Yvon Chouinard has taken his company, Patagonia Inc., to the very top--it is among the best in its market for outdoor and recreational gear, it's profitable and it's large with sales of $241 million last year.

Outside magazine has an excerpt from his book, Let my people go surfing, where Chouinard discusses the challenges that came with Patagonia's growth.

On growth versus principles:

By the late eighties we were expanding at a rate that, if sustained, would have made us a billion-dollar company in another decade... To reach that theoretical mark, we would have to begin selling to mass merchants or department stores. This challenged the fundamental design principles we had established for ourselves as the makers of the best products, compromised our commitment to the environment, and began to raise serious questions about the future.

It would take 20 years, and the near collapse of our company, to find the answers.

On the dangers that come with growth:

From the mid-eighties to 1990, sales skyrocketed from $20 million to $100 million. Most companies would relish such rapid growth, but for us it was nearly disastrous... But with a big company came big problems.

On multiple products and channels of distribution:

But we made some classic mistakes. We failed to provide the proper training for the new company leaders, and the strain of managing a company with eight autonomous product divisions and three channels of distribution exceeded management's skills. We never developed the mechanisms to encourage them to work together in ways that kept the overall business objectives in sight.

...no one could solve the Rubik's Cube of matching market-specific product development with such a complex distribution mix. Organization charts looked like the Sunday crossword puzzle and were issued almost as frequently. The company was restructured five times in five years; no plan worked better than the last one.

On finding a company's real purpose:

Before he could help us, he said, he wanted to know why we were in business. "What are you worried about?" said our consultant. "You're young. You'll find other jobs!" I said I was worried about what would happen to the company if I sold out. "So maybe you're kidding yourself," he said, "about why you're in business."

On knowing your limits and staying focused:

Never exceed your limits. You push the envelope, and you live for those moments when you're right on the edge, but you don't go over. You have to be true to yourself; you have to know your strengths and limitations and live within your means. The same is true for a business. The sooner a company tries to be what it is not—the sooner it tries to "have it all"—the sooner it will die.

On the difference between a goal and a journey:

You can solo-climb Everest without using oxygen or you can pay guides and Sherpas to carry your loads, put ladders across crevasses, lay in 6,000 feet of fixed ropes, and have one Sherpa pulling you and another pushing you. Rich, high-powered plastic surgeons and CEOs who attempt to climb Everest this way are so fixated on the target—the summit—that they compromise on the process. The goal of climbing big, dangerous mountains should be to attain some sort of spiritual and personal growth, but this won't happen if you compromise away the entire process.

On building a long-term business:

When I look at my business, I realize one of the biggest challenges I have is combating complacency. If I say we're running Patagonia as if it's going to be here a hundred years from now, that doesn't mean we have a hundred years to get there! Our success and longevity lie in our ability to change quickly. Continuous innovation requires maintaining a sense of urgency—a tall order...

...The American dream is to own your own business and grow it as quickly as you can until you can cash out and retire to the golf courses of Leisure World...

...When you get away from the idea that a company is disposable, all future decisions in the company are affected. The owners and the officers see that, since the company will outlive them, they have responsibilities beyond the bottom line.

There's a treasure trove of applied common sense in the excerpt, much more than can be captured here--it's a worthwhile read.