Toms Shoes: The Big Business of Being Good

Bad boys are no longer in style, and it looks like being good is the new black. Many companies are now incorporating feel good, do good deeds directly into the culture of their business models. It’s not an afterthought. It’s the core foundation built right into the structure of the business from the get-go. Businesses obviously have been “giving back” for years – that’s not new. But what is new is the trend of making the giving back itself the business model, in some cases superseding the importance of product that is being sold. This is called Social Entrepreneurship.

Deeds that were once left in the hands of the non-profit sector, now have spread their wings and landed in the for-profit arena. Some savvy entrepreneurs are now realizing that harnessing the power of doing good can make for a nice profit, an undeniably positive brand image, a loyal customer base, unlimited PR opportunities, and last but not least, charity.

Companies like Terracycle and GotBooks.com are following this basic model, but one company that seems to be mastering it is Toms Shoes. Toms is a company founded by Blake Mycoskie in 2006. Blake is in the business of making and selling shoes, but ironically, the product that his company produces and sells is secondary to what his company does.

While traveling on a polo vacation in Argentina, he noticed that the impoverished village adjacent to the polo field was filled with children who were all running around barefoot. Because these children did not have shoes, they were not allowed to attend school and they were susceptible to various diseases that could be picked up from the ground. On his way flying back home from his vacation, Blake decided that he would start a company that would make shoes, sell shoes and give one pair away to needy children for every pair sold. He calls it the “One for One Movement.” This is all very good. He is doing a good thing by helping needy children, I will definitely not argue with that. But don’t forget, he is in the business of making money too.

I’ve been in the shoe business, so I have a pretty good sense about the cost of shoes. Toms Shoes retail for $48. Knowing approximately what shoes of this type would cost to manufacture, I would estimate that in a typical retail scenario, these shoes should retail for about 1/2 of what Toms is charging. These are basic shoes, known as alpargatas or espadrilles. They are simply constructed out of inexpensive materials by low cost labor in Argentina, China and Ethiopia. There are other similarly constructed shoes on the market selling for about $20 – $24.

My point is that Toms charges about twice what would be expected for a shoe of this type in order for the consumer to pay for the additional pair that Toms gives away. Toms is technically giving shoes away, but seems to be passing on the cost of giving them away to the consumer, and even making a profit on the giveaway pair as well. The consumer really is the benefactor in this scenario, not Toms. Another way to look at it is that rather than Toms selling one pair and giving one away, the consumer is paying for two pair and getting one, so Toms can give a pair away at no cost to the company, and at a nice profit. Toms has also set up a non-profit wing of the company, not for the manufacturing of the shoes, but for soliciting and managing volunteers to distribute the shoes to the needy. The giveaway shoes are paid for by the consumer and distributed to the needy by volunteers. Toms Shoes is a for-profit business, so it seems to me that the distribution of the shoes should be paid for out of Toms’ pocket, not by the donated time of volunteers.

It’s a marketing thing, really. He’s doing some good, helping people, making a nice profit, and making consumers feel good by knowing they are helping shoeless children, and in turn doing some serious brand building. It is a win-win situation for everyone as long as the consumer doesn’t mind footing the bill for what Toms markets to be their own generosity. Don’t get me wrong, I have no problem with a business making a profit at all, and donating goods or services to the needy is absolutely a good thing, but Toms should acknowledge their consumers more directly as partners in their business model and in their generosity, rather than taking the sole credit for the giving. Blake does refer to himself as the Chief Shoe Giver, but it’s Toms’ consumers who are making the sacrifice out of their wallets, not him.

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Who Is Afraid Of The Big Bad Lawyer?

lonewolf
There was a recent discussion on Copyblogger, about the importance of spreading the word when you have an idea. The point of the article basically was that instead of hoarding your great ideas in a file on your computer, you should share them with anyone who will listen to spread the word. An argument arose when I piped in that BEFORE you let anyone in on your idea (assuming it is in actuality, a great one) you should protect it with a patent application, a trademark, a copyright, or at least a nondisclosure agreement. It quickly became clear to me that that the distrust of lawyers is so strong in some people that they would rather risk making their ideas vulnerable to thieves out in the marketplace than trust a lawyer to protect them. I am going to put myself out on a limb here and jump on the lawyers bandwagon for a change and suggest that exposing your ideas without any protection is a dangerous road to travel. I know, I’ve been there.

I have a great deal of gratitude to and respect for several lawyers that I have had the pleasure to work with. In my previous business venture, which involved products with unique patentable features, trademarkable names and slogans, and numerous negotiations and contracts, our company would have been left extremely vulnerable had we had not protected the IP assets that we created. On more than one occasion, the legal protection that we had the wherewithal to put in place thwarted would-be thieves.

Intellectual property is a key asset that adds tremendous value to a company’s worth. Protecting it, therefore can be essential to a company’s success or failure. Here’s why:

Try getting backers to invest in your company if you don’t hold or own trademarks or patents on the products that you produce or on your business model. A business that holds intellectual property is a much more enticing investment proposition than a business that doesn’t hold any IP.

Try attempting to confront another company that is knocking off your idea without any IP ownership. There is nothing worse than having a unique idea, watching it being ripped off, and having no legal recourse to prevent or remedy it, because you neglected to protect it.

Try selling something that is not unique in the marketplace.The lack of proper IP protection also has the potential to devalue your brand in the consumer’s eye. Having a patentable idea which turns into a unique product is a lot easier to sell in the marketplace than something that offers no innovation. Holding a patent or trademark on something instantly adds value because it says that your product, business method, name, idea, or slogan was unique enough to achieve protection. Innovation sells.

Try pitching your idea to an existing business to invite collaboration or licensing. Most reputable businesses don’t want to hear your ideas unless they are protected for fear that they might already have something in their pipeline that is similar. Other not-so-reputable businesses are on the lookout for eager suckers who will unwittingly hand over their ideas. Invent it, protect it, then go talk to people. (A great movie on this subject is Flash of Genius)

I am a true believer and practitioner of the power of word of mouth marketing, creative collaboration and brainstorming, but I always proceed with caution before letting the cat out of the bag. I fear potential thievery in marketplace (and spiders) much more than I fear lawyers.

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Does An Idea Have Value?

brightideaA similar question was recently posed in an online discussion. Some people answered this question quickly by saying that ideas are worth absolutely nothing until someone puts money down on the table for them. I wholeheartedly disagree. Value is not just about dollars and cents. Value can be about potential – for change, innovation, meaning, emotion, function, or design. Even in the context of business, these elements, especially in today’s economy are the keys to business success. It’s the businesses that understand that, the ones that have the intuition and sense to see and believe in that potential, that will be the ones that move on to create the future in business world.

In Daniel Pink’s book, A Whole New Mind, he states his theory that right brainers will rule the future in business. Pink argues that outsourcing (finding manufacturing overseas for cheaper production) and automation and computerization (replacing the information based knowledge workers) are forcing the Information Age to give way to a new Conceptual Age that values creativity, innovation and inventiveness. Ironically, it’s those intangible things like ideas that cannot be replicated or automated, that will give a business its greatest value.

Every business starts with an idea. It can be an epiphany that wakes you up in the middle of the night. It can be inspired by something you see or hear. It can be born from a desire to try to do something better than how it’s been done before, or to invent something that never existed before. But how do you know when an idea is just an idea or when that spark is something that has potential to be big and worth turning it into a business? Oftentimes, that’s where the strength of the conceptual side of the brain kicks in. Studies, focus groups, and market research can play a role, but if an idea is so innovative that there’s nothing to compare it to, then research results may not reflect an idea’s full potential for success. Likewise, if a business relies too heavily on consumer input, especially with a highly innovative idea, the results may be the same. Consumers know what they have seen before. They are not innovators, they are consumers.

In the early 1970’s Xerox created the Alto, considered by many to be the first PC for desktop use. Unfortunately for Xerox, they lacked the vision to see the full potential and the ability to innovate quickly enough to bring it to market.

They were left in the dust when in 1979 Apple Computer’s Steve Jobs visited Xerox and was said to have taken inspiration from their innovation and in turn incorporated similar technologies into the MacIntosh. So when answering the question of the value of an idea, just ask yourself what that idea was worth to Apple. The rest is history.

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Butter Your Bread With Innovation

breadnbutterThere often comes a time during the life of a company when the need for a new product smacks them in the face.  Maybe their current product line has reached the natural end of its life cycle and it’s time for an infusion of something new. Or maybe they are seeking to expand into a new market. This is when a fork in the road appears, and what path is taken can determine whether a company succeeds or fails.

Some brands choose the path of building their product line by shopping around and purchasing products already on the market for inspiration or in many cases, to directly knock off. Some brands, for fear of scaring existing customers away or because of insecurity, rely too heavily on focus groups, consumer input and data to determine product direction. Although keeping a finger on the pulse of the competition and consumers is important, it shouldn’t necessarily be used to dictate the direction of a new product. But there are other, perhaps braver brands that choose to take the path of innovation. These are the brands that most often end up being the leaders and the trend setters.

Originality and innovation are what makes a brand shine. True innovators are creatives who are always looking, not necessarily just at what the competition is doing, or listening only to what their existing customers are saying, but they are looking and listening to what the world in general is doing and saying across many industries and platforms. They are the ones who often do things in spite of what the competition is doing, rather than because of what the competition is doing. And if the formula is right, that innovation is what can turn into a company’s bread and butter.

A lack of innovation most often happens when companies get too big and cumbersome or overly secure and complacent or are too new and insecure. A lack of innovation happens when companies depend too much on data and focus groups or what the competition is doing rather than on what a truly talented creative team can invent. It also comes when the desire for what may seem like guaranteed money supersedes the desire for great product. But ironically, if you have great a product, the money will come and that great new product could turn into the new bread and butter for the company. Innovation doesn’t come from looking at what’s flying off the shelves today, it comes from an ability to imagine what will fly off the shelves tomorrow. Innovation doesn’t generally come from consumers. Consumers know what they have seen, what they have used, what they have bought before. They generally don’t imagine what doesn’t exist yet. That is where designers, inventors and visionaries come in. Innovative product and strong brand identity come from creativity, inventiveness, perception and innate intuition and bravery about what direction to go in or what to create.

The most successful companies are the ones that are able to strike that magic balance between maintaining a core product that sustains them (which had its roots in innovation) and being willing to take the greater risk that comes along with breaking the mold. Valuing and putting faith in the importance and abilities of a talented creative team can be the ticket to a brand’s long term success.

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How To Stand Out Like A Genius In A Crowd Of Clowns (literally)

I saw this amazing video and it made me think about what it means to stand out from the crowd.Take a couple of minutes to view this to the end and read on…

Here is a guy who juggles. Big deal, a juggler, right? I can go to Faneuil Hall in downtown Boston on any given day and see jugglers juggling while telling jokes, dressed in silly clown outfits, on a unicycle, or while standing on someone’s shoulders. But when I saw this guy juggling, I was amazed and riveted because I was seeing it done in a way that I have never seen it before. This juggler takes it and makes it his own. He, I would say, is a juggling artist. It’s part juggling, part dance, part performance, part conducting, but it’s all passion.You can see it on his face. The guy is lost in what he is doing because he loves what he is doing.

Here’s a quick recipe for standing out from a crowd of clowns:

1. Do something you are passionate about.

2. Mix in some innovation and originality.

3. Add a dash of artistry and smarts.

4. Leave out any artificial ingredients.

5. Mix well and serve.

I’d love to hear from you about what you do and how you try to stand out from the others…

(By the way, the juggler is Chris Bliss)

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Are You a Thought Leader or a Thought Follower?

photo by Cheryl Andonian

photo by Cheryl Andonian

For anyone who spends any amount of time working online, it doesn’t take long to realize that there is a social media elite, the who’s who of bloggers and social media mavens that many in the blogosphere turn to for direction, instruction and advice.  I have spent countless hours reading what some of the go-to people have to say, and much of it has been extremely useful. I have learned a lot and have had the opportunity to put in my two cents through comments on their blogs, and well as writing my own commentary on my blog.  The so-called “thought leaders” of social media have quite a flock that follows their every word.

I do find that the term “thought leader” a little disturbing, with somewhat Orwellian undertones.  To me, it implies that there is an inner circle that needs to lead all others in how they should or shouldn’t think. Experience can produce knowledge, but sometimes it can also produce a closed mindedness and a sense of ownership and entitlement. I would suggest that what others outside of the elite circle can bring to the table is innovation.  Sometimes those that don’t have as much experience or that are coming in from the outside have the ability to view things with open eyes. They don’t have those preconceived notions about what should or shouldn’t be done. Those that have set the rules and would like to let all others know what those rules are and how they should be followed should listen a little more carefully to what outsiders or lesser-experienced people have to say.  The so-called thought leaders may feel like social media methodology is their baby, but the baby eventually grows up and starts dating.

This applies to any field, not just social media.  I got into a discussion with my son’s teacher last year, and I was trying to make a point to get him to look at something in a different light than what he was used to.  His response to me was “I’ve been doing this for thirty years.”  And that was that, discussion over. That statement was enough of an explanation for him to me as to why he didn’t have to listen to my perspective. Well, thirty years ago, teaching was different, school was different and kids were different. We have to be able to keep our minds open to listen to those who may be from outside, but may be able to offer a fresh outlook or a new way of doing things that could be just as valid (or more) as a well worn methodology.   An outsider’s view can sometimes shed new light onto something that otherwise, if you are too close, you cannot even see.

Social media is a relatively new concept.  It is ever-changing and evolving rapidly.  The rules, technology and methods change and mutate.  Read what others have to say, whether they are the “thought leaders” or not, insiders or not. Take what you can use or relate to and discard the rest (or even better, throw in your own comments), but don’t discount or accept anyone’s opinion based on his or her popularity, name recognition, or subscriber or follower count.  Don’t always take the safest route; let your own brain be your thought leader.

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Brand Building: Innovate or Stay the Same?

450_heinz_largeIndependent thinkers and creatives always seem to be going against the current. Great new ideas can be hard to come by, but having the courage to implement those ideas or knowing when not to implement them is even harder. Creativity is the lifeblood of innovation and innovation is the lifeblood to longevity of a business.  I don’t mean to suggest that the only successful companies are on the cutting edge of innovation; sometimes innovation is accomplished in very subtle ways.

Heinz ketchup, for instance, has been the same since 1869, and just recently dared to change their label with the bold move of taking the pickle off and putting a tomato in its place.  They did take a questionable turn at a fork in the road when, back in 2000, they added green, purple and blue ketchup to their lineup. Although it was reported that it initially gave a boost to sales, as it turned out, consumers apparently decided that ketchup should be red. Heinz figured out that they had something good as it was: tasty, reliable, recognizable, and yes, red.  Aside from dropping the pickle and adding squeeze bottles, the branding and the product has virtually remained the same, undeniably Heinz Ketchup. In a strange and ironic way, Heinz is innovative in their lack of innovation.  They have decided to innovate by not changing.

Innovation can’t happen without a few brave souls who have natural intuition, vision, creativity and courage to do things that haven’t been proven first, nor can it happen without those traditionalists on the other end of the spectrum who are strong enough in their convictions to stand up to those who are screaming “change” when they know that it’s not a good thing for their brand.

Obviously, some industries require constant innovation to remain competitive and some don’t, but whether you are a machete wielding creative maverick, always cutting new paths through uncharted territory, or a tried and true purist with a deep knowledge and belief in maintaining a strong legacy through consistency, or someone who falls somewhere in the middle of the spectrum, just make sure that you always remain true to your your brand. Ego and inflexibility can be equally dangerous to progress. Innovate by creation or by staying the same, because both schools have their place. It’s just all in the knowing.

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