When businesses engage in politics, alignment is key

In June 2017, President Donald Trump announced his intent to withdraw the United States from the Paris climate accord, an international initiative to help combat global warming. The announcement immediately drew criticism from prominent business leaders. For example, Disney CEO Robert Iger tweeted he would be leaving the president’s Strategic and Policy Forum as a result of the announcement.

Some people applauded Iger’s decision -- and, by extension, Disney’s acknowledgment of the dangers of climate change. Others questioned Iger’s true motives: He had served on the president’s committee during the controversial travel ban policy, which drew ire from employees within his own company. Why was climate change the issue that prompted action? More than that, why was it necessary for Disney to voice its opinion on climate change rather than another political or international issue?

This foregoing example illustrates the complicated and unpredictable reactions businesses may encounter when they enter political conversations, as well as how perceived alignment of values is crucial for success.

When is the right time to take a stand?

Whether it be through private lobbying efforts in Washington, D.C., or publicly airing their political opinions across advertising or media outlets, most businesses and brands are already involved in the political landscape. But each entity varies in what causes it chooses to support and how vocal it should be.

The political causes a company supports impacts not just its image but also its bottom line. According to a 2015 study from Cone Communications, 91% of millennials said they would switch to a brand that supported a political cause. Accordingly, the very fact of companies’ supporting a cause resonates with these young consumers and thus drives revenue.

Take, for example, Nike’s promotion with Colin Kaepernick, the former San Francisco 49ers quarterback who became an outspoken activist after kneeling during the national anthem in protest of racial discrimination. Kaepernick notoriously lost favor with many NFL fans but earned the support and admiration of others who agreed with his protest and political beliefs. His career prospects within the NFL suffered, and Kaepernick filed a grievance against the league stating that teams had colluded against him because of his protest.

For a sports apparel company, the prospect of working with a controversial athlete such as Kaepernick could be too risky an endeavor because of the potential backlash from its consumer base. Additionally, Kaepernick was no longer playing in the NFL, so there might not have been much value in having a nonprofessional athlete representing a sports brand.

But even with these potential conflicts in mind, Nike announced over Labor Day weekend that Kaepernick would be the new face of its 2018 “Just Do It” campaign. The announcement sparked both an outpouring of support from those sympathetic with Kaepernick’s cause and intense backlash from those who disapproved of his actions, with the latter even boycotting Nike products as a result. But the campaign proved successful, giving Nike a huge boost in sales and significantly raising the company’s stock price.

It’s questionable if another sports apparel brand, such as Adidas or Reebok, would have been as successful if it had implemented a similar campaign with Kaepernick. But a key reason the Nike campaign has worked is it aligns with the brand’s values and, quite literally, Nike’s slogan: “Just Do It.” The video released with the Kaepernick campaign features the former NFL quarterback as its main subject but emphasizes the importance of athletes and individuals making difficult choices and dedicating themselves to achieving hard-to-reach goals. For Kaepernick in particular, that difficult “Just Do It” choice meant supporting a social cause even at the detriment of his own career.

Nike wasn’t so much making a statement agreeing or disagreeing with Kaepernick’s actions; it was arguing that a person should uphold and act upon his or her beliefs. This allowed Nike to appear supportive of a social cause without tying the brand specifically to it and to generate an authentic conversation that elevated awareness of its own brand. Once Nike took a stand on a hot-button social topic, it surely alienated one side of its consumer base. But with Kaepernick came an opportunity to build a successful, engrossing campaign that aligned with Nike’s signature company value of “Just Do It.”

Political speech vs. commercial speech

There is no law that can prevent a brand from associating itself with or speaking out on a specific social or political cause. Although it would likely hurt revenue and profit, a brand could announce it is in full support of another country’s oppressive political regime or run commercials stating how much it agrees with or is against our current government’s policies and face no legal backlash.

Some of this carries over to commercial speech as well. A car dealership can state its deals on $10,000-priced vehicles are incredible but can’t commit false advertising by stating they’re offering used cars for less than $10,000 without informing consumers these cars will exceed that price after taxes and fees -- hence the reason for fine print.

When it comes to a political issue, though, political speech and commercial speech don’t have to be mutually exclusive. A car brand can voice its support for a controversial foreign war and offer discounts for veterans and current members of the military. For that promotion to be successful, it just needs to come across as genuine and in alignment with the brand’s values.

Companies and brands that do associate themselves briefly with political causes for capital gain will eventually face backlash. For example, if that car dealership has never supported a social cause or spoken out on a political issue before, suddenly advocating for a random cause would immediately come across as disingenuous, even to people who identify with that belief. It might initially generate publicity and a potential boost in sales, but it will hurt that brand more in the long run because consumers will perceive it to lack integrity.

A strong real-life example of a brand successfully supporting social and political causes is Ben and Jerry’s. The ice cream manufacturer has frequently supported initiatives against growth hormones and other issues relating to the preparation of ice cream over the years. Because it was already voicing its opinion on social causes, when Ben and Jerry’s supported renewable energy and Occupy Wall Street while advocating against drilling for oil in the Arctic, its customer base and consumers at large interpreted these actions as authentic. Consumers trusted that Ben and Jerry’s wouldn’t throw its voice to a random cause or product and that the company would speak out only on issues that actually mattered to it.

Building values into company culture

One of the best ways to address the types of social or political issues that Ben and Jerry’s and other companies tackle is by instilling strong values into company culture, something that is often of great importance to younger employees.

A notable example is Netflix, a company that emphasizes culture fit as much as, if not more than, skill and experience when hiring new employees. Candidates for positions at Netflix are often required to read the company’s internal culture memo to make sure they’re fully aware of and onboard with how Netflix does things. The memo is extensive and highly detailed, much more than similar documents offered by tech and entertainment companies. But individuals who read that memo get an immediate understanding of Netflix’s chosen identity and what it expects from its employees. Plus, everyone in the company, from the CEO to administrative staff, adheres to the guidelines set forth by the memo.

But while Netflix has often been praised for having such a bold stance on corporate culture, the company faced backlash when the implementation of those same values seemed to have a negative effect. A Wall Street Journal article described the work environment at Netflix to be high-pressure and cutthroat, where even if people have a shared goal, they don’t care about helping each other as much as getting ahead or not losing their jobs. On a larger scale, Netflix’s Los Angeles and Los Gatos offices reportedly have been at odds with each other: Los Gatos favors algorithm-influenced solutions, and Los Angeles places more emphasis on personal relationships with actors and key talent for its entertainment offerings. It’s worth questioning if the core values that helped define Netflix and make it successful are starting to impact the company negatively.

Netflix would benefit by getting its corporate culture into harmony by standing for values that unite its employees in supporting a shared purpose that is greater than themselves -- not necessarily cutthroat tactics that ensure high performance but make workers lose sight of what they’re even working toward. The values of Netflix are strong, but the way employees have been interpreting and reacting to those values may need adjustment.

Accounting for context and proximity

Consumers’ worldviews are shaped by what they see and with whom they interact on a daily basis. That means that they will choose to pursue and support political and social causes pertaining to things more familiar to them. For example, a person will likely care more deeply about a homeless crisis in his or her home city than a hunger crisis in a developing country.

Companies should take this into account when or if they decide to take a stand for political causes. Nike is a global brand with consumers across the world. Utilizing an athlete and an issue that spoke to its customers was effective -- it was a topic Nike’s customers were already familiar with since it was close to their sports interests. A smaller company with less global reach can speak to a social issue impacting its consumers in a compelling way if it does so in an authentic manner that generates a strong emotional connection. Without such an emotional connection, consumers will likely ignore or, worse, react negatively to the message.

For brands, taking a stand or making a political statement all boils down to a question of profit or purpose. Is the company trying to win PR points by commenting on some controversial government policy, or does it want to advance a social cause in alignment with its values? If companies answer “yes” to the latter and have a strong understanding of the consumers they want, they can succeed with politically motivated business campaigns. It’s not just having a message but believing and defending it. That alignment and backbone can generate new relationships with consumers and boost business regardless of whether the company’s political views are controversial.

Craig Barkacs is a professor of Business Law and Ethics at the University of San Diego School of Business. Craig Barkacs began his long and close association with the University of San Diego when he arrived as a law student in August of 1978. Upon attaining his JD/MBA, Barkacs embarked on an exciting and illustrious career spanning the legal profession, the business world and academia. As an attorney who often represented the underdog in high-profile civil and business litigation cases, he and his law partner wife, Linda, consistently achieved outstanding results litigating opposite some of the largest and most powerful law firms in the country. As an educator, Barkacs has designed and taught numerous courses on negotiation, corporate social responsibility, ethics, law and international business, and has published extensively in those disciplines. He has been very active in teaching in USD’s study abroad programs, and in the numerous graduate programs in the School of Business.

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