CEO Activism Will Only Get More Ubiquitous

A pair of researchers on CEO activism predict how the trend will unfold and share advice with executives looking to make a statement on a controversial issue.

Aaron Chatterji on CEO activismContinuing our conversation of CEO activism and speaking out on controversial issues with Aaron Chatterji, associate professor at Duke University’s Fuqua School of Business and former senior economist at the White House Council of Economic Advisors (CEA), and Michael Toffel, professor of environmental management at Harvard Business School,

In part one, Chatterji, who have written extensively about the subject for Harvard Business Review and in formal research, talked about the main drivers of CEO activism and the different types of CEO activists we’ve seen come out since the trend came to prominence in 2015. In part two, the duo talks about the importance of knowing your audience before speaking up, other tips on activism and how this trend will change over time.

Below are excerpts from their conversation.

How important is it to really know your audience before you speak up? I say this because when the CEO of Patagonia spoke up about the conservation of lands against the Trump administration, she was preaching to the choir a little bit, of who her audience is and, you know, not everyone might be afforded that luxury.

Chatterji: Yeah, it’s incredibly important. I mean, you see a lot of variation across corporate America in terms of who [a CEO’s] customers are, who their employees are, and that can be just a matter of what industry they’re in or where they are located. So if you’re at Nordstrom and you’re thinking about whether to drop Ivanka Trump’s brand, it’s a very different conversation based on consumers you have and locations you have than if you are Target, [and you’re thinking about the transgender bathroom issue].

So you see this many, many times across the board with companies like Papa John’s and the NFL issue. Publix supermarket is now dealing with the guns issue…there’s Delta and the NRA. All these companies are being forced, either before or after the fact, to grapple with, what do their customers and other important stakeholders, including their employees, really believe? And how is this issue going to sit with them?

And I think for some companies, either they have the right data or they just have a better sense of who their customers and employees, where they stand and it’s easy for them. And others it’s a much different [calculation] and sometimes it’s a big risk and sometimes they just don’t know. So I would say that’s one of the most important things for a CEO to consider when they’re speaking out, is how the stakeholders in the firm, the employees, the customers, the investors, the people you’re ultimately accountable for, feel about the underlying issue. That’s not to say you should always be a prisoner of public opinion or what other people think, but it’s just to be sort of in recognition of the responsibility you have.

Toffel: Yeah, I think also, it is important to consider, who are you trying to communicate with when you’re exhibiting CEO activism. One of the things that I thought was most interesting when we were doing a bunch of interviews…in this area, is that I had assumed that those public comments were often meant for the general public. But in fact they were often motivated by the employees of the firm…[to act as] a credible statement by the CEO of where that [the company] stands [rather] than just writing an internal memo to one’s employees, which might get leaked anyway.


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