Chief executives can no longer stay out of the political fray

Activism is everywhere.

From our neighbourhoods to boardrooms, national crusades to local causes, there is no shortage of people clamouring to bring pressing, worthy issues to our attention.

And business is no exception, hence the rise of a new type of chief executive: the “activist”.

This creature takes many forms: publicly outspoken, actively involved in campaigns, or the lesser-spotted quiet supporter of social movements – in other words, the cheque behind the chatter.

For chief executives, speaking up offers a chance to raise their company profile and further their own political agenda at the same time.

Think back to former Starbucks chief Howard Schultz’s crafty positioning following Donald Trump’s election. Announcing that his firm would employ 10,000 refugees over the next five years, along with slamming the 2017 Republican tax plan, Schultz raised his profile to the such an extent that a presidential campaign of his own in 2020 is being suggested.

But there’s a catch: personal success for Schultz did not translate into success for the brand.

Following an 11 per cent fall in the company share price, Schultz left his post earlier this year. And while the two are not necessarily connected, his outspoken policies had previously got the global coffee firm into hot water.

There is no doubt that this kind of activism is quickly changing the business landscape. The fact that political positions are something we would even consider as a factor in the share price demonstrates an enormous shift in our perception of the role of the chief executive.

Of course, politically-engaged corporate leaders are hardly some new beast, and business and politics have always been closely linked. Dick Cheney, at one time the second most powerful man in the world, transitioned to vice president of the US from being the Halliburton chief, as documented in an upcoming film starring Christian Bale.

However, there is increasingly a newfound appetite for campaigning chief executives, and as business leaders build their own profiles, the lines between a company’s identity and that of its leader become blurred.

Take, for instance, Apple boss Tim Cook. In 2015, the tech titan vocally condemned Indiana’s Religious Freedom Restoration Act, which opponents argued could be used to discriminate against LGBTQ people.

Cook, as a gay man, did not just object on his own personal grounds; instead, he claimed to oppose the new legislation on behalf of Apple itself. He leveraged his position as leader of a giant company to take a stand for something he believed in.

Of course, sometimes such action can backfire, and executives must learn to pick their battles – and be prepared to face the consequences.

Joining the picket on issues with little to no relevance to your company’s objectives, with which you hold no personal stake, is unlikely to garner support, and instead risks alienating your base of stakeholders, consumers, and investors.

What worked for Apple didn’t go down so well for Delta Air Lines, which cancelled its discounts to members of the National Rifle Association in February.

The backlash in this case was quick and legislative: Republicans in Georgia scrapped a jet-fuel tax break. Being outspoken on gun control, whether as a result of personal convictions or as a response to mounting public pressure, cost Delta millions.

Undoubtedly, this kind of activism can impact company reputation, shape public policy, and influence consumer and investment audiences. But in an increasingly polarised world where businesses are constantly under the microscope, the political stance of a firm is no longer optional.

It might be a PR trope but “in the age of social media”, we demand speech, positions, and perspective from business leaders like never before. Precision and detail in communication has maybe never been more important when it comes to managing both public perceptions and profitability.

If you want one final example of how a seemingly risky political stance can pay off for a company, look at Nike.

Its most recent ad campaign – featuring the NFL star quarterback Colin Kaepernick, who famously knelt during the national anthem to protest racial injustice – challenged the notion that the Black Lives Matter movement is too controversial to engage with.

The one thing that Nike’s “Believe in Something, Even if it Means Sacrificing Everything” campaign didn’t force the brand to sacrifice was market cap. Nike has closed multiple record highs since Kaepernick’s ad campaign went viral.

Sometimes taking a risk and linking your business to the forces of social change works. What will ultimately guarantee the success or failure of the activist chief executive is how authentic they are when they choose to leverage their economic power. Above all, are they listening to their stakeholders, or just looking to jump on the activist bandwagon?

And when it truly comes to it, are they willing to put their money where their mouth is?