(Originally published on 6 September 2018)
Companies come and companies go. Many powerful brands, household names that seemed unassailable in their heydays, disappeared overnight without so much as a shrug from consumers. Of the Fortune 500 firms that existed in 1955, almost 90% are gone today. Big names that left the stage in recent years include the likes of Woolworth, Compaq, Enron, Blockbuster, Polaroid, and Toys ‘R’ Us. And that’s just in the U.S.
Equally rich pickings exist in the airline business where many once iconic brands joined the scrap heap of aviation history: PanAm, TWA, US Airways, Northwest and Continental in the United States; Sabena, Swissair and Malev in Europe; Ansett Australia, and Brazil’s Varig, to name but a few. Indeed, surveys consistently show that most people would not care if 3 out of every 4 brands disappeared tomorrow.
There are countless reasons that a brand might die, from failing to keep up with market trends to bad investment decisions or a shift in the market landscape. With so many external and internal threats, one thing you would expect a company to steer clear from is to deliberately court controversy and risk alienating part of its customer base. It is all the more surprising therefore, to see a growing number of companies – or in some cases their CEOs personally - making headlines for openly and loudly tying their political colors to the mast of public opinion.
Last year, Dutch flag carrier KLM made waves with its “rainbow seatbelt” ad welcoming the LGBT crowd to the Amsterdam Pride. Besides leaving industry commentators to wonder whether the airline’s safety department had signed off on the ad, many in the Twitter courtroom of public opinion thought the action amounted to unnecessary corporate pandering. Similar reactions could be heard in response to a recent initiative from Qantas, the “Spirit of Australia”, with people questioning why a publicly listed company would use shareholders money to promote “virtue signaling, politically correct behavior” which has absolutely nothing to do with its core business. In yet another example, US company Delta Airlines earlier this year saw its actions in support of gun control blow up in its face when it prompted local authorities to block a US$ 40 million annual tax break for the airline.
Now, it is true that 9 out of 10 people want their brands to be more purposeful than just superficial slogans and straplines. Which would seem to support the case for corporate activism. At the same time, however, many believe that these companies are knowingly and willingly putting their brand and their financial health at risk, something available research seems to confirm. As much as speaking up for certain values should be applauded, companies – and their CEOs - would do well to keep in mind that political consumerism works both ways. As shoemakers Nike has been finding out in the wake of its recent ad campaign featuring controversial ex-NFL player Kaepernick, consumers quite happily vote with their feet and run towards the competition, in this case Adidas and New Balance.
In an attempt to find out whether purpose-led companies are likely to outperform their competitors, a 2018 report found that 94% of CMOs believe that having a purpose is having a high impact on the brand value (which makes you wonder if the other 6% are in the right job, but that aside…). The same report also found, however, that consumers ranked price, special offers, the brand’s overall reputation and a new product variety as more important than a brand’s social purpose in their purchase decision: they ranked a brand’s support of a social cause fourth out of five.
Given the public’s general lack of trust in Big Business, it is easy to see why people would question companies’ integrity and their real intentions. Do they genuinely wish to become a purpose-led company or are they simply trying to ride the latest cultural wave towards a fresh group of wide-eyed consumers? Or worse, might their ostentatious righteousness even be a cynical PR move to distract from or compensate for less palatable corporate behavior in other areas? Could Nike’s controversial move simply be a renewed attempt to rid itself of its ‘sweatshop image’? Could banning plastic straws just be United Airlines’ calculated response to some of their recent gaffes, including stuffing a dog into an overhead bin and killing it? Giving these corporates the benefit of the doubt, one could simply dismiss this as badly bungled CSR policy. The alternative, namely that it is opportunistic moral grandstanding at the expense of its shareholders, would be much worse.
Of course, when companies exist as virtual monopolies or part of an oligarchy (such as Google, Facebook, Mastercard, or Visa, all of whom have recently been terminating services to users whose political views were deemed unpalatable) they may actually get away with their proselytizing behavior. Simply because no viable alternatives exist for their users, they have nowhere else to go – at least not yet. But when companies are operating in highly competitive markets, like airlines, perhaps they should think twice about potentially alienating a substantial portion of their customers by wading into politically loaded moral quagmires. As history has shown, most people couldn’t care less if they existed or not.
About the author: Andreas Hardeman (The Hague, 1967) is an internationally experienced air transportation lawyer, sustainability expert and acclaimed aviation writer and commentator on current industry trends. Opinions in this blog are exclusively those of the author and do not necessarily reflect those of his business associates or clients. He can be contacted directly at info@astraworx.com
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