Posted on Aug 22, 2019


TL;DR: Corporate Soul Searching, Polluters Not Scooters, And Call The Polic(ymakers)

Corporate Soul Searching

Here’s what you need to know…

Well, it looks like outrage has struck again. This month the chorus of boos and corresponding chants of “TRUMP HAS NO SOUL” and “EQUINOT” were aimed at luxury fitness brands SoulCycle and Equinox. The boycott came as news spread over social media that Stephen Ross, the chairman of The Related Companies, which owns the fitness boutiques, was hosting a fundraiser for President Trump at his home in the Hamptons. Some offended customers were even inquiring about whether the development would allow the companies’ membership cancellation policy to be relaxed.

Given how the fitness brands have positioned themselves to inspire and appeal to a liberal clientele, the blowback onto the company from the fundraiser was an entirely predictable collision that could have been foreseen and prevented had it been viewed through the lens of political and reputational risk. However, like many brands and startups, they may not have thought about how their investors or ownership structure might reflect on consumers’ views of them. So, for other companies seeking to avoid such a crisis and anticipate such risks, the lessons learned from this debacle are instructive. Here’s how your company can do the “soul searching” and due diligence necessary to achieve your business objectives:

  • But First, More On The Story: Both SoulCycle and Equinox market themselves as “socially responsible firms,” with SoulCycle positioning itself as pro-woman, pro-LGBTQ, and recently partnering with the NAACP Legal Defense Fund. Equinox sells luxury products, including lipstick made from “blank newspaper pages from The Washington Post” and a perfume “infused with the actual DNA of Kathrine Switzer, the first woman to run the Boston Marathon.” So, it should shock no one that many of SoulCycle’s and Equinox’s customers were appalled that Ross – despite not being a household name and even then one whose principal business is not a majority stake in the brand’s parent company, but rather real estate development – would host a fundraiser for Trump.
     
  • The Public Expects Companies To Practice What They Preach: With heightened scrutiny and increased political polarization, companies and their executives need to be keenly aware of what their brand is promising the public. Business professors and corporate boycott experts Mary-Hunter McDonnell and Brayden King found evidence that building a strong reputation as a socially responsible firm creates certain expectations, making “incongruent behavior more noticeable and damaging to the firm’s image.” Social media has made it incredibly easy for activists to hold firms accountable for their actions and publicly shame them when they stray away from their values, suggesting that more companies should be more cautious about mixing business with politics as well as more cognizant of whether their executives’ and owners’ politics are consistent with the politics of their brand.
     
  • Don’t Make Yourself A Target: McDonnell and King also found that companies that were more aggressive in their “pro-social marketing” were more likely to be targeted by a boycott in a given year. In other words, firms that are implicitly promoting that they are “socially responsible” are only opening themselves up to more criticism. Just ask Nike, which has been building up its socially responsible bona fides yet found itself embroiled in a #MeToo scandal over its corporate culture of “discrimination and bad behavior” toward female employees and backlash that it paid its sponsored female athletes less than its males.
     
  • People Are Companies, Too: Companies should be aware of the vulnerabilities they face when their executives’ and top investors’ values and actions do not align with those the brand espouses. It is increasingly difficult to separate such key figures – even those who are not especially public-facing or only hold a minority stake – from the entities they represent. If an owner’s or investor’s values do not square with the brand promise and target audience, the result is political and reputational risk that leaves companies more susceptible to public affairs challenges.
     
  • It Doesn’t Matter, Until It Matters. A company’s vulnerabilities can hide in plain sight for a long time without being noticed or becoming an issue. Yet in today’s digitally enabled age, an incident or other viral moment can rapidly evolve into scrutiny of these vulnerabilities, weaving a narrative that fairly or unfairly paints the company in an unfavorable light. While it can be difficult to anticipate the inciting incident or viral moment, anticipating what comes next – and which organizations or groups are likely to pile on – is not.

Understanding and assessing the risks and vulnerabilities outlined above can help companies achieve their objectives and avoid embarrassing public fiascos. As consumers increasingly expect companies to take a stand on social, political, and cultural issues, it will only become more imperative for companies to make sure the views of their executives, investors, and employees all align with the brand. Failure to do so could lead your company to be the next target of the boycott mob.

News You Can Use

POLLUTERS NOT SCOOTERS?

Electric scooters have taken many cities across America by storm of late with people boasting of their convenience, playfulness, and contribution to environmental sustainability, but it turns out they may not be that good for the environment after all. A new analysis from researchers at North Carolina State University found that electric scooters actually increase carbon pollution more often than not, and contrary to popular belief, the study concluded that scooters don’t replace enough car trips to match emissions from their manufacturing and redistribution.

The results should serve as a warning for companies to verify the truthfulness of their branding and for customers to be skeptical when something may seem to be “too good to be true.” The study, after all, was sparked after the researchers received a phone notification from e-scooter company Lime that told users their ride was “carbon free.”

CALL THE POLIC(YMAKERS)

Somewhere George Orwell is smiling. Amazon-owned home security company Ring is pursuing contracts with police departments across the country that would grant it access to real-time emergency dispatch data. Ring has requested the data streams so it can curate “crime news” posts for its neighborhood watch app, dubbed Neighbors, that allows users to share “suspicions about alleged criminal activity in their neighborhoods” and post video captured by their Ring doorbell cameras.

Privacy-rights advocates were already outraged by Ring, and this latest development is sure to fuel the fire. As other tech companies have faced a grilling for violating users’ privacy, Amazon and Ring may find that soon not the police, but the policymakers, will be called on them.

NOT SMART ENOUGH TV’S?

Move over plastic straws – the environmentalists have found their next target. With a new report from the National Resources Defense Council (NRDC), it seems as though smart devices such as TVs and speakers finding a prominent place in American homes may not be smart enough for environmentalists. Americans have purchased and installed nearly 100 million of these smart devices over the past several years, although little information regarding how energy efficient these devices are – which typically are “on” and in “standby” mode waiting to respond to a user’s voice command – has been available.

While it doesn’t appear that the owners of devices like Amazon’s Echo and Google Home have been clamoring for research on the environmental impact of their digital assistants, the NRDC report found that most devices are “energy efficient,” but that TVs commanded by voice control could add more than $2.5 billion to U.S. energy bills per year if design improvements are not made. This seemingly benign finding serves as a warning to device manufacturers that environmentalists will be targeting their products and seeking to change the way they are designed, as well as a warning to consumers that their products may be getting more expensive – not to mention controversial – in the near future.

TWITTER’S DOUBLE-STANDARD 

Earlier this month, Twitter temporarily locked Senate Majority Leader Mitch McConnell’s (R-KY) campaign Twitter account after it determined a video the campaign posted of an activist calling for violence outside the Senator’s home violated the company’s “violent threats policy.” At the same time, Twitter allowed the hash tag “#MassacreMitch” to appear on its “trending” section without intervention.

The incident provides more fodder for conservatives who argue that technology companies treat conservative viewpoints differently on their platforms. In fact, a 2018 poll found that 58% of registered voters think that social networks are unfair to conservatives. Twitter’s latest blunder could also spell trouble for technology companies looking to please Congress to avoid costly and burdensome regulations, of which offending the Senate Majority Leader may not be the best strategy.

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