Understanding Social Enterprise: TOMS vs. Nisolo

11 · 15 · 16

november-15th-blogWith the advent of the concept of social enterprise came many new models for business aimed at social good. One such model was the One-for-One model of TOMS Shoes, which gained international acclaim for its commitment to donating a pair of shoes to a child in a developing country for every pair of shoes bought from their store. I doubt I need to spend much time explaining how successful this campaign was, as TOMS drew major attention worldwide from people wanting to do good and help those in need.

While good-hearted, TOMS drew intense criticism a few years after its inception for the impact that was created in these rural communities they set out to help. There was backlash against their model of “imposed charity,” in which they dropped off a commodity that was not asked for and ultimately wrecked a lot of local economic growth.

One of the most important things we can do in social enterprise is to establish business models that create financial return while stimulating positive social and environmental impact. This triple bottom line is a difficult balance but ultimately creates the most lasting changes in the global community. TOMS showed us the movement that can be sparked around good marketing and the motivation to help others, even if not ultimately sustainable for those it seeks to help. We have seen since the popularity of TOMS the rise of several other models of social enterprise, one of which being Nisolo, a shoe company that sources high quality leather goods from Peruvian manufacturers. There are a few key differences between the models of TOMS and Nisolo that are important for anyone looking to establish a social enterprise, and we want to share three key takeaways with you.

Developing countries need access to global markets, not international philanthropic efforts. Nisolo realized their role in business was not to bring items to those in Peru who experienced poverty, but to connect their local artisans and entrepreneurs to a competitive global market. They had the industry and expertise to craft high-quality goods, but were cut off from a larger market in which to sell their shoes. The TOMS model operates in the opposite way, bringing shoes and items that create competition and the demise of local businesses. We learn a lot about sustainable impact from the model of Nisolo, who channels its energies and revenues into spurring Peruvian business owners and bridging the gap between their product and the international market.

Nisolo experienced the needs and problems within Peruvian communities before beginning their work. This is core to the practices of human-centered design work, and displays that social enterprise must first start with a problem that demands to be addressed. In contrast, TOMS desired to help those in need, thinking that what they needed were shoes. What they didn’t know was that more than shoes, these communities needed jobs, education, and simple healthcare like clean water and sustainable agriculture. Listening to community needs before creating solutions is crucial for social enterprises looking to promote lasting change. 

Good marketing must promote a good idea. Nisolo has crafted a company that shares the story of high-quality Peruvian leather goods with customers looking to shop ethically and buy items that will last. This can be traced back through the entire supply chain of Nisolo, offering a trail of impact that connects artisan to shoe-wearer. While TOMS told a compelling story, it was unable to show the evidence of impact in its manufacturing or methods of charity. This ultimately created distrust in the organization and caused TOMS to lose their reputation as a social business within the impact entrepreneurship space.

We can learn a lot from the models of social enterprise that have found success and continue to emerge today. It is worthwhile to seek out and share the stories of companies looking to promote ultimate transparency and authenticity in their practices and methodology. If you have a story to share or a question about defining a social enterprise, leave a comment below or reach out to us on our contact page!

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