Should Leaders Buy Into Social Issues?

Episode #305 Should Leaders Buy Into Social Issues?

TAKING ON THE CONTROVERSIAL TOPICS

For those of you who are long-term listeners, you’ll know that I don’t shy away from the toughest issues that affect leadership performance, and today’s topic is one of the most controversial that I’ve ever produced.

Over the last decade, there’s been a creeping trend for chief executives to weigh in on social issues, making very public statements about their personal stance. This also ties their company, brand and everyone associated with it to that position.

Some of these are clearly laudable, timely, commercially effective, and entirely consistent with the brand. Others that we’ve seen over the years range from the mildly inappropriate to the quantifiably disastrous.

As I began to put this newsletter together, I realized that I’m a little conflicted myself on what the right thing is in different situations. In today’s bumper episode, I’m going to lay my thoughts out on what is a really complex issue.

What do you think about the ever-increasing expectation for business leaders to weigh in on social issues? And what’s the appropriate balance of social activism that you might look to incorporate into your unique leadership fingerprint?

I’ll start by addressing a key issue: when leaders buy in, they buy in for all their stakeholders. I’ll explore why not all motivations are equal, and I’ll also look at why not all issues are equal. Then I’m going to bring it home with a few examples of when companies have got it right, and when they’ve managed to shoot themselves in the foot.

THE FILTERS THAT I SEE THE WORLD THROUGH

Before we go too far with this topic, I want to just give you a little window into my own personal philosophy, so that you can get a better understanding of the filter that I’m looking through. Hopefully, this will help you to put my observations into context.

If you’ve been a long-term listener of the No Bullsh!t Leadership podcast, it won’t come as any surprise to you, but I suspect that many of you will have differing views about some of the things that I say in this newsletter – that’s okay. In fact, with an audience as large as ours, it’s likely that some of you may violently disagree with me.

There’s no right and wrong in this type of subject matter: today’s topic is a thorny one, which will increasingly affect you as you rise through the ranks of your organization. I think it’s really important to form your views consciously, rather than just adopting whatever your boss wants you to do. There can be a lot at stake here and you need to be confident in your approach.

I would describe myself as socially liberal, but economically conservative.

For example, in social terms, I believe in total equality. I believe in equal rights for all people, regardless of their age, race, sex, religion, cultural background, or any other identifying characteristic that you might wish to focus on.

I don’t believe in or support any form of discrimination, and this includes the popular trend towards so-called positive discrimination. But I do believe absolutely in the principle of differentiation.

There’s a big difference between discrimination and differentiation. The principle of differentiation dictates that, as leaders, we need to do everything in our power to provide equality of opportunity, but not equality of outcomes.

Outcomes are determined, for the most part, by every individual and the choices they make about the amount of work, effort, commitment, sacrifice, tenacity, and risk that they’re prepared to invest. And this is consistent in pretty much every area of life.

Freedom of choice for the individual should be sacrosanct, but we also need to recognize that every choice comes with a range of potential consequences. There’s a clear cause and effect relationship that’s going to play out, irrespective of your belief system or social perspectives.

I realize that some of you may not believe in the power and causation of personal choice in determining outcomes. You don’t have to believe in gravity either, but it operates on every piece of matter the same way… whether you believe in it or not. That’s just life!

When it comes to my economic conservatism, I also have a very clear belief system.

I absolutely believe in the power of competition and free markets. This is the vehicle that drives the best outcomes for everyone. The unrivaled economic growth and prosperity that we’ve experienced in the last 50 years is due almost exclusively to the innovation and productivity that free markets have delivered.

I know it’s easy to look at the top 0.0001% of the world’s population and say that globalization and free markets don’t work. But, in the same period, the global economy has lifted almost two billion people, the world’s most disadvantaged people, out of poverty. That’s around 30% of the current global population.

Globalization has delivered unparalleled living standards to those of us who are privileged enough to have been born in a developed nation. But, of course, it’s easy to forget where we’ve come from.

So, the disgruntled Gen Zs and Alphas, who believe that their parents’ generation has “stolen their future”, can post their views on social media, using their iPhones, from their $90,000-a-year Ivy League campuses.

Oh, and one more thing you should know about me – I’m a huge fan of irony!

WHEN YOU SPEAK FOR A COMPANY, YOU SPEAK FOR ALL ITS STAKEHOLDERS

Okay, let’s get down to business, and talk about prominent leaders and institutions buying into social issues.

In case you’ve been living under a rock, the month of June is designated as Gay Pride Month. This milestone dates back to the late-1960s when these freedoms were not taken for granted.

As you may have figured from my declared social stance, I’m a strong supporter of equality, and this includes equal rights for LGBT people, including the right to marriage. I do not care what your sexual orientation is. You should be granted the same rights as everyone else.

But gay rights is clearly not a universally-agreed issue. Let me explain what happened to set me off down this path.

Back in 2003, I was awarded an MBA from the Graduate School of Business at QUT. If you know how LinkedIn works, when you build your profile, you can link to an educational institution’s own profile and put its logo next to that entry on your educational qualifications.

My LinkedIn profile has a link to QUT, in reference to my MBA qualification. So the QUT logo appears on my LinkedIn profile. I must admit I was a little annoyed when my alma mater changed its LinkedIn tile to incorporate a rainbow logo in support of Pride Month.

What this effectively means is that every person on LinkedIn who has the standard QUT logo now has it automatically replaced with the QUT rainbow logo.

Just bear with me here for a minute: for me, hey, look, no real drama – it’s consistent with my personal views. But, what about the QUT graduates who don’t hold the same beliefs? And what about my clients and my potential clients?

There are many states in the U.S. whose people, for the most part, don’t share the same views about the LGBT community. When they see my involuntary show of support on LinkedIn, will that affect their buying decision? And if it does, should I care? Isn’t it more important that I stand up for my principles?

Well, the answer to that one is, “I am standing up for my principles!”… The principle that business is business, and every company on the planet does business with other companies that have differing beliefs and values. Tolerance rules.

My purpose is to improve the quality of leaders globally. It’s not just to improve the quality of leaders who happen to share my own social and economic beliefs.

The bottom line is, for me, why disenfranchise a whole bunch of people by dragging them into the well-meaning support of a social issue, even one which, in my view, is as obvious as gay rights?!

SHOULD CEOs COMMIT THEIR COMPANY TO A SOCIAL POSITION?

I learned this lesson in spades over my 5 years as the CEO of CS Energy.

During my tenure there, the Australian government held a referendum on gay marriage. My first instinct was to get right behind it and say, “CS Energy supports gay marriage. Make sure you all vote yes on Saturday.“

But then, I learned that the support for gay marriage amongst our employees was far from unequivocal. In fact, in one particular electorate where we owned a major power station asset, the final vote was a resounding no. If I had come out on behalf of the company to impose my personal views, over 60% of our employees in that region would have disagreed with me.

Like many other social issues, that’s one that might be best left to the individual. You can’t change attitudes and beliefs by sheer force of will – and as much as you can enforce the legislation and policies that are put in place to protect people, as Martin Luther King Jr. said, “Ignorance, prejudice, and fear walk hand in hand.“

WHAT DID U2 AND BONO TEACH ME?

Let’s face it, not all motivations are equal. Context is everything. Seeing people use their position of influence to raise awareness for social issues is nothing new.

I remember many years ago when I was at a U2 concert feeling simultaneously annoyed and guilty. About two-thirds of the way through the concert, the lead singer Bono launched into a monologue about global poverty, resplendent with heart-wrenching images on the big screen behind him.

My initial reaction was, “Dude, I came here to get away from all this sh!t just for a few hours. Would you please shut up and play the next song?”

But another (better) part of me was thinking, “Wow, it’s so easy to forget how lucky I am to be here in this country at this moment in time. I need to do more.”

Some people like Bono are genuinely committed to making change through whatever platform they can leverage. Other people, well, not so much.

You can use the ever reliable rule, though – Don’t watch their lips. Watch their feet.

U2 is a band that puts its money where its mouth is. For example, they played a concert in the late-1990s in Sarajevo, one of the world’s hottest conflict zones at the time, after the Bosnian Serb siege, which lasted for almost four years.

They didn’t do it for the money.

They didn’t do it to signal their virtue.

They did it to bring hope of renewal to Sarajevo’s traumatized population and awareness of the conflict to the rest of the world.

NOT ALL MOTIVATIONS ARE EQUAL

The obvious question I ask myself whenever I see a business leader come out strongly in support of a social issue is, why?

Is it just words or are you performing meaningful actions to back it up? What are you trying to achieve? What’s in it for you?

Here are the six obvious motivations I’ve seen most often. There may well be more, and sometimes it’s a combination of multiple factors.

1. Backing an issue that aligns with the organization’s purpose.

An example of this would be a developer of clean energy projects coming out strongly in support of climate change action. It’s entirely consistent with the company’s purpose, and all its stakeholders, from employees to customers to investors, would be aligned to that purpose.

2. Some people are motivated by a personal hobby-horse.

One could speculate that Qantas’s stand on gay rights was driven as a personal hobby horse by then Chief Executive, Alan Joyce, who was one of the first openly gay men to run an ASX-50 company. Whereas I’m sure there was no argument from cabin crew, I wouldn’t have assumed that Joyce had universal support for this social issue from the baggage handlers, particularly in light of the animosity that existed between Joyce and the unions.

3. Virtue signaling.

Many CEOs come out and say what they think people want to hear, but their actions clearly demonstrate different core beliefs. A classic example of this is the gender pay gap. Some companies talk about equal pay for equal work for men and women. Then in the next breath, they talk about how difficult it is to achieve. I’ve seen some pretty tricky issues over my career and, seriously people, this one shouldn’t be that hard. Just get it done.

4. The cynical marketing ploy.

I’m going to give you an example of this in much more detail towards the end of the episode.

5. Certain issues that directly impact employees… that they’re passionate about.

At CS Energy, mental health and suicide prevention were lightning rod issues. And, I must confess that I didn’t initially understand how important this was to our people. But when my Head of Safety talked me into investing in a program, it received unprecedented support right across the workforce. It brought a critical issue out of the darkness, and many of our people benefited as a result.

6. An issue that aligns with brand and customer.

Awareness of poverty and privilege is a key issue in the minds of many consumers today. So, companies like TOMS can leverage this social awareness in a very meaningful way. For every pair of TOMS shoes that are sold through a retail channel, they will deliver a free pair to a child in need somewhere in the world. If I get a choice, I’m buying from TOMS!

NOT ALL ISSUES ARE EQUAL, EITHER

I think we can all agree that not all motivations are equal, but not all issues are equal either. I’m not suggesting that we only support majority positions, by any means. Quite the opposite. You know I’m all about leaders doing what’s right, rather than just following the path of least resistance.

What I am saying, though, is that we have to be really thoughtful about which social issues we choose to back… what are our motivations for backing those issues… what those issues might mean to the company’s key stakeholders… and how this social position might impact the business.

For example, in the U.S. at the moment, issues like gay marriage, reproductive rights, positive discrimination, the right to free speech and peaceful protest are all highly polarizing. Just ask the surviving presidents of the Ivy League universities.

I genuinely believe that there’s very little benefit in weighing in on these issues because, for a start, the likelihood that you’ll be able to affect a shift in anyone’s view is negligible. But, even more than this, it would be virtually impossible to find a way to speak for the spectrum of views that are held by your key stakeholders.

Sometimes it can be helpful to align with customer expectations. So, for example, when Elon Musk bought Twitter, he clearly stated that he was going to prioritize freedom of speech over censorship of potentially misleading content. I’m not sure how well that’s working out for the company financially, but on the upside, it’s pretty clear what he and X stand for.

Here are some social issues that I think are no regrets:

• Domestic violence prevention;
• Pay equality; and
• Mental health and safety.

Just be careful not to fall into the trap of talking up a virtuous position and then undermining it with a lack of action, or even worse, not adhering to the principles and standards that you are espousing. This will just serve to drive a deep cynicism into all of your stakeholders.

Let’s take the example of domestic violence. Now, that’s a social issue that you probably can’t go wrong with. Think about its characteristics: in virtually every developed country, it’s a serious crime; and 99% of people see it as a terrible social scourge that urgently requires greater visibility, attention, and investment.

What would it look like for a CEO who decided to come out in support of domestic violence prevention?

• First of all, they’d seek to increase awareness and understanding of the issue, including a focus on occasions like Global White Ribbon Day;
• They would invest in confidential referral, counseling, and rehabilitation services for both victims and perpetrators;
• They would provide additional paid leave for those who are struggling to flee from a domestic violence situation; and
• They’d make financial donations to charities and not-for-profits that deliver practical and accessible support for domestic abuse victims.

If you did all of that, then what could possibly go wrong? Well, your committed stance to domestic violence prevention could be terminally undermined by something as simple as:

• A view expressed by any leader in the company that could be perceived to be contrary to that position;
• Any behavior from a leader that could be interpreted as a verbal or psychological attack on a woman; or
• Any charge or complaint of gender-based violence brought against any leader in the company.

Once you nail your colors to that mast, people are going to test you, for sure. But I’d say that one is absolutely worth the risk.

MAKING THE RIGHT CALL ON A SOCIAL ISSUE

I just want to cite a couple of examples of what it looks like to get it right when choosing to back a social issue and what it looks like to get it wrong.

In 2016, the quarterback for the San Francisco 49ers, Colin Kaepernick, began a movement to raise awareness for racial inequality and police violence against Blacks in America. He protested by taking a knee when the American National Anthem was being played at the start of each game.

This show of protest quickly spread across the NFL. It drove widespread support, and widespread condemnation from fans, team owners, and, of course, the NFL itself.

After a tumultuous 2016 year, Kaepernick’s contract wasn’t extended by the 49ers. And looking at the circumstances, it’s not really hard to see why: he was a solid rather than a spectacular quarterback (you can check out his stats); and it was the third year in a row that the team hadn’t made it to the playoffs.

It wasn’t hugely surprising that, after five years with Kaepernick as their starting QB, the 49ers were looking for a change. However, he also failed to secure a new contract with one of the other 31 NFL teams… and that was the last time he ever played in the NFL.

It’s likely that Kaepernick’s stand on the social issue didn’t help his job search efforts.

Fast-forward a couple of years to 2018. On the 30th anniversary of Nike’s Just Do It campaign, they released an ad featuring Kaepernick, amongst other athletes. The punchline, over a close-up of Kaepernick’s face was, “Believe in something, even if it means sacrificing everything.”

This completely divided Nike’s customers. People were incredibly passionate, one way or the other. Some posted social media videos of them burning their Nike shoes.

But as it turns out, this was an incredibly astute marketing ploy by Nike. The company understood its core customer incredibly well. It knew that the ad might well offend their older demographic who, on average might buy one pair of Nike shoes every two years.

But the people who supported that social position were its younger customers – you know, the ones who were happy to sleep outside a Nike store to purchase the first pair of a new release shoe… the ones who routinely bought three or four pairs of Nike’s every single year.

The company claims that, despite the backlash from some of its customers, it generated $163 million in earned media from that ad; it experienced a $6 billion brand value increase; and a 31% boost in sales. Nike backed a social issue that became a grand slam home run.

MAKING THE WRONG CALL ON A SOCIAL ISSUE

Then there’s missing the mark, as the more recent campaign that Bud Light ran featuring transgender influencer Dylan Mulvaney. This ad campaign, too, had a polarizing effect but, unlike Nike, Bud Light didn’t really understand how its loyal customer base would react.

Shows of outrage on this one included musician Kid Rock posting a video on YouTube where he used his personal supply of Bud Light for target practice – he took to about four cases of the product with a semi-automatic assault rifle.

Turns out, Bud Light’s customers don’t all support transgender rights. Parent company Anheuser-Busch is paying the price for backing a social issue that was completely out of step with its customer base. It saw an immediate profit decline of over 17% in its U.S. business on the back of declining Bud Light volumes being shipped.

And Modelo has since taken over as the number one selling beer in the U.S., a title that Bud Light had seemingly held forever.

In retrospect, it’s hard to tell what motivated this campaign. Was it a misguided attempt to attract a new customer demographic? Was it a cynical grab to ride the coattails of a hot social issue? Or was it just the hobby horse of someone in the Bud Light Marketing department?

Of course, we’ll never know. But we do know that the gamble on this hot social issue completely backfired.

SO, SHOULD YOU WEIGH IN?

As you can see, leaders weighing in on social issues isn’t as simple as you might imagine. Remember, above everything else, you’re there to run a business – to create maximum value for all your stakeholders.

Of course, this doesn’t preclude you from addressing social issues… but my advice would be, stick to your knitting.

If you think you want to weigh in on a social issue, first ask yourself the question, “why?” If you can answer why, this is often going to provide all the guidance you need.