Should CEOs be actively involved in big business today?

UK, September 10, 2017.- In the face of major events in major cities and western countries, citizens are seeking arguments. Public authorities, experts, politicians, and ultimately, people to rely on. Within these groups, business leaders are a voice to take into account, because they are involved only in the big issues of today. CEOs can influence opinion trends and must analyze their role. I have had the opportunity to read the following analysis on CEO activism written by Sebastian Reiche at IESE Business School:

The global political landscape has recently been immersed in the aftermath of racial violence in Charlottesville, Virginia. Along with the horror of the event itself, what drew even more attention was the very controversial reaction to it from the one who is expected to speak up for the people, the country and its values. President Trump’s remarks on “violence on both sides” and “the very fine people among alt-right groups” were highly criticized not only in the US, but also abroad. Many felt that Mr. Trump failed to take and communicate a public stance that ought to condemn racism and unite the people. Yet other strong voices — the voices of global CEOs — did just that.

Apart from being yet another reminder of deeply concerning political trends, the aftermath of the event also displayed the rise of a new form of activism: CEO activism. Earlier this year, prominent global CEOs spoke out against Trump’s immigration ban and the decision to pull out of the Paris climate agreement. At the European level, some French CEOs broke their silence and supported Macron during elections. Hence, it seems that global businesses are increasingly joining the political conversation. Why?.

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I would argue that this is a natural development, given the highly-interconnected world nowadays. With all the public media platforms that businesses are using to attract their clients, it probably feels even more difficult to remain silent in the wake of critical events, as the pressure to speak up is high. For example, Weber Shandwick and KRC surveyed 1,050 senior executives and 2,100 consumers in 21 global markets, and found that customers do indeed care about how companies behave in times of crisis. Specifically, one important factor that plays a role in shaping customer perceptions of companies is their proactive reputation for risk management, which may also show in clear and public responses to controversial issues. As such, CEO activism seems not only to reflect the moral part of standing up for one’s personal or brand values, but might also support business performance objectives. Research by Aaron Chatterij and Michael Toffel shows that when consumers favor a company’s standpoint, they are also more likely to buy a company’s products.

Naturally, not everyone will like the company’s stand and not every customer, with his or her political preferences, can be pleased. Yet, Coca-Cola CEO James Quincey believes that brands have to take a clear stand in this volatile environment. Mr. Quincey argues that this should be done even at the risk of alienating some customers, given the diversity their customers represent. For example, Coca-Cola was among those that stood up for inclusiveness amidst Trump’s travel ban, which might have certainly disappointed some of their Trump-supporting customers. I personally support this belief and suggest that CEO activism, when directed towards democratic values, is highly needed. When such a powerful voice as Trump gives encouragement to anti-globalist, populist and nationalist movements (e.g. David Duke seemed to be very pleased with Trump’s Charlottesville comments), we need other strong voices speaking up for, and serving as role models for, more liberal, progressive and inclusive values. As discussed in one of my previous posts, in times of high volatility global businesses — with their outreach to diverse pools of employees and customers — might be the ones to make a positive impact.

The ideal use of social networks by CEOs

Foro Económico Mundial de Davos

Dillon Baker recently wrote in The Content Strategist the use CEOs should make of social media:

Thought leadership gets a lot of flak in marketing circles. Some of it is fair. “Thought leadership” is jargon for something companies have done forever: trying to position their executives as influential leaders. But just because it’s a new way to refer to an old technique doesn’t mean it’s not effective. New technology has just changed how it’s done.

That’s why, much to some people’s chagrin, the term just won’t go away. Thought leadership has fundamentally changed in the age of smartphones and social media. It’s become more effective thanks to the low cost of digital distribution and the ability for individuals to cultivate their own followings. While building up an executive as a thought leader once required an immense PR effort, professionals with loyal followings and powerful influence are now a dime a dozen.

CEOs, in particular, have become social media rockstars. Elon Musk, Marc Benioff, and Mark Zuckerberg are easy examples. But not every CEO uses social media. According to new research from CEO.com and Domo, 60 percent of Fortune 500 CEOs have no social media presence whatsoever.

CEO.com found the result incongruous with best practices. As the company writes in the report, “Social media… has a major impact on brand reputation. A CEO can either participate in the discussion and influence it, or risk the implications of allowing his or her corporate image to be decided in the court of public opinion.”

It’s worth noting, however, that social media thought leadership tends to have more of an impact in certain industries. The study found that executives from technology, retail, media, and entertainment were most active, while energy and air travel were the least active. B2C industries need to play in the public square, while B2B industries can afford to be more targeted with their approach.

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The more active industries tend to be more competitive as well, so companies want their executives front and center in real-time. Tech executives, for example, need to shape and promote company vision. Exxon’s CEO, on the other hand, would probably rather avoid public scrutiny and let his company do the boring work of slowly gaining market share. The report also analyzes which social media networks play host to CEOs.

A majority of them are only on one or two networks at most—only five executives are on four networks, and only one (Expedia CEO Dara Khosrowshahi) is on five. For those who are active on social, LinkedIn tends to be the first choice, followed by Twitter. Every other social network lags behind in a major way: 40 F500 CEOs use Facebook (but only eight are active), while 11 are on Instagram.

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