1 to 1 models: are they a social business?

By Stephen King, Founder at SocialBusiness.org

Popularized by Tom Shoes, the 1 to 1 business model is when the consumer buys 1, the company gives 1 to those in need for free. This has become more and more popular over the last few years for any product or service within the price range of $20-100. The likely first version of this was the Aravind eye institute, who has being giving cataract eye surgery for paying customers through one door, and the same surgery for free through another – they have been doing this for over 40 years.

The business model is popular in part because of the elegant in its simplicity. For the entrepreneur it is very easy to understand the concept, write your business plan and even now point to successful examples to more easily secure funding. It is also a great story to attract talented employees, that might just work for less than the equivalent job at another similar product company. The marketing is also very straightforward and compelling; buy one of these, and I will give one to someone who cannot afford them. If the product is of the same quality, and about the same price, then you will convert consumers. This has been true of the Fair Trade coffee movement in the past, get the products to be the same priced with equal quality and the consumer will switch over to the more socially minded product.

It all sounds good, and these companies are doing great work. But are they really a social business? Is this not the same as giving away some of your profits to charity? What happened if Dell computers gave 1 computer away for every computer bought to someone disadvantaged?

The definition of social business is widely contested; let’s make an assumption that it is about the company doing something that is socially and environmentally beneficial and continues to do this through earning revenue by operating its service or selling its product. If we use that as the basis, does it qualify? The business helps people without shoes, get shoes – that is good. It does it in a sustainable manner through earned revenue from selling a pair to other people. You could ask where are the materials sourced from, and whether this is an environmentally damaging company, although that is covered at least by TOM’s shoes. Sounds pretty good to me, in particular because as long as TOM continues to sell shoes to customers, we know another customer will get a pair; and I also like how easy it is for me to audit whether or not the company is keeping to its promise of doing good. My belief is that the 1 to 1 model is a social business, the concept of giving a free ‘1’ away with the buying of ‘1’ is intrinsic to the business model.

And this then takes us back to doing this on a larger scale, and the case of Dell computers. Large companies are having a really tough time lately, as they are not seen to be able to achieve any good, and if they try we are generally suspicious. If Dell or any of these large companies started doing what TOM’s shoes is doing the world would be a much better place. Alongside of the remarkable amount of technology that would now be in the hands of those that could not afford it, I am positive that Dell would learn a lot about how to innovate in order to deliver on this promise. Imagine a computer company that could really give one away every time you bought one, that would be a remarkable offering that would grab the market.

We need to focus on the improvement from where we are currently and then look to critique constructively on how we can move forward. If more people were to buy TOM’s shoes the world would be better. And in the long-term it might be even better for the recipients of TOM’S shoes to be in a position to afford their own shoes, as they would have a job and are able to take care of themselves. A pair of shoes helps in many ways, and they are hugely valued, although it is not boosting the local economy in the same way that jobs can support independence and reduce the need to rely on aid. This is the longer-term goal, and we will get there, with 1:1 companies now in many markets around the world.

2 thoughts on “1 to 1 models: are they a social business?

  1. Hi Stephen, thanks for bringing a bit more critical light on the TOMS case. Here are some more critical opinions about this model with which I agree.

    http://goodintents.org/in-kind-donations/toms-shoes
    http://www.good.is/post/the-toms-shoe-model-meaning-or-marketing/

    In my opinion, the 1to1 model (let’s stay with TOMS) is either a social business or a sustainable business. First of all it is a Cause Related Business – few years ago we had a big boom for cause related marketing now we have a big run (with the 1to1 model) on CRB.

    First of all TOMS is just giving away something for people in need, but is not empowering the people to actually do something for them self – if this would be a truly Social Enterprise it would go further and actually empower the people in need to be an entrepreneur – give them the right skills to actually do the shoes by them self and start their own businesses. TOMS could do this with some licencing or educational programs. Right now it is just passive giving without empowering – and everything driven by the western consumer. Yes, still consumer and not user (see the circular economy http://www.youtube.com/watch?feature=player_embedded&v=zCRKvDyyHmI ) – we face a big resources problem with 3 billion people joining the global community till 2050 – the question is, if TOMS wants to be truly a Sustainable Business – how is it going to decouple its shoe production form the use of resources and how environmentally friendly is actually the manufacturing process and the distribution of these shoes?

    To sum it up – TOMS is a good move to the right direction, but there is a lot of work to be done. I would suggest that the TOMS business model needs more innovation, which could lead to a truly sustainable business.

  2. Thanks Sebastian, very thoughtful comments and thanks for the additional links.

    I believe your last paragraph sums it up perfectly, I could not agree more. TOMS is filling a current gap, people without shoes, and that is good. To be great, these shoes need to be made local to where they are distributed and need to push further on the environmental standards of production.

    The movement of 1:1 models is growing, and the world will be better for this growth, as TOMS was a leader to popularise the first stage of the model, we look forward to seeing them continue to improve on this model to become fully sustainable.

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