Off Brand

Why the Smartest Companies Are Shunning Neutrality, and Taking a Political Side

What Cloudfare, Dick’s Sporting Goods, and Nike reveal about the future of brand survival

The fundamental task of a business is to generate profits for its owners, investors, or shareholders, right? “Make as much money as possible while conforming to the basic rules of the society,” to borrow a phrase from Milton Friedman. That’s an appealing stance, precisely because its absolute clarity makes it easy to sidestep any number of tricky social, cultural, or political issues that might complicate a pure focus on the bottom line.

But lately, that proposition has gotten complicated. In fact, something like 200 CEOs of massive firms such as Apple, General Motors, and Bank of America, under the auspices of the Business Roundtable, recently tried to declare a new kind of era, in which business would serve not just shareholders but “stakeholders” — holding themselves responsible to employees, customers, and the environment. “We commit to deliver value to all of them,” the group’s statement read, “for the future success of our companies, our communities and our country.”

For many business owners this sudden stroke of enlightenment was nothing new; stakeholder-driven B Corps have been around for more than a dozen years, and there are currently over 2,500 companies with its certification. But the collective statement responded to a zeitgeist, one that as Harvard Business School historian Nancy Koehn pointed out, is animated partly by increasingly widespread skepticism of big business, income inequality, and excessive CEO compensation, among other issues.

In a way, the declaration was simply one piece of a years-old trend: indisputably profit-driven enterprises (particularly those that have tied their brand to the “disruptive” use of technology) slathering a thick layer of vague-yet-highfalutin virtue over their business plans. “Our mission is to elevate the world’s consciousness,” WeWork declared — shortly before its IPO plans cratered, and the company became Exhibit A for the end of chutzpah-driven startups, better at performative rule-breaking than at actually delivering results.

These aren’t airy and meaningless Googley “don’t be evil” stances that nobody in the entire world would seriously contest.

Nevertheless, the Business Roundtable — even if it ends up being more spin than substance — is actually onto something. We are starting to witness businesses actually making decisions that seem to transcend the profit motive. I don’t just mean the usual suspects (looking at you, Patagonia) whose brand proposition is explicitly tied to social responsibility. I mean thoroughly mass-oriented enterprises like Walmart or Dick’s Sporting Goods pulling certain gun or ammunition offerings altogether in the wake of mass-shooting events — thus risking being seen as taking sides in one of the most volatile political issues of our time. Or car companies, including Ford and Honda, choosing to meet California emission standards. Or Nike doubling down on its relationship to Colin Kaepernick and his social justice mission.

These aren’t airy and meaningless Googley “don’t be evil” stances that nobody in the entire world would seriously contest. They are decisions with actual potential consequences. Of WeWork’s many problems, none involved alienating potential customers who oppose “elevating the world’s consciousness.” Such rhetoric carries no risk. Taking a stand does. And while it’s easy to consider both practices under the general banner of social responsibility, it’s vital to separate the two ideas.

Consider Cloudflare, basically an internet infrastructure company that offers vital security and other technical services, like DDOS protection and domain name services to online clients. In general, the San Francisco-based company has maintained ideological neutrality about who it will sell its services to; its job is to make money, period. But there have been some crucial exceptions. In 2017, following the violent white supremacist rally in Charlottesville, VA, Cloudflare dumped The Daily Stormer, a neo-Nazi site. More recently, it cut off 8Chan, after it emerged that the alleged shooter in the El Paso massacre distributed his disturbing manifesto on the controversial message board.

Cloudflare CEO Matthew Prince has been strikingly open about the difficulty he’s had making a decision that practically kicks an entity off the internet. “No one should have that power,” he has said.

But actually, you could more usefully reframe this as: “No one wants that responsibility.” The real dividing line now emerging is between those businesses that are willing to accept their role in society beyond the quarterly earnings report, and those who prefer to hide behind some version of neutrality as a justification for making as much money as possible while conforming to the most generous possible interpretation of “the basic rules of the society.”

In the old days, this was what made a mass brand truly mass: It welcomed everyone’s dollars, without question. More recently, the same worldview has driven the “platform” theory of digital business: A hands-off neutrality about who does what with the (profitable) tools that one provides.

But as we learn just how bad the worst-case scenarios can get, this pose seems feeble. It’s not a point of view, but rather the absence of one. A recent Morning Consult poll identified the 15 most “polarizing” brands, almost all of which were media companies, which is not surprising. But the one real consumer brand on the list was Nike. This is notable both because Nike’s backing of Kaepernick really did make some people angry — and because the company has done extremely well anyway.

“There is one and only one social responsibility of business,” Friedman wrote. “To use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” He summarized those rules as engaging in “open and free competition without deception,” but perhaps the rules have changed. Maybe now we want a company that can look us in the eye and say what it believes. The old strategy of trying to offend nobody? That’s become the most offensive strategy of all.

Author The Art of Noticing. Related newsletter at https://robwalker.substack.com

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