Analyzing Toms Corporate Social Responsibility Model 1

Analyzing Toms Corporate Social Responsibility Model: One for One

While travelling in Argentina in 2006, Blake Mycoskie grew upset by all of the children he

witnessed wearing inadequate shoes, or, in some cases, no shoes at all. Once returning to the

United States, Mycoskie created Toms shoes (Toms coming from the word tomorrow and

referencing Shoes for a Greater Tomorrow) (Miller 2009). Toms introduced the concept of One

for One. The premise of One for One is that for every pair of shoes purchased, another pair of

Toms shoes is donated to a child in need overseas. Toms recently donated their ten millionth

pair of shoes and the brand seems to only be increasing in growth and popularity, as the

organization has expanded their reach to eyewear and coffee. Since the founding of Toms in

2006, the canvas style shoes have become a cultural icon, and are widespread among young

people, particularly on college campuses. Further, Toms has received multiple awards from

humanitarian advocacy groups praising their efforts. Even though Toms provides benefits by

way of shoes and eyewear to those most in need, criticism has not escaped the popular brand. .

The idea of the One for One model has raised the issue of whether Toms is making a sustainable

difference, as it has been argued that the people living in these countries would be better served

by becoming self-sustaining. Toms is also not registered as a non-profit, which brings about the

question if businesses are truly interested in their total profit, or in the philanthropy they

promote. As such, the line between Toms operating as a business or as a charity is becoming

increasingly blurred. Because Toms presents itself both as a business and a charity, there are

multiple issues concerning how best to operate: what is the main priority? Is there room for both

profit and charity in an organization? How has Toms proven to be so successful with little to no

formal advertising? Why is Toms so popular with young people? As such a young company,

these questions are only beginning to be answered.

How TOMS Operates

Since Toms beginning in 2006, 50 million shoes have been distributed to children in 70

countries across the world. In the past ten years, Toms has also expanded into the eyewear and

coffee market, further reaffirming its mission of being an organization interested in the welfare

of people. Toms has marketed itself as a humanitarian organization, and continues to do so.

However, it is also worth noting that Toms does not operate as a non-profit. Rather, Toms is a

private company, and as such, many aspects of the organization are not disclosed to the public.

While the Toms website is full of information regarding its goals, missions, and practices, it is

difficult to retrieve information regarding labor practices overseas. None of Toms shoes are

made in the United States (although the practice of having locals in impoverished countries is

gaining popularity and remains one of Toms main goals).

Because Toms does not report to stakeholders, it is free to make many decisions as it pleases.

Further, Toms works to create an inclusive relationship with its customers. Once a customer

purchases a pair of Toms he is automatically a Toms tribe member. According to the Toms

website, A Toms tribe member is someone who goes the extra mile for others in need, has

giving back woven into their DNA and shares inspiration in order to start a movement to create

positive change (One for One, 2016). By making the consumer feel involved in the

organizations mission, Toms continues to be a company that people respect. Further, Toms

encourages active involvement in the donation of shoes to children, inviting to participate in

Shoe Drops, where customers wanting to volunteer place shoes on the feet of children in

need (Barrter, 2012). Toms does not pay for the volunteers in regards to travel and food

expenses; rather, the participants are volunteering at their own will. Toms customers are so

devoted to the mission of the company that they are willing to essentially advertise the brand for
Analyzing Toms Corporate Social Responsibility Model 4

free, because they feel a sense of connectedness to the company. This feeling of inclusiveness

even relates to the way that Chief Shoe Giver Toms creator, Blake Myocskie, leads his

organization, as he does not call himself a CEO and is directly involved with donation of shoes,

instead of being in an office and leading from afar. As such, it is hard to imagine that a for profit

company would put the same effort into its customers as Toms has done. By not going public

and offering a chance for stakeholders to have a say in how Toms operates, Toms is able to focus

on its mission and goals. However, with Bain Capital recently purchasing a 50% stake in the

company, it has been suggested that aspects of Toms business model may be forced to change

and adapt in order to please Bain.

Toms Corporate Social Responsibility Model

Toms mission has not changed over the ten years it has been in existence, as it remains the

One for One model. For every pair of shoes purchased, another pair is donated to someone n

need. Even as Toms has expanded into different markets, including accessories, eyewear, and

coffee, the One for One business model has remained steadfast and is unlikely to change. Toms

has built its reputation around being a responsible company, and the One for One model

exemplifies said mission. Further, Toms has made itself known in popular culture for promoting

events such as One Day Without Shoes and World Sight Day. Toms markets itself as

responsible and its mission reflects that. On the Toms website, it is clearly stated that the

organization is a strong promoter of the Global Goals for Sustainable Development and is

committed to supporting the Global Goals to end extreme poverty in the next 15 years. The

Sustainable Development Goals, or SDGs, are promoted by the United Nations. On September

25, 2015, world leaders adopted the 2030 Agenda for Sustainable Development, which includes

a set of 17 Sustainable Development Goals to end poverty, fight inequality and injustice, and
Analyzing Toms Corporate Social Responsibility Model 5

tackle climate change by 2030 (SDGS, 2016). Many of the goals line up with Toms mission,

including universal clean water (for every bag of Toms coffee purchased, a week of sanitary

water is delivered to a person in need), decent work and economic growth (in 2014, Toms

committed to producing 1/3 of their Giving Shoes in regions where they are needed most), and

good health and well-being (Toms supports programs that aim to reduce maternal mortality and

end preventable newborn deaths) (Toms 2016). Toms is committed to being a responsible

corporation, and believes that it is possible to improve peoples lives through business. As such,

corporate responsibility provides focus on the environmental and social impacts of our products

and operations, responsible giving and employee life. Toms continues to fulfill this mission by

making their shoes with organic materials, ensuring their suppliers behave in an ethical manner,

and offering generous benefits to their employees (Toms, 2016). Further, leadership at Toms

does not operate in the traditional manner of employees blindly agreeing and following a leader.

Founder Blake Mycoskie makes an effort to lead by example and be a leader that his employees

can trust and believe. In his journal article on responsible leadership, author Thomas Maak

argues that todays leaders act in a global, complex, uncertain, and interconnected business

environment and that many challenges involve the need to reduce complexity and uncertainty

for people and provide a desirable picture of the picture, which is shared by the people they lead

(Maak, 2006). This sense of leadership is precisely what Mycoskie attempts and continues to do.

He has made it clear that his goal is for TOMs to be the most inspirational company in the world

and that he actively supports companies with similar missions. After receiving a large amount of

funds rom selling half of Toms to Bain, Mycoskie spent over $100 million investing in like-

minded companies, (Tetzeli, 2016), highlighting that he is committed to Toms mission and is not

solely in business for profits

Bain Capitals Relationship with Toms

However, one aspect of business that Toms has remained quiet on is the fact that Bain Capital

purchased 50% stake in the company in 2014. Bain Capital is a private equity firm with

approximately $75 billion in assets under management. Since 1984, Bain Capital pioneered a

consulting-based approach to private equity investing, partnering with management teams to

build great businesses and improve their operations (About Bain2016). When Bain became

involved with Toms, many lamented that Toms had sold out and would soon be focusing mainly

on corporate interests. Toms certainly had a lot to lose, as details from the sale estimated Toms

worth near the $600 million mark (De La Merced, 2014). However, Toms has expressed support

for its new partner, explaining that the inspiration for reaching out to Bain was to build the

companys impact globally. Blake Mycoskie stated that his dream is for Toms to be the most

influential and inspirational company in the world. And in order to do that, Toms needed to

bring in a deep-pocketed partner who could help take over the day-to-day management of the

company while helping it expand globally and into new business lines (De La Merced, 2014).

Toms has kept quiet about the sale, but notes that Mycoskie still has a 50 percent stake in the

company and his title as Chief Shoe Giver (as opposed to CEO) (De La Merced, 2014).

Though the sale happened only two years ago, Toms has continued to expand upon its mission of

eradicating poverty around the world. What needs to be paid attention to is the behavior of Bain

Capital. Unlike Toms, Bain is not interested in charitythey are 100% for profit and as Kyle

Stock noted in his article regarding the sale, private equity lives and dies by the exit, the point

at which firms eventually sell the company (Stock, 2014). For Toms, even if Bain Capital

claims to support their mission and philosophy, the fact that a corporate interest now holds such

a significant portion of the company means that Toms no longer only reports to itself.
Analyzing Toms Corporate Social Responsibility Model 7

Toms vs. BOBS by Sketchers

Although Toms did not invent the socially responsible business, it is responsible for starting

and initiating a trend of businesses donating a product for each product purchased. For every pair

of glasses purchased through Warby Parker, the company donates a pair of glasses to non-profits

across the world. Another notable example is Bobs, by Sketcher. At first glance, Bobs appears to

be an exact replica of Toms and for the most part, it is. When a consumer purchases a pair of

Bobs, another pair is donated to a child in need internationally. The packaging for the shoes even

looks similar to Toms (made from recycled material) and the shoes themselves are nearly

identical to Toms canvas style shoes. However, whereas Toms began from a humble beginning

Mycoskie had in Argentina, Sketchers seemingly created Bobs for marketing purposes

(Mainwaring, 2010). As a result, Bobs by Sketchers has not been nearly as successful as Toms.

Even though Bobs operates under the sample principle as Toms, Sketchers is a large corporation

with over 6,000 employees; further, Sketchers trades on the New York Stock Exchange.

Conversely, Toms is estimated to have around 100 employees and does not trade on any stock

exchange. Thus, Toms appears more socially responsible than Bobs. As a result, Bobs have been

subjected to large amounts of criticism. During the release of the Bobs campaign, Sketchers

quickly removed the promotion online because of the backlash. Bobs lack of success in

comparison to Toms begs the question of how corporations can appear to be socially responsible.

It would appear that Bobs is doing a public good and acting in a responsible manner. So why

have they not been given the same respect as Toms has? One explanation is that Sketchers acted

out a sense of duty to stakeholders, and not out of a sense of virtue. It is unlikely that Sketchers

launched Bobs out of the pure goodness of their heart. Rather, Sketchers witnessed the success

Toms enjoyed and wanted to join in. Sketchers realized that charitable capitalism sells. As a duty
Analyzing Toms Corporate Social Responsibility Model 8

to stakeholders, Sketchers has an obligation to continue to increase profits on a quarterly basis.

Unfortunately for Sketchers, the consumer easily saw past Sketchers efforts and Bobs have

largely been a dud and not nearly as influential as Toms. Mainwaring noted, consumers do not

respond to the how of what you do but the why. Thats because the why is emotional and

something they can connect to (Mainwaring, 2010). In a sense, Mainwarings definition is

essentially what socially responsible businesses are. Consumers view the organization as not a

business only in the market for profit, but rather to perform a public good. As such, this is where

Sketchers went wrong. Toms founded itself out of a sense of virtue, as well duty of a different

sort. Mycoskie first hand witnessed the need for impoverished children to have shoes, while

Sketchers saw a market it could expand into. Further, Mycoskie felt a duty to provide assistance

to those needing shoes. As for Sketchers, they received accusations of disingenuous social

concern (Mainwaring, 2010). Although Sketchers does donate a pair of shoes to a child in need,

the information of that practice is hidden, as Sketchers donates shoes to Soles4Souls, an outside

organization (Mainwaring, 2010). As a result, critics have accused Sketchers of abusing peoples

generosity for their own profit, which is no way to win a consumer base. Manuel Branco argues

in his journal article that many corporations are now realizing that even if CSR programs can

reduce the companys taxable income, companies are now affected by the new moral

marketplace factor, which is associated to an increased importance of perceived corporate

morality in choices made by consumers, investors and employees (Manuel, 2006). This idea

suggests that it is now becoming more of a risk to not participate in corporate social

responsibility initiatives, as consumers have decided that doing so is important in deciding if

they will support said company. Sketchers entrance into the one for one mission could be

interpreted as a financial move, or as a move designed to create and maintain consumer bases.
Analyzing Toms Corporate Social Responsibility Model 9

Analyzing the One for One Initiative

As noted above, Bobs nearly replicated the entire concept of Toms, down to the exact product.

But Blake Mycoskie said he did not mind people copying his idea, in fact, he hoped that others

would. The One for One business model has proved so successful because of its simplicityit

easier for consumers to know what they are purchasing and that when they buy a pair of Toms

shoes, someone in need will also receive a pair of shoes. Unlike the GAP Red Campaign, which

donates a percentage of profits to charity, the results of purchasing a pair of Toms shoes, are

tangible and easy to identify. Further, the One for One initiative essentially gives Toms free

advertising through the best way: word of mouth. This creates a sense of loyalty, which is of the

utmost importance to companies looking to remain relevant. As Andrew Park explains, studies

have long shown the importance of customer loyalty, as loyal customers are more likely to

repurchase products, pay more for products they are aware of and trust, and recommend the

brand to other potential customers. Further, because buy-one-give-one companies tap into

consumers personal passions, they are more likely to create lasting and deep relationships

(C.M., 2014). Further, Mycoskie does not feel that other companies replicating his business

model will hurt profits and feels that there is enough room in the market for companies to follow

the same business model. However, what makes Toms an interesting company, and different

from other companies that promote the One for One imitative, is that Toms corporate social

responsibility model is its business model. Unlike the majority of companies with prominent

CSR initiatives, such as how Starbucks works to make sure the coffee it imports is grown and

harvested in an ethical manner, Toms has no other mission besides its corporate social

responsibility model of One for One. Starbucks participates in its CSR mission because

consumers have grown to expect it; however, Starbucks was not created with the sole purpose of
Analyzing Toms Corporate Social Responsibility Model 10

improving the lives of those who produce its coffee. Conversely, Tom Mycoskie created Toms

with the intention of improving the lives of children by providing access to shoes. This

distinction is what differentiates Toms CSR from other organizations. Even Bobs by Sketcher,

which is the exact same premise as Toms by donating a pair of shoes for every pair of shoes

purchased, is merely a CSR and not the entire mission of the organization. Sketchers is a public

organization that responds to stockholders, unlike Toms. Toms earns its profits by rightfully

believing that people will buy into its mission. If people believe they can make a difference by

purchasing a pair of Toms shoes, TOMs continues to remain successful. Toms creates a loyal

customer base by making customers feel valued and like they are a part of the organization that

is making a difference and providing for those in need. And for over eleven years, Toms has

stood by this mission and continued to expand into other markets.

While the criticisms of Toms are not invisible, it can generally be agreed upon that Toms is

doing more harm than good. The founder of the company has personally spent over $100 million

in investing in new, up and coming companies that work to better the lives of people in

developing countries. Further, Toms is not a for-profit company; their sole purpose is their

corporate social responsibility: to improve lives through business. Blake Mycoskie founded

Toms because he felt that he could make a difference by providing shoes to those in need. In

other words, he felt a duty to others, which relates to the duty perspective. In duty ethics,

actions are judged on the intrinsic character of the act rather than on its effects (May, 2013).

Toms is criticized, but the intrinsic nature of the organization is to provide good. This idea

relates on all levels in the organization, as employees are encouraged and often participate in the

process of donating shoes and developing innovative ways to enhance the mission of Toms. In

order to fulfill this sense of duty Toms has towards people, it participates in multiple ethical
Analyzing Toms Corporate Social Responsibility Model 11

practices that help the company perform its mission. Toms mission aligns with its every day

organizations. The company culture fully supports the mission, which starts at the top. Chief

Shoe Giver Blake Mycoskie participates in donating shoes on a regular basis, and is open to

criticism. Further, Toms fosters an environment of participation, where employees are

encouraged to support their opinions. This participation enabled Toms to expand into other

markets and ventures, such as eyewear and coffee. Lastly, Toms is accountable to both itself and

to its consumers and critics. When critics said that Toms should focus on investing in the people

it donates its shoes to, Toms publicly made the commitment to manufacture its shoes by locals,

thus providing stable, safe employment. Toms very easily could have avoided critics and

continued to operate as it had, but by being open to criticism, Toms continues to grow and

expand.

Unlike many corporations who develop corporate social responsibility models as a side

project, Toms main project is the CSR initiative. And although Toms is not immune from

criticism, Toms is a socially responsible corporation. The company maintains its mission that

change can occur through business, and that business does only have to be about business.

Rather, an organization can exist as a way to make profits while also acting in a socially

responsible manner. Toms appears to be doing both, and is setting the way for other companies

to do the same. And while some may argue that Toms is not truly offering true change, their duty

is primarily to those who need help, not to stockholders, which is more than major corporations

can say.
Analyzing Toms Corporate Social Responsibility Model 12

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Analyzing Toms Corporate Social Responsibility Model 13

Tetzeli, R. (2016, November 01). Behind Toms Founder Blake Mycoskies Plan to Build an
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