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I took the opportunity to see Nau CEO Chris Van Dyke speak in front of a packed house at The Portland Business Journal Power Breakfasts. These events seem to draw an amazingly engaged audience, and their format is expeditiously run by publisher Craig Wessel. My enthusiasm to hear VanDyke speak grew from both my involvement as an outdoor product consumer and a curious researcher of creative business strategy. He has spent the last three years building a team designed to ‘shift legacy thinking’. Amidst all the green noise in today’s corporate landscape, Nau’s differentiation efforts are being led by a CEO who truly walks the walk by embedding Corporate Social Responsibility into his company’s DNA.

Van Dyke explained how many decisions were made to grow the company in ways that contradict conventional retail business fundamentals. In spite of naysayers, they used this approach as an opportunity to carve out a niche for themselves in a field that no one had previously attempted. The Nau approach deconstructs how successful business is defined, and in the process sets a precedent for what I see being business as design.

Here are a few of the interesting points he made during this discussion that exemplify a well calculated strategy to convince non-believers that profitability and philanthropy can indeed coexist.

Audience Definition: When I first heard of Nau and discovered the prices of their product I immediately had some sense of sticker shock. The same shock I get when browsing polypros in the Patagonia catalog. My first thought was that the target audience was going to be too small to get their product off the ground. I realized however, I was wrong. By pushing the market of design-savvy artistic people, the market they’re entering grows from a limited 5 billion dollar high-tech outdoor industry, to the 50 billion dollar fashion industry. The three components to their audience include the:

• Athlete
• Artist
• Activist

Or, in other words the person who lives in a place like Portland, pursues exercise outdoors, is drawn to well designed products, and has a consumer conscious with their purchasing power.

Transparency: Nau publicizes what they stand for so anyone can determine the validity of the lofty business practices the company has decided to take on. Van Dyke commented that “if at first Corporations worked in glass houses, now they work under a glass microscope.” Two ways Nau establishes transparency with their business practices are through:

Their Bylaws: These are publicly displayed on their site and outline a sincere commitment to:

• social and environmental responsibility
• 5% corporate giving practice
• fair wages
• minimum and maximum compensation
• equal employee benefits

*All of these bylaws can’t be amended w/out a 75% shareholder approval

Their Blog: The Thought Kitchen is a the company blog that is a repository for all the employees shared inspiration. There is some great reading material here for people interested in what makes this new school company tick.

Sustainable Marketing: 5% of Nau’s revenue is donated to well-respected non-profits. This alone is unheard of, but what makes this more impressive is the way the Partners For Change receive their money. When purchasing a Nau product, the customer gets to decide where their 5% goes. This empowerment fosters an emotional connection to the brand. In return for the 5%, the partnerships being gifted are eager to help w/ ground efforts marketing Nau-one clever way to create incentive for well-respected partners to jump on board as brand ambassadors.

Open Source:
Nau has developed most of their products from scratch without putting any patents on their innovation. This gift of fabric technology encourages business growth for other companies who share Nau’s values. Now THAT’S standing behind your product.

Whole Systems View:

• only use recycled polyester and natural polyesters
• invented fabrics that take their life cycle into consideration
• materials can be recycled back into usable products

No Middle Man:

• no middle person to get between their product and the customer
• margins are being captured
• enables stronger brand building by being connected to their customer

Willing to Admit Risks:

• Growth is subject to real estate vulnerabilities
• Selling directly to customer makes them own all their inventory
• can get ahead of themselves as is the case with their website

All these points lead up to making a company that is way ahead of curve in terms of growing sustainable business practices in the outdoor apparel industry. Van Dyke admitted that many of his business decisions have gone against conventional business strategies, but that’s exactly what makes the company stand out. I am eager to see how 2008 pans out for this company that has intelligently designed itself in preparation for highly scalable yet sustainable growth.

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For more reviews of Nau, check out these sources:
TIME
High Touch Concept
Cool Hunting