sees technology playing a large role at the retail level with the rise of QR codes and smartphones.

It’s not just about price when consumers scan tags, Sheahan said. Scanned tags will soon allow consumers the ability to compare the environmental impacts of products. “You will be able to make a responsible buying decision,” he said.

And while Patagonia will embrace the digital world, Sheahan said the company still has no plans to sell directly through Amazon.com. “They would bring us a ton of people and new customers, but they wouldn’t be telling our story.”

A video recording of Sheahan’s talk will soon be available here.

The Business of Outdoor Recreation Lecture Series in Boulder will continue March 22, with a talk by Mark Satkiewicz, president and general manager of SmartWool.

–David Clucas