Patagonia: innovation culture and sustainability — a look at their circular business model

Explanation of the circular economy model (Source:

The Circular Fashion Economy

The circular economy is a consumption model where nothing ends up in the landfill, and nothing is produced from virgin materials. In few industries is developing a circular economy more urgent than in that of apparel: the fashion industry is the second worst polluter in the world after oil. The main issue with the fashion industry is its structure, which is based on continuous growth and the planned obsolescence of products. The fast fashion economy is built on 52 seasons — a clothing cycle that forces consumers to buy every week to stay on trend. Furthermore, once these cheaply-made clothes are no longer trendy, they will also fall apart. It’s possible, however, to function as a responsible, slow fashion business and still make money. And this does not mean having one ‘ethically-sourced cotton’ line per year- it’s about true sustainability and even circularity.

Sustainable Clothing at Patagonia

The fashion industry’s only large company that lives and breathes circularity is Patagonia. According to Rose Marcario, the former CEO of Patagonia,”if a product is totally worn out, we are going to take it and recycle it. If it needs to be repaired, we are going to have a mechanism to repair it. If it can be resold but they don’t want it any more, there’s a mechanism to do that.”

A business of recycling

According to Glen Morden, the Head of Product Innovation at Patagonia, in order to achieve this mission, the innovation strategy at Patagonia is based on a two-pronged approach: minimizing the environmental impact of their clothing, and developing the circular economy. Their team generally innovates incrementally on recycled materials in-house, and screens the market for radical new materials that they can employ.

Patagonia makes clothes from recycled materials (Source:

Innovating for Circularity

Patagonia innovates not only at the product level, but at the business model level as well. For example, Patagonia practices total supply chain transparency, so that customers understand the environmental impact of their clothes. They have also supported sustainability at the hindrance of profits through their “ Do Not Buy This Jacket” marketing campaign and their 1% For the Planet Alliance, where 1% of their sales are donated to sustainability initiatives. Patagonia also offers a service entitled “ Worn Wear,” that allows customers to “repair, share, and recycle” broken or used gear. These are highly innovative anti-growth business practices unheard-of in any industry, and effectively designed to fulfill the mission of Patagonia.

Patagonia clearly puts sustainability before profit (Source: Patagonia)

Innovation Resources, Competencies, and Capabilities at Patagonia

Patagonia expertly utilizes its most important resource — its people. Job openings at Patagonia headquarters have 9,000 applicants. They hire the most competitive talent, and they hang on to it: Patagonia has around 4% turnover every year, much lower than the industry average. The organizational culture at Patagonia is highly horizontal and includes many cross-functional teams, two organizational practices that maximize innovation potential during new product development. This development is also driven by their former CEO Rose Marcario who had realized that she wants to work at a place that shares her personal values.

Patagonia products are developed over a long time (Source:

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