TOMS Shoes LLC was profit oriented company and transformed into a social kind of enterprise. It sells products for profit and, at the same time, donates another kind of product needed by the poor in the country. Its website defines the company as a “One-for-One Company” and uses the slogan “With every product you purchase, TOMS will help a person in need. One for One.” Although the company had from the outset wanted to help people improve their lives through its products, TOMS did not actually achieve that and ended up operating purely for profits. The author reflected on the company’s purpose and decided to recommit it to helping people. He writes about his important realizations in article in Harvard Business Review.
Takeaways
The article offers many lessons. Two seem to be particularly important takeaways. First is the importance of purpose in a corporation. Second is the importance of the entrepreneurial spirit. Although these two lessons may not necessarily be determinants of a corporation’s success, they are certainly crucial for the happiness and fulfillment of the entrepreneur, the committed employees, and the beneficiaries of the company. This is not to say that other aspects will have to take precedence. The company will have to succeed in the usual business sense. After all, only in doing well (being profitable) can a company also do good (social purpose).
The Business Purpose
After years of financial success, the founder of TOMS realized that the company had drifted away from its purpose helping improve the lives of people. During his sabbatical, he realized that the company can help the needy while still doing business profitably. TOMS began selling shoes with a counterpart donation of shoes. For every pair in a category of shoes sold, another pair will be donated to poor Argentine children who needed shoes to go to school. This model was dismissed by many businessmen. TOMS experience in it had been a resounding success. TOMS had been profitably and had made millions worth of donations to its beneficiaries. Later, TOMS went into selling roasted coffee. For every pack of coffee sold, a certain amount of coffee went into Rwanda. This time, the company strayed away from its core competence in operations. However, it remained true to its purpose. The venture was another success. Mykoskie suggested that, as important as the business goals and mission, a company’s social mission is equally important. The corporate mission should not just be fluff. It is the “why” of a company’s existence. The company should commit itself and pursue this purpose on top of the business one.
The Entrepreneurial Spirit
While he did not say it directly, a company should retain its entrepreneurial spirit to be able to pursue such a purpose, especially a social or philanthropic purpose. Mykoskie was met with skepticism and resistance when first vouched his ideas. TOMS had grown as a business. It was more concerned with processes, profits and how to further grow the company in the more common business sense. He had to take back the helm of the organization so he could force it to pursue what he thinks is its mission. The company had been thinking about itself in a narrow scope, as many businesses do, and could not think of it expanding into other areas. Mykoskie was an entrepreneur and a risk taker. He “gets a high” in starting new things. He was also founder and 100% owner of the company. When he returned as CEO, he easily got his way. He imposed his ideas and the company followed. Of course, these were accomplished after a lot of planning. Obviously, all of what Mykoskie accomplished would not have been possible if he were not an entrepreneur, owner and CEO of the company. A CEO thus should have such an entrepreneurial spirit and drive to be able to do the same thing.
Reaction
The article is very informative. The idea of having a social or philanthropic purpose together with the business mission did not seem possible. One rarely finds such a mission in companies. TOMS proved that a company can be profitable while at the same time purposely helping others. The “One-for-One” concept seems to be particularly good. It was a very generous exercise of CSR. It was costly; however, it also brought in profits.
There are some points in the article that may be difficult to pursue. First is investing in activities that veer away from core operations as TOMS did in coffee. This is something people in a company might not even be able to imagine, much less plan out. One has to keep some distance from the organization to realize it as Mykoskie did.
Another difficult and inapplicability to many persons is the role of the CEO. Not everyone can be CEO. Mykoskie achieved what he wanted because he was CEO. It is doubtful if he could have done the same things if he were not. He could have expounded a bit in the article if he had listened to other people in the company or encouraged others how to think like him.
Walmart is a company frequently encountered in other classes. Its case is the reverse of TOMS’s. It was a profit driven company that inadvertently came up with environment-friendly solutions in its cost-cutting scheme. It touts this accomplishment in its publicity. However, this is not the kind of purpose that Mykoskie is talking about. Walmart’s efforts seem to be more like a cosmetic cover for some of its wrongdoings. This not the way to pursue a purpose. To begin with, this was not a purpose for Walmart’s existence. It is PR under the cover of corporate social responsibility (CSR) cover.
References
Fishman, C. (2006). The Walmart Effect: How the World's Most Powerful Company Really Works—and How It's Transforming the American Economy. London, UK: Penguin Books.
Mykoskie, B. (2016, Jan-Feb). The Founder of TOMS on Reimagining. Harvard Business Review.
TOMS Shoes LLC. (2016). (TOMS Shoes LLC) Retrieved Feb 23, 2016, from TOMS: http://www.toms.com/
