Building Brand Equity by Supporting Progressive Policies
For most of the 20th century, corporations were conservative. They only recognized one stakeholder: the shareholder. The dominant mantras were “free markets” and “driving shareholder value.” The conservative business perspective was taught in all large MBA schools. We learned that “What is good for business is good for America.” Indeed, progressive views on corporate responsibility that recognized all stakeholders rarely saw the light of day.
In terms of marketing, companies were product-centric. Their focus was: How do we get more people to buy our product?
During the conservative business era, no one said it was “political” to hire lobbyists to advocate for conservative legislation favoring the company and its shareholders. Donations for politicians who supported lower corporate taxes were normative. Going further, large corporations often supported candidates in both parties. This was even better for business … if you could afford it.
But product markets changed radically starting in the 1990s. Corporations lost their monopoly on product information, thanks to the internet. By the 2000s, buyers could complete most of the buying process before contacting a company or a sales representative.
Just as important, labor market power shifted radically. For most of the 20th century, it was hard for job seekers to learn about a company’s true labor practices. Now, sites such as Glassdoor provide forums where current and former employees can anonymously review companies. Job seekers use the internet to choose which companies to pursue or avoid. So, even while union power has faded, workers increasingly vote with their feet by avoiding or quitting poor employers.
Corporate support for diversity was the first major shift toward progressive business practices. The 1964 Civil Rights Act had a widespread impact, including the formation of the EEOC and its power to enforce laws against workplace discrimination.
While many companies resisted it initially, many others created competitive advantages by embracing diversity programs. Diversity laggards suffered the consequences. Customers and job seekers tended to avoid corporations that did not support diversity.
Today, corporate diversity programs are normative. Companies are not labeled “activist” when they feature people of color in ads or require diversity training for all employees.
One especially stubborn aspect of corporate responsibility involves pay equity. White workers are about 50 percent more likely than workers of color to hold good jobs, and much less likely to be displaced from their jobs by automation. Women receive 81 cents for every dollar earned by men.
These statistics highlight the systemic nature of racism and sexism in the US.
A leader in correcting pay iniquity is Salesforce. They have spent over $12 million on pay raises to reduce it.
The Salesforce example is not yet normative. Many corporate boards conveniently dismiss pay inequity as inappropriate corporate activism. They say it is not their fault if the labor market pays less to minorities and women.
Others, like Marc Benioff, CEO of Salesforce, regard their pay equity investment as good business strategy. It is closely tied to maintaining their top competitive position around the world.
Corporations now pay close attention to the environmental catastrophe due to global warming. GM recently announced it will only offer electric vehicles (EVs) by 2035. Most US utilities offer customers incentives to adopt energy efficient products (e.g., LED lighting, solar generation) and technologies (smart thermostats). The examples are numerous and growing daily.
Companies that offer sustainability products and services or favor suppliers who actively support sustainability are now normative. They are not activist corporations.
What Are Conservatives Afraid Of?
The number two Google search result for the term progressive corporations is a self-proclaimed “consumer watchdog” website. It declares at the top of its home page:
The Cardinal rule of business is to never even discuss politics, yet some companies have recklessly chosen to alienate half of the country by attacking Donald Trump and/or Republicans, pushing for censorship of conservative speech, and/or supporting the false and racist narrative of systemic racism in police and in America in general. These companies are a threat to our freedoms. If we do nothing, then their left-wing ideologies become the norm.
On the one hand, it is shocking this fake consumer watchdog site ranks so high on Google. On the other, it is a sign of the tumultuous times we live in.
The Way Forward
Many large corporations now enhance their competitiveness by embracing progressive thinking. For marketers, brand activism is nothing more than aligning marketing efforts with the company’s use of progressive thinking to improve its competitive position.
Companies that think business success depends on a singular focus on the shareholder are getting left behind.