Walking the Walk

And as his pitch to McDonald's shows, Swartz also sees service as a powerful differentiator for Timberland with its current and potential customers. To celebrate its 30th anniversary, Foot Locker, one of Timberland's largest retailers, invited its top-five shoe brands to a huge leadership conference in October 2004. Each brand tried to top the other: Reebok, for example, brought spokesperson and rapper 50 Cent. Timberland brought Swartz and a group of young people spending a year with City Year.

And Timberland's anniversary gift to a key retailer? About 15 Foot Locker employees were invited to help Swartz and other top Timberland execs clean up a women's and children's crisis center. "It made our two brands stronger and enhanced our partnership," says Jeanine Zocks, Foot Locker's director of sports marketing. "It was an unusual, but worthy gift."

But while Timberland's message is getting through to its business customers, it's not at all clear that consumers have any clue what the brand stands for beyond cool stuff. Nor is it clear that they care. Says John Shanley, senior athletic and footwear industry analyst at Susquehanna Financial Group: "The vast majority of footwear is purchased by teenagers, and some don't believe in advertising at all, so it's tough to reach them."

Swartz insists that it's simply a matter of time until consumers refuse to patronize companies that don't tell them what they're doing for the community. "I expect deep engagement on the issue of not just what you make but how you make it; not just where you make it but under what circumstances; not just the environmental ethos but the environmental practices. I believe that there's a storm coming against the complacent who say good enough is good enough." To help that storm gather strength, Swartz is criss-crossing the globe. He stops in for impromptu meetings at retail shops in cities across the country. And he walks the factory floors of his suppliers, helping to spot problems.

Sometimes, Swartz's causes cause trouble. Although Judaism is not a part of Timberland, it is so much a part of Swartz that it can be difficult for him to distinguish between his role as CEO and as a spokesman for Jewish causes. In 2002, he caused a stir when The Jerusalem Post printed comments he made about the Israeli-Palestinian conflict. "The boycott started two hours after it showed up online," he says. It was a painful lesson for Swartz on the need to segment his life. "I wrote a note [to the company] and said, 'I beg your pardon. I crossed the line.' "

Probably Swartz's biggest challenge is getting Wall Street to buy into the doing-good side of the story. "Jeff can scream from the woods and say that this is actually helping his numbers," says Samantha Beinhacker, president of New Capital Consulting, a social-entrepreneurship consultancy, "but the fact is we don't have these metrics yet." Sure, the brand's a success, says analyst Shanley. "But investors would rather see Timberland doing things like increasing dividends or share buybacks. Nobody's investing in Timberland just because Jeff's a nice guy. They expect results." Shanley rates Timberland a "neutral," not because of its altruism, but because current fashions favor sneakers over boots.

That shift in fashion hit Timberland in the second quarter of 2005, when earnings per share fell 18%. While no one suggests that was anything more than a blip, it's worth considering what would happen to Timberland's model if things really did go awry. The cautionary tale is Levi, Strauss & Co. Levi's was once as vaunted for its "enlightened management" as Timberland is for its service--and it was a successful apparel company, too. Now Levi's is ice cold. The rap: Levi's took its eye off the ball, largely because its former scion CEO Robert Haas spent too much time and money on being nice--paying employees for "aspirational" leadership, for example.

Swartz thinks that Levi's social activities and its business problems were unrelated. And he has the advantage of having already weathered one such crisis himself. In a story that's part of Timberland's corporate mythology, Swartz, as COO, overexpanded the company and led it into a liquidity crunch in 1995. A banker told him that he would now have to "cut the country-club crap out." Swartz went home, dejected, and happened upon a brochure for a volunteer project. "I started to cry, because I thought, What are these people doing? Do they have any idea that we're cooked, that the goose is headed toward crispy?" But then he decided that if his workers were really committed, there was no reason he shouldn't be. Instead of heeding the banker's advice, he doubled the amount of paid service hours Timberland provided--and managed to turn the company around.