Don’t get confused between philanthropy and marketing, says Peter Knight
A good-looking young serial entrepreneur from Texas called Blake Mycoskie started a canvas shoe company in 2006 with a great unique selling point. For every one of his Toms canvas shoes sold, he promised to give a pair to a barefoot urchin in the developing world. You may have a pair of Toms in your closet because consumers have really bought his story and his product.
Overnight, Blake moved from being a serial entrepreneur to a social entrepreneur. Gone were the earlier enterprises of laundry delivery, billboard sites and online driving instruction. Blake became what he calls himself on Facebook: Founder and Chief Shoe Giver at Toms.
The success of Toms, the deification of Blake on the business and gossip blogs, and the current infatuation with social entrepreneurship highlights the disturbing blurring of corporate philanthropy and marketing.
I think we should be worried about it. A whole generation is growing up in the belief that conventional businesses – those that don’t give away their products – have no greater social purpose, which is clearly wrong.
There is nothing to dislike about the Toms model other than the cloying whiff of self-satisfaction that rises from its publicity. What is more disturbing is the argument, enthusiastically promoted by Blake and other social entrepreneurs, that every business should use the Toms model. In other words, business has no social purpose unless every chief executive becomes a Chief Giver.
You can imagine it now. Paul Polman of Unilever has to schedule his Surf-giving trips to poor countries (Bangladesh, Britain…) to avoid bumping into Bob McDonald of P&G on his Tide drops.
Muhtar Kent from Coke and Pepsi’s Indra Nooyi will be competing to give away gallons of some hydration product least likely to cause offence to the native politicians. I’m not sure what Jeff Immelt of GE will give away, but there are plenty of shoeless urchins in southern Africa who would love a jet engine to help them drive the foot-driven playground water pump that some other Chief Giver foisted on them.
In the good old days, business found a social need to fill – energy, bicycles, candles, whatever – and tried to make a profit from fulfilling it. After distributing the profits to investors, the chairman’s wife (aka Chief Giver) chose the recipient of the company’s philanthropy. Displaying civic duty helped build loyalty in the community where the employees lived and improved the status of executives as community benefactors.
Globalisation has made a mockery of old-style philanthropy. Most large manufacturing companies in the US probably employ more people abroad than they do at home. Yet their giving remains focused on what used to be the company’s home town, rather than their “local” communities, which are now in Beijing or maybe Bangalore.
Furthermore, pure philanthropy – as a social service and civic duty – has been ousted by “strategic” philanthropy. This is where you link your giving very closely to your corporate mission to maximise the commercial kickback from the giving.
So, instead of sponsoring the local philharmonic, you head in the direction of the Toms business model: buy this pair and we will match your purchase with a donation of another pair to a poor person.
This giving has nothing to do with meeting social needs, it’s a device to sell more stuff. It is unadulterated marketing.
There is absolutely nothing wrong with marketing. But let us not call it giving. What Warren Buffett and Bill Gates are asking the super-rich to do is philanthropy – giving without expecting a kickback.
Strategic philanthropy and much of what is called social entrepreneurship is quite simply cause marketing. Blake should rename his position: Chief Cause Marketer.
We are about to see an explosion of cause marketing as business begins to grab the opportunities presented by social movements – groups of like-minded people networked via social media.
The drugs industry already uses this system when it supports patient groups clustered around a specific disease. Marketers are about to spread the net to include the promotion of green technologies, such as electric cars.
The infatuation with the Toms model (and fans include the Wall Street Journal), combined with corporate exploitation of social movements, are harbingers of a blurry future where consumers will find it difficult to tell if they are giving, getting or just being manipulated.
Let’s just call a shoe a shoe.