The Mihir Chronicles

Let My People Go Surfing Inc by Yvon Chouinard

March 05, 2020

I. Brief Summary

Yvon Chouniard was ahead of its time to challenge the conventional wisdom and responsibility of what a typical business means. He argues against the model of capitalism which chases endless growth and the destruction of natural resources. Patagonia is in the business to make the best quality product, take care of planet, innovate on old rules of simplicity, and use business to drive behavioral change to prevent environmental crisis. The book uncovers Patagnoia's various business philosophies. Clothing business was born in late sixties, after a climbing trip in England. He began to see clothing as a way to help support the marginally profitable hardware business. Patagonia was named for the clothing business. Patagonia went through classic business challenges—inventory management, growing demand, quality control, vendor relationship, global logistics, financing operations, and many more. It almost brought Patagonia to bankruptcy. Yvon never thought himself of him as a businessman until now. He was a climber first. When I think about Patagonia, I think about a company that prioritizes its values over profits. He is an American business hero with an iconic story.

II. Big Ideas

  • History: Chouinard was a young outdoor enthusiast. He did not appreciate how Europeans were rock climbing because they were damaging the rock. So, he pursued to becoming a blacksmith and started making pitons to leave no trace when rock climbing. There was no competition for pitons. He surrounded himself with people who had similar interest of not damaging the nature and having a passion for outdoor life. These people also happened to be his customers. As the business grew, he expanded into other climbing tools. Each tool was constantly redesigned to be stronger, lighter, simpler and functional. Quality control was always taken seriously because if a tool failed, it could kill someone, and since they were their own best customers, there was a good chance it could be one of them. The values of Patagonia have always been the same—there should be no difference between work and play. Providing on-site day care is a huge benefit provided to working parents. Parents can visit their kids anytime during the day. Patagonia has been innovating fabric since its early days while also trying to be environmental cautious. Patagonia has been donating and supporting grassroots organization to fight against natural resource disruptor. This bottom-up approach has protected several natural resources. Since 1985, Patagonia has given away $79 million dollars protecting landmarks and human rights. Patagonia has kept up all these promises during boom or bust. This is only possible because the company is held private and not in the business of maximizing shareholder wealth, but rather in the business of maximizing protection for natural resources. In 1991, country had entered recession and the business faced many challenges. Patagonia had laid people off simply to reduce overhead. Once Patagonia got its act together, it went anti-growth and created philosophies that it would operate on. Patagonia would let customers decide how much they should grow each year. It limited company's growth at a sustainable rate so they would never have to lay off its employees again. Patagonia's story comes down to one mission statement: Make the best product, cause no necessary harm, and use businesses to inspire and implement solutions to the environmental causes. The book breaks down its philosophies by the following:
    • Product Design Philosophy
    • Production Philosophy
    • Distribution Philosophy
    • Marketing Philosophy
    • Financial Philosophy
    • Human Resource Philosophy
    • Management Philosophy
    • Environmental Philosophy

III. Quotes

  • What if we shopped to live, instead of lived to shop?
  • Studying Zen has taught me to simplify; to simplify yields a richer result. The rock climber becomes a master when he leave his big wall gear at the base, when he so perfects his skill that he climb the wall free, relying on his skill and the features of the rock.
  • In anything at all, perfection is finally attained not when there is no longer anything to add, but when there is no longer anything to take away, when a body has been stripped down to its nakedness.
  • One of my favorite sayings about entrepreneurship is: If you want to understand the entrepreneur, study the juvenile delinquent. The delinquent is saying with his actions, “This sucks. I'm going to do my own thing.”
  • Some crises were created by management to keep the company in yarak, a falconry term meaning when your falcon is super alert, hungry, but not weak, and ready to hunt.
  • I’ve always thought of myself as an 80 percenter. I like to throw myself passionately into a sport or activity until I reach about an 80% proficiency level. To go beyond that requires an obsession and degree of specialization that doesn’t appeal to me. Once I reach that 80% level I like to go off and do something totally different; that probably explains the diversity of the Patagonia product line – and why our versatile, multifaceted clothes are the most successful.
  • I couldn’t find any American company we could use as a role model.
  • I abide by the MBA – management by absence.
  • I was the outside guy, responsible for bringing back new ideas. A company needs someone to go out and get the temperature of the world, so for years I would come home excited about ideas for products, new markets, or new materials. I also began to see the environmental degradation happening. Some countries were in so much trouble that they were eating their seed corn.
  • Never exceed your limits. You push the envelope, and you live for those moments when you’re right on the edge, but don’t go over. You have to be true to yourself; and you have to know your strengths and limitations and live within your means. The same is true from business. The sooner a company tries to be what it is not, the sooner it tries to “have it all,” the sooner it will die. It was time to apply a bit of Zen philosophy to our business.
  • The Iroquois have a 7-generation planning. As part of their decision process, the Iroquois had a person who represented the seventh generation in their future. If Patagonia could survive this crisis, we had to begin to make all our decisions as though we would be in business for 100 years. We would grow only at a rate we could sustain for that long.
  • We have controlled our growth to what we call organic growth. We don’t force our growth by stepping out of the specialty outdoor market and trying to be who we aren’t. We let our customers tell us how much we should grow each year. Some years it could be 5% growth or 25%, which happened during the middle of the Great Recession. Customers become very conservative during recessions. They stop buying fashionable silly things. They will pay more for a product that is practical, multifunctional, and will last a long time. We thrive during recessions.
  • Your philosophies aren’t rules, they’re guidelines. They’re the keystones of our approach to any project, and although they are “set in stone,” their application to a situation isn’t. in every long-lasting business, the methods of conducting business may constantly change, but the values, the culture, and the philosophies remain constant. At Patagonia, these philosophies must be communicated to everyone working in every part of the company, so that each of us becomes empowered with the knowledge of the right course to take, without having to follow a rigid plan or wait for orders from the boss. Living the values and knowing the philosophy of each part of the company aligns us all in a common direction, promotes efficiency, and avoids the chaos that comes from poor communication. We have made many mistakes during the past decade, but at no point have we lost our way for very long. We have the philosophies for a rough map, the only kind that’s useful in a business world whose contours, unlike those of the mountains, change constantly without much warning.
  • Having useful and high-quality products anchors our business in the real world and allows us to expand our mission. “Make the best,” period.
  • Quality = degree of excellence.
  • Function of an object should determine its design and materials.
  • The more you know, the less you need.
  • Good design is as little design as possible.
  • I’d rather design and sell products so good and unique that they have no competition…The value of our products even seems to grow over time. In Tokyo there are stores that deal only in vintage Patagonia clothing.
  • We’ve found that each new line requires the hiring of 2.5 new people. The best-performing firms make a narrow range of products very well. The best firms’ products also use up to 50% fewer parts than those made by their less successful rivals. Fewer parts means a faster, simply (and usually cheaper) manufacturing process. Fewer parts means less to go wrong; quality comes built in. and although the best companies need fewer workers to look after quality control, they also have fewer defects and generate less waste.
  • When I’m working on a problem, I never think about beauty. I think only how to solve the problem. But when I have finished, if the solution is not beautiful, I know it is wrong – Buckminster Fuller
  • Because of our commitment to quality, we run at such a slow pace that we’re the turtles in the fashion race. Our design and product development calendar are usually 18 months long, too long to be a contender in any new fads.
  • Coming in second, even with a superior product at a better price, is often no substitute for just plain being first. This doesn’t mean we should be “chasing” trends or products. It applies more to “discovering” a new fabric or a new process. Again, the key word is discovering instead of inventing. There’s imply no time for inventing. Maintaining a sense of urgency throughout a company is one of the most difficult challenges in business. The problem is further compounded by having to depend on outside suppliers who may not have the same sense of expediency. I constantly hear people giving lame excuses of why something is impossible or why a job didn’t get done on time.
  • The designer must work with the producer up front. this applies to every product. This team approach is concurrent rather than assembly-line manufacturing. A concurrent approach brings all participants together at the beginning of the design phase. Only about 10% of a product’s costs are incurred during the design phase, but 90% of the costs are irrevocably committed.
  • Patagonia, making a profit is not the goal, because the Zen master would say profits happen “when you do everything else right.” In our company, finance consists of much more than management of money. It is primarily the art of leadership thought he is balancing of traditional financing approaches in a business that is anything but traditional. In many companies, the tail (finance) wags the dog (corporate decisions). We strive to balance the funding of environmental activities with the desire to continue in business for the next hundred years…We avoid, at all costs, to go on a growth at any cost (suicide) track.
  • We recognize that we make the most profit by selling to our loyal customers. A loyal customer will buy new products with little sales effort and will tell all his friends. A sale to a loyal customer is worth 6-8x more to our bottom line than a sale to another customer.
  • Quality, not price, has the highest correlation with business success.
  • Whenever we are faced with a serious business decision, the answer almost always is to increase quality. When we make a decision because it’s the right thing to do for the planet, it ends up also being good for the business.
  • By growing at a “natural rate,” by growing by how much our customers tell us they want our products, we do not create artificial demand for our goods by advertising. We want customer who need our clothing, not just desire it.
  • We never wanted to be a big company. We wanted it to be the best company, and it’s easier to be the best small company than the best big company. We have to practice self-control, growth in one part of the company may have to be sacrificed to allow growth in another. It’s also important that we have a clear idea of what the limits are to this “experiment” and live within those limits, knowing that the sooner we expand beyond them, the sooner the type of company we want will die.
  • We have little to no debt and this allows us to take advantage of opportunities as they come up or invest in a start-up without having to go further in debt or find outside investors. In any age when change happens so quickly, any strategic plan must be updated at least every year. An inflexible plan is centralized planning at its worst. It is oblivious to changes in reality.
  • We win with the government as well. We don’t play games, we aim to pay our fair share but not a penny more.
  • A master in the art of living draws no sharp distinction between his work and his play; his labor and his leisure; his mind and his body; his education and his recreation. He hardly knows which is which. He simply pursues his vision of excellence through whatever he is doing, and leaves others to determine whether he is working or playing. To himself, he always appears to be doing both. – LP Jacks
  • A business that thrives on being different requires different types of people.
  • We provide on-site childcare because we know parents are more productive if they’re not worrying about the safety and well-being of their children. Ours has an infant care room for children as young as 8 weeks and rooms progressively for toddlers to kindergartners. The staff-to-child ratio in all parts of the center exceeds what is required by the state, and the caregivers are highly trained, and most speak more than one language to the kids. We encourage parents to interact with their child by breast-feeding, having lunch together, or visiting at any time. More than once we have had a father who fell asleep with this child at nap time. The first few years of a child’s life are recognized as being the most important learning period of their entire lives. When their brains are actively growing is the best time for them to learn cognitive skills, including problem solving and sensory processing, and language, social, and emotional skills. They are also learning physical skills, including gross and fine motor skills, as well as perceptual skills. Our child development facility is producing one of our best products, excellent kids. The babies are constantly being held and handled by lots of caregivers; they are being raised by a whole village, with lots of stimulation and learning experiences. As a result, when a stranger says hello to them, they don’t run and hide behind their mother’s skirts.
  • There are more than 500 employees in Ventura and more than 60 children in the center. We charge the parents rates that are comparable to local child-care centers, because we fund it with another $1m in subsidies. But what appears to be a financial burden is in fact a profit center. Studies have shown that it costs a company an average of 20% of an employee’s salary to replace an employee – from recruiting costs, training, and loss of productivity. 58% of our employees in Ventura are women, and many occupy high-level management positions. Our center helps us retained our skilled moms by making it easier for women to progress in their careers. Both moms and dads are motivated to be more productive, and the center attracts great employees.
  • One cautionary tale we learned: if you’re going to have a child development center, you also need to give at least 8 weeks of paid maternity/paternity leave (we actually offer 16 weeks fully paid leave and 4 weeks’ unpaid for the mother, as well as 12 weeks fully paid paternity leave). Otherwise, many young parents still unclear on the concept of parenthood dump the baby in the nursery as soon as possible and go back to work and to pay for the new car or whatever. Those first few months are extremely important for children’s bonding with the parents instead of child-care workers.
  • The child development center, with tax subsidies, pays for itself, ad the cafeteria requires only a small company subsidy. Patagonia is consistently included in a list of the 100 best companies to work for and for working mothers. Why on earth would anyone run a company that was hard to work for?
  • We never order employees around, so they have to be convinced that what they’re being asked to do is right, or they have to see for themselves it’s right. Some independent people, until the point arrives that they “get it” or it becomes “their idea,” will outright refuse to do a job.
  • Systems in nature appear to be chaotic but in reality, are very structured, just not in a top-downs centralized way. Like in an ant colony, no one ant is in charge of a colony, there is no central control. Yet each ant knows what its job is, and ants communicate with one another by way of very simple interactions; altogether they produce a very effective social network. A top-down central system like a dictatorship takes an enormous amount of force and work to keep the hierarchy in power. Of course, all top-down systems eventually collapse, leaving the system in chaos.
  • How you climb a mountain is more important than reaching the top.
  • Anyone who thinks you can have infinite growth on a finite planet is either a madman or an economist. – Kenneth Boulding
  • Every time we’ve elected to do the right thing, it’s turned out to be more profitable.
  • I have a definition of evil different than most people. Evil doesn’t’ have to be an overt act; it can be merely the absence of good. If you have the ability, the resources, and the opportunity to do good and you do nothing, that can be evil.
  • It seems to me if there is an answer, it lies in these words: restraint, quality, and simplicity. We have to get away from thinking that all growth is good. There’s a big difference between growing fatter and growing stronger.
  • I've been a businessman for almost fifty years. It's as difficult for me to say those words as it is for someone to admit being an alcoholic or a lawyer. I've never respected the profession. It's business that has to take the majority of the blame for being the enemy of nature, for destroying native cultures, for taking from the poor and giving to the rich, and for poisoning the earth with the effluent from its factories. Yet business can produce food, cure disease, control population, employ people, and generally enrich our lives. And it can do these good things and make a profit without losing its soul. That's what this book is about.
  • I knew, after thirty-five years, why I was in business. True, I wanted to give money to environmental causes. But even more, I wanted to create in Patagonia a model other businesses could look to in their own searches for environmental stewardship and sustainability.