Recently in the U.S., we have been bystanders to a conundrum at the heart of a “moral” capitalism – whose morals are to be elevated above other alternatives?
Sexual lifestyles have recently tripped up two major consumer companies – one the maker and seller of beer, Anheuser-Busch and the other the shopping mall retail giant, Target. Anheuser-Busch recently ran an ad for its Bud Light brand of beer featuring a trans woman. That public presentation of the company’s values triggered a customer boycott of the beer. Then, Target put on sale a line of clothing designed for trans women in association with a celebration of LBGT values and lifestyles. There were protests in stores and the company lost $15 billion in market capitalization.
Faced with rejection from some in its customer base, the company took down the pride displays. The Target CEO issued this statement:
Team –
I want to end the day … on a note of care. This has been a very hard day for Target and it follows many difficult days of deliberation and decision-making.
To our team in stores: thank you for steadfastly representing our values. No one is better at working through uncomfortable situations in service to an inclusive guest experience.
What you’ve seen in recent days went well beyond discomfort and it has been gut-wrenching to see what you’ve confronted in our aisles.
To our team in the service centers, thank you for your patience and professionalism through high volumes of angry, abusive and threatening calls. I recognize how difficult and even frightening those interactions can be and thank you for the composure with which you’ve fielded those comments.
To the teams who have been working so hard on our plans for pride – and now are showing incredible agility as we adjust – thank you. Your efforts will ensure we can still show up and celebrate pride in meaningful ways.
To the LGBTQIA+ community, one of the hardest parts in all of this was trying to contemplate how the adjustments we’re making to alleviate these threats to our team’s physical and psychological safety would impact you and your wellbeing and psychological safety. We stand with you now and will continue to do so – not just during pride month, but each and every day.
Those were the two guiding principles when it came time for us to act: do all we can to keep our team safe and do all we can to honor our commitment and connection to the LGBTQIA+ community.
You just can’t please everyone all of the time. Some people all of the time, yes; all of the people some of the time, yes; but all of the people all of the time, no!
A third recent case in the U.S. is that of CNN’s firing of its new CEO. He tried to expand the audience for CNN by appealing to Trump supporters. CNN hosted a town meeting with former President Trump. Providing that cultural “product” antagonized CNN’s regular audience, who mostly hate Trump. CNN was caught between a rock and a hard place. The CEO took the fall for his marketing shortsightedness. The company’s salable product was a certain “taste” in politics and culture. Those who tuned in wanted to experience that “taste” and only that “taste,” not any other.
In retrospect, one of the wisest comments I’ve ever heard is the Latin quip: De gustibus non disputandum est – “You can’t argue about taste.”
Another truism is: “One person’s trash is another person’s treasure.”
In capitalism, companies are in the business of satisfying tastes. They are not tastemakers, though many try through advertising to link their product or service to some strongly felt preference, value, taste or emotional need. Firm reputation management is also about coming out ahead in the “taste” wars or at least avoiding customer alienation.
But the task for managers in successfully navigating community civil wars over tastes and values is like squaring a circle – sometimes it just can’t be done. To please one taste/value constituency, you inevitably alienate another.
This is especially true when the values at stake are emotionally profound, triggering identity anxieties and are even existentially important for some customers or other influencers.
Reflecting on the cases of Bud Light and Target, the Wall Street Journal ran a frontpage story with the caption “Companies Rethink Embrace of Social Issues.” The story continued on page 10, filling the entire page.
Actually, two years ago, I forewarned our Caux Round Table network about the dangers which would arise for firms when CEOs took public positions on controversial differences of opinion. On April 19, 2021, I wrote to our network:
In the current cultural turmoil in the U.S., Big Tech companies such as Facebook, Twitter, Amazon and Google take political positions by censoring opinion and speakers they don’t like. Many advocates of good causes press companies to sway public opinion or adopt new norms with respect to remediation of global warming or compensation for past discrimination based on race.
The issue of when corporate social responsibility would encourage political engagement by companies is most relevant to democracies where rights of free speech, the rule of law and free markets are the reality. In one party or other, authoritarian states, where control of private lives by the government is the norm, companies do as they are told, not as they might like. In such states, what can’t be helped must be endured, as the recent experience of Alibaba and Ant Financial in China has demonstrated.
The Caux Round Table, many years ago now, made a distinction between corporate social responsibility, on the one hand and the responsibilities of governments and civil society, on the other. The ethics of competency and “sphere sovereignty” constrain the power of companies to dictate politics, as they see fit to do.
But there currently is little discussion of what the ethics of companies, especially publicly held corporations, should be when the responsibility of companies, as citizens, is under discussion and open to critique.
As James Madison reminded us: “If we were angels, there would be no need for government.” Corporate social responsibility, likewise, cannot presume that companies are always on the side of the angels. Some degree of circumspection is therefore wise.
In a related essay, ascribed to either Madison or Alexander Hamilton, the point was made that “as there is a degree of depravity in humanity, which requires a certain degree of circumspection and distrust, so there are other qualities in human nature which justify a certain portion of esteem and confidence.” When companies and their executives presume to lecture and admonish citizens as to what is right and what is wrong, should their recommendations be received with mistrust or with esteem and confidence?
You can read my April 2021 argument for wise use of corporate discourse in the public domain here.
A problem always arises when companies take sides in a conflict of “tastes” – be they commercial, social or political. To borrow a mental construct from the economists, the good or service offered by the company to the public or the brand associated with that good or service is not exclusively a “private” good, but one which has externalities that make it more of a “public” good than one only privately consumed.
Is a beer advertisement communicated to a mass audience really only a “private” matter without any entanglement with the feelings of others? Is a display of clothing in a mass retailer only for “private” consumption of a few or does it speak to all who happen to pass by?
Generally speaking, we don’t care all that much about who consumes what private goods. My taste is not yours. I buy what I like and want and don’t spend much time worrying about getting your approval for my purchases. What I buy for myself is, mostly, none of your business. I, too, have my safe space in which to be myself.
But there is a line which can be crossed: what I buy may threaten you physically – a gun or drugs for example or upset you emotionally – a prejudice which you can’t stand, something vulgar or sexual, a cultural appropriation.
Fathers and mothers do not approve of every purchase made by their children, but then they are parents with a role responsibility for taking due care of those in their charge.
When some such socializing line between “private” and “public” is crossed, the good or service purchased loses its completely “private” character and acquires “public” impact. The more a good or service acquires a “public” quality, the more it becomes subject to public comment and perhaps, disdain. Such a product or service is then less a matter of free private choice and more a matter for social disparagement and even regulation – like pornography or “disinformation.” Other people then care who buys what and who sells what. The business transaction is no longer just a socially insignificant matter between a private seller and a private buyer, as Adam Smith famously put it in the cases of the butcher and the baker.
In these circumstances, the company is forced to choose among stakeholder constituencies. Who does it want to serve? What if one constituency likes the “taste” that the company brings to the market and another one despises it? Then what does management do?
Thus, the conundrum just reported on by the Wall Street Journal.
Tim Knavish, CEO of PPG Industries, was quoted as saying: “There’s no pure algorithm to put all this stuff in a spreadsheet to tell you what to do.”
Knavish asked his staff to review their processes for engaging on polarizing topics. So, PPG now uses an internal scoring system to determine if and when it makes sense for the company to comment on matters that may offend some of its customers and employees or affect its brands.
Knavish said further: “We run a business. We don’t run a political organization. We don’t run a religious organization and we don’t run a social organization. However, we recognize that we operate in a society. We hire employees with opinions and views. We work with customers that have opinions and views, so we have to take all that into account.”
Now, Knavish here stands right in the vortex of stakeholder management. Not all stakeholders are of the same mind and never will be. And there is no AI algorithm to make the choices among stakeholders easy and without risk.
Human judgment is all a CEO and board have by which to navigate their way between this Scylla and that Charybdis, as Odysseus might say. Providing some guidance for CEOs and boards when they find themselves mired in such a quandary was my intent two years ago in writing about CEOs speaking out in public on “public” issues.
Now, I would add to my recommendations the mindset of seeking equilibrium, of cultivating a sense of balance which triggers awareness of when a course of action will shift the equilibrium among stakeholders off balance too far in one direction.