It’s a feature of social and political life that people often react far more strongly to what other people say than what they actually do. Dividing lines are drawn and entrenched positions are established around fictions rather than realities.
We’re in one of those binds right now with the issue of corporate social responsibility.
Before he took up his current post as chief executive of Birds Eye Iglo, Martin Glenn was hauled before a House of Common Select Committee in his capacity as chief executive of Walkers Snack Foods. The issue was obesity. “It wasn’t about giving evidence,” he told the British Brands Group in his recent annual lecture. “It was about being publicly flogged and chastised.” He felt he was being treated as “the devil incarnate”.
Why should this be? The answer has its roots in the era of Margaret Thatcher, Ronald Reagan and radical free market theorists such as Milton Friedman. They backed a strident position that business’s only purpose is to maximise shareholder value, and that to show a scintilla of concern for anything else is to lose focus and compromise the noble mission of wealth creation.
As is so often the case, the cause’s most zealous supporters turned out to be its biggest enemy. Friedman famously asked the question/ “Do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible?” His emphatic answer was “No, they do not.” Every time sentiments like these were expressed, a new generation of anti-globalisation activists was born, steeled in their resolve to change things. They knew who the enemy was, because he went around boasting of the fact.
The underlying reality was much more mundane, however. Even Friedman accepted that big business had to stay within the law, and you can’t pick which bits of the law you choose to obey, or decide to prioritise one law ahead of another. Even though some parts of the law stress a fiduciary duty to maximise shareholder value, others require businesses to protect the rights of employees, consumers, the environment and so on. So back then, as now, the real job of managers was to manage trade-offs, strike balances, negotiate across many conflicting demands, and so on. There was a huge gap between rhetoric and reality.
Now take the marketing services industry, which is sometimes extremely good at saying silly things. Not long after the war, for example, Clyde Miller wrote in his book The Process of Persuasion: “It takes time, yes, but think what it can mean to your firm in profits if you can condition 10 million children to grow up as adults trained to buy your products as soldiers are trained to advance when they hear the trigger words ‘forward march’.”
Around the same time, a marketing agency specialising in marketing to children declared: “Eager minds can be moulded to want your products!” The advertising industry has repeated similar claims and sentiments ad nauseam in the decades since. So it beggars belief that the advertising industry should be surprised that calls to restrict advertising to children always fall on ready ears.
The underlying reality, of course, is that it’s in agencies’ vested interests to puff up their persuasive prowess in the hope of impressing clients enough to open their cheque books. But their claims to have found the “triggers” of human behaviour, and to be able to mould peoples’ minds, have always been way in excess of their actual abilities. Once again, the gap between rhetoric and reality has been huge. And it is the claims, not the reality, to which politicians and regulators react.
This was beautifully illustrated by the farcical debate over tobacco advertising. The whole point of advertising a product is to get more people to buy it more often. This is the promise agencies sell, and what clients buy. But suddenly, when tobacco advertising came under the spotlight, the industry had to stand on its head. “You don’t understand,” it suddenly announced. “Advertising never persuaded anybody to actually buy any more cigarettes than they would have done anyway. All the advertising does is influence brand switching!”
Politics of pretence
Enter the politicians. They have an over-claiming problem of their own. They have to pretend they have the power to do something about issues like obesity and smoking. Otherwise there’s no point people voting for them. The last thing a politician can say is “Shucks! This is a really complex problem and my ability to influence things for the better is marginal”. Politicans have to be seen to be doing something, and often the easiest thing to do is ban or restrict the advertising.
So we have a rather bizarre situation where real – and often quite damaging – actions are being triggered not by what the main actors actually do, but by what they say they are doing or would like to do. But it doesn’t stop there, because pressure groups, the media and consumers have their own role to play.
With the pressure groups there is a double dynamic at work. First, a great deal of their venom is animated by distrust: distrust of corporations’ motives as distinct from their actions. This lack of trust is largely generated by corporations’ own statements about shareholder value always coming first. That’s why, as Glenn observes, pressure groups will never be satisfied with what companies do. “Their underlying attitude is, it’s shut up shop or nothing”.
Second, like advertising agencies, pressure groups have a vested interest in exaggeration, because they are in intense competition themselves for grants, charitable donations and airtime. They need headlines to do their work, and you don’t make headlines by even-handed “on the one hand, on the other” caution.
The media meanwhile likes pressure groups because they are an endless source of easy headlines. The media does not have a mission to inform, only to grab audiences, so the more arresting the headline the better. News manufacture is also a self-referential process. What is news? It’s what the media talks about. Journalists define their agenda mainly by what other journalists are writing about. That’s why an issue like obesity can be as dead as a doornail one minute and all over the place the next: journalists hunt in packs.
This leaves consumers, who routinely tell researchers little white lies about their attitudes and behaviours. The research always shows that consumers are more ethical, more environmentally concerned and more focused on health than they demonstrate through their actual purchasing patterns.
The net effect wouldn’t go amiss in a Shakespearean comedy of errors. People aren’t actually talking to one another properly. In shareholder value mode, businesses are talking to shareholders; agencies are talking to businesses; politicians are talking to voters; pressure groups are talking to the media; the media is talking to consumers and consumers are largely talking to themselves (their own sense of self-worth). Each party is eavesdropping on the other parties’ conversations, taking what they hear out of context, and deciding what to do on that basis.
In a comedy of errors, all would suddenly come right in a sudden scene of universal revelation. That’s not likely to happen here, where the issues are far more serious. So what is the way forward?
Be as good as your word
Simple awareness may be part of the answer: merely understanding the dynamics of a dysfunctional system can help you avoid its excesses. Changes of terminology can also help. The term “reputation management” is pregnant with implications of spin. What brands need now is the absolute opposite: a strategic commitment to building trust based on demonstrably responsible performance over a long period of time.
And how to do that? Too many companies are still making the mistake of separating “social responsibility” from day-to-day brand management, argues Glenn. Social responsibility is addressed in long-term “strategic” reviews, without any connection to brand managers’ immediate targets. “We are failing to break it down into things to impact on an annual basis,” argues Glenn. To do this, businesses need to segment the issues and prioritise those that really matter to that particular brand. It’s about implementing the priority issues so that they become a part of how business is done. Sustainable fishing, for example. This may not be spectacular, or headline-grabbing. But if it helps shift the reality, it’s worth a lot more than a whole load of misleading talk.
Alan Mitchell, www.alanmitchell.biz