The new age of CEO activism

Time to step up? Most millennials expect business leaders to take a stand on social issues Image: REUTERS/Mike Hutchings

Ashifi Gogo
Chief Executive Officer, Sproxil
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This article is part of: World Economic Forum Annual Meeting

Lately, it’s been easier writing press headlines that evoke an impassioned response. Not because of omnipresent artificial intelligence or menacing robots, per se, but thanks to old-fashioned human behaviour.

The rising popularity of wedge issues in the West increasingly dominates global headlines, stirring emotions and prompting responses. Such reactions are sometimes streamed as they are conceived without attention to detail and careful fact-checking. Last year’s Global Risks Report shows a growing perception of polarisation, driven by populist agendas and a sense of systematic disenfranchisement. The nuanced middle ground is drying up.

These polarising forces draw in even the most disinterested. Low-profile business leaders focused on investor return can find themselves at a fork in the road. Amidst an impatient online audience that grows virally while choices are pondered, the leader best pick a side of the wedge before rumours and misstatements replace truth. In a few persuasive tweets, the story can write itself while the CEO weighs options. There is little time for soul-searching in today’s world of instant gratification.

Luck of the draw?

Under those challenging and highly-fluid circumstances, some CEOs have emerged as conscious leaders. Ken Frazier, Merck Chairman and CEO, drew a firm line in protest when he resigned from President Trump’s American Manufacturing Council in objection to the president's response to the violence in Charlottesville. An avalanche of fellow council CEO resignations followed and the council eventually came tumbling down. While Frazier’s stance came as no surprise to those who knew him over the years, it’s now clear to all where he stands on intolerance.

Others who have bravely picked a side have had mixed outcomes. After Starbucks CEO Howard Schultz led an effort to create opportunities to discuss race-related matters with a calming warm beverage in hand, it seemed it would take more than the soothing Starbucks ambience to facilitate a civil, informal conversation on race in America.

Leveraging her position as president of Ariel Investments with over $12 billion under management, Mellody Hobson advocates for more inclusive corporate leadership, given fewer than 7% of Fortune 500 companies have female CEOs. She is inspired by NFL quarterback-turned-activist Colin Kaepernick’s broader social justice protest. Kaepernick lost his job (and eight-figure salary) and is yet to play for a new NFL team. If your values don’t cost you from time to time, they probably aren’t impactful.

Improving the odds of success

Soon, prominent CEOs who cannot afford to miss an opportunity to affirm their values will have additional help as PR firms grow their coaching toolkit, according to a recent Harvard Business Review article.

CEO activism isn’t that new to social enterprises, which are often founded to promote a cause which can be divisive. Can social entrepreneurs’ experience help guide mainstream CEOs to achieve more positive outcomes for their cause? Here are three useful guiding themes:

1. Developing an authentic voice takes time and concerted effort

Chetna Sinha, Founder and President of renowned Mann Deshi Mahila Bank and Mann Deshi Foundation, and one of the co-chairs of the 2018 WEF Annual Meeting has spent over two decades advocating for financial services for women in rural areas of India. The average large-cap CEO has less than half that time to develop a public brand congruent with their personal values. Start early, well before the C-suite recruiter comes calling.

2. Focus and alignment increase likelihood of great outcomes

Research shows CEOs fare better when the issues they promote bear a tangible connection to their business. Without such a strong connection, cynicism takes hold and the tweeting public begins to assume the CEO has been caught boosting the bottom line, again. Social enterprises tend to have brands that transcend their products and services, making it easier for the entire team to understand what common goals they share on and off the clock.

3. Recruit and promote competent senior leadership who are also co-activists

It takes more than one CEO to sustain a message that could become synonymous with the company's brand over decades. Picking a cause that matters to the entire leadership team can help create a solid succession plan that reaps the benefits from goodwill investments made years earlier when it was unpopular to promote a specific viewpoint. However, the most authentic voices will still come right from the top, and the public will know when the CEO is not speaking from the heart.

Despite the clear benefits, there are significant risks that can materialise quickly. CEO activism may trigger the need for companies to react publicly during rapidly-evolving situations where all the facts aren’t yet on the table. Beyond making shareholders uncomfortable, adopting certain positions can put supplier and customer relationships at risk and create career-derailing scenarios for senior management. To get comfortable with these risks, it is worth being an advocate leader at an earlier career stage, where there is greater room to recover from mistakes and perfect one’s communication style and message.

Engulfed by accelerating machine-human relations under the Fourth Industrial Revolution, it is reassuring to see a core human trait regain attention – developing complex emotions and acting on one’s conviction to take a stand despite the risks. Compared to closed-door lobbying, CEO activism provides a more transparent and participatory environment for society to improve its understanding of the values it holds dear.

Besides, with a majority of millennials expecting CEOs to take a stand on social issues and rewarding CEOs who do that well with sales boosts and lower staff churn, competitive CEOs may have no other choice.

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