The purview of corporate senior executives is growing ever wider. Beyond incorporating the new technologies, the individualization of consumer preferences, the pressure of competitors, and the fragility of global supply chains, they must now contend with regulators, non-governmental organizations, and social movements that have adopted an “activist” style.
We now live in an era where the mobilization of public opinion—through social media, consumer boycotts or street protests—is a weapon used to pressure corporations, and their leaders, to alter their behavior.
Such behaviour is not new. What’s new is that political parties and even governments are embracing the activist’s rulebook. The current U.S. administration is a case in point, with former activists now occupying official positions within the public bureaucracy and the president applying his executive resources to align firms with his policies.
As a result of this seismic shift, corporate leaders must prepare for an increasingly polarized world where neutrality is often no longer an option, and where the penalties for betting wrong are both economic and personal.
The first step for managers is to understand the types of activist, their motives, and tactics. Sometimes this comes from a single high-profile individual. Investor Carl Icahn, for instance, attempted to install board members at McDonald’s to change how its suppliers treated pregnant pigs—a cause raised by his daughter, an animal rights advocate. Other activists operate on ideological grounds. Bud Light faced backlash from a substantial part of its traditional customer base after partnering with a transgender influencer, a clash that cost it its market lead.
Activists can target companies for a variety of reasons. Wealthy private-sector firms are prime targets, as their resources make them inclined to concede to avoid public battles. Companies that champion social responsibility are often targeted for their perceived hypocrisy. Minor discrepancies between their stated values and actual practices can lead to accusations, as Nike experienced regarding alleged sweatshop labour.
Activists may also target companies that share values with them, as these organizations are more likely to make concessions. Companies can also come under attack for pure political gain, as seen in then Republican candidate Ron DeSantis’s confrontation with Disney over LGBTQ rights.
Additionally, targeting influential firms can potentially create a ripple effect that impacts the rest of that sector. This is one of US president favourite tactics, applied to to a variety of fields, from the legal sector to high tech. He knows, as sociologists of organizations know, that what corporations and individuals fear most is making mistakes that leave them on their own. Taking risks, or adopting a political stance, is always better when you are in good company.
Such “groupthink” can explain the plethora of high-tech leaders who attended the inaugration, and joined forces to pledge millions to support P]presidential policies at a recent White House reception. It also explains the stampede by large corporations to water down previously robust DEI commitments to better align with Trump’s anti-woke agenda.
Despite these shifts, executives are not completely powerless:
- Have a team to deal with these situations and ensure that clear protocols are in place so you know what steps to take before you need to take them.
- Don’t leave the management of a reputational conflict to lawyers, or economists. Social and political conflicts are won because of perceived legitimacy—and neither legal or fiscal arguments guarantee that. Harvard’s former president Claudine Gay lost her job after a disastrous appearance at the US Senate when she answered along legal lines, not politically.
- Cultivate powerful friends. Building alliances before a crisis or conflict arises can actually help deter attacks, or ensure that they are deflected to easier targets.
- Most conflicts are decided by the tribunal of public opinion. Ensure you have reputation of transparency with journalists. They will end up reporting the truth no matter what but you may gain some time to gather the facts.
- Know what the real issue is (often is not what appears to be), the actors that count, what information is relevant and what resources you need.
- Try to co-opt the more moderate activist so that the more extreme find themselves isolated. For example, often corporations hired activists to lead newly created DEI units. However, often many of those quit, feeling it was just a “window dressing” operation.
- Never lie. Nestle’s CEO Laurent Freixas was not forthcoming when informing their boards of serious personal faux pas and lost his job. Full transparency is the norm.
- Victor Hugo, the author of “Les Misérables”, said that there is nothing as powerful as an idea whose time has come. There are “moments” that are irresistible. We do not know whether Jimmy Kimmel’s late night program was temporarily cancelled out of fear, panic, or as a cautious retreat in a moment of intense emotions, but it illustrates the old adage that “bending is better than breaking”.
These tactics are meant to focus on a short term response to a specific crises, but that shouldn’t deflect from the point that all firms have a long-term obligation to act ethically and sustainably – and indeed that activism and activists play a vital role in calling out organisations when they fail to do so. Conflicts with social and political activists are often public, dramatic and happen fast. Everything is weaponized and carries with it high corporate and personal reputational stakes. Because these conflicts are so intensely emotional, they often provoke rushed and mistaken reactions. Keeping a cool head is essential. The only way to ensure a measured response and a positive outcome for you and your firm is through preparation: having clear plans, established protocols, and an expert team that is trained and ready to act.
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