In 2018, Google took itself out of the Maven contract with the U.S. Department of Defense (worth $10 billion to the company over 10 years) after a staff outcry against the company agreeing to let its AI technology be used for military purposes.
Earlier that year, employees at both Microsoft and Salesforce had protested against their companies’ work for the U.S. Immigration and Customs Enforcement (ICE) in opposition to then President Trump’s policies that separated children from their parents. CEO Satya Nadella issued a memo to employees with an explicitly political title, “My views on U.S. immigration policy,” in which he stated that Microsoft was not involved in a policy with which he disagreed.
More recently, Disney launched, with much fanfare, its Reimage Tomorrow program focused on diversity, equity and inclusion. A few weeks later an open letter from employees stated that the company “has come to be an increasingly uncomfortable place to work for those of us whose political and religious views are not explicitly progressive.”
We live in an increasingly political and ever more polarized cultural environment. A polarization ignited by a growing sense that our current system of political economy is not working for large swathes of the population, fanned by public figures who gain from encouraging a sense of grievance, and given further fuel by the easy outrage of social media bubbles.
This is all having an impact on corporations that now find themselves embroiled in political issues and pushed to ‘take a stand’ by activists—be they employees or external activist groups.
This is a different world: volatile, emotional rather than rational, complex, multi-directional and multi-dimensional, full of the unexpected and not amenable to the usual business analytical skills. To thrive in this world, business thinking will move on from traditional approaches. Business leaders who will navigate the new era successfully are those who develop and hone the skills to think, act and structure their business politically as well as they have, to date, honed their skills to think and act commercially and financially. This is not a technique. It’s a frame of mind.
But what does it mean to act and think politically?
First of all, I’d like to be clear on what I mean by politics—a word usually associated with partisan politics, or the sleazy world of lobbying for narrow self-interest, or the increasingly unedifying electoral campaigning process. But all that is just part of the highly imperfect operational process. Politics, in its broadest sense, is the mechanism through which we collectively decide what sort of society we would like to live in. That is something that we all have views about, views that are deeply and often viscerally held.
In a pluralistic society, there will be a variety of views on every single issue. In democracies, progress emerges out of the continuous debate around that diversity of views. Politics is therefore a process of conciliation whereby we can move forward while recognizing that there will never be full agreement about any political action.
In this regard, corporations have a choice. They can choose to be political, or they can choose to be activist.
The political corporation recognizes divergent and conflicting views, takes the time to debate them in detail and develops well thought out positions reflected in how it conducts its business. It explains those positions, and the reasons for them, clearly and with humility, acknowledging that they will not please everyone but that they form a framework for how that company does business.
The activist corporation takes more direct positions on issues and publicly advocates for those positions. This approach tends to be successful when it is embedded in corporations’ DNA and forms part of their overall brand.
Patagonia, for instance, has environmental activism built into its core business model and has created a customer base that is passionate about the issue. When it mounted its The President Stole Your Land campaign, the U.S. House Committee on Natural Resources sent out an email with the subject line “Patagonia: don’t buy it.”
Benetton created an edgy, differentiated brand in a crowded, largely undifferentiated clothing market through hard hitting campaigns focused on social justice. So hard hitting that some magazines refused to carry its ads.
The challenge is not to let oneself fall between two stools, to be dragged into an activist position on individual issues under internal or external pressure without clarity on how that all fits into a company’s overall political framework. In such situations, activism can become an out-of-place add-on that risks developing into a festering wound.
It also opens corporations to charges of hypocrisy if their stances end up being undermined by operational behaviors elsewhere in the corporation. For instance, taking up social justice activism is never going to work if corporations don’t have squeaky clean labor conditions in their supply chains.
Political pressures on corporations are coming, and will continue to come, from many sides: activists, investors, employees, politicians, regulators, customers. In the current environment, no corporation can credibly declare itself to be apolitical. Neither can businesses dodge having a political component to their brand image. All of which needs to be developed proactively rather than in reaction to activist pressure—something that is almost guaranteed to lead to missteps.
More Pressure to Come
This requires the development of a set of skills that have not been in such high demand in the past. The skills to think and act politically (in the broad sense I described above). The ability to embed clear and cohesive political positions into how one does one’s business and delivers value to customers, to shareholders, to employees and to society. And the ability to communicate effectively around fuzzy highly emotive issues for which there is no “right answer.”
The 2022 Edelman Trust Barometer concluded that “societal leadership is now a core business function.” Which is why the development and deployment of these new skills is a matter for boards and senior executive teams. They must live in the in-trays of board chairs and CEOs, not delegated to some newly set up department. It is more appropriate to delegate operational issues in order to focus on these core ones. After all, operational skills are currently more prevalent than political skills.
We have entered the age of what I call The New Political Capitalism. As always, it is those corporations who can adapt and quickly develop the necessary skills that will thrive in the new opportunities created.