In 2011, on one of America’s most profitable shopping days — Patagonia made an extraordinary move.
This outdoor clothing and gear company partnered with eBay on a new initiative. They kicked it off with a full-page ad in The New York Times showing their best-selling jacket with a banner that read: Don’t Buy This Jacket.
Yes, you read that correctly: they wanted people to buy less stuff. Although this seems counterintuitive to corporate leaders charged with top line growth, they demonstrated an Innovation Management practice called “Systemic Authenticity.”
This term comes from The World Database of Innovation, an initiative that sprung out of a project with The Mayo Clinic in 2007. It is the world’s first broad look for statistics underlying Innovation Management practices. The initiative looked at several thousand companies that have repeatedly transformed the world, grown the fastest, and shaped markets. And in doing so it found that these high performers share 27 practices in common – what could be considered a menu or equation for innovation management.
A study by Dr. Rajendra S. Sisodia, states that "mission-led" businesses outperform the market by an astounding 9:1 ratio. Even if it is only half right, we believe this fits the definition of innovation as "future top line growth" and/or changing human behavior on a wide scale. Our own research has now shown three important aspects to this mission-led phenomena or Systemic Authenticity. And we believe Patagonia’s newest innovation is one of the best examples of this practice.
A few months before its launch, Patagonia's R&D leader Randy Harward presented the Don’t Buy This Jacket campaign (part of the Common Threads Initiative) to a gathering of corporate innovation leaders at 3M. He was met with wide eyes, and strong commentary on how it ran against the basic concept of commercial self-interest. But Patagonia moved ahead anyway because they knew — almost like it was endemic — that this was who they are and one of the best expressions of their mission.
Later, some months after the launch, while at Google’s offices, Randy presented the idea again but met with significantly less resistance from the group of 25 CTOs at the table. Why? Because numbers talk: Patagonia had won more customers and believed that at the same time they reduced overall human consumption.
You might be thinking, “Okay, this was just a savvy PR move.” You might also ask, “How can they claim a success when more of their product was consumed?”
Since Patagonia’s goods last longer, one of their jackets will last as long as three average products meaning people consume less. Also, their customers were actually opting to buy used items from their partner eBay. Add to this that their materials are far more sustainably produced than average meaning there is a net positive effect when their product is chosen over any average good.
So how does a radical, counterintuitive business model like this make it through any for profit company? We know that Patagonia takes their mission so seriously that they have often voluntarily lost money on projects, and made immense investments for a small company such as helping to create the organic cotton supply chain, and building one of the most robust Cradle to Grave analyses in the world.
But, these sentiments are backed up by both a culture and systemic efforts aimed at achieving specific goals.
The campaign shows that their mission is incredibly genuine. It is essential that a company's mission is genuine and we have found this to be the first important aspect of Systemic Authenticity.
Next, we saw that a company's mission cannot just be a consultant's word's sitting on the wall, but must also penetration through all staff, leadership, and beyond. This is the second aspect. On Patagonia’s campus you can feel it deeply — staff rattle off their mission in a short, casual breath “Yeah, sure, of course we’re here to build the best product, cause no unnecessary harm, and use business to inspire…” But it goes deeper. From the executive team to the warehouse staff, employees actually live the life of their core customers: the “Dirt Bag” as they fondly call them. They will tell you that if they didn’t live the lifestyle, they could not ever design for their core customer. And if they didn’t design for their core customer's extreme needs, they would not be making the stuff that the rest of the world also now wants. You can even see that their customer is conscious of their mission – this is the deepest level of penetration and an admirable goal for all companies.
The third and final piece of this puzzle: in order to make a mission work for the company, we found real the company must know what it means in the real world. The company must have a deep sense of what it is and is not, and specifically what it’s Core Competencies are. For instance in this case, Patagonia knew it had the audience and strategy, and that the new business model would help them take the next step in expressing their mission. But they also knew that they did not possess the Core Competency of crowd-souring used items and getting them into buyers hands, so they very smartly like there was not even a second thought called on eBay. The well-known article on Core Competencies by Prahalad and Hamel (1991) defined Core Competency and lays out the rigorous process of identifying yours.
Together these three aspects make up Systemic Authenticity. But why does it actually work?
While it is impossible to gather data on why, we believe from working with Patagonia and many others that there is a clear theme: know thyself. Yes, this is where spirituality and hard-core business cross paths.
We’ve all experienced the results that occur when we learn something new about ourselves and then make a meaningful move in this direction. Well, we have found that the same is true for a company. If your mission is real, and is felt and known by all of your team, then everyone knows which direction to go, which market opportunities are and are not for the company, and how to tackle these opportunities. It in essence lessens the need for management, reduces the bottleneck that often exists at the leadership level and allows the company to more quickly innovate, grow the top-line, and to scale more with fewer failures and more quickly.
Leaders, think of how fast your company could move if you didn’t have to be in on every decision but still knew it was naturally heading in the right direction.
Don’t Buy This Jacket campaign is one of the best examples of Systemic Authenticity. And its success in the marketplace makes it a true innovation. Patagonia believes that this and many other practices are what have led to their incredible top line growth, increased margins, and market share that any executive would be ecstatic to write home about.
And we have seen that any organization — corporate, government, or social — that seeks to grow or change human behavior can create their own Systemic Authenticity by adapting the three aspects described here. With some basic work, and time spent on articulating and spreading the word on the company’s mission and identity, any company can implement this Innovation Management practice, and grow while doing something that just happens to be great for the world.
Want more? This piece from The World Database of Innovation initiative was adapted for LOHAS from the original in Harvard Business Review, 2011. This is one of 27 common practices the initiative found to be shared by the world’s innovation leaders. We are publishing on each of these practices here and elsewhere. Read more at HBR.org, and InnovationManagement.se.