In its latest report, SustainAbility, the Brooklyn, N.Y.-based think tank and strategic advisory firm, provides insight about a variety of earth-friendly business models that are profitable but also benefit people and the planet. Over the next few months, I’ll cover each of five unique business models, including: Social Innovation, Environmental Impact, Base of the Pyramid, Diverse Impact, and Financing Innovation. Each one can serve as a template or inspiration for a new and profitable paradigm.
Organizations focused on contributing to the greater social good are realizing that their deeds can also result in good business. Companies using this business model sell a specific good or service and designate a portion of the profits to buy and donate a similar product or service to those in need.
This kind of model provides consumers with an instant ability to “do good” and a personal boost by giving to a worthwhile cause. Generally focused on a strong brand story or theme, many fashion, accessories and home decor companies have built a loyal fan base using this model. I think many would agree that the shoe brand, Toms is the poster child here.
With its “One For One” mantra, consumers can purchase a pair of Toms (with an average price of $50) and the company will, in turn, donate a pair of its shoes to a good cause. Toms has been so successful that in 2013 the brand introduced a new site, The Marketplace, an online catalog of items from a variety of social entrepreneurs.
I was impressed by Yellow Leaf Hammocks, a mission-driven company founded by Rachel Connors and Joe Demin that sells colorful, handwoven hammocks made by hill tribe artisans including members of the Mlabri tribe (also known as the “People of the Yellow Leaves”) of northern Thailand. By supporting high-wage weaving jobs for these artisans who work from home year round, Yellow Leaf Hammocks has empowered them with an opportunity for a brighter future, but has also resulted in ancillary local economic opportunities such as the addition of a post office.
Connors and Demin shared some of the lessons they learned along the way.
“The idea for Yellow Leaf was born out of a belief in a better lifestyle,” says Connors. “Our motto is, ‘Do Good. Relax.’ Since neither of us had an e-commerce background, we faced some tough challenges early on. In retrospect, I wish that we had spent some more time at the very beginning interviewing our mentors and reading up on best practices in e-commerce,” she explains.
Many social entrepreneurs like Connors turn to organizations such as The Center for Science, Technology and Society at Santa Clara University for support. Mentors help social entrepreneurs build their businesses, often by teaching them how to overcome obstacles that range from government antipathy and a dearth of distribution channels to a lack of talented human capital. These are radically different than the challenges they have faced in their Silicon Valley careers.
“We were so new to the space that we didn’t even have a marketing budget,” says Demin. “So, we built our business based on the power of social media, spurred on by our fan base’s repeat business and referrals. We have also been diligent about promoting any media coverage we’ve received in publications such as Elle Décor, Forbes and Martha Stewart Living by featuring it on our site and all of our social platforms,” he adds. “We enlist our fans to help spread the word, too.”
“It’s exciting that consumers are increasingly savvy about social enterprise but, it’s important to be authentic, transparent and true to your brand values,’ Connors continues. “It is great to see that people can shop their values and purchase a product that has a positive impact – especially when it is also something they love that is beautiful and luxurious. If you are working to make the world a better place, we find that people are excited to work with you to amplify your message.”
If you know and love other organizations using the social innovation business model, please share them in the comments below.