When Activist Consumers and Activist CEOs Collide

Gone are the days when consumers would buy a banana and not think about how the company grew it, how much the company paid the farmers to pick it, and whether the CEO who runs the banana company is for or against abortion, for or against same sex unions, for or against a temporary travel ban, for or against the current President of the United States.

Consumers are no longer interested in the taste of your company's banana alone. They want to taste the company's politics first. Concurrently, many CEOs are feeling the need to be activists themselves, guided by business, morals, or a combination of both. In this new world of the Activist Consumer, I have 6 recommendations for the Activist CEO.

Recommendation #1: In most cases, SHUT UP!

Though it would be more polite to say "remain silent", "shut up" is more apt. The country is so split politically across liberal and conservative lines that you are likely to alienate half of your customers by expressing your opinion on sensitive issues. If you run a company that provides products and services to a broad audience, in particular, it is best not to engage. Importantly, if you are a CEO of a publicly held company, your fiduciary responsibility is to shareholders, many of whom are invested in your company via large mutual funds that reflect a wide swath of investors from the political spectrum. You owe it to them to make money to support their retirement, not to express your personal opinion on sensitive issues that many may not agree with.

If you run a privately held company, you certainly have more latitude since you own the burger stand. But you are still responsible for the livelihood of your employees. To state your personal political opinion runs the risk of alienating many of your employees while putting them at risk of consumer backlash and sales decline.

Recommendation #2: FIGHT WHEN ISSUES HAVE A DIRECT IMPACT ON YOUR BUSINESS.

There are times to make your opinions known and to fight. Various companies are now aligned against the temporary travel ban on seven countries that the government identified as places with significant terrorist activities. A solid business argument is that the ban prevents talented foreign professionals from filling important positions here in the U.S. This prevents companies that rely on international talent such as Google, Apple, Tesla, and General Electric from optimizing operations. From a business standpoint, that's sound judgment. These are good fights to have.

In a broader sense, lobbying government in legal ways to increase shareholder value is well documented. The amount of money that businesses reportedly spend on lobbying Congress totals about $2.6 billion a year. Whether that is beneficial or not is the subject of a different article.

But when referencing opposition to the temporary travel ban, some companies shifted from a business argument to a moral argument. The Ford Motor Company's chief executive officer stated that, "We do not support this policy or any other that goes against our values as a company". And that, "I think we're just going to be a company that lives by its values and let the chips fall where they may." Be careful there. Recent research revealed that 55% of Americans are in favor of an immigration ban and only 38% are opposed. Ford should have stuck to the business argument and not to the moral argument, especially since domestic security is also a moral concern, one that most Americans rank higher.

Recommendation #3: DON'T PANDER

If the preponderance of your business comes from a target audience that has a specific political view, then yes, it can make sense to express your view since your consumers like the taste of your politics. But it must be done in a sincere and concrete way that can have the added benefit of increasing the value of your company. Ben & Jerry's, for example, caters to a youthful, more liberal demographic that appreciates the stand it takes on issues, and the company communicates its opinions in a whimsical nature that takes the edge off. The company supports many efforts including democracy for all, GMO labeling, LGBT equality, and "climate justice" in which the company states, "We're not scientists, but we figure that ice caps, like ice cream, are best kept frozen." The company also does what it advocates. In the environment arena, it has invested to increase its energy efficiency while shrinking its carbon footprint. Love them or hate them, Ben & Jerry's does not pander. The company puts its time, money and energy behind both its ice cream and politics that many of its customers find tasty.

Conversely, do not pander to your consumers in a shallow effort to gain business. Insincere efforts to momentarily gain awareness and customers through politics rather than through the quality of your products and services can backfire. Consumers can smell insincerity.

Recommendation #4: SHOOT STRAIGHT

If you are going to offer your opinion on a sensitive issue, make sure you communicate it well. A recent failed attempt was the 84 Lumber commercial that the company aired during the 2017 Super Bowl. The 90 second television spot shown to over 111 million people conveyed the arduous efforts of a Hispanic mom and daughter as they made their way across Mexico to the United States. The commercial gave the impression that the company was sympathetic to the plight of immigrants coming to the U.S. The commercial also directed viewers to the company website that had a longer video that ended with the mother and daughter finding and entering a massive door in the U.S. border wall. It ended with, "The will to succeed is always welcome here."

But what is the company trying to tell us? Is it merely proclaiming its sympathy for immigrants? Is it trying to tell us that we should welcome all who come here whether they enter legally or not? In an attempt to resolve the confusion, CEO Maggie Hardy Magerko said that she was in support of President Trump's plans and that, to paraphrase various press releases and interviews, "We need to keep America safe...The wall, I think it represents, to me, security...I am all about those people who are willing to fight and go that extra yard to make a difference and then if they have to, you know, climb higher, go under, do whatever it takes to become a citizen." Her nuanced view seems to be that she supports the wall and legal citizenship yet can still be sympathetic to those with good intentions who travel difficult routes to get here. But the commercial did not convey that nuance. It gave a lopsided pro-immigration view at the least, and could easily have been interpreted as pro-illegal immigration. So if the objective of the spot was to increase awareness of 84 Lumber, then mission accomplished. But if the objective was to also provide a clear idea of the company's opinion, then mission not accomplished. If the objective was to increase business, it's hard to tell at this point, but confused marketing does not usually result in a massive sales success. If the objective was to recruit new employees, time will tell. But when you consider that the spot cost approximately $15 million to air and probably several million dollars to produce, you have to doubt that this was money well spent. More importantly, this was a lost opportunity. 84 Lumber is, after all, a building materials supply company. The nature of their work could have led to an attention-getting commercial that had a more direct association with the company's core competency...materials and know how for building walls...whether they be across a national border or across a backyard. Swing and a miss.

Recommendation #5: CONSIDER UNINTENDED CONSEQUENCES

If you decide to make your opinions known, be sure you consider unintended consequences. Boycotts are now common, made more potentially devastating by the speed of social media and the growth of online sales that makes it easier for consumers to forego your offering with a click. Chick-fil-A made headlines a couple years ago when its chief executive officer, Dan Cathy, made public statements opposing same-sex marriages. It did not help that the company's charitable wing reportedly donated millions of dollars to organizations perceived to be opposed to the LGBT community. He probably didn't consider that a boycott would ensue meant to diminish sales. Nor did he probably consider that a counter-boycott would immediately follow meant to increase sales. Having experienced the roller coaster of consumer politics and public debate, and the uncontrollable effect it can have on a company's fortunes, the company decided that "Going forward, our intent is to leave the policy debate over same-sex marriage to the government and political arena."

Good idea. Stay in your own lane.

Recommendation #6: GROW A BACKBONE

Democratic activists, unhappy that they lost an election to Donald Trump, have now called for a boycott of his daughter Ivanka's fashion line. I guess we do not just eat politics, but we wear them, too. Retailers such as Nordstrom and Neiman Marcus have reportedly dropped the line. Nordstrom explained that Ivanka's line was simply under-performing. That may be true. It could be that a sales decline was already in the works and was deepened by the boycott. Then again, it could also be that these companies simply yielded to sudden pressure. But was it a good business decision? Consumer activism is often short-lived as activists rush from one issue to another. As we know from the Chick-fil-A example, there is often an equal and opposite reaction from consumer activists with an opposing opinion. As fewer retailers offer Ivanka's fashions, those that continue to sell them may grow as consumers who appreciate her style and politics seek them. As of this moment, this may bode well for companies like Amazon, Bloomingdales, and Bed, Bath and Beyond. Unless they knuckle under.

Whether you are being threatened by activists on the left or the right, the more you yield to their demands today, the more they will demand of you tomorrow, which increases their control of your future business. In some cases, you need to grow a backbone.

This is not to say that companies should consider only business issues and not moral ones. Morals have always played a key role in business and have led, with government demands and oversight, to better working conditions, an array of healthier products, greater transparency in financial transactions, and so much more. But you have to wonder why a CEO of a marshmallow company would ever want to make a public statement on abortion, only to see it erupt in public discourse, which would either persuade or dissuade any of us from enjoying marshmallows in our hot cocoa.

But that's the world we live in now. We eat, drink, wear, bathe, exercise, drive, vacation, sleep, and brush our teeth in politics. So as more and more of your customers become Activist Consumers, the first line of defense for the Activist CEO should be to just shut up and think. Give it a week. In most cases, your best decision will be to remain silent. But fight when an issue truly effects your business, make a real commitment and don't simply pander, communicate your intended message accurately, consider unintended consequences, and most of all, grow a backbone when needed.