Thank you for the article and for providing insight into how Goodwill actually creates value! I love their business model and the social impact that the organization strives to create. One of the nonprofits that I was involved with back in Mexico (a healthcare nonprofit) had some conversations with Goodwill about the possibility of partnering with them in order to become self-sustainable. In other words, this Mexican nonprofit would operate Goodwill stores in Mexico so that a % of the contributions would be used to fund their operations and depend less on declining donations. Two obstacles prevented them from going forth with the partnership: 1) the Mexican informal apparel market – which happens in the street and needs little real estate – already provides a place for donors to give their clothes and for future users to purchase them at even lower prices than Goodwill 2) as one organization whose business model was geared towards outpatient healthcare it would be extremely difficult to operate the number of stores they needed in order to break even.
I did think, however, that in theory this represented a very interesting value proposition and I wonder how Goodwill may be able to leverage its knowledge and capabilities in the future to help other growth stage nonprofits with their funding needs.
I loved this post!! It was very interesting to learn how a creative company like Pixar also has to think about linking their operating model to their business strategy. I wonder how their rules and processes change once it’s time to create the movie (vs come up with the idea) – does the same creative, high-risk, high-reward environment prevail during movie production, when attention to detail is paramount?
Great article Steve! I have always admired Trader Joe’s business model – not only for what you described above but also because (willingly or unwillingly) they seem to have a focus on healthier and less processed foods. I assume that in the future years they will begin to face stronger competition and wonder to what extent they will strive to keep their higher margins through vertical integration – and how, if at all, they can leverage their current operating model to do that.
Thanks for your comment! They have to comply with the $3 per meal that the meal refund programs mandate; so they’re explicitly targeting lower income school (although they do have products catered for higher income – which subsidize school meals)