Sustainability’s gone from fringe to mainstream, says Michael Crooke. As the former CEO of eco-driven outdoor apparel companies such as prAna and Patagonia, Crooke is now delighted to continue to be a part of that movement as an academic. Last summer, he joined the faculty of Pepperdine University’s Graziadio School of Business and Management in Los Angeles as a visiting professor. He helped to coordinate the launch of the school’s new Certificate in Socially, Environmentally and Ethically Responsible (SEER) Business Practice program and now teaches courses on strategy, leadership, and corporate social responsibility.
Former Patagonia CEO Michael Crooke now teaches business students the four cornerstones of leading sustainable and profitable businesses.
Crooke brings more than his years of corporate leadership to the classroom. The former Navy SEAL, who served four years with an underwater demolition team in the 1970s, also is an academically qualified professor with a doctorate degree in management from California’s Claremont Graduate University. In his doctoral dissertation, Crooke highlighted four primary values that companies must adopt to be successful for the long term: sustainable business practices, environmental ethics, a good product or service, and strong finances. If any one pat of this model falters, he argues, the business will fail.
When asked what his experiences have taught him about business, he’s quick to answer: the importance of teamwork and team-based management. “I’ve learned that there’s very little you can do as an individual,” Crooke says. “What can be achieved through collective intelligence is so much more powerful than anything one can achieve alone.” Graziadio’s SEER certificate program itself was a collective effort, says Crooke, brought about by the students who first requested such a program and by the educators who put it into place. By tapping into that shared energy and enthusiasm for social entrepreneurship, he adds, business schools can lay the foundation for more successful and sustainable enterprises.
You now teach in Graziadio’s SEER program. What do you think a program like this should achieve?
I want it to get students thinking about the long term. There was a time when businesses were passed on to future generations. When you were passing a business on to someone, you really had to take a long-term approach. But over time, we started thinking in shorter and shorter time spans. Today, we don’t even think in full years—we think in quarters! I think it’s important to get back to that long-term perspective.
What approach do you think that programs like SEER should avoid?
They shouldn’t be programs for people who only want to be sustainability managers or who only want to go into non-profits. SEER is a mainstream program. Our students are going to Wall Street, they’re going to Main Street, they’re going into sustainability ventures. The whole idea of this business model is that any business in any domain or industry can use these principles to optimize its strategic plan.
You emphasize that successful businesses must integrate a great product or service with strong finances, sustainable practices, and environmental awareness. How do these aspects intersect?
I depict this model as four circles, all overlapping each other much like a regression equation. You can’t take any one of those away and still have a great business. That is, if a company has a great product or service, it also must have taken into account the environmental aspects of its operations. It also must demonstrate corporate social responsibility, which includes avoiding sweatshop labor, treating its employees well, and coexisting with the communities where it works. Of course, if a company does those things correctly, it’s my belief that it will have strong finances. We’re teaching students that they need all four of these macrovalues in their strategic plans to succeed.
Under Crooke’s leadership, the SEER program emphasizes that any successful business must link four areas of its operation: finances, a great product or service, social responsibility, and environmental stewardship.
You have to start with a strong product or service and have a unique, sustainable, competitive position. If you don’t start with that, it will be very difficult to be a geat corporate citizen or environmental steward.
But even if the social component is missing, some companies can still go a fairly long time without repercussions. For example, Lehman Brothers was 150 years old before disaster struck.
Ah, but the model requires that there must be a great product or service! In Lehman’s case, it had turned to collateralized debt obligations, or CDOs, which did not meet the definition of a geat product or service! Financial engineering is not a true product.
How do you think students today are different from when you were in business school?
I was very much an environmentalist when I was getting my MBA back in the late ’80s, but I was one of the few. Back then, I was considered a “tree hugger”—I was seen as being on the fringe. From what I’ve seen so far, values are very much front and center for today’s students. They want to align themselves with an organization or other like-minded people who have values similar to theirs. Sustainability isn’t a fringe movement anymore.
What do you think are students’ biggest misconceptions about business and social responsibility?
Students must understand that it doesn’t matter how eco-groovy you are, or how well you treat your people. If you don’t have a product that wins in the marketplace, your company is out of business. You have to look through the SEER lens—through all four values. You have to start with a strong product or service and have a unique, sustainable, competitive position. If you don’t start with that, it will be very difficult to be a great corporate citizen or environmental steward.
What companies do you point to in the classroom as examples that bring together the four aspects of a profitable and sustainable business?
I always start with the Patagonia case, of course, but there are a number of other really good ones. Ray Anderson and InterfaceFLOR is one of the best. GE also is doing amazing things right now. Nike also is a great case study. It’s one of the real leaders in the sustainability movement. It had been a target for NGOs for a long time, but what Nike did was brilliant. It was among the first companies to make its CSR reports public. Its executives said, “Here is what’s going on in all of our factories.” They joined the Fair Labor Association, which made surprise visits at factories and put information on Web sites for the public to see. Nike invested in transparency, and it’s always been at the forefront of looking for ways to promote sustainability.
As you look back on your business career, what has been your most eye-opening experience?
I would say spending time with Yvon Chouinard, Patagonia’s founder. A couple years before I joined Patagonia, he had visited conventional cotton fields. He saw the toxic ponds filled with pesticides, and he saw that the farmer posted guys with shotguns around them because he didn’t want birds to land on them and be poisoned. He thought, “We can’t be a part of that.” Almost overnight Patagonia became one of the largest users of organic cotton in the world. Because of that its margins suffered, and the business had to completely change. But Yvon said, “If we go out of business, we go out of business.” Conventional cotton farming had crossed a line, and he couldn’t support it anymore. Visionaries like him and Ray Anderson at InterfaceFLOR are people who really inspire me. They have taught me that you have to lead with your values.
What do you most want to accomplish in the years to come, either as a professor, business leader, or in some other role?
I would love to continue to be a part of this movement as it moves more into the mainstream. I’m still on a number of boards, but I think one of the ways that adds the most value to this movement is helping to train the leaders of tomorrow. I became a CEO at a young age, and I’ve had great mentors in my life who helped me through the learning curve very quickly. I would like to repay that.
It seems like you’ll have your chance to be a mentor as well, now that you’ve made the transition from business leader to academic.
It’s transformational to see these young people so hungry and so ready for this movement toward social and environmental responsibility. It’s been fascinating to see their enthusiasm. When they’re talking about their ideas and starting to bolt those ideas to the ground, their eyes just light up. There’s no better feeling than that, because they’re the future CEOs of our planet.