James Frayne: What role for business in the 'reboot of capitalism'?

Written by James Frayne on 21 January 2019 in Opinion
Opinion

Gillette has decided to fall in with the #MeToo movement but other brands might be better off backing conservative causes.

Businesses have generally been wary about engaging in public conversation on political issues. They’ll engage narrowly and diplomatically on big issues they care about like Brexit, but they’re usually careful not to engage in commentary on emotive and divisive political issues.

Led by high-profile businesses in the US, this appears to be changing. Casting historic shyness aside, more and more businesses are engaging in culture wars on the assumption this is what their customers want. But is it? And if it is, how do businesses navigate the clear risks associated with such an approach?

Those that read the business pages of the media daily will know there are two closely associated debates on the future of corporations at the moment. Firstly, on whether or not businesses should, in the views of the late Milton Friedman, focus purely on maximising profit and returns to investors, or whether they should instead exist to meet a higher social goal. And, secondly, on whether consumers, and particularly younger consumers, want the businesses they buy from to display a clear moral purpose. From these two debates spring Nike’s decision to endorse (and be endorsed by) NFL player Colin Kaepernick, and Gillette’s decision to fall-in with the #MeToo movement with their controversial new ad.

 

 

 

 

The way these debates are playing out at the elite level strongly suggests there is public groundswell for a major shift: that the public want a “reboot” of capitalism and that they want businesses effectively to campaign for societal improvement. Even some Conservative politicians and strategists have bought the first of these conclusions and now talk about how the Party needs to show it believes capitalism should be reformed - above all through the taming of big businesses. Everything points to a huge growth in the public conversation on reformed capitalism and purpose in the next decade. And there'd be an explosion in this area in the (still unlikely) event of a Jeremy Corbyn premiership. 

So, do consumers really want brands to engage in politics? In truth, the answer is complicated. Top-line polling suggests, strongly, "yes". A YouGov poll at the end of 2018 revealed that 57% of people think brands people like should have a "clear / transparent point of view on wider issues in society". Furthermore, 58% of people said they wanted to "trust the brands I interact with", while 41% said they did not want to "support businesses who have values I disagree with". Communications consultancy Edelman released a report, also in late 2018, showing that 64% of the public across eight major markets, are "belief-driven buyers". 

While the evidence appears to suggest that brands should at least consider engaging on political and moral issues to further their engagement with consumers, danger lies in store for those that do so without fully thinking through the reality of their own customers’ political and moral views. After all, below the high figures in YouGov and Edelman's polling, there is obviously no agreement at all on what the nature and style of public engagement should be. Different brands will have wildly different customer bases (and prospective customers) who want and will expect different approaches. Thinking about the UK market, clearly, the political and moral interests of Aldi customers are going to differ wildly from those of Waitrose customers. They’d likely divide significantly over issues like Brexit, but likely too over issues like public health, tax and so on. And there would obviously also be divisions within these businesses own customer bases too.

At the present time, those elite voices pushing for firms to embrace purpose are effectively encouraging them to push a left-liberal worldview - precisely because these are the causes that they personally believe in. For many firms, this will be 100% the right thing to do. For firms whose customers skew affluent, young, and urban, it makes sense to support liberal causes. But for those firms whose customers are more likely to be less affluent and old, it obviously doesn’t. Rather, for those firms, it makes much more sense to support respectable, mainstream (small-c) conservative causes and to use more conservative language. Despite this obvious point, very few businesses seem willing to accept this truth; to them, taking a stance means embracing liberal causes or doing nothing at all. Embracing conservative causes – like security, financial success, low tax - is not an option.

This is where the real danger lies for businesses. If they embrace language and causes without considering where the customers and prospective customers are on political and moral issues, they risk either pouring money down a black hole or, worse still, alienating them. Businesses should only engage publicly where they can be sure they will represent their customers’ and prospective customers interests and values. If they can't be sure, they should ignore those voices pushing the idea of "purpose" and stay focused purely on delivering high-quality goods and services. 

 

 

About the author

James Frayne is former policy director at Policy Exchange and founding partner of the public affairs agency Public First.

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