Speaking with purpose
Activist CEOs are allegedly good for business. But the line between speaking out and being outspoken is extremely thin
One of my current favourite songs to play on guitar is Rudderless, by The Lemonheads. I'm not a massive Lemonheads fan; I vaguely remember someone calling them "fake" back in the nineties and turning my nose up. But I've recently discovered It's A Shame About Ray is a great album. Rudderless, taken from that album, has a beautiful feel that apes its lyrical content perfectly - it spins around with repeated melodic motifs and a simple chord structure. Like that ship without a rudder, you're moving quickly as you listen but pointlessly, aimlessly - going nowhere in particular.
In agency land, we abhor rudderlessness. Everything needs an objective. Upon receiving a written client brief, it's the first thing you interrogate - well-thought-out, measurable goals create a strong base for a response. If there's no objective, or the objectives are too woolly ("awareness"), you'll be stuck in the planning equivalent of listening to Rudderless on repeat - going nowhere in particular.
Objectives give campaigns purpose - if you're not ultimately going to have a material impact on the business with your work, what's the point? In consumer and B2B campaigning, that material impact can be easier to track. Increased clicks, increased searches, and increased leads can all correlate to increased sales.
The direct line to the bottom line is only sometimes apparent in corporate campaigning. We often focus on driving trust or conditioning a positive environment; the route from those two objectives to revenue can be incredibly complex. You might look at the financial impact of potential regulation. Or, for listed companies, you might correlate the impact of communications with changes in share price.
Measurement is complex, and getting hold of data, particularly trust data from hard-to-reach audiences like analysts, investors and MPs, can be expensive. A share price, on the other hand, is publicly available and straightforward to map against coverage, social media chatter and/or brand trackers. It also makes for a compelling argument in the boardroom - we did this, so our share price increased by x points.
That methodology got a fair amount of coverage last week in a paper that compared "activist" statements by CEOs of Fortune 500 companies with subsequent changes in share price. The report has yet to be peer-reviewed but makes for a compelling argument. As per this summary in Contagious, the headline finding is that CEOs who speak out on "social, environmental and political issues" have a "small but positive effect" on their company's share price.
Over the past decade or so, there's been a growing expectation for businesses, particularly people leading those businesses, to take a stance and speak out on the issues of the day. If you believe the various qual research studies, taking a view on issues that matter to consumers, potential employees (particularly at the younger end of the spectrum), and investors is essential. This expectation of a position, a stance, or a comment has become inextricably linked to the rise of "purpose" in business.
"Purpose" is one of those words, like content, like digital, like creator, that means different things to different people depending on the context. When I talk about the "rise of purpose in business", I'm referring to "social purpose" (as per this excellent series of articles on the topic by
). There's an increasing expectation that businesses should exist for something bigger than making money or delivering shareholder value. That means giving something back and making a difference in society.You can plot businesses' approach to social purpose on a sliding scale. Companies like TOMS and Patagonia building their social purpose into their business models at one end. Then a sliding scale through less substantive business commitments, through awareness-raisers, down to those making meaningless announcements and gestures.
It all adds up to the fact that having a "social purpose" and being an "activist CEO" aren't always as grand as they sound on paper. The “activist” CEO label in the research above is a big over-stretch - we're talking about CEOs making a statement in the wake of the murder of George Floyd or speaking up on LGBTQ+ rights. These guys (and they are primarily white, male American guys) are not out on the streets campaigning or mobilising their network on WhatsApp or Discord. They're parroting carefully crafted lines from their PR teams. And the research shows it was only posts on less divisive social issues that had a positive effect on share prices. Wading into culture war topics such as trans rights or gender ideology produces very different results. The names quoted in the report are also not exactly synonymous with big, opinionated political statements - we're talking about Satya Nadella, Tim Cook and Howard Schultz. These “activist CEOs” are hardly Greta Thunberg or Amika George.
Being a genuinely activist CEO would come with a huge amount of risk - you’d need cast-iron conviction in your beliefs to see them through. The backlash against Natwest and Allison Rose in the wake of the "Who can bank with Coutts"-flip flop affair is a testament to that. What your business might consider to be the "right thing" might not chime with your audience's attitudes. Fred Sculthorp, writing in The Times, used the whole Coutts affair to call for CEOs and businesses to cease with what he called "corporate hypocrisy" when it comes to speaking out on issues.
The worry with reports like those on “CEO Activism and Firm Value” is they contribute to a culture where we expect companies to comment on the cultural and social issues of the day. Even with those relatively “less divisive” topics, any business or CEO keen to speak out in 2023 must tread extremely carefully.
In the third part of his series on purpose, Nick Asbury quotes legendary ad-man Bill Bernbach, who said, "A principle isn't a principle until it costs you something". Taking a stance on an issue rarely generates unilateral support. Companies and CEOs need to think through the consequences of their positions carefully. And that careful thought process needs to be rooted in deep audience understanding - and sometimes that means deciding who your brand is for and equally who it is not for. Having that clear audience filter, built on a solid knowledge of what those audiences care about, means you can outline a stance on an issue with a better (but not fool-proof) idea of how that stance will land.
And sometimes, there needs to be a recognition that saying nothing is the best route. Sometimes sticking to for-profit companies' primary purpose of making money and delivering value, either for owners, investors or shareholders, is a perfectly sensible approach. As the cost of living crisis continues to bite and the threat of recession looms ever more prominently on the horizon, consumers want actions, not empty words and vague promises. That means businesses and CEOs looking to speak out about anything and everything could end up going nowhere - like a ship without a rudder.
Thank for the mention Mark. That research does sound like a stretch to me – not sure how they establish the link between one utterance and all the other factors that affect share price. But interesting nonetheless.