Reducing the Risks of Corporate Activism

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Taking a stance on social issues doesn’t have to antagonize a large swath of your customer base, however. That’s the conclusion that Kim Whitler, an associate professor at the Darden School of Business, and Thomas Barta, the dean of the Marketing Leadership Masterclass, came to after interviewing hundreds of executives, C-level leaders, and board members about corporate activism.

Many scholars have been looking at how a firm’s political positions can affect its relationship with a broad spectrum of stakeholders, but Whitler and Barta have zeroed in on one question: How should companies assess the threat of a negative reaction among consumers? 

Whitler and Barta advise brands to focus on two factors: consumer agreement (how unifying or polarizing the social issue involved is) and positional alignment (how well a stance fits with a firm’s mission and values). Before making a public statement or launching a campaign, executives should analyze data on those variables—which can be gathered from surveys, focus groups, and social media posts—to estimate market share risk. The more divisive an issue is, and the further afield a stand is from a firm’s image, the bigger the risk.  The researchers don’t recommend that brands always soften their stances or that they avoid activism altogether. Instead, they offer four guidelines:

1. Your organization’s position on issues shouldn’t be one person’s decision. A company shouldn’t advocate for a cause solely because it reflects the CEO’s personal beliefs.  CEOs should discuss any stance with employees from across the political spectrum first, to get a thorough view of potential stakeholder reactions and their business consequences.  Another good way to limit risk is to adopt stances that support common values.
2. Don’t allow activism to distract you from your purpose. Brands jump from one cause to another for many reasons. Perhaps they’re trying to align themselves with a special occasion, or the CEO has a new personal passion, or the media have raised awareness of a problem. A better approach is to support causes that fit with your brand’s historical positioning and activism, your core customer base, and the markets you serve.  Some brands are able to deviate from their main purpose without incurring additional risk.
3. Don’t attack your base. Companies can upset brand loyalists even when the cause they’re championing is widely supported.  You don’t have to limit your causes to those that your customer base universally agrees with, but you must understand that risk increases as your activism moves toward direct criticism of your customers’ behavior or beliefs. 
4. Team up with others. Some causes are so polarizing that supporting them will always carry high risk. If you still feel your brand must respond publicly, recognize that there’s safety in numbers.