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December 12, 2017
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How much good is the TOMS buy-one-give-one scheme really doing? Source: fastcoexist.com.

Your latest online purchase arrives in a box at your doorstep. Opening it, you find a pair of shoes tucked away inside a canvas bag, along with a healthy helping of warm-and-fuzzy, do-gooder feelings. Yes, you've just bought yourself some TOMS alpargatas and, at the same time, supplied an equally adorable pair to a foreign child in need. Instant gratification.

It's no surprise that this buy-one-give-one (BOGO) business model is becoming just about as fashionable as the TOMS shoes themselves. The concept is simple: companies sell and simultaneously donate everything from blankets to flash lights and eyeglasses. Meanwhile, already altruistic customers get the pleasure of receiving while also giving, and those less charitably inclined might be more inspired to make the crossover. Everyone feels good, including - hopefully - the children who now own a much-needed pair of shoes, eyeglasses or what have you.

On the surface, it would seem the risks of this benevolent business approach should be few. Apart from simply clothing those in need, donations like those given by TOMS serve to ward off diseases and even make it easier for children to be admitted at schools often requiring shoes. But the road gets a little rockier when one considers whether the well-intentioned freebies truly lead to a better, long-term future for those in need.

Source: fashionwindows.net.

"If you don't buy it, you don't value it," says Stuart Coulson, a Silicon Valley investor, about free handouts in an interview with the Pacific Standard. The devaluation of donated items may very well be the root of other unintended side effects, contributing to what some say is a cycle of dependency. Not only will recipients potentially come to expect the items, but they may also see no benefit in starting their own businesses. Worse, their entrepreneurial spirits may be squashed altogether.

"Rather, what they learn at a very early age, is that in order to make good money, they should learn to speak English incredibly well and then maybe, just maybe, they can get a job driving for an NGO," observes R. Todd Johnson, a renewable energy lawyer, upon completing his seventh trip to Ethiopia. He goes as far to suggest that, "the NGO economy is killing entrepreneurship."

TOMS, on the other hand, sees it from a different perspective, asserting the hope that TOMS' donations create demand within developing communities. Explains Chief Giving Officer Sebastian Fries in an interview with the New York Times: "We hope the local shoe industry will take this up and start selling shoes." But this argument assumes that people will break the cycle of dependency. Not only that, it would also require that the community's economic situation improves such that people can actually afford to buy those shoes in the first place.

Dependency, demand, whatever the outcome, the ambiguity of it all emphasises the importance of not just throwing shoes at a problem but rather solving it from the ground up. According to Greg Dees, Professor of Social Entrepreneurship at Duke University, in speaking with the New York Times: "The act of giving is fine when there are temporary needs to be met, but we need to get around to finding out what the underlying problems are." 

Dependency, demand, whatever the outcome, the ambiguity of it all emphasises the importance of not just throwing shoes at a problem but rather solving it from the ground up.

How to give effectively, and over an extended period of time, is certainly a challenge faced by all those who give - BOGOs and non-BOGOs alike - whether we choose to confront it or not. Oscar Wilde, in his 1891 essay, The Soul of Man under Socialism, even claimed that, "with admirable, though misdirected intentions, they [people] very seriously and very sentimentally set themselves to the task of remedying the evils that they see. But their remedies do not cure the disease: they merely prolong it. Indeed, their remedies are part of the disease." A dreary and perhaps extreme assessment, but maybe there is some truth in it.

Dr. Jim Patell might be inclined to agree with Wilde. Only a couple of years ago, he started teaching a course called Entrepreneurial Design for Extreme Affordability at the Stanford Graduate School of Business. The course focuses on innovating in developing countries, and how both recipient communities and outside businesses can benefit. The program works around "bottom of the pyramid marketing," a term coined by late management specialist C.K. Prahalad in his book of the same name, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. He says in the book: "What is needed is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win-win scenarios where the poor are actively engaged and, at the same time, the companies providing products and services to them are profitable."

Not surprisingly, the benefits to Prahalad's approach are manifold. In developing a closer relationship and even working with the receiving communities, many charity-related flaws are mitigated. From ensuring the product is actually functional in each environment, to not stepping on the toes of already existing businesses, literally walking in the footsteps of the poor can serve as an effective approach to determining sustainable solutions.

So you're thinking: if there's an across-the-board problem with giving free handouts in general, then why all the fuss just about BOGOs? The trouble is that businesses utilising this model not only capitalise on consumers' altruism but, by default, must cater to it. Devoting attention to the paying customer means less diligent focus on the other customers - those in need.

Children with an Alive & Kicking football.
Source: theball.tv.

One company believes it has found a giving-and-selling sweet spot, however. Alive & Kicking, which produces footballs "made in Africa, by Africa, for Africa," claims they employ a "hybrid of trade and aid" and, in doing so, addresses naysayers' doubts related to the new business approach. Says the company's Program Manager Robbie Barkell, "[Our] model is different. Our [foot]balls are hand-stitched…in the region we operate, by local people being paid a fair wage. This simple difference, which many donors do not immediately grasp, is integral to demonstrating how BOGO can be used effectively."

Beyond this, by producing in-region, development of locally appropriate items becomes more feasible. For example, while Alive & Kicking sells plastic balls suitable for urban school yards, its factories in Africa produce leather versions durable enough to withstand sweltering summers in the sandy desert. TOMS, on the other hand, produces one model of shoe, and only in Ethiopia, Argentina and China, while giving to some 40 developing countries.

To TOMS' credit, in the same recent New York Times article, Fries affirmed that the company is not only looking into manufacturing in more of the countries which they serve, but also distributing different models and styles depending on context. This is surely a step in the right direction. 

There's no doubt that this increasingly popular buy-one-give-one strategy is an admirable endeavour, benefiting businesses, consumers and the disadvantaged alike. Even Hillary Clinton thinks so - she presented TOMS with the Award for Corporate Excellence in 2009, commending them for the positive role they've played abroad. Not too shabby. But, perhaps all this BOGO brouhaha is a reminder that the business model du jour is indeed just that - a business. And for that reason, buyer - rather giver - beware.

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