summary for this artcile :key theme, major findings, and key implications

Harvard 10 JANUARY-FEBRUARY 2016 REPRINT R 1601A Business Review The Founder of TOMS on Reimagining the Company's Mission The Idea: Mycoskie realized that a desire to sustain hyper- growth had pushed the company away from its mission So he took a sabbatical to figure out the future of TOMS and his role in it. The improbable result was an expansion into coffee. by Blake MycoskieFOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG HOWIDID IT THE FOUNDER OF TOMS ON REIMAGINING THE COMPANY'S MISSION by Blake Mycoskie The Idea Mycoskie realized that a desire to sustain hypergrowth had pushed the company away from its mission. So he took a sabbatical to figure KENDRICK BRINSON out the future of TOMS and his role in it. The improbable result was an expansion into coffee.HOW I DID IT n the fall of 2012 I did something The Company's Genesis term from Eric Ries's The Lean Startup, I never thought I'd do: Itook a I got the idea for TOMS on something our first shoes were a "minimum vi- sabbatical from TOMS. Itwas not | like a sabbatical. After founding and able product." They had glue stains on your typical travel-the-world sabbati- selling several companies (a door-to- them, were in Argentine rather than cal. My wife, Heather, and I moved door laundry business, an outdoor ad- U.S. sizes, and didn't always fit the to Austin, Texas, where I'd grown up, vertising company, an online driver's same from pair to pair; but they were and I used the physical and psycho- education service) and making a brief just good enough to test the concept logical separation from the company detour into reality TV (I competed on among my friends in Los Angeles. My to do some soul-searching The Amazing Race with my sister and goal was to sell 250 pairs so that I could In the six years since I'd founded created an all-reality cable channel), give away 250 pairs in Argentina. TOMS, it had grown from a start-up I decided to take some time off in 2006 Back home, I hosted a dinner based in my Venice, California, apart- to learn to play polo in Argentina. I party for some women friends to get ment to a global company with more know that sounds like a strange mix of their advice. They loved the shoes than $300 million in revenue. I still pursuits, but I've always been happiest and were even more excited when I owned 100% of it, and we were still chasing my latest interest. shared my vision of helping children delivering onourpromise to give a pair While in Buenos Aires, I met a in need. They suggested a number of of shoes to someone in need for every woman who worked for a nonprofit, localboutiques that might serve as re- pair sold, but Ifelt disillusioned. My delivering shoes to children in poor tail outlets, so I went to one of them, days were monotonous, and Ihad lost rural areas. She invited me to accom- American Rag, and asked to speak my connection to many of the execu- pany her, and the experience was with the shoe buyer. I knew my shoes tives who were running daily opera- truly life-changing. In every town we couldn't compete on quality or price tions. What had once been my reason were greeted with cheers and tears. I alone, so I told the buyerwhy I wanted for being now felt like a job. met apairofbrothers, ages 10 and 12, to sell them and give them away. The During my months away, I did a lot who had been sharing a single pair storebecameourfirst retail account. of thinking about my personal "why." of adult-size shoes. Because the local On a Saturday morning soon after I knew why I had started the com- schools requiredfootwear, they had to that, I woke up to find my BlackBerry pany, and why people joined me in take turns going to class. Their mother vibrating. At the time, the TOMS web the early days. And I still believed in wept when I handed her shoes that site was set to e-mail my phone every our mission and the impact we were actually fit her boys' feet. I couldn't time we made a sale. Usually it was making. But I was no longer sure why believe that such a simple act could just family and friends placing orders, I wanted-or even if I did want-to have such an enormous impact on and the occasional buzzing was a nice continue driving the business forward. people's lives surprise. But on this day the phone Eventually I came to a surprising I decided to do something more. kept buzzing... and buzzing...and conclusion: I felt lost because TOMS Rather than go home and ask my buzzing. Atbrunch I started flipping had become more focused on process friends to donate their hand-me- through the Los Angeles Times and than on purpose. We were concentrat downs or make financial contribu- saw that what I'd expected would be ing so hard on the "what" and "how" tions, I would start a for-profit com- a short piece by its fashion writer on of scaling up that we'd forgotten our pany basedon the buy-one, give-one TOMS had landed on the front page overarching mission, which is to use idea. I named it Shoes for Tomorrow of the Calendar section. By the end business to improve lives. That is our latershortened to Tomorrow's Shoes, of the day we had sold 2,200 pairs of greatest competitive advantage: It al- and finally to TOM S so that the name shoes. This was incredible-but it was lows us to build an emotional bond would fit on the little tag on our shoes. also the company's first supply-chain with customers and motivate employ- (To this day, some people are puzzled management challenge. We had fewer ees, because they know they are shop- when they meet me, because they're than 200 pairs in my apartment. ping and working for a movement expecting a guy named Tom.) Over the next six months I worked bigger than themselves. My polo instructor, Alejo, and I with a team of interns to turn my After my time away from the busi- persuaded a local shoemaker to help "shoe project" into a real company. ness, I returned with renewed energy. us make a more fashionable version of We received a flood of additional My mission was clear: Make TOMS |the alpargata, a canvas shoe worn by press from Vogue, People, Time, movement again. Argentines for a century. To borrow a Elle. Soon celebrities such as TobeyFOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG CHOES THA entrepreneur friends, and business and non- TOMS THIS BAG profit leaders I admire. PROVIDES MASTING CO. WATER I traveled to confer- ences around the coun- try to learn from experts in social enterprise and international development It was during this time that I read Simon Sinek's fantas- tic book Start with Why, which Maguire, Keira Knightley, and Scarlett Johansson were being photographed TOMS Giving insisting that we im- looks at leaders who inspire Since Its Founding plement processes and action, such as Dr. Martin Luther wearing TOMS. Nordstrom insisted on systems similar to those King Jr., and companies that create carrying our shoes. By the end of the used at theirprevious companies. As products so compelling that fans will summer we had sold 10,000 pairs. The 50M "why" of TOMS was clearly resonating PAIRS OF SHOES an organization, we were so focused line up to buy them, such as Apple. on protecting what we'd already built Sinek argues that one can build and Disillusionment 250K that no one was thinking about new sustain these movements only when possibilities. I noticed that longtime leading with the "why." People fol- By 2011 TOMShad an annual growth WEEKS OF rate (forfive years running) of 300% SAFE WATER employees were starting to leave for low you, buy from you, when they more-entrepreneurial organizations, believe what you believe. and we'd recently given away our 10 millionth pair of shoes. Theone-for- 360K and I realized that, secretly, I wanted The more I thought about this one model-initially dismissed by PAIRS OF to follow them. idea, the more I realized that TOMS traditional businesspeople as nice GLASSES OR I'dstarted and sold companies be- had veered away from its "why." In MEDICAL fore-butTOM Swas different. Itwas the early days we always led with our but not financially sustainable-was TREATMENTS TO clearly a success, and we'd decided to RESTORE SIGHT more than a company to me: It was story: We weren't selling shoes; we my life. So this period of uncertainty were selling the promise that each extend it to eyewear, giving away pair felt likehavingproblems in a marriage. purchase would directly and tangibly of glasses or medical treatments to re- You thought you'd found your busi- benefit a child who needed shoes. But store sight for pairs sold. We had set ness soul mate, but you're not in love our desire to sustain the company's ourselves apart in other ways, too: A anymore. What do you do? Forme, the hypergrowth had pushed us away third of our revenue was coming from sabbaticalwas likegoing into couples from that mission and into compet- direct-to-consumer sales via our web- counseling. I wasn't walking away; I ing on the "what" and "how,"just as site, and we spent virtually nothing on wasputting in the work to see if TOMS every other shoe company does. In an traditional advertising, relying instead and I could reconcile. If it had been a effort to meet aggressive sales goals, on our 5 million social media followers pure businessproblem, Iwouldhave we had begun promoting deals and to create word-of-mouth buzz. organized a strategic offsite. But this discounts on our website-something In September 2012 Heather and I was both corporate and personal. I we'd never done before. Our market- got married. I'd brought in an expe needed to figureout the future course ing increasingly felt product-focused rienced team of executives to man- of the company and my role in it. And rather than purpose-focused. And as age the day-to-day operations, and I tend to do my best thinking alone. the leader of TOMS, I was ultimately for the first time since founding the When I left for Austin, I was care- accountable forthose mistakes. That business, I felt I could take a break ful not to make a big deal of it-I told was a tough pill to swallow. from it. I was relieved, but also deeply people the break was an extended Another breakthrough came unsettled. The excitement and cama- honeymoon with Heather. But once during a Dallas Cowboys game. I COURTESY OF TOMS raderieofourstart-up wasbeginning there, I dedicated a lot of time to pri- was introduced to a man named to be replaced by a more hierarchi- vate contemplation. I also started talk- Joe Ford, who told me that his son, cal culture. The leadership team was ing to anyone I thought might offer Scott, was also using business to im- bogged down in personality conflicts good advice and inspire me. I spoke | prove lives, but through the coffee and bickering, with key members regularly with my executive coach, | trade in Rwanda. Joe explained theHOW I DID IT FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG importance of water in the coffee sup- time for my sabbatical to end. We'd I decided to meet with private equity ply chain. When beans are processed just bought a house, and we had a firms that had a track record of help with clean as opposed to dirty water, great group of friends, but in early ing entrepreneurial companies into they are transformed from a com- 2013 she said to me, "Blake, we need the next stage of growth, and after a modity to a specialty and can be sold to move back to L.A." If I was going to thorough search, I sold 50% of TOMS at dramatically higher prices. Scott's fully recommit to TOMS, it couldn't to Bain Capital in mid-2014. We clearly company, Westrock Coffee, was help- happen from afar defined my role and responsibilities ng Rwandan growers build commu- and agreed to hire a world-class CEO. nity-owned washing stations to in The Reentry The man we found, Jim Alling , crease the value of their product and Coming back was great, but I quickly embodies the core values of TOMS. to prevent the spread of waterborne made some of the classic mistakes Although he scratched his head a bit disease. It was also buying direct from that founders do upon rejoining their over the "coffee decision" (he spent growers, helping to break up unfair companies. First, when Ioutlined my much of his career in senior roles at industry price controls, and offering vision forusing the coffee business to low-interest loans as an alternative to reinspire the "why" of TOMS, I did so those from predatory lenders. Best of without a fully thought-out plan. That The new product allowed all, Westrock was a profitable business made some of my coworkers anxious. employees to think bigger, that sold fantastic coffee. Second, I asked the company's CMO After meeting Scott, I realized that to step down so that I could take over challenge the status quo, and a TOMS coffee venture could have a brand marketing and communica- reconnect with our mission. real impact-and maybe lift me out of tions, which I considered to be key the funk I was in. Like mostentrepre- pieces of our new direction-not only Starbucks), he understood what the neurs, I get a high from starting things for integrating the new business but move represented. Creating TOMS and doing the unexpected. No one also for reigniting the passion of our Roasting wasn't an attempt to com doubted our shoe business anymore, customers. But I quickly realizedthat pete with big chains but, rather, abold but few people would imagine that I'm better in the founder's role-set- move to reengage with the commu we could also sell coffee. And the ex- ting the vision and traveling the coun nity and help more people. Over the pansion could pave the way for a new try to communicate it, not running pastyearJimhas broughtgreat stabil- TOM Sretail experience, something I marketing or anyother department. ity and strategic thinking to the busi had long wanted to try. We could cre- Despite these hiccups, by the end ness. We now also sell bags, to fund ate cafes and use them as community of 2013 we had launched the coffee safe births for mothers and babies gathering places to share ideas, get business nationally in Whole Foods in need, and backpacks, to support inspired, and connect guests with the stores, opened up three of our own anti-bullying programs. why" of TOMS. The vision-and the cafes, and started exploring interna As TOMS approaches its 10th an- challenge-pumped new life into me. tional expansion. To date we have niversary, I feel more energized and I told our senior executives about provided morethan175,oooweeksof committed than ever. As far as we've my idea. Like TOMS Shoes, TOMS clean drinking water to people in need come, I still see tremendous oppor Roasting would have a one-for-one around the world. The new product tunities to grow our movement. The model: For every bag of coffee we sold, generated a ton of PR and got our "why" of TOMS-using business to we would provide a week's worth customers excited about TOMS again improve lives-is bigger than myself, of water to a person in need. When But most important, I believe, it gave the shoes we sell, or any future prod they gave me the green light, I quickly our employees permission to think ucts we might launch. It took going assembled a small team of TOMS bigger, to challenge the status quo, on a sabbatical to realize the power of employees to get the project (code- and to reconnect with the mission what we've created-and the best way named "Burlap") off the ground. Iwas of the business. for me to move it forward. Now that still living in Austin, but the more I It also got me thinking bigger. I re- I have a clear purpose and amazing discussed myplans with Heather (an alized that my ultimate aim was to cre- partners supporting me, I'm ready for early TOMS employee who knew the ate the most influential, inspirational the company's next 10 years and the business-and me-better than most company in the world, which would many adventures ahead. people), the more she realized it was be possible only with more help. HBR ReprintR 1601A