Backed by Y Combinator - Summer 2022
Coming soon to Europe & Brazil Sign up for early access

Tag: takeaways

What can business owners learn from Patagonia’s hand over vs. Starbucks’ reinvention plan?

  |   By  |  0 Comments

A lot of high-profile business decisions were published in the recent weeks, most notably Patagonia’s handover which sparked widespread support for the brand. 

 

Patagonia’s founder – Yvon Chouinard announced in a personal letter, [1] the handover of the company to two non-profit organisations and that going forward, 100% of revenue will go towards protecting the environment, supporting thriving communities and fighting the climate crisis [2]. 

 

They have experimented with ethical business models for years and this radical decision sets a new bar for corporate sustainability. Patagonia has consistently evaluated their impact and made steps to improve including becoming a B corporation. However, Chouinard addresses there were “no good options available” going forward for generating more money to fight the climate crisis while maintaining company values, so they “created [their] own” path. 

 

Going public with the company was not an option due to the pressure it would bring to “create short term gain at the expense of long-term vitality and responsibility”. This shows the commitment to maintaining the company’s values and staying true to what he’d envisioned the company to be. 

 

In contrast to another company in recent news – Starbucks have announced their “reinvention plan” for the coming years entailing aggressive growth targets, a 450-million-dollar investment into North American branches and intent to open thousands more across the US and China [3]. This demonstrates how far Starbucks has and will be straying from its roots. 

 

Howard Schultz’s vision for Starbucks was a place for people to experience the “purity of Italian coffee” that he’d fallen in love with [3] and he admits in certain ways, the company has “lost its way”. Most consumers now view Starbucks as a quick coffee stop as opposed to the authentic Italian coffee experience Schultz had envisioned. 

 

Starbucks has been a public company for 30 years and as a result, their immense growth has largely aligned with the goals of shareholders. While the reinvention plan is great for shareholders, current fans of the company will either love or hate the growth trajectory. 

 

So, what can business leaders take away from this? 

Growth should be considered with intention. 

 

While expanding is a long-term goal for many entrepreneurs, business owners need to be careful of how their plans align with their vision for the company. It can be easy to get caught up in the pursuit of major development milestones and lose sight of the intention behind building your business. This is especially true of public companies whereby the only goal then becomes creating massive returns on investment for shareholders. 

 

When this becomes the primary goal, it can lead business owners to cut corners and undertake unethical business practices in order to shape the company to the visions of shareholders. With pressure like this on leaders, there are high chances of making business decisions that end up being met with widespread distaste.

 

By taking a more thoughtful approach with consistent consideration of how your company impacts its community and prioritising your audience, your company will likely grow into one that sets examples for future entrepreneurs while staying true to your vision. 

 

References: 

[1] https://www.patagonia.com/ownership/

[2] https://www.upi.com/Top_News/US/2022/09/15/patagonia-outdoor-retailer-yvon-choulnard-climate/8801663251152/

[3] https://www.inc.com/justin-bariso/starbucks-howard-schultz-patagonia-how-big-should-my-business-grow.html?utm_medium=browser_notifications&utm_source=pushly&utm_campaign=2385105&cid=pushly

 

keyboard_arrow_up