Summative Case Study 2
Ethics in the Workplace
Tom's of Maine: Doing Good while Doing Business
Tom's of Maine represents one of the first natural health care companies to distribute their product beyond the normal channels of health food stores. While it continues to grow, the owners, Tom and Katie Chappell, continue to emphasize the values that got them started over 28 years ago. The question becomes, can a small firm stay true to its founding principles and continue to grow in a fiercely competitive environment?
For its first 15 years, Tom's of Maine looked a lot like many other new businesses. It was started in 1970 by Tom and Katie Chappell, two people with an idea they believed in and felt others would also buy into, and financed by a small loan. Like many business startups, the company's first product was not successful. Its phosphate-free detergent was environmentally friendly but, according to founder Tom Chappell, "it didn't clean so well." Consumers did appear to be interested in "green" or environmentally friendly products, however, and the fledgling company's next products, toothpaste and soap, were more successful.
All Tom's of Maine products were made with all-natural ingredients and packaged using recycled materials whenever possible. New personal care products, including shampoo and deodorant, were developed while avoiding the controversial practice of animal testing. This refusal caused Tom's to wait seven years and shell out about 10 times the usual sum to get the American Dental Association's seal of approval for its fluoride toothpastes.
In 1992, Tom's deodorant accounted for 25 percent of its business. Chappell reformulated the product for ecological reasons (replacing petroleum with vegetable glycerin), but the new formulation "magnified the human bacteria that cause odor" in half its customers. After much agonizing, Chappell ordered the deodorant taken off the shelves at a cost of $400,000, or 30 percent of the firm's projected profits for the year. Dissatisfied consumers were sent refunds or the new product, along with a letter of apology.
Tom's of Maine recovered from this experience, but founder Tom Chappell was not happy. The company's products were a success in health food stores, and Chappell was beginning to think in terms of national distribution. He had hired a team of marketing people who had experience at major companies. At the same time, he felt that something was missing; he was "tired of creating new brands and making money."
One pivotal event was the introduction of a baking soda toothpaste. The product was gritty and didn't have the sweet flavor typical of commercial toothpastes, and the marketing manager told Chappell, "In all candor I don't know how we're going to sell it." Chappell insisted that the product be test marketed. It proved to be a best seller and was quickly copied by Arm and Hammer and Proctor and Gamble. It also appeared that a new product's sales potential had become more important to the company than the qualities of the product itself. "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?" As a result of this line of thinking in the fall of 1986, the successful businessman Tom Chappell entered Harvard Divinity School.
The years that Chappell spent as a part-time student at the Divinity School brought him to 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 explained. He realized that his company was his ministry. "I'm here to succeed. But there's a qualifier. It's not to succeed at all costs, it's to succeed according to my principles.
One tangible result was a mission statement for the...
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