{"id":1912,"date":"2015-12-06T17:18:05","date_gmt":"2015-12-06T22:18:05","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/patagonia-a-different-way-of-defining-value\/"},"modified":"2015-12-06T17:18:05","modified_gmt":"2015-12-06T22:18:05","slug":"patagonia-a-different-way-of-defining-value","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/patagonia-a-different-way-of-defining-value\/","title":{"rendered":"Patagonia: A Different Way of Defining Value"},"content":{"rendered":"

Patagonia<\/strong> is a great example of effectively aligning their business model with their operating model. Patagonia has crafted both its business and operating models around a unique mission statement.<\/p>\n

Mission Statement<\/strong>: \u201cBuild the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.\u201d1<\/p>\n

Business Model<\/strong>: Patgonia\u2019s business model is ostensibly to design, create, and sell the best quality outdoor gear. From this explanation their business model is not unlike other retail companies but they are different in that their mission statement does not mention profit. According to the founder and former CEO, the bottom line is the \u201camount of good that the business has accomplished over the year.\u201d 1 This is interesting because it changes the \u201cvalue\u201d the firm is attempting to create and capture from money to \u201cgood.\u201d Taking this into account Patagonia\u2019s business model shifts to creating value by utilizing sustainable business practices in addition to selling the best product, and capturing value by investing their profits and time to develop solutions to the environmental crisis.<\/p>\n

Operating Model<\/strong>: The operating model is set up to support the business model in every step of the process from design to distribution, and even to disposal.<\/p>\n

\u2022 Build the best product<\/strong>: Designers are given a checklist of criteria. The products must be holistically designed to be functional (and if possible multifunctional), durable, easy to care for, authentic, do no harm to the environment, and provide added value to the core user. 1<\/p>\n

\u2022 Production<\/strong>: The designers work with the producers to ensure they are working as a team. Oftentimes the producers are able to provide input to the designers to create a superior product or reduce waste. All production is done in a manner to \u201cdo no harm,\u201d even if it costs more.1<\/p>\n

\u2022 Distribution<\/strong>: Patagonia employs a diversity of distribution strategies in order to reach the maximum number of customers. They utilize mail order sales, direct internet sales, wholesales to dealers, and retail stores. Each distribution channel is available worldwide.<\/p>\n

\u2022 Employees<\/strong>: The employees that manage the processes to create value are bought into the mission. One of the companies hiring standards is that employees must \u201clike to use the clothes we design, have made, and sell\u2026\u201d1 Employees are also given additional time off and financial support to work on causes that support sustainability.<\/p>\n

\u2022 Disposal<\/strong>: Patagonia excepts all used clothing for recycling via mail or drop off at a store. They also have a partnership with Yerdle, a unique company that accepts used goods for resale and pays you back in Yerdle Dollars to buy other used goods. This last step in their operating model, perfectly aligns with their mission and allows them to both create and capture additional value by reducing waste and obtaining raw materials at no cost. 2<\/p>\n

Conclusion<\/strong>: Patagonia is a unique company. Their business and operating models are designed to support their mission that is based on doing good instead of generating profit. However, the models are designed such that by creating the best quality products and promoting sustainable practices they are also creating a competitive advantage for themselves and maintaining profitability.<\/p>\n

Sources<\/strong>:
\n1: \u201clet my people go surfing,\u201d Yvon Chouinard
\n2: www.patagonia.com<\/p>\n","protected":false},"excerpt":{"rendered":"

Patagonia aligns its business and operating models to “do good for the world” as opposed to generating profit.<\/p>\n","protected":false},"author":1108,"featured_media":1913,"comment_status":"open","ping_status":"closed","template":"","categories":[395,14,182],"class_list":["post-1912","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-patagonia","category-sustainability","category-sustainable"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nPatagonia: A Different Way of Defining Value - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/patagonia-a-different-way-of-defining-value\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Patagonia: A Different Way of Defining Value - 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