#22 5 Ways the one-for-one model can not suck

 
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Otherwise known as the “buy-one-give-one” model, 1-for-1 got crazy popular with the launch of TOMS shoes – and along with that popularity came the controversy.

Before we get to the controversy, let’s look at this business model because it is - on the surface – a pretty cool way to integrate social impact into a for profit business: For every unit (shoe) a customer buys, a unit is given away to someone in need. The cost of the unit given away is covered by the margins gained from the unit sold. The donated product can be written off by the company as a true donation.

This is a particularly awesome B2C (business to customer, or businesses who sell directly to consumers versus to other businesses) model because consumers, increasingly, are willing to pay premiums for goods and services that drive social and environmental impact, and the one-for-one model creates really salient impact for each individual consumer from a marketing perspective.

If you haven’t already studied this, here’s what’s problematic: First, when TOMS gives shoes away to some community, it puts the local cobbler out of business. Even if he or she wasn’t able to keep up with demand, now TOMS has come and said “here are some free shoes,” so nobody wants to pay money for the cobbler’s shoes anymore. This isn’t just hypothetical, it’s very real and is emblematic of a larger problem of western countries giving things to developing economies - it seems great until it totally disrupts local economic development for the worse.

Second, shoes? Yes, they’re important. But so is healthcare, clean water, education, gender equity, and other big f***ing problems. So let’s say TOMS donates 1,000 pairs of shoes, and the cost of donation is $10,000 (I’m making this up for illustrative purposes). Would this community and would experts in economic development have recommended this $10K get spent on shoes? Who knows, but it’s worth asking.

TOMS, since it got slammed with criticism in the mid 2000s, has taken big steps to up its game. It now partners with local shoemakers and cobblers, among other things. And it’s been, willingly or not, a great case study for other one-for-one models out there.

What are the lessons learned?

  1. Do empathetic and immersive research: While I’m very glad effective altruism had its moment and seems to no longer be in the social impact hot seat, it’s still way more impactful to immerse and research a community before giving it things. I don’t even mean crazy PhD stats nerd research; just go out and talk to people. Seriously - if you pat yourself on the back for “donating” without actually asking communities and individuals what they want, well . . . stop. Remember your wedding registry and how annoyed you got when people went off registry? It’s kind of the same when it comes to philanthropy. Communities, not donors know best. Researchers may know second best but only if they talk to communities.

  2. If you learn that funding vaccines is the most impactful use of your money but you sell makeup and want to donate makeup, fine, just be honest and intentional: I don’t know how to say this more succinctly. I think it’s totally fine to not always donate to the area of greatest need, especially if your one-for-one model is part of a marketing strategy (which is also fine) and your customers are not going to be as jazzed about donating to vaccines (which is also fine). Just PLEASE make sure you’re not screwing over a local makeup maker (metaphorically speaking).

  3. Consider ties to actual social impact: Shoes, or makeup, or even vaccines in and of themselves aren’t impactful. Health, gender equity, and economic opportunity are. Donating shoes? Great - figure out how those are helping reduce diseases, or enable people to go to and have employment. Donating makeup (I’m stretching this analogy you guys)? Awesome - figure out if and how it’s making women (and, hey, men!?) more confident for job interviews. If you can’t figure out how to measure this stuff, I strongly encourage you to get my signature download as it touches on my approach to impact metrics. If you’re not driving change with actual impact, figure out how you can.

  4. Consider new business (in addition to marketing) models: What if, instead of partnering with local shoemakers in its donation campaign, TOMS actually moved its manufacturing operations to developing countries and employed local shoemakers permanently in creating its core product? At fair wages, with ethical labor practice? That’d be pretty badass, and more sustainable in its impact; if budgets get tight for TOMS now it can always cut its “give one” part of the equation for another marketing play, but when impact is integrated into the core of the business, it’s no longer an optional cost center but rather an integral revenue generator.

  5. Find someone who knows more than you do and partner: Warby Parker also has a one-for-one model, but in the US, rather than directly giving people glasses (which is a huge cluster, as that needs to somehow involve a doctor who can assess Rx), Warby Parker partners with government programs such as the Department of Education in New York or Department of Health in Baltimore to provide glasses to school age children screened under government programs. In the rest of its work, it partners with VisionSpring, who knows the impacty work way better than Warby Parker does. Warby Parker totally admits this; there’s some humility there, and humility is a really smart thing in the social impact world.

At the end of the day, consider who your one-for-one model is serving most: your company’s bottom line or the community you’re giving to? If it’s the former, take the five steps above to reconsider.

Sources
1. https://www.nielsen.com/us/en/insights/reports/2015/the-sustainability-imperative.html
2. http://content.time.com/time/world/article/0%2C8599%2C1987628%2C00.html
3. https://ssir.org/articles/entry/the_elitist_philanthropy_of_so_called_effective_altruism


 
Business StrategyHannah Gay