Doing Good by Making Toothpaste
The founders of Tom's of Maine, makers of personal-care products, strive to rebuild rapid growth rates and stay true to their mission
KENNEBUNK, MAINE — TOM'S of Maine set out in the early 1970s to produce a different kind of toothpaste - free of saccharin and other chemical additives and infused with natural flavorings. That goal has been amply realized, with annual sales of more than $16 million and a line of products that ranges from toothpaste to mouthwash to shaving cream.
But company founders Tom and Kate Chappell were never content with the mechanics of manufacturing and marketing ``natural'' personal-care products. They also wanted to develop a new brand of capitalism, one imbued with a concern for others and for the environment.
Relaxing in his corner office, where you're as likely to find books on theology as on management, Mr. Chappell fields the inevitable question: How can you be hard-nosed in business and a campaigner for ``goodness'' at the same time?
``It depends on your aim, your attitude. We're in business to serve,'' says the tall, bespectacled company namesake. ``There's a difference between that and taking.''
Chappell argues that the job of running a profitmaking business is not an either/or issue when it comes to values. ``It takes skill, competence, efficiency, focus, and discipline,'' Chappell says. ``It also takes caring, tolerance, patience, honesty, and an intention to do good.''
``Intentional goodness'' is a recurrent theme with Chappell, both in conversation and in his book, ``The Soul of a Business: Managing for Profit and the Common Good,'' published by Bantam Books last fall. The phrase is a two-word summary of the ``mission statement'' visitors see posted around the Tom's of Maine corporate headquarters on the third floor of a renovated mill building in downtown Kennebunk.
The ``mission'' includes making high-quality products, nurturing community life, respecting employees, and caring for the environment - ideals the Chappells have long held. But a formally stated mission took hold only after Tom Chappell enrolled part-time at Harvard Divinity School in the late 1980s, eventually earning a master's degee in theological studies.
``Competence'' is a new addition to the company's statement of beliefs. Its exaltation springs more from tough business experience than overriding philosophy. From a bottom-line perspective, the last year was not a banner one. After averaging sales growth of 20 percent for a number of years, 1993 was flat.
The firm's annual report acknowledges some mistakes, such as the premature marketing of a new vegetable glycerin-based deodorant, which resulted in a product return and exchange for customers unhappy with the new item and a consequent loss of $400,000.
Last year was a time of ``resizing, in which several managers had to leave,'' Chappell says. It was also a time when the company's management may have gotten a little too cerebral, the president admits. He grimly sums up the year's lessons: ``We found, basically, that we were beginning to lose sight of the fact we're entrepreneurs, innovative. We take risks.
``Instead, in my quest for further empowerment and interdependence, I feel that I was building hierarchies of analysis, indecisiveness, and circular thinking. That hurt in the development of new products, in marketing, in a number of ways.''
But reclaiming the company's entrepreneurial roots won't mean downplaying the ``mission.'' At Tom's, values and products go hand in hand, says Glenn Rudberg, whose work as brand manager involves marketing and advertising strategy.
The company has substantially raised its advertising budget in recent months to include spreads in major newspapers and TV spots on CNN. The ads highlight not only the natural ingredients that are the firm's hallmark, but the commitment to good works, too.
``It's not just what we make, but what we believe,'' Mr. Rudberg says. The idea, he says, is to ask prospective customers, ``If you share our beliefs, why are you still using the same old toothpaste?''
Rudberg says the ad campaign has shown results, with the company's share of the toothpaste market in Boston rising a point to 4.4 percent, and in San Francisco going up to 3.4 percent. That represents thousands more customers in the $1.3 billion national market for toothpaste, Rudberg points out.
He sees potential sales growth in the Pacific Northwest and the Rocky Mountain states too. King Supermarkets, the largest grocery chain in the Denver area, recently agreed to carry Tom's of Maine products.
A secret ingredient
The new products area is commanded primarily by Kate Chappell, an accomplished watercolorist who applies her creative talents to product lines as well. On the drawing board are a ``completely new'' gel toothpaste that will have an ``exciting'' flavor (natural mint extracts plus a top-secret new ingredient), a new kind of stick deodorant, and, possibly, a return to soap products, which Tom's had dropped early in its evolution.
Innovation at the company applies as much to packaging as to products. Mrs. Chappell recalls with pride the challenges encountered in switching to glass roll-on containers, so deodorant re-fills could be used, and the move to recyclable shampoo bottles made from old milk cartons. Such choices show mission-driven management at work.
But ``management'' is a word Tom Chappell isn't completely at home with, at least with its traditional connotation of top-down authority. ``We do everything we can to flatten the hierarchy, so turfs are blurred and teams are interdepartmental,'' he says.
On the other hand, the hard-nosed side of this chief executive can kick in, steering back toward what the people at Tom's of Maine call the ``middle road.'' ``The company is not a church,'' asserts Chappell. ``It's a vulnerable entity in an unforgiving marketplace.''
And managers, he concedes, are there to ``sustain our viability in that marketplace.''