Author's Note: This post was initially published by me as an article in LinkedIn.
This week’s statement by the Business Roundtable about of the "purpose of a corporation" shattered the idea—still prominent in most of our corporate laws—that corporations exist primarily to enrich their shareholders. Signed onto by over 180 CEOs of some of America’s most prominent companies, the statement “redefines the purpose of a corporation to promote ‘an economy that serves all Americans’,” making clear companies should be managed “for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.” If you haven’t read the actual statement, it’s worth doing, in part to see the actual words rather than read second-hand news summaries, and in part to see the signatures of 181 CEOs who put their personal and business commitments behind those words.
Although much of the reaction to the statement has been positive, critics have already called it out as much overdue and a “too little, too late” effort at trying to defend corporate America from the aggressive anti-business attacks by many of the progressive Democrat presidential candidates, notably led by Elizabeth Warren.
One of the interesting things about the statement is that so many leading CEOs signed it and spread their names across full page ads in The Wall Street Journal and other publications. The signers include J.P. Morgan Chase’s Jamie Dimon, Amazon's Jeff Bezos, Apple's Tim Cook, Bank of America's Brian Moynihan, Dennis A. Muilenburg of Boeing and GM's Mary Barra, among a raft of others. These are smart people, advised by other smart people, who must have understood the political implications of broadening the purpose of a corporation in today’s political environment, where capitalism is under attack and socialism is renewing its periodic appeal. They took the risk of wading into that fray because they believed doing so was in the best interests of their companies—and maybe even America.
Which gives rise to the question of whether your business would Sponsor America. I explored that query in a novel I just released about a geopolitical cyber conspiracy aimed at the 2020 U.S. presidential election. The book’s called Intentional Consequences. In one of the subplots, a billionaire tech CEO named Rakesh Jain who’s concerned about the bitter divisiveness of American politics decides to put together a business consortium to reunite America. He asks his business colleagues to “sponsor America” by putting their weight and sponsorship dollars behind his project. His wife, a prominent political science professor named Valerie Williams, counsels him on how companies look at brand affinity sponsorship decisions that have political implications—something I wrote about back in the fall of 2017 in a Playoff Tech blog post on The Slippery Slope of Sporting Event Protests for Sports Sponsors.
In the book, Jain says he wants to “build a national consensus that reinforces the things we believe in as Americans, the things that help us assimilate this boiling pot into one country. As Howard Schultz, the former CEO of Starbucks, said the other day, we need to stop focusing on what divides us and start focusing on what brings us together. I’d like to create a coalition that can rekindle our spirits and reset our horizons, regardless of whether we’re Blue or Red. We need to repaint America.”
When Jain complains about the challenges of lining up business support, Valerie explains,
“For most companies, it’s just Marketing 101. Companies take positions they think will help their business, which means attracting the customers they want to attract. They avoid positions they think will harm their business. Target demographics matter here. For most companies, younger customers are more valuable than older ones because the younger ones spend more, both now and over their longer lives. These younger customers often have more progressive values, which can skew how a company thinks about its political persona. Some companies with aggressive marketing strategies, like Nike, may be willing to risk offending a less valuable customer segment if they can fire up their most important customers. It’s like a political party firing up its base. Risk avoidance works the same way in reverse. It’s not like an election where you win if you get 51%. Most businesses can’t risk losing the other 49% of their customers. Employee pressure in some companies can also keep them from supporting political and social programs. Google’s employee contributions were 95% Democratic in the 2018 mid-terms.”
She also warns him about the risks of seeking business support for his program in the 2020 political environment: “The platform issues in 2020 are not going to help you attract business partners. With both parties attacking big tech, those companies will be especially cautious about offending either side. Some potential sponsors may not want to be associated with you because you made your money in tech. Health insurance companies are going to be worried about seeming to take sides on the fight over Medicare for All. The list goes on.”
When Jain says he’s just trying to reunite America, not take positions on those platform issues, Valerie warns him, “That’s not the way your opponents will paint it. They’ll call you out for being against new ideas and progressive change. They’ll align you with the billionaires and big businesses they’re attacking as part of their basic thesis about America.”
I don’t want to be a spoiler on how Jain makes out with his efforts to reunite America—you’ll have to read the book to see how his efforts go and how the main story comes out.
But the issues Jain struggles with in the book are clearly relevant today as businesses decide how to act, what to say and what to sponsor in a world where virtually everything has become politicized and bitterness and even hate have replaced what we used to call rational political debate. Just check out the leading online advertisers who are increasing the words they are blacklisting from the obvious ones about violence, hate and racism to words about the 2020 election and the names of the candidates for president, including the incumbent.
So, if your company were given an opportunity to Sponsor America, to help bring us together in a time of political bitterness and division, would you do it? How would you judge the affinity value? How would you judge the risk, especially in a world where social media can be mobilized against you in a few heart beats? Clearly it would depend on the specific messaging. Could you build a reunite America version of the long-famous Coke commercial I’d Like to Teach the World to Sing? Even if you could, would you take the risk, especially with the 2020 elections coming up?
It’s a sobering thought.
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