Business plus politics: a formula for failure


A few years ago on St. Patrick’s day, my mother brought a bottle of Bushmills’ Irish Whiskey to my neighbors’ celebration. When the host’s reserves ran low, they pulled out the bottle and it was enjoyed by nearly everyone – with the exception of their grandfather, an elderly man, who made a bit of a spectacle out of refusing. When asked what the problem was, he explained to us that Bushmills was the Protestant whiskey, and that as a proud Catholic, Jameson was the only such beverage he’d enjoy.

When businesses get involved in politics, it rarely ends well for them. Whether it’s religious tensions in the whiskey market, or personal feelings on immigration rights, the more controversial the topic is, the worse the possible ramifications are. When a CEO chooses to weigh in publicly on the hot-button issue of the day, they can almost certainly count on angering a decent segment of their target market.

When Target announced in early 2016 that transgender shoppers were welcome to use the bathroom of their choice, it sparked a massive boycott among conservative critics. To date, over 1.4 million people have signed a petition to stop shopping in Target’s stores. While it’s difficult to directly attribute what effect the boycott had, over the first two quarters of 2016 the company’s sales dropped 7.2% ($1.25 billion) and their stock price has yet to recover to the level it traded at before the April announcement.

Looking back to 2012, fast-food chain Chick-fil-A came under heavy fire from LGBT rights activists after President and CEO Dan Cathy remarked that he was personally against the idea of gay marriage. Besides becoming a national target of criticism (and losing the business of many consumers to this day), Cathy’s decision made his company’s name synonymous with the political argument he espoused.

The common factor between these two companies, however, is that they (or their executives) made a conscious choice to step into political discussions. Whether these were calculated moves or careless messaging, they made a choice and dealt with the consequences; no outside force pressured them to take a side. All other businesses had the prerogative to remain neutral. Today, a growing contingent on the left is of the opinion that this very neutrality is no longer acceptable.

Clearly, the end of 2016 was a polarizing and contentious time in the political realm, and as President Donald Trump begins his term, the controversy seems unlikely to dissipate. Against the backdrop of recent protests, prominent voices among Leftist activists and media alike have begun to suggest that neutral silence is unacceptable; some even explicitly state that not commenting on current political issues amounts to tacit support of Trump’s actions, which they harshly oppose.

Shaun King, a Black Lives Matter activist and writer, launched what he dubbed the ‘Injustice Boycott’ following Trump’s election. This boycott targets New York City, San Francisco, and Standing Rock, and lists multiple demands for the governments of each city. In his official statement, after laying out his demands, King goes on to address businesses specifically, stating that he “will give… big brands and corporations an honest chance to publicly endorse the reasonable reforms of local activists before we publicly announce a boycott of them.”

King, of course, is the arbiter of what “reasonable reforms” entails, and presumably of what an appropriate endorsement looks like. Likewise, Buzzfeed’s Tom Gara recently wrote an article noting which Silicon Valley executives had spoken out and drawing attention to the rest of corporate America’s silence.

In a tweet the day before, Mat Honan, a Buzzfeed editor, actually tweeted that “We’re following which companies are speaking out on #MuslimBan and which are not.” These instances and more like them add up to an increasingly popular ‘If you’re not with us, you’re against us’ mentality which demands explicit action from companies, in the form of taking political sides.

Implicit in this demand is the threat that if companies do speak out, and express opinions contrary to those of Buzzfeed’s editorial board, they will face retaliation in the form of boycotts or, to borrow another of King’s phrases, “creative disruptions.” And so the businesses are left with two choices: endorse the approved opinion, or put a target on their back.

What these activists don’t take into consideration, however, are the long-term implications of pushing companies towards the political realm. The logical conclusion of this expectation leads to a world in which businesses take sides on every political issue; the philosophy of executives would become official company policy, rather than remaining privately held beliefs. This benefits no one. We have seen it with the companies that have chosen to take sides politically, and the consequences are rarely good.

First and foremost, it distracts from the efficient running of a company. Any time executives or employees have to spend time crafting statements or responses based on political happenings is time that could be spent improving products, developing ideas, or generally being productive towards company goals. Tangible actions can be expensive, too: Target reported that their plan to install gender-neutral bathrooms would cost them over $20 million.

Also, as mentioned above, making statements that alienate customers is almost never good business. While a statement favorable to one’s beliefs could conceivably draw some consumers in, negative impressions tend to have stronger tangible effects than positive ones. This negative bias essentially means that a company will be far more likely to see a drop in popularity (and by extension sales) than any positive effect. When business meets politics, it hurts the bottom line.

Even beyond the fact that politicization hurts companies financially, we need to ask ourselves if the views behind the businesses we patronize are really something we want to know. What really matters: the beliefs of the individuals behind a company, or the quality and efficiency of service? The ideas they endorse, or the humans they employ? The world is already so visibly polarized, should businesses also pick a side? At the end of the day, all I know is that I’d like to be able to drink my Bushmills in peace.

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