Featured Review: The TOMS Effect

Photo Credit: Ariel Waldman

In 2006, the TOMS shoe company radically disrupted the for-profit business model, literally for good. In challenging what a money-making company could do with its earnings, TOMS incorporated a giving component within its business model, making giving intrinsic to each sale. For every pair of shoes sold, another pair would be given away to a child in need. Giving thus became ‘good business’ at both levels: in making money and in helping kids.

Elizabeth Ferszt’s book The TOMS Effect is a study that explains and explores this phenomenon, through TOMS company history, as well as through major corporations like Walgreens, Walmart, and Nestle, as well as smaller companies and start-ups.

TOMS founder Blake Mycoskie was the epitome of counter-culture CEO; his goal to ‘start something that matters’ has been proven in terms of business sense (he is worth $300 million) and the TOMS effect has influenced the behavior of consumers, as well as young entrepreneurs and established corporations.

Kent Grayson, Associate Professor of Marketing at Northwestern University, recently reviewed the study. You can read his comments below:

This book is a must-read for any manager aiming to start a corporate social responsibility effort, as well as any entrepreneur seeking to launch a company with social responsibility as part of its mission. Many people are well aware of TOMS, a shoe company that donates a pair of shoes to a needy child for every pair of shoes sold. But why did the TOMS model do so well? How easily can it be adapted by other businesses in other categories? Under what conditions might it fail?

To answer these questions, this book takes a deep dive into the TOMS business model. Using a wide range of short and punchy case studies, the author examines exactly what makes the model tick and diagnoses the successes and failures of firms that have applied their own version of the model in a variety of industries and categories. The author also helpfully situates the TOMS business historically, identifying key progenitors whose business models preceded and foreshadowed the TOMS approach.

Readers will come away with a clear understanding of how the “one-for-one” business model works, what elements of the model can (and can’t) be adjusted, and how the model can be applied to future business ideas and ventures. [It is a] great book for those interested in understanding the opportunities and tensions that arise when making corporate social responsibility a core element of strategy.

The author of the book Elizabeth Ferszt is an Instructor in the English Department and Writing Programs and at the W.P. Carey School of Business at Arizona State University. She also teaches writing in the summer as an LEO Lecturer at the University of Michigan, Ann Arbor. She holds an MA in English from the University of South Carolina, Columbia, and a PhD in English from Wayne State University, Detroit, USA.

Our thanks go to Kent Grayson for the review and for allowing us to reprint it. To read an extract from the book or to purchase a copy, you can visit it at our website.

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