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CEO Activists: The Answer is in the Data. You May Just Have to Wait a Decade

Last month, Stanford’s David F. Larcker and Brian Tayan published 2018 CEO Activism Survey, a U.S. survey (included at the end of this post) of 3,544 people across age, gender and political leanings to ask about CEO activism. The findings in the survey echo others in the past couple of years. Almost two-thirds believe CEOs should be CEO activists, but millennials have very different expectations from brands and CEOs than older cohorts. 71% of millennials expect “CEOs of large companies to use their position and potential influence to advocate on behalf of social, environmental, or political issues that they care about personally”, versus 46% of baby boomers.

Interestingly, Larcker and Tayan show that there’s also a big schism between Republicans and Democrats – 72% of Democrats agree, versus 57% of Republicans.

Both statistics tell both brand managers and CEOs something that should already be obvious – when deciding if, when and how a CEO should speak up, it’s critical to know who your target customers are, and the relative lifetime values of various subgroups. In a world where staying silent is no longer equated as staying neutral, CEOs are being increasingly put in a position where they have to speak up or take an action, and it’s a given that some people will agree and some will disagree. Knowing whether your alienating an occasional shopper with no brand loyalty, or a young loyalist with a potential 40-year relationship with your brand can make the decision easier. Not knowing can be fatal.

Nike’s decision to run the Colin Kaepernick ad campaign is the most obvious example of this. Nike was counting on the loyalty of its core customers’ and brand advocates’ support of Kaepernick to be solidified, knowing it would likely alienate another group of people. I’m willing to bet the company knew exactly who fell into the latter camp – people who buy white running shoes and only at the outlet mall and don’t have 40 years of purchasing power ahead of them.

While Larcker and Tayan reinforce the importance of CEO activism, the gap in academic research that still remains is a longitudinal study of what shoppers actually do in the face of that activism. It’s one thing to say they will switch toothpaste or banks because the CEO pleased or offended them. It’s quite another to actually follow through and change long held shopping habits or resist a sale. Some shopping habits are stickier than others, too.

As we know from the 2016 U.S. presidential election, even voting outcomes – a one-time action – can differ widely from advanced polling. Not everyone who says they are going to vote actually does, just as not everyone who says they’ll change brands does. To truly understand the impact of CEO activism on business outcomes, more data is needed. Certainly Nike results over the next few quarters and the rise in its stock price may hint at the answer, but it’s the long game that really matters.

Here’s the Larcker and Tayan paper.

Prop C and the CEO

I wonder how Marc Benioff is feeling this morning. Leading up to the  U.S. mid-term elections, Benioff, CEO of San Francisco-based Salesforce led a spirited campaign for Prop C, which will see Salesforce pay about $10 million a year in additional taxes to support homeless solutions.

Benioff has been the poster child for CEO activism in the past year, taking on politicians in Indiana and Georgia in defence of LGBTQ rights, confronting fellow CEOs in public debates, such as Twitter’s Jack Dorsey about Prop C, and alternatively providing air cover for other CEOs to speak up in Indiana and Georgia without sticking their heads too much above water.

With this latest win, what’s on Benioff’s calendar today? He is, after all, the founder, chairman and co-CEO of a publicly traded company. Would love to see an analyses of how much of Benioff’s reputation is embedded in Salesforce’s stock price. At midday today, Salesforce shares were up 5.8% while the S&P was up 1.29%. Over the year to date, Salesforce shares have climbed 27%, versus 1.6% for the S&P. While I’m sure there are board members who are just hoping Benioff is in the office today, they should be doing the math on the halo effect that he’s bringing the company, in its share price and sales by such aggressive CEO activism and reputation building.

Expert Self-Doubt

I’ve thought a lot about writing a book over the years, in vague, someday terms. When I fill out my marriage licence, more than two decades ago, and was still in journalism school, I listed my profession as “writer” rather than journalist; still not sure why, but perhaps it was a wise challenge to myself to make it true one day.  More than once, I’ve come close to quitting my day job, fed up with the grind and the stress of it all, in order to write the book. The first time, it was a book about mergers and acquisitions in Canada – a how to guide for fighting off the activists through storytelling, inspired by the recently deceased Bill James, who fought an epic battle as the head of Inmet Mining. The second time, it was a book on media training for CEOs – working from the “write what you know” playbook. But I never really had the courage to just do it.

Years later, after pushing close friends to bet on themselves, I am finally in a position where I have the means to take a time out from the quest to make more money, build the resumé, climb, climb, climb. So here I am, sitting at the writing desk, and there it is, self-doubt.

Over my career in public relations, I’ve had countless conversations about why women turn down media interviews. I’m always reassuring both men and women that they know more than they give themselves credit for, and if not them, then who? I talk to my women friends about why we limit ourselves, even though we know we’re the experts in our fields.

The book I’m writing is a cri de coeur to CEOs, particularly in Canada, to speak up on not just their businesses, but also social policy, economic policy, and nation building. Our future, and your business success, depend on it.

And yet. This morning I’m having a bout of self-doubt who am I to write about this?  Why is my outline so awful when I read it the next day? How do I find an editor? Will I ever get a publisher?

It’s a good reminder to myself, this sick feeling, that speaking up, putting all the theory into practice, is done by actual humans.

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