Businesses are about returning shareholder value.
Or are they? More and more companies are turning to corporate social responsibility as a means of building loyalty among their customer base, and now could be just the right time to invest.
Social responsibility has long been a publicity tool in the corporate toolbox, many now companies see it as a way to strengthen their brand and harness a loyal following, which ultimately delivers the bottom line results that shareholders are interested in. Campaigning organisations, such as Not For Sale and Stop the Traffik, have brought bad business principles into the public square, and social enterprises, with a ‘clean business’ approach are highlighting that it is possible to successfully fuse business and charity.
During a recent trip to Asia, I picked up a book at Changi airport to relieve the boredom of hours of travelling. The book was called Start Something that Matters, by Blake Mycoskie.
Mycoskie is the founder and Chief Shoe Giver at TOMS, a social impact shoe company he started in 2006 after a ‘time out’ visit to Argentina. Mycoskie was shocked by the number of children walking around with no shoes, and the impact this had on their health. After much trial and error (he had no experience of the shoe industry) he managed to bring to market a range of shoes that delivered social impact.
The TOMS business model is simple
The TOMS business model is simple (the good ones usually are). For every pair of shoes he sells, he gives a pair to a child who hasn’t got any. For new generation micro philanthropists, this is a no brainer. I can buy a pair of TOMS and make a difference or I can choose an alternative brand. The impact probably goes much deeper that this though. By choosing TOMS you put a pair of shoes on a child, but it is likely that you also contribute to an ethical supply chain rather than an unethical one.
This is just one example of business creating social impact, and there are many others now copying the TOMS model (take a look at crowdfunding website Indiegog.com).
So how can you translate this concept into your business model? For some companies this could be relatively easy, providing you are a product developer with a product that has the possibility of benefitting others. For other this may be more difficult. Nevertheless, there is a lot to be learned from Mycoskie.
Firstly, TOMS doesn’t sell shoes (well, not directly). TOMS is selling a story, an experience, and an opportunity to make a difference. This flips the business model in such a way that buying shoes becomes an emotional decision to make a small difference in the world.
TOMS is selling a story, an experience, and an opportunity to make a difference
Secondly, the ‘One for One’ concept is replicable. In other words, once the concept is adopted by a loyal following you can apply the model to other products. By doing so you leverage this loyalty by inviting customers to do more through their buying decisions. For TOMS, this has been translated into sunglasses. One pair of TOMS sunglasses = sight for one person.
Thirdly, the model provides a campaigning opportunity for businesses, which is also a new concept that builds positive publicity, a sense of community and extends the loyalty further.
Having spent twenty years in business and nearly fifteen years in the charity sector, I have a passion for transforming lives. What I’ve realised, and experienced, along the way is that there is such a thing as good business. The business community has the opportunity to change the world in a big way, and I want to be part of it. It would be great to see groups of business leaders come together just to explore the possibilities.
If TOMS has anything to offer to businesses, it’s the encouragement that social impact business does work. Considering that they started selling shoes just before the global economic crisis in 2006, they’ve done pretty well in selling one million pairs of shoes by the end of 2012 – and putting shoes on the feet of one million children around the world.