Business 2018: Values Matter, More Than Ever
by John Howell, Editorial Director, 3BL Media
The intersection of business and values has been the site of several collisions lately—some accidental, some accidents waiting to happen.
While the subjects in question have varied from CEO activism and governance to issues of ethics and data privacy, the end point is the same: In business 2018, values matter, more than ever. No company looking to its future viability can afford to avoid making choices—and statements—about what it stands for while avoiding pitfalls and misguided actions.
Taking the “right” positions in business can be as difficult as foreseeing future growth and profitability at a time of maximum political uncertainty and market disruption. The hard work of getting it right is illuminated by some recent examples of major companies getting it wrong in areas of major concern.
- CEO activism. A negative spotlight shone on Facebook’s Mark Zuckerberg, who defended the site’s publishing of posts by Holocaust deniers; Tesla’s Elon Musk who falsely name-called a rescuer of the cave-bound Thai boys; and Papa John’s founder and former CEO (now former chairman) John Schnatter, dismissed for racial slurs (he’s now suing for reinstatement to the board). The incidents highlighted the risks to an organization when the chief executive of a company is “the face” of the business. The brand reputation and share price of all three companies suffered—Facebook suffered a $120 billion drop in valuation when it announced the belated hiring of 20,000 new employees to deal with issues of fake news and privacy and projected declining revenue in a context of ongoing questions about the privacy of the data it collects.
- Ethics. Among brands taking a beating for governance failure was Ivanka Trump’s fashion line, which shut down among ongoing questions about using political status for personal gain—and after Hudson’s Bay Company announced that it would stop selling the line, joining major retailers Marshall’s, Nordstrom, and T.J. Maxx, which had previously discontinued it. Burberry was called out for burning $37 million worth of unsold products “to protect intellectual property,” a stance that drew criticism from politicians and shareholders, as well as environmentalists.
- Brand positioning. Washington hamburger chain Z Burger published a Twitter ad touting its burgers using an image of a US journalist moments before he was executed by ISIS terrorists. Everyone involved apologized.
- Operational stumbles. Google was fined $5 billion by the EU for antitrust violations. This follows last year’s EU fine of $2.7 billion fine levied against the company for manipulating search results. Twitter’s stock fell as the company purged thousands of what it admitted were fake accounts and reported fewer users.
These missteps by big brands are speed bumps, not barriers, to better practices. As Dr. Daniel Korschun has noted, “companies can’t avoid politics and shouldn’t try to.” That’s also the title of his Harvard Business Review article, co-authored with N. Craig Smith. “Business as usual now means including considerations of worldviews and values as well as the quality of products and services in strategic planning,” Korschun and Smith argue.
Mistakes are inevitable. As Korschun puts it, “Clearly, our often-divided political environment poses some danger for companies.” But he claims that there is no choice: “Executives who wish to respond fully to the needs of their stakeholders will need to embrace the new reality if they hope to succeed.” Transparency, consistency, materiality, leadership— a commitment to these qualities will determine the success of any purpose-driven company that stakes out clear positions on the issues of the day, from taking a stand on socio-political issues to internal practices, such as diversity and inclusion and employment engagement programs. Korschun elaborates on these ideas in an e-Book, Stand or Sit: Changing Roles of Companies & CR Directors in Politically Divisive Times, published by 3BL Media.
Continue the important conversations on corporate responsibility long after 3BL Forum with the Brands Taking Stands newsletter. Written by veteran journalist, John Howell, this newsletter is published every Wednesday morning.