TOMS has adopted a buy-one-give-one business model as a way of creating both commercial and social value. The company is a social enterprise striving to kill two birds with one stone; making a profit while helping the poor communities in developing countries. Blake Mycoskie, the founder of TOMS, was actually driven by the urge to help the poor more than that of making profits (Marquis, Christopher & Andrew 28). Since TOMS has actually managed to stick to its policy of donating one pair of shoes for every pair sold it qualifies to be a social enterprise. TOMS’s business model is appropriately captured in its one-for-one mission statement. However, certain aspects of this model have proven less effective in achieving the social mission. Foremost giving the poor free shoes is a temporary solution to an otherwise permanent problem. It’s comparable to giving a man a fish rather than teaching them how to fish. Secondly, the funds used in making free shoes can be better utilized in availing permanent solutions to other pressing needs such as building a hygienic washroom.
Companies have been conventionally evaluated using traditions methods which emphasized profits and shareholder value only. The Triple Bottom Line (TBL) approach enhances these traditions methods by incorporating both environmental and social dimensions. The TBL criteria, therefore, applies a three-pronged approach to evaluating a company using its environmental, social, and economic measures. TOMS is environmentally compliant since it manufactures shoes from sustainable and vegan materials including organic cotton, natural hemp, and recycled polyester. Socially, TOMS has given away over 10 million free pairs of shoes to poor destitute communities in developing countries (Chu 2). Per Quittner (2), posts that TOMS was valued at an impressive $625 million by the private equity firm Bain Capital. Considering this was in 2014, it is safe to assume that the company may have outgrown this mark by now. TOMS is economically successful going by this number. Based on the TBL approach, TOMS appears to be performing very well.
TOMS has successfully paved the way for many other buy-one give-one companies. If I were to rate TOMS on a scale of Shared Value, I would give the company an 8.5 rating out of a possible 10. This is because while the company does provide a footwear solution to the disadvantaged, it does so on a limited scale since the solution is temporary. An example of a firm that provides a permanent solution to a problem is Common-Bond. This company funds a poor student’s education for every degree fully funded by its clients. Educating an individual is equivalent to educating a community. As such, Common-Bond provides a lasting solution since the educated individual can uplift his/her community in the long-term. This generates a greater chunk of Shared Value than TOMS does.
Blake Mycoskie’s one-for-one model has the ability to generate extensive positive externalities if TOMS can shift gears and start investing in other ventures with more benefits than footwear. The company can, for instance, build schools, hospitals and other social amenities such as washrooms. These amenities have the benefit of serving the whole community, unlike shoes which only serve an individual. These amenities also benefit the community in the long-term since they enable the people to be effective in their other activities. The company can also generate extensive positive externalities by partnering with local affiliates to increase their capacity to serve the community.
Chu, Jeff. “TOMS Sets out to Sell a Lifestyle, not Just a Shoe.” Fast Company (2013).
Marquis, Christopher, and Andrew Park. “Inside the buy-one give-one model.” (2014).
Quittner, Jeremy. “What the Founder of TOMS Shoes Is Doing Now.” (2016).