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Patagonia’s purposeful transition

“Earth is now our only shareholder,” wrote Yvon Chouinard.

You’ve likely read the letter by now. Last week, Patagonia’s founder made an unconventional move, giving away his $3B company. In order to preserve its core values—protecting the planet over prioritizing profits—Patagonia’s voting stock will be transferred to the Patagonia Purpose Trust, a trust dedicated to battling the ongoing environmental crisis.

A purpose trust is a trust established to carry out a specific purpose. Instead of having individual beneficiaries, it may benefit an entity—a business, a family property, or in this case, Planet Earth. From now on, each year, the money Patagonia makes after reinvesting in the business will be distributed to help protect the environment.

Chouinard considered other options, including selling the business and donating the profits or taking the company public. But giving the company to a purpose trust ensures its future will remain dedicated to the core environmental mission. “Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility,” he explains in the letter.

Sustainability and strategy

Many companies are making changes to counter that statement. B Lab, a nonprofit dedicated to turning business into a force for good, has certified over 5,000 companies as b-corporations over the last decade. These companies (Patagonia included) have met exceptionally high standards for social responsibility, environmental consciousness, and transparency.

These are not only well-known environmentally friendly companies like Patagonia; the list of b-corps now includes companies in food (e.g., Ben & Jerry’s), consumer products (e.g., TOMS, Warby Parker), technology (e.g., Box), education (e.g., Coursera), and entertainment (e.g., Redbox), among others.

Outthinker research on the evolving role of the chief strategy officer (CSO) shows more companies are moving sustainability under the remit of the CSO. This is logical for two reasons. First, sustainability is being increasingly recognized not as a “nice to have” but as essential to a firm’s long-term sustainability.

Second, since a commitment to sustainability demands a long-term perspective, the CSO is a sensible choice to support purpose over profits—the role and its unique inhabitants are responsible for making sure their company looks beyond this year’s profits and this quarter’s results toward a long-term future that aligns with its “north star.”

Evolution of ownership

B-corp certification and CSOs leading sustainability are high-impact near-term steps companies can take to stand up to a rapidly evolving environmental crisis. But can they last long enough? Chouinard didn’t think so.

Locking in a long-term commitment to sustainability requires aligning your ownership structure, too.

Traditional ownership models of publicly held corporations perpetuate the fact that a company owned by individual shareholders are ultimately beholden to the desires of those individuals. Chouinard made his decision to preempt that dilemma.

Paul Newman made a similar choice in 1982 when he decided to donate all profits from the sale of Newman’s Own products to the Newman’s Own Foundation, an organization that supports nonprofits to help children facing adversity. Mastercard made a similar decision when it decided to set aside some funds from its IPO to fund an independent Mastercard Foundation in 2006 (now worth $4.4B) to increase financial inclusion.

The Patagonia Purpose Trust replaces individual self-interest around decision-making with collective purpose. New organizational models are springing up that indicate this may be the way more organizations will operate in the future. For example, consider decentralized autonomous organizations (DAOs.)

A DAO is a cooperative that uses blockchain technology, cryptocurrency tokens, and smart contracts to carry out its purpose. Lacking a hierarchical leadership model, the DAO is “regulated by a set of automatically enforceable rules on a public blockchain.” Smart contracts set the rules, and similar to a purpose trust, DAOs are said to be “incorruptible” and self-managed “without any human involvement.”

Contrary to a purpose trust, DAOs benefit shareholders and distribute profits in the form of tokens or coins, but smart contracts are established to guarantee that the DAO acts according to its values and cannot be subject to human greed. Some DAOs are using purpose trusts in which no individual members benefit, but the trust itself represents the DAO community’s objectives, regulations, and voting mechanisms.


Long-term strategic trends suggest organizations of the future will align their long-term motivation to social purpose. Embracing models like the b-corp or moving sustainability efforts to the center of your strategy are powerful first steps. But locking-in a long-term commitment to sustainability or any social mission is better assured by shifting ownership to a value-driven entity like Patagonia did or embracing decentralized organizational models that supplant individual motivations with the collective.

Photo by Pixabay

“8Ps” of StrategyOpportunity
for Disruption
Recommended Leverage Points
Position- The farmers, individual and corporate, that you are targeting.

- The need of the agricultural industry that you seek to fill.
3- What technologies do you control that can help you tap into market
segments that you previously thought unreachable?

- What are the potential business alliances you could think about with key players in the segment to serve your customers with integrated solutions? (Serving customers with more integrated solutions example: serving farmers with fertilizers, crop protection and other).
Product- The products you offer, and the characteristics that affect their value to customers.

- The technology you develop for producing those products.
8- What moves are your organization taking to implement Big Data and analytics to your operations? What IoT and blockchain applications can you use?

- What tools and technology could you utilize or develop to improve food quality, traceability, and

- How can you develop a more sustainable production model to accommodate constraints on arable

- What is the future business model needed to serve new differentiated products to your customers?
Promotion- How you connect with farmers and consumers across a variety of locations and industries.
- How to make consumers, producers, and other stakeholders aware of your products and services.
8- How are you connecting your product with individual and corporate farms who could utilize it?
- How could you anticipate market and customer needs to make customers interested in accessing your differentiated products?
PriceHow consumers and other members of the agricultural supply chain pay for access to agricultural products.7- What elements of value comprise your pricing? How do each of those elements satisfy the varying needs of your customers?
Placement- How food products reach consumers. How the technologies, data, and services reach stakeholders in the supply chain.9- What new paths might exist for helping consumers access the food they desire?
- How are you adapting your operations and supply chain to accommodate consumers’ desire for proximity to the food they eat?
- How could you anticipate customer expectation to make products more
accessible to customers/agile supply chain?
- Have you considered urbanization as a part of your growth strategy?
- How your food satisfies the needs and desires of your customer.
- How the services you provide to agribusiness fulfill their needs.
9- Where does your food rate on a taste, appearance, and freshness
- Could the services you provide to companies and farms in the agriculture industry be expanded to meet more needs?
- What senses does your food affect besides hunger? How does your
customer extract value from your food in addition to consumption?
Processes- Guiding your food production operations in a manner cognizant of social pressure.8- How can you manage the supply chain differently to improve traceability and reduce waste?
- How can you innovate systems in production, processing, storing, shipping, retailing, etc.?
- What are new capabilities to increase sustainability (impact on the environment, or ESG) components?
People- The choices you make regarding hiring, organizing, and incentivizing your people and your culture.- How are you leveraging the agricultural experience of your staff bottom-up to achieve your vision?
- How do you anticipate new organizational capabilities needed to perform your future strategy (innovation, exponential technologies needed, agile customer relationship, innovative supply chain)?
- How do you manage your talents to assure suitable development with exposure in the agrifood main challenges/allowing a more sustainable view of the opportunities/cross-sectors?