Is a Big Political Mouth a CEO De-Pillowtary

In the world of corporate marketing, the mantra for CEO survival had been: keep your big mouth shut, because just about any political opinion is going to alienate some segment of the consumer base. Michael Hiltzik, writing for the January 21st Los Angeles Times, puts the evolving “best practices” CEO communications practices this way: “The traditional rule for CEOs has been that it’s best to let your products speak for themselves and keep your big mouth shut about anything other than narrow business principles. In recent years, the rule has become more often honored in the breach. That’s because social conditions have led to a broadening of the principle of corporate social responsibility.

“The redefinition has been driven by major institutional investors such as BlackRock, whose CEO, Larry Fink, has called on companies ‘to wade into sensitive social and political issues’ in part because governments have ceased to address them.

“Major corporations and their CEOs still take care when wading into political waters. They have been more willing to take a stand on questions with an economic coloration, such as the minimum wage and climate change, than polarizing topics such as LGBTQ rights, gun control and abortion, according to a 2018 study by Aaron K. Chatterji of Duke University and Michael W. Toffel of Harvard University.

“Social conditions sometimes can change a precarious topic into one seen as appropriate, even mandatory, for corporations to take a stand on — the Black Lives Matter movement and the George Floyd killing, for instance, have placed support for racial justice squarely on corporate agendas.” Some folks have products so unique, so compelling, that even the twisted words of their CEO cannot change that. Weed-smoking rightist Elon Musk, railing against safe-distancing rules in his California plants and lambasting higher state taxes that drove him to move to Texas, is now the richest man in the world. Tesla sales are skyrocketing.

On the liberal side, openly gay Apple CEO, does not seem to have impaired his company’s sales. Apple is still a wild success. But when a CEO speaks specifically against an identified demographic segments, the risks magnify. Hiltzik: “[O]ccasionally CEOs take it upon themselves to speak out. That can be a bad choice. Same-store sales at the pizza chain Papa John’s cratered after its founder and chairman, John Schnatter, blamed the take-a-knee protests by NFL players for a decline in the league’s TV ratings and consequently his company’s sales… Schnatter ceded his post as CEO and, following a later report that he had used the N-word on a conference call, left the company’s board and sold all his stock.

“Sometimes a top executive’s comments don’t have a direct impact on sales but damage a company’s reputation nonetheless. That happened to the family-owned fast-food chain Chik-fil-A in 2012, when its president, Dan Cathy, spoke out against gay marriage in interviews with a Baptist publication and a devotional radio program. The company was also found to have contributed to organizations opposing LGBTQ rights.

“Boycotts ensued, along with expressions of support by evangelist politicians such as Mike Huckabee. The company reported a 12% gain in sales for 2012. But the controversy plainly hurt. Chik-fil-A stopped contributing to anti-LGBTQ organizations and announced it would henceforth ‘leave the policy debate over same-sex marriage to the government and political arena.’

“By 2014, Cathy was expressing regret for ‘making the company a symbol in the marriage debate.’ He told the Atlanta Journal-Constitution that aligning the company with ‘anti-gay groups’ resulted in its ‘alienating market segments.’… ‘Consumers want to do business with brands that they can interface with, that they can relate with,’ Cathy said. ‘And it’s probably very wise from our standpoint to make sure that we present our brand in a compelling way that the consumer can relate to.’” Perhaps the most toxic brand association of all, particularly after the January 6th debacle, is with former President Donald Trump. 

MyPillow CEO Mike Lindell (pictured above) was photographed carrying documents suggesting the invocation of martial law as he visited Trump in the latter’s waning days in the White House. Lindell has been a seriously outspoken supporter and campaign contributor to the ex-President. “Mike Lindell is discovering the downside of becoming known as a right-wing crank… Or so the My Pillow chief executive claims. He says that in recent days, Bed Bath & Beyond, Kohl’s and Wayfair have dropped his product.

“Lindell is convinced their decisions are related to his continued support for Donald Trump’s claims of a rigged election, telling Yahoo Finance that the retailers were pressured by ‘left-wing groups that attack with bots and trolls.’

“Bed Bath & Beyond said it’s dropping My Pillow because it isn’t selling well; the retailer called it one of a “number of underperforming items and brands” being excised from inventory, though it’s possible that reflects consumer distaste for Lindell’s position… Kohl’s, citing ‘decreased customer demand,’ said it would sell off remaining inventory and not order any more. Wayfair hasn’t commented publicly…

“It can be hard to distinguish whether extremist CEOs have a negative impact on their companies because of their views or their distraction by noncorporate matters. After building Overstock.com into an innovative online retailer, Patrick M. Byrne veered into a conspiracy-infected fever . He announced that he had been serving as an informant against the Russian foreign agent Maria Butina, and plunged into the cryptocurrency world.

“Overstock’s profit and market capitalization plunged. In mid-2019, Byrne announced he had sold all his stock, blaming his decision on attacks on him by ‘organs of the Deep State,’ including the SEC. Under a new CEO and with a tail wind provided by a pandemic-related surge in online commerce, Overstock.com’s revenues and stock price have recovered… The old mandate to keep corporate executives out of the political limelight has obviously faded…

“For all that, some business executives will find it hard to stay out of the limelight, to their own disadvantage. The best example may be a prominent businessman who has lately been losing corporate sponsorships and public credibility because of his extreme public positions while reportedly facing growing deficits and mounting debt at his businesses. His fortunes may end up defining the limits of CEO cults of personality. His name is Donald Trump.” Hiltzik.

But as the government had stepped away from addressing some difficult core policy issues, the notion of “corporate responsibility” has become an increasing reality. Issues like climate change as well as racial and gender inequality seem to have moved into mainstream corporate citizenship. “[Corporations] have been more willing to take a stand on questions with an economic coloration, such as the minimum wage and climate change, than polarizing topics such as LGBTQ rights, gun control and abortion, according to a 2018 study by Aaron K. Chatterji of Duke University and Michael W. Toffel of Harvard University.

“Social conditions sometimes can change a precarious topic into one seen as appropriate, even mandatory, for corporations to take a stand on — the Black Lives Matter movement and the George Floyd killing, for instance, have placed support for racial justice squarely on corporate agendas.” Hiltzik. In some ways, inclusion is a good way to expand a customer base. Conspiracy theorist beware… if you are deeply associated with a company that depends on reputation and customer goodwill. That appears to be the one arena of consistent business quicksand.

I’m Peter Dekom, and while the First Amendment guarantees free speech, it goes not preclude consumer blowback for the words so freely spoken.