Tom’s of Maine: “Doing Business” Means “Doing Good” Tom’s of Maine was one of the first natural health care companies to distribute outside normal channels. The company holds fast to the values that got owners Tom and Kate Chappell started more than three decades ago, providing insight into how a small firm can grow while staying true to its founding principles in the midst of competition. Now that Tom’s has been sold to Colgate, one wonders if those principles can be sustained in a large corporate environment. Getting Tom’s of Maine Going
Tom and Kate Chappell, dreaming of a line of all-natural, environmentally friendly household products, started Tom’s of Maine in 1970. The company’s first product, a phosphate-free detergent, was environmentally friendly, Tom Chappell says, but “it didn’t clean so well. ” But consumers were interested in environmentally friendly products – and the toothpaste and soap that followed were more successful. All of Tom’s products were made with all-natural ingredients and packaged in recycled materials whenever possible.
New personal care products, including shampoo and deodorant, were developed without animal testing. But the road to success wasn’t always direct or fast. Tom’s stand against “business as usual” made the company wait seven years longer and spend about ten times the usual sum to get the American Dental Association’s seal of approval for its fluoride toothpastes. And mistakes were made. At a time when deodorant made up 25 percent of the business, Chappell reformulated the product for ecological reasons.
Later, he realized that the new formulation “magnified the human bacteria that cause odor” in half its users. After much agonizing, Chappell took the product from his shelves at a cost of $400,000, 30 percent of the firm’s projected profits for the year. Dissatisfied consumers were sent refunds and a letter of apology. One pivotal event was the introduction of baking soda toothpaste. The gritty product had none of the sweetness of commercial toothpastes, and the marketing manager told Chappell, “In all candor, I don’t know how we’re going to sell it. Tom insisted that the product be test-marketed. It became a best-seller and was quickly copied by Arm and Hammer and Procter & Gamble. As the company moved from experience to experience it gained strength and customers, but Tom was still unhappy, saying he was tired of simply “creating new brands and making money. ” He felt that something was missing. It seemed to him that sales potential was becoming more important than product quality. “We were working for the numbers, and we got the numbers.
But I was confused by success, unhappy with success,” said Chappell. He later wrote, “I had made a real go of something I’d started. What more could I do in life except make more money? Where was the purpose and direction for the rest of my life? Following this line of thinking, Tom Chappell entered Harvard Divinity School. Sharpening the Company’s Focus The years that Chappell spent as a part-time divinity student gave him a new understanding of his role. “For the first time in my career, I had the language I needed to debate my bean-counters. He realized that his company was his ministry: ”I’m here to succeed … according to my principles. ” Tom’s new mission statement reflected both business aspiration and social responsibility, spelling out guiding values for the company that included natural ingredients and high quality. It talked of respecting employees by providing meaningful work, as well as fair pay.
Concern for the community and the world required that Tom’s of Maine “be a profitable and successful company, while acting in a socially responsible manner. The company began donating 10 percent of pretax profits to charities – from arts organizations and environmental groups to curbside recycling programs – and supported the Rainforest Alliance. Tom’s also urged its employees to work with charitable causes and allowed them to donate 5 percent of their work time to volunteer activities. Employees enthusiastically took advantage of the opportunity – when one employee began teaching art classes for emotionally disturbed children, nearly all the employees got involved. Others worked in soup kitchens and homeless shelters.
The volunteer program required other employees to cover for absent volunteers for an equivalent of 20 days each month, but Colleen Myers, vice president of community life, called volunteer activities valuable to the company as well as the community. “After spending a few hours at a soup kitchen or a shelter, you’re happy to have a job. It’s a morale booster, and better morale translates pretty directly into better productivity. ” Sometimes the company benefited even more directly: “The woman who headed up those art classes – she discovered she’s a heck of a project manager. We found that out, too. Not all employee benefits were strictly psychological.
The company offered flexible four-day scheduling and subsidized day care, designing even coffee breaks with employee preference in mind. Individual employees were helped to earn high school equivalency degrees and to develop skills required for new positions. Even as product distribution expanded nationwide, Tom’s marketing efforts remained low-key, according to Katie Shisler, vice president of marketing. “We just tell them our story,” she said. “We tell them why we have such a loyal base of consumers who vote with their dollars every day.
A number of trade accounts appreciate our social responsibility. ” Tom Chappell agreed: “We’re selling a lot more than toothpaste; we’re selling a point of view – that nature is worth protecting. ” He stuck by those notions even in face of increased competition. Tom’s prices were similar to those of national competitors for baking soda toothpaste, but 20-40 percent higher for deodorant and mouthwash. But Tom, unworried, believed that “that’s not the way you’re going to get market share – you’re going to get it by being who you are. ” He explained his philosophy: “If we try to act like commodities, act like a toothpaste, we give up our souls.
Instead, we have to be peculiarly authentic in everything we do. When you start doing that, customers are very aware of your difference,” says Tom. “And they like the difference. ” Selling the Company In 2006 Tom’s of Maine entered into what Tom and Kate called a “partnership” with a global conglomerate, the Colgate-Palmolive Company. For approximately $100 million dollars – or 84 percent of outstanding shares – they sold the company and retained a minority interest, with Tom staying on as CEO of Tom’s of Maine as a free-standing division of Colgate.
The Chappells stated in a letter to employees and stakeholders that “after much soul-searching, and many conversations with our children and trusted advisors, we realized that we cannot meet this growing demand alone. We decided to seek a partner to help us. It’s been a quest that we entered with trepidation and excitement because we wanted to find a company that would honor our values, and we were unwavering in our commitment to stay intact in Maine as Tom’s of Maine. ” Afterward, Chappell compared Colgate to a big Tom’s of Maine: “I find that we have more in common than we have differences.
They have an organization run by human beings, and they’re very capable, savvy, and caring human beings. ” Tom’s Future: A Different Kind of Company? Tom’s of Maine stresses the “common good” in everything and is passionately concerned about corporate, customer, product, community, environmental, and employee wellness. The firm uses the services of a wellness advisory council, provides wellness education, and practices stewardship by using natural, sustainable, and responsible ingredients, products, and packaging.
In “doing well by doing good,” Tom’s has also been recognized as an exemplar for “common good” capitalism. In order to pass his knowledge on to others, Tom Chappell has authored two books – The Soul of a Business: Managing for Profit and the Common Good and Managing Upside Down: Seven Intentions for Values Centered Leadership. He also created the Saltwater Institute, a nonprofit organization providing training in the Seven Intentions: 1. Connect with goodness. Non-work discussions with an upbeat spin usually draw people to common ground, away from hierarchical titles. . Know thyself, be thyself. Discovering and tapping people’s passions, gifts, and strengths generates creative energy. 3. Envision your destiny. The company is better served if its efforts are steered by strengths, instead of following market whims. 4. Seek counsel. The journey is long, and assistance from others is absolutely necessary. 5. Venture out. The success of any business hinges on pushing value-enhanced products into the market. 6. Assess. Any idea must be regularly reviewed, and refined if necessary. 7. Pass it on.
Since developing and incorporating values is a trial-and-error process, sharing ideas and soliciting feedback allows for future growth. Tom’s of Maine achieved financial success while following its principles. But will the acquisition by a large, profit-seeking corporation make it hard to hold fast to those principles in the future? Will Tom’s reputation for commitment to the environment and ethical behavior be threatened in the large corporate environment, or can a little company from the Northeast teach a cosmetics giant a thing or two about corporate responsibility?
DISCUSSION QUESTIONS Does the Tom’s of Maine experience prove that one can “do business with principles,” or are there business realities that make it hard for others to copy this principled management model? What examples and incidents from this brief history of Tom’s of Maine illustrate how the personal ethics and values of founders can positively influence a firm and its culture as it deals with the challenges of start-up and growth?
What are the biggest threats that Tom’s faces in its new life within Colgate’s global corporate structure, and especially with respect to maintaining what Tom and Kate call “the character, spirit, and values of our company”? FURTHER RESEARCH-Find news items reporting on what has happened at Tom’s of Maine since being purchased by Colgate. Has the firm been able to operate with the ethics and independence that Tom and Kate had hoped for? Is the company starting to lose its way now that it’s part of a global corporate giant? Filename: tomofmaine-10e. doc