Flying By The Seat of Your Pants?
You may have read in Inc. Magazine or Fast Company or elsewhere recently about a stunning announcement.
Yvon Chouinard, founder, and the shareholders of the iconic outdoor apparel company Patagonia, gave away 100% ownership of the company to a private trust and nonprofit foundation dedicated to solving climate change. It's estimated that Patagonia's value approximates $3 Billion.
Chouinard wrote an open letter about how this would work and why (You can find it on the Patagonia website). As he wrote: "The Earth is now our only shareholder".
Patagonia's stated purpose? We’re in business to save our home planet. This move by Chouinard and the shareholders is certainly aligned with that purpose.
I was curious to find out how this was possible, and my research led me to Patagonia's purpose-based flywheel.
The Flywheel Effect
In Good to Great: Why Some Companies Make the Leap And Others Don't, Jim Collins introduced us to the Flywheel.
The Flywheel Effect is the cumulative effect of small incremental changes and effort that over time, begin to build momentum and that lead to breakthroughs. It's predicated on making the complex simple by focusing on one thing that leads to major breakthrough.
And because the right people (Collins) are aligned with the company's purpose - the one thing - the consistent actions of the company which yield tangible results lead to greater momentum. What do the right people want more than almost anything else? Collins asked.
They want to be part of a winning team. They want to contribute to producing visible, tangible results. They want to feel the excitement of being involved in something that just flat-out works."
- Good to Great, Jim Collins
What's really important to note here is what Collins observed. To become great, the good companies did something that others failed to do.
The Great companies were consistent and focused their overarching purpose on one thing. (Want some help in defining your one thing? Let's get on a call to chat about it.)
The Purpose-Based Flywheel
Patagonia's purpose? Simple. Straightforward. You instantly know what the company stands for. And its actions up until now have supported this purpose through grants and other financial support from Patagonia Action Works and by giving away 1% of its annual sales each year.
Patagonia and other iconic companies driven by purpose have found a way to drive their growth and fuel their initiatives by using their version of The Flywheel, a purpose-based flywheel.
At Patagonia, the more it invests in its beliefs and its products, the more creative solutions are created with the results being greater growth and profits, which then help to further fund projects that are aligned with its purpose - consistent action driven by clarity of its stated purpose, its one thing.
Final Thoughts
Some data points to consider:
The Deloitte 2022 Global Marketing Insights report found that 66% of high-growth brands are more likely to see Purpose as a guide to employee decision-making.
The 2021 Edelman Trust Barometer found that 68% of consumers believe they have the power to force corporations to change, and 86% of people expect CEOs to speak out on societal issues.
Similarly in 2020, Deloitte found that purpose-driven companies had 40% higher levels of workforce retention than their competitors.
I continue to believe that how you treat your employees directly impacts how your customer are treated.
And I believe that if you haven't done so by now, you need to have clarity of purpose about your company or organization.
Don't fly by the seat of your pants or assume that purpose and values are clear.
Be intentional about it.
What is that you believe? What does your company stand for? Explore these questions with rigor.
Find that one thing. Doing so will make your life easier as you simplify the complex.
Your customers will applaud you for it, your employees will be energized by it, and growth of your business and bottom line will be the proof.
Until next time!
Think Differently
P.S. Reach out to me here and I'll share a couple of ideas that you can use right now.
