Business models for good are business models for companies that want to create impact. With the use of one of these models, you are contributing to a solution of a social problem in the core of your business. For commercial companies, like TOMS, who was one of the first to use the business model “one for one”; for foundations who want to grow, like Dance4Life, who laid the foundation for explosive growth with their business model “social franchising”; and for social entrepreneurs, like Peerby, who enables neighbours to borrow or rent things from each other with their multisided platform. This first part of the series “business models for good” is about the business model one for one and describes how TOMS gives new meaning to the model.

TOMS gives new meaning to one for one
– Business models for good part 1

When TOMS started in 2006 they were unique with their one for one principle. If you buy a pair of TOMS shoes, a child in need of a pair of shoes will receive a pair for free. In the past few years TOMS has gotten lost of critique. That is why they evolved the model from “one pair of shoes for one pair of shoes”, to “one purchase, one purpose”. This article shows how they got there and what the new direction looks like.

Changemakers telling their story

In 2018 TOMS partnered up with local changemakers who receive a platform from TOMS to share their story. They work together on the good cause of the changemaker to create more awareness for this specific cause. Lisa Hogg, EMEA Marketing Director at TOMS, presented this new direction during OnBrand18 and gave more details during an interview right after her presentation. On February 21st TOMS officially shared this new direction.

Lisa Hogg at OnBrand Amsterdam 2018 – Image copyright Dan Taylor

From spring 2019 TOMS will focus on issues like homeless, female empowerment and social entrepreneurship. TOMS works together with partners like Centrepoint, Ashoka and European changemakers Joshua Coombes, Ella Grace Denton and Sara Nuru.

The first projects started in March. Joshua Coombes will lead an art show tour, with the aim to create more awareness for the growing issue of homelessness across European cities. Together with Sara Nuru and Ashoka Germany, TOMS will fund a social entrepreneurship summit and accelerator to support and grow the next generation of social entrepreneurs.

TOMS’ journey

This change did not happen over night. It started with different insights:

  • TOMS is not unique any more;
  • TOMS is accused of poverty porn;
  • Customers care more about things that happen nearby.

1. TOMS is not unique any more

Last year, during Onbrand17, Lisa showed that from 2006 more and more companies are using the one for one principle, following the example of TOMS. Pampers follows TOMS in 2006 with one pack, one vaccine. For every pack of Pampers with the sticker “one pack, one vaccin” Pampers donated a Tetanus-Vaccine to a mother and her baby in a developing country via Unicef. In 2007 and 2008 another 5 companies join and in 2009 it really takes off. Between 2009 and 2016 approximately 70 companies apply the one for one model, like Unilever with “buy a mail – we’ll donate a meal” and Starbucks with “plant a tree for every bag of coffee”.

2. TOMS is accused of poverty porn

Over the years TOMS has endured lots of critique

Many argued that donating shoes is not an effective way of aid when 800 million people lack access to basic nutrition. Others claim that giving shoes for free hurts the local shoe industry.

After this critique, TOMS commissioned a study and found out that their products often acted as a replacement to previous pairs of shoes. In response, TOMS set up partnerships with local shoe manufacturers aiming for a third of their products being manufactured in the communities they donate to.

Despite their constant improvement in applying their one for one principle, many critics still claim that TOMS is picturing a too sexy picture, making its customers feel good, while this sentiment is not found in reality.

In the Harvard Political Review, Russell Reed states: “If one seeks to maximize impact, they should consider donating directly to an organization that focuses on impact and dedicates itself more directly to its mission of creating effective, sustainable change and making the most of every dollar used.”

That is exactly the road TOMS has now taken. Lisa: “We get slammed for poverty porn, therefore we now give changemakers a platform to tell their story. One of these changemakers is Sara Nuru, founder of nuruCoffee, a social startup based in Berlin that empowers women in Ethiopia.”

3. Customers care more about things that happen nearby

Lisa: “We took a deep dive in what our customers care about and asked ourselves: How can we as a brand engage the people in issues that really matter to them and give them a platform to engage in.

We found out that the local aspect is very important: our customers don’t care so much on putting shoes on people far away. They are far more engaged whats happening in their backyard.

But there are big differences between the countries:

  • Germans really care about dignity: “a better me makes a better community”. How do we address that?
  • From a UK point of view it is about fairness. In the UK they believe that the public and the private sector should empower the youth;
  • In France they believe in solidarity: the right and the commitment to rise up to a situation in solidarity. There is a rise of young activists that will make big impact soon.”

Lisa Hogg at OnBrand Amsterdam 2018 – Image copyright Dan Taylor

New direction

Lisa: “where we landed is economic empowerment and education. This is the umbrella for the entire EMEA region and can cover many different themes.

In each country we pick one specific issue and work with different partners:

  1. Changemakers
  2. Organizations focussing on solving specific issues
  3. Media companies

In the UK we chose to focus on homelessness. It is very difficult to find out how big the issue of homelessness actually is, because you can’t always see them. So we asked ourselves: What influential person is actually making a difference in that area?

1. Changemakers

In the case of homeless people in the UK TOMS works with Joshua Coombes, who cuts the hair of homeless people in the streets of London. He is sharing his story and shows that small acts of kindness can make a difference.

2. Organizations focussing on solving specific issues

To really create an impact, TOMS works with Centrepoint, a UK based organisation that helps homeless people in the UK.

3. Media companies

And TOMS works with Good-Loop, a media company that also applies the one for one principle. If the consumer watches an advertisement it unlocks a gift and they can give this gift to one of the three good causes. In this way every touchpoint has purpose.”

Giving new meaning to one for one

With this new direction, TOMS has given the one for one principle a new meaning: “one purchase one purpose” focussing on issues that matter most to people in specific countries. Instead of donating a pair of shoes, TOMS now invests in the good cause of change makers so they can create more impact together.

During OnBrand this direction was presented as the new meaning of one for one, but according to the press release from 22 February, it is an addition to the one for one model. With this addition TOMS is getting closer to activist marketing like Ben & Jerry’s, who help multiple social movements to create impact.

It looks like TOMS has created something totally new next to its one for one model, but behind the scenes TOMS is already way ahead. Lisa: “In the future we would like to give our customers the opportunity to choose their own good cause when buying a pair of shoes.” TOMS has been experimenting with this in retail and would like to grow this approach throughout all their channels.”

If you really want to change, change your business model

TOMS is a great example how a company should continuously listen to what their customers find important. If you really want to change your company, you also have to change your business model. Depending on your situation, you either chose to further develop your current business model or you chose a totally new model. As long as it fits the vision of your company and the needs of your customers. The right business partners can help you to grow further and create more impact.

 

Are you ready to start?

I have created a free checklist for you to start a successful business with impact. If you tick off all the boxes, you have laid the perfect foundation for your business for good.

 

A revised version of this article was originally published in Dutch on Frankwatching.