I was listening to a talk the other night given by Yves Chouinard, president and founder of Patagonia Inc. In a lecture given at
Stanford University , he outlined his company's mission to continually reduce the impact of its products and how this green product-innovation has become a cornerstone of the brand identity ofthe company.
A fact that struck me from his talk was the way companies such as Patagonia manage to redefine the rules of the market in their favour. Over the past 5 years, Patagonia has undertaken efforts to move exclusively to organic cotton for all of the cotton-based fabrics used in their clothing products. They were one of the first to do this and by educating customers as to the value of organic cotton, they have essentially created a new variable in the customer choice-set for outdoor apparel. Many customers now look for an organic cotton label prior to buying an item of clothing - regardless of the fact that organic cotton products may be more expensive. In doing this, Patagonia has forced its competitors to source organic cotton in order to play catch-up. All the while, Patagonia benefits from the first-mover advantage in this new market niche and the brand recognition that goes with it.
Similarly, Whole Foods is starting to redefine the way we view food - moving us away from the late 20th century food-paradigm of more, bigger, cheaper to a focus on the importance of quality in terms of both production and nutritional value. The growth of Whole Foods markets has forced their competitors to increasingly stock their shelves with organic and local products in an attempt to keep pace with the evolving tastes of their customers.
These two examples show how a company can reinvent the parameters of the markets in which it operates in its favour and, on the flip-side, the risk for business-as-usual companies that are caught on the wrong side of this innovation and are forced to react, often slowly to the changing rules of the game just to maintain market position. By changing the logic of the markets in which they operate, sustainable innovators create value for their brand and provide the catalyst that can alter the behaviour of the entire market.
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